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Solid Execution of inTEST’s 5-Point Strategy Drove Record Fourth Quarter and Full Year 2022 Revenue

  • Record fourth quarter revenue of $32.4 million increased 45% while record full year 2022 revenue of $116.8 million increased 38% versus the prior year
  • Fourth quarter earnings per diluted share were $0.30 and full year 2022 earnings per diluted share were $0.78
  • Fourth quarter orders of $31.3 million increased 3% versus the prior-year period, while full year 2022 orders of $129.6 million increased 27% versus the prior year
  • Strong demand in semiconductor, automotive including electric vehicles (“EV”), defense/aerospace, and life sciences resulted in record annual orders of $129.6 million
  • Q1 2023 revenue expected to be in the range of $30 million to $32 million; full year 2023 revenue expected to be in the range of $125 million to $130 million

inTEST Corporation (NYSE American: INTT), a global supplier of innovative test and process solutions for use in manufacturing and testing in key target markets which include automotive, defense/aerospace, industrial, life sciences, security, and semiconductor (“semi”), today announced financial results for the fourth quarter and year ended December 31, 2022. Results include the impact of the following acquisitions: North Sciences, formerly Z-Sciences (October 2021), Videology (October 2021) and Acculogic (December 2021).

Nick Grant, President and CEO, commented, “Solid execution of our 5-Point Strategy to drive growth enabled us to end this past year with a record $117 million in revenue. By expanding our addressable markets, building out our sales channels, upgrading our talent and staffing, and driving innovation with new products, we have expanded our geographic reach, our customer base, and market positions. Further demonstrating the success of our strategy, we integrated three acquisitions that added new technologies and deepened our positions in target markets.”

5-Point Strategy Drove Growth

The Company is focused on the execution of its 5-Point Strategy that it initiated in 2021. inTEST’s goal is to further diversify the business while accelerating growth. The elements of the strategy are:

  • Global and market expansion;
  • Innovation and differentiation;
  • Service and support;
  • Talent and culture; and
  • Strategic acquisitions and partnerships.

The Company saw growth in revenue across all its served markets in 2022 compared to the prior year. This growth was fueled both by end market demand for inTEST’s highly engineered technology solutions as well as the impact of acquisitions. The Company’s revenue from its semi business grew 24.5% in 2022 to $68.4 million, which was driven by induction heating solutions for silicon carbide (SiC) crystal production. Sales of the Company’s highly engineered solutions for automotive/electric vehicle (EV) grew 73.7% to $10.8 million for 2022. The acquired businesses contributed significantly to the revenue increases in industrial, automotive/EV, life sciences, defense/aerospace, and security.

Mr. Grant continued, “I am exceptionally proud of our global team, who delivered the outstanding results for 2022. By executing on our strategy, we are driving a culture of greater openness, collaboration and accountability across the organization which enabled us to overcome many supply chain challenges throughout the year and deliver on our commitments to our customers. We are executing on our vision to be the supplier of choice for innovative test and process technology solutions globally.”

Fourth Quarter 2022 Review (see revenue by market and by segments in accompanying tables)

Three Months Ended

($ in 000s)

Change

Change

12/31/2022

9/30/2022

$

%

12/31/2021

$

%

Revenue

$32,405

$30,771

$1,634

5.3%

$22,358

$10,047

44.9%

Gross profit

$14,981

$13,898

$1,083

7.8%

$10,346

$4,635

44.8%

Gross margin

46.2%

45.2%

46.3%

Operating expenses (incl. intangible amort.)

$10,949

$10,739

$210

2.0%

$10,051

$898

8.9%

Operating income

$4,032

$3,159

$873

27.6%

$295

$3,737

1266.8%

Operating margin

12.4%

10.3%

1.3%

Net earnings

$3,244

$2,524

$720

28.5%

$287

$2,957

1030.3%

Earnings per diluted share (“EPS”)

$0.30

$0.23

$0.07

30.4%

$0.03

$0.27

900.0%

Adjusted net earnings (Non-GAAP) (1)

$3,707

$3,016

$691

22.9%

$799

$2,908

364.0%

Adjusted EPS (Non-GAAP) (1)

$0.34

$0.28

$0.06

21.4%

$0.07

$0.27

385.7%

Adjusted EBITDA (Non-GAAP) (1)

$5,256

$4,453

$803

18.0%

$1,368

$3,888

284.2%

Adjusted EBITDA margin (Non-GAAP) (1)

16.2%

14.5%

6.1%

(1) Adjusted net earnings, adjusted EPS, adjusted EBITDA, adjusted EBITDA margin and organic revenue are non-GAAP financial measures. Further information can be found under “Non-GAAP Financial Measures.” See also the reconciliations of GAAP financial measures to non-GAAP financial measures that accompany this press release.

Compared with the prior-year period, revenue grew $10.0 million, driven by organic revenue (Non-GAAP)(1) growth of $6.3 million. Revenue growth reflected strong demand across all technology offerings and end markets. Demand for induction heating technology solutions for silicon carbide (SiC) crystal growth applications, as well as back-end test solutions for analog and mixed signal applications drove sales to the semi market up 58.4% to $19.5 million.

Compared with the third quarter of 2022, fourth quarter sales to the semi market grew 1.5%, due to continued strength in demand for solutions serving silicon carbide (SiC) crystal growth applications. Revenue increased sequentially to the automotive/EV and defense/aerospace markets by 73.0% and 13.7%, respectively. All the Company’s technology platforms serve these markets.

Gross margin increased by 100 basis points on a sequential basis primarily due to higher volume and beneficial product mix. Sequentially, operating income grew 27.6% to $4.0 million and operating margin expanded 210 basis points driven by operating leverage as the business scales.

Net earnings for the fourth quarter were $3.2 million, or $0.30 per diluted share. Adjusted net earnings (Non-GAAP)(1) were $3.7 million, or $0.34 per diluted share. Adjusted EBITDA (Non-GAAP)(1) was $5.3 million, representing a 16.2% adjusted EBITDA margin (Non-GAAP)(1).

Balance Sheet and Cash Flow Review

Cash and cash equivalents (including restricted cash) and short-term investments at the end of the fourth quarter of 2022 were $14.6 million, an increase of approximately $1.0 million from the end of the third quarter of 2022. During the quarter, the Company generated $2.3 million in cash from operations, up from $1.4 million in the third quarter. Cash used in operations for the year was $1.4 million. At quarter end, after paying down $1.0 million in debt, total debt was $16.1 million.

Capital expenditures were $0.3 million in the fourth quarter of 2022 compared with $0.4 million in the prior-year period. For the full year 2022 capital expenditures were $1.4 million, compared with $1.0 million in 2021.

Available funding under the Company’s delayed draw term loan facility is currently $30.0 million. In addition, there were no borrowings at the end of the fourth quarter of 2022 under the revolving credit facility.

Fourth Quarter 2022 Orders and Backlog (see orders by market in accompanying tables)

($ in 000s)

Three Months Ended

Change

Change

12/31/2022

9/30/2022

$

%

12/31/2021

$

%

Orders

$31,315

$32,680

$(1,365)

-4.2%

$30,459

$856

2.8%

Backlog (at quarter end)

$46,800

$47,890

$(1,090)

-2.3%

$34,052

$12,748

37.4%

Fourth quarter orders of $31.3 million grew 2.8% over the prior-year period reflecting increases across all end markets except in semi, which declined $6.6 million as last year’s fourth quarter benefitted from a $10.0 million front-end, long-term order. Sequentially, orders declined 4.2% driven by the timing of orders for semi and automotive/EV markets, which were partially offset by increased orders for life sciences, security and other markets.

Backlog at December 31, 2022, was $46.8 million, up 37.4% versus the prior year. Backlog declined sequentially 2.3% as supply chain constraints moderated enabling the Company to better meet customer demand. Approximately 45% of the backlog is expected to ship beyond the first quarter of 2023.

First Quarter 2023 Outlook and Full Year 2023 Goals

Mr. Grant concluded, “We have made excellent progress with our 5-Point Strategy and are optimistic that we can deliver high single-digit organic growth in 2023. While our quarterly cadence may vary, we are confident in the team and their ability to execute and deliver on our strategic goals.”

For 2023, the Company expects to deliver between $125 million to $130 million in revenue.

Gross margin in 2023 is expected to be consistent with 2022, or between 45% and 46%, while operating expenses are expected to be in the range of $44 million to $46 million. Expenses include intangible asset amortization expense which is currently estimated to be approximately $2.1 million for the full year, or approximately $1.7 million after tax.

The effective tax rate is expected to be consistent with 2022. Capital expenditures for 2023 are expected to run at approximately 1% to 2% of sales.

Revenue for the first quarter of 2023 is expected to be in the range of $30 million to $32 million with gross margin of approximately 45%.

First quarter 2023 operating expenses, including amortization, are expected to run at approximately $11.1 million to $11.3 million. Intangible asset amortization is expected to be approximately $540,000 pre-tax, or approximately $450,000 after tax. Interest expense is expected to be approximately $190,000 for the quarter and the effective tax rate is expected to be approximately 16% to 17% for the year.

First quarter 2023 EPS is expected to be in the range of $0.21 to $0.26, while adjusted EPS (Non-GAAP) (1) is expected to be in the range of $0.25 to $0.30.

The foregoing guidance is based on management’s current views with respect to operating and market conditions and customers’ forecasts. It also assumes macroeconomic conditions remain unchanged through the end of the year. Actual results may differ materially from what is provided here today as a result of, among other things, the factors described under “Forward-Looking Statements” below. Further information about non-GAAP measures can be found under “Non-GAAP Financial Measures” and the reconciliations of GAAP financial measures to non-GAAP financial measures that accompany this press release.

Conference Call and Webcast

The Company will host a conference call and webcast today at 8:30 a.m. ET. During the conference call, management will review the financial and operating results and discuss inTEST’s corporate strategy and outlook. A question-and-answer session will follow. To listen to the live call, dial (201) 689-8263. In addition, the webcast and slide presentation may be found at https://ir.intest.com.

A telephonic replay will be available from 11:30 a.m. ET on the day of the call through Friday, March 10, 2023. To listen to the archived call, dial (412) 317-6671 and enter replay pin number 13735047. The webcast replay can be accessed via the investor relations section at www.intest.com, where a transcript will also be posted once available.

About inTEST Corporation

inTEST Corporation is a global supplier of innovative test and process solutions for use in manufacturing and testing in key target markets including automotive, defense/aerospace, industrial, life sciences, and security, as well as both the front-end and back-end of the semiconductor manufacturing industry. Backed by decades of engineering expertise and a culture of operational excellence, inTEST solves difficult thermal, mechanical, and electronic challenges for customers worldwide while generating strong cash flow and profits. inTEST’s strategy leverages these strengths to grow organically and with acquisitions through the addition of innovative technologies, deeper and broader geographic reach, and market expansion. For more information, visit www.intest.com.

Non-GAAP Financial Measures and Forward-Looking Non-GAAP Financial Measures

In addition to disclosing results that are determined in accordance with GAAP, we also disclose non-GAAP financial measures. These non-GAAP financial measures consist of organic revenue, adjusted net earnings, adjusted earnings per diluted share (adjusted EPS), adjusted EBITDA, and adjusted EBITDA margin.

Definition of Non-GAAP Measures

The Company defines these non-GAAP measures as follows:

  • Organic revenue for any given period is derived by excluding "acquired revenue” from total revenue for that period. Acquired revenue is revenue generated by an acquired business for months when that business was not owned for the full comparable prior period.
  • Adjusted net earnings is derived by adding acquired intangible amortization, adjusted for the related income tax expense (benefit), to net earnings (loss).
  • Adjusted earnings per diluted share (adjusted EPS) is derived by dividing adjusted net earnings by diluted weighted average shares outstanding.
  • Adjusted EBITDA is derived by adding acquired intangible amortization, interest expense, income tax expense, depreciation, and stock-based compensation expense to net earnings.
  • Adjusted EBITDA margin is derived by dividing adjusted EBITDA by revenue.

These results are provided as a complement to the results provided in accordance with GAAP. Organic revenue is a non-GAAP financial measure presented to provide investors the understanding of the performance of the core business excluding the contributions of acquisitions in the first twelve months of ownership. Adjusted net earnings and adjusted earnings per diluted share (adjusted EPS) are non-GAAP financial measures presented to provide investors with meaningful, supplemental information regarding our baseline performance before acquired intangible amortization charges as management believes this expense may not be indicative of our underlying operating performance. Adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures presented primarily as a measure of liquidity as they exclude non-cash charges for acquired intangible amortization, depreciation and stock-based compensation. In addition, adjusted EBITDA and adjusted EBITDA margin also exclude the impact of interest income or expense and income tax expense or benefit, as management believes these expenses may not be indicative of our underlying operating performance.

Management’s Use of Non-GAAP Measures

The non-GAAP financial measures presented in this press release are used by management to make operational decisions, to forecast future operational results, and for comparison with our business plan, historical operating results and the operating results of our peers. Reconciliations from revenue to organic revenue, net earnings and earnings per diluted share (EPS) to adjusted net earnings and adjusted earnings per diluted share (adjusted EPS) and from net earnings to adjusted EBITDA and adjusted EBITDA margin, are contained in the tables below.

Limitations of organic revenue, adjusted net earnings, adjusted earnings per diluted share (adjusted EPS), adjusted EBITDA, and adjusted EBITDA margin

Each of our non-GAAP measures have limitations as analytical tools. They should not be viewed in isolation or as a substitute for U.S. GAAP measures of earnings or cash flows. Limitations may include the cash portion of interest expense, income tax (benefit) provision, charges related to intangible asset amortization and stock-based compensation expense. These items could significantly affect our financial results.

Management believes these Non-GAAP financial measures are important in evaluating our performance, results of operations, and financial position. We use non-GAAP financial measures to supplement our U.S. GAAP results in order to provide a more complete understanding of the factors and trends affecting our business.

Organic revenue, adjusted net earnings, adjusted earnings per diluted share (adjusted EPS), adjusted EBITDA, and adjusted EBITDA margin are not alternatives to revenue, net earnings, earnings per diluted share or margin as calculated and presented in accordance with U.S. GAAP. As such, they should not be considered or relied upon as substitutes or alternatives for any such U.S. GAAP financial measure. We strongly urge you to review the reconciliations of organic revenue, adjusted net earnings, adjusted earnings per diluted share (adjusted EPS), adjusted EBITDA, and adjusted EBITDA margin along with our financial statements included elsewhere in this press release. We also strongly urge you not to rely on any single financial measure to evaluate our business. In addition, because organic revenue, adjusted net earnings, adjusted earnings per diluted share (adjusted EPS), adjusted EBITDA, and adjusted EBITDA margin are not measures of financial performance under U.S. GAAP and are susceptible to varying calculations, the organic revenue, adjusted net earnings, adjusted earnings per diluted share (adjusted EPS), adjusted EBITDA, and adjusted EBITDA margin measures as presented in this press release may differ from and may not be comparable to similarly titled measures used by other companies.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements do not convey historical information but relate to predicted or potential future events and financial results, such as statements of the Company’s plans, strategies and intentions, or our future performance or goals, that are based upon management's current expectations. These forward-looking statements can often be identified by the use of forward-looking terminology such as “expects,” “may,” “will,” “should,” “plans,” “potential,” “forecasts,” “outlook,” “anticipates,” “targets,” “estimates,” “goal,” or similar terminology. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements.

Such risks and uncertainties include, but are not limited to, any mentioned in this press release as well as the Company’s ability to execute on its 5-Point Strategy, achieve high single-digit growth in 2023, realize the potential benefits of acquisitions and successfully integrate any acquired operations, grow the Company’s presence in its key target and international markets, manage supply chain challenges, convert backlog to sales and to ship product in a timely manner; the success of the Company’s strategy to diversify its markets; the impact of inflation on the Company’s business and financial condition; the impact of the COVID-19 pandemic on the Company’s business, liquidity, financial condition and results of operations; indications of a change in the market cycles in the semi market or other markets served; changes in business conditions and general economic conditions both domestically and globally including rising interest rates and fluctuation in foreign currency exchange rates; changes in the demand for semiconductors; access to capital and the ability to borrow funds or raise capital to finance potential acquisitions or for working capital; changes in the rates and timing of capital expenditures by the Company’s customers; and other risk factors set forth from time to time in the Company’s Securities and Exchange Commission filings, including, but not limited to, the Annual Report on Form 10-K for the year ended December 31, 2021. Any forward-looking statement made by the Company in this press release is based only on information currently available to management and speaks to circumstances only as of the date on which it is made. The Company undertakes no obligation to update the information in this press release to reflect events or circumstances after the date hereof or to reflect the occurrence of anticipated or unanticipated events, except as required by law.

– FINANCIAL TABLES FOLLOW –

inTEST CORPORATION

Consolidated Statements of Operations

(In thousands, except share and per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

December 31,

 

 

Years Ended

December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

32,405

 

 

$

22,358

 

 

$

116,828

 

 

$

84,878

 

Cost of revenue

 

 

17,424

 

 

 

12,012

 

 

 

63,388

 

 

 

43,654

 

Gross profit

 

 

14,981

 

 

 

10,346

 

 

 

53,440

 

 

 

41,224

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling expense

 

 

4,405

 

 

 

3,234

 

 

 

15,903

 

 

 

11,083

 

Engineering and product development expense

 

 

1,880

 

 

 

1,519

 

 

 

7,529

 

 

 

5,531

 

General and administrative expense

 

 

4,664

 

 

 

5,315

 

 

 

19,287

 

 

 

15,865

 

Restructuring and other charges

 

 

-

 

 

 

(17

)

 

 

-

 

 

 

286

 

Total operating expenses

 

 

10,949

 

 

 

10,051

 

 

 

42,719

 

 

 

32,765

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

4,032

 

 

 

295

 

 

 

10,721

 

 

 

8,459

 

Other expense

 

 

(151

)

 

 

(59

)

 

 

(576

)

 

 

(57

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before income tax expense

 

 

3,881

 

 

 

236

 

 

 

10,145

 

 

 

8,402

 

Income tax expense (benefit)

 

 

637

 

 

 

(51

)

 

 

1,684

 

 

 

1,119

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

$

3,244

 

 

$

287

 

 

$

8,461

 

 

$

7,283

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share - basic

 

$

0.30

 

 

$

0.03

 

 

$

0.79

 

 

$

0.70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - basic

 

 

10,725,662

 

 

 

10,580,431

 

 

 

10,673,017

 

 

 

10,462,246

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share - diluted

 

$

0.30

 

 

$

0.03

 

 

$

0.78

 

 

$

0.68

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares and common share equivalents outstanding - diluted

 

 

10,928,220

 

 

 

10,836,396

 

 

 

10,862,538

 

 

 

10,729,862

 

inTEST CORPORATION

Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

 

December 31,

 

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

13,434

 

 

$

21,195

 

Restricted cash

 

 

1,142

 

 

 

-

 

Trade accounts receivable, net of allowance for doubtful accounts

 

 

21,215

 

 

 

16,536

 

Inventories

 

 

22,565

 

 

 

12,863

 

Prepaid expenses and other current assets

 

 

1,695

 

 

 

1,483

 

Total current assets

 

 

60,051

 

 

 

52,077

 

Property and equipment:

 

 

 

 

 

 

 

 

Machinery and equipment

 

 

6,625

 

 

 

5,733

 

Leasehold improvements

 

 

3,242

 

 

 

3,001

 

Gross property and equipment

 

 

9,867

 

 

 

8,734

 

Less: accumulated depreciation

 

 

(6,735

)

 

 

(6,046

)

Net property and equipment

 

 

3,132

 

 

 

2,688

 

Right-of-use assets, net

 

 

5,770

 

 

 

5,919

 

Goodwill

 

 

21,605

 

 

 

21,448

 

Intangible assets, net

 

 

18,559

 

 

 

21,634

 

Deferred tax assets

 

 

280

 

 

 

-

 

Restricted certificates of deposit

 

 

100

 

 

 

100

 

Other assets

 

 

569

 

 

 

39

 

Total assets

 

$

110,066

 

 

$

103,905

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current portion of Term Note

 

$

4,100

 

 

$

4,100

 

Current portion of operating lease liabilities

 

 

1,645

 

 

 

1,371

 

Accounts payable

 

 

7,394

 

 

 

4,281

 

Accrued wages and benefits

 

 

3,907

 

 

 

4,080

 

Accrued professional fees

 

 

884

 

 

 

1,048

 

Customer deposits and deferred revenue

 

 

4,498

 

 

 

6,038

 

Accrued sales commission

 

 

1,468

 

 

 

863

 

Domestic and foreign income taxes payable

 

 

1,409

 

 

 

2,024

 

Other current liabilities

 

 

1,564

 

 

 

1,267

 

Total current liabilities

 

 

26,869

 

 

 

25,072

 

Operating lease liabilities, net of current portion

 

 

4,705

 

 

 

5,248

 

Term Note, net of current portion

 

 

12,042

 

 

 

16,000

 

Deferred tax liabilities

 

 

-

 

 

 

1,379

 

Contingent consideration

 

 

1,039

 

 

 

930

 

Other liabilities

 

 

455

 

 

 

453

 

Total liabilities

 

 

45,110

 

 

 

49,082

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies (Note 14)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value; 5,000,000 shares authorized; no shares issued or outstanding

 

 

-

 

 

 

-

 

Common stock, $0.01 par value; 20,000,000 shares authorized; 11,063,271 and 10,910,460 shares issued, respectively

 

 

111

 

 

 

109

 

Additional paid-in capital

 

 

31,987

 

 

 

29,931

 

Retained earnings

 

 

32,854

 

 

 

24,393

 

Accumulated other comprehensive earnings

 

 

218

 

 

 

594

 

Treasury stock, at cost; 34,308 and 33,077 shares, respectively

 

 

(214

)

 

 

(204

)

Total stockholders' equity

 

 

64,956

 

 

 

54,823

 

Total liabilities and stockholders' equity

 

$

110,066

 

 

$

103,905

 

inTEST CORPORATION

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

Years Ended

December 31,

 

 

 

2022

 

 

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net earnings

 

$

8,461

 

 

$

7,283

 

Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

4,734

 

 

 

3,145

 

Provision for excess and obsolete inventory

 

 

771

 

 

 

203

 

Foreign exchange loss

 

 

109

 

 

 

34

 

Amortization of deferred compensation related to stock-based awards

 

 

1,787

 

 

 

1,450

 

Discount on shares sold under Employee Stock Purchase Plan

 

 

36

 

 

 

8

 

Proceeds from sale of demonstration equipment, net of gain

 

 

68

 

 

 

145

 

Loss on disposal of property and equipment

 

 

-

 

 

 

50

 

Deferred income tax benefit

 

 

(1,659

)

 

 

(489

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Trade accounts receivable

 

 

(4,886

)

 

 

(4,775

)

Inventories

 

 

(10,631

)

 

 

(2,544

)

Prepaid expenses and other current assets

 

 

(243

)

 

 

(416

)

Restricted certificates of deposit

 

 

-

 

 

 

40

 

Other assets

 

 

(2

)

 

 

(9

)

Operating lease liabilities

 

 

(1,363

)

 

 

(1,218

)

Accounts payable

 

 

2,875

 

 

 

1,177

 

Accrued wages and benefits

 

 

(118

)

 

 

1,220

 

Accrued professional fees

 

 

(157

)

 

 

267

 

Customer deposits and deferred revenue

 

 

(1,464

)

 

 

4,755

 

Accrued sales commission

 

 

621

 

 

 

280

 

Domestic and foreign income taxes payable

 

 

(573

)

 

 

301

 

Other current liabilities

 

 

184

 

 

(59

)

Other liabilities

 

 

61

 

 

(6

)

Net cash provided by (used in) operating activities

 

 

(1,389

)

 

 

10,842

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Acquisitions of businesses, net of cash acquired

 

 

-

 

 

 

(20,378

)

Payment of contingent consideration related to Z-Sciences acquisition

 

 

(179

)

 

 

-

 

Refund of final working capital adjustment related to Acculogic

 

 

371

 

 

 

-

 

Purchase of property and equipment

 

 

(1,365

)

 

 

(994

)

Purchase of short term investments

 

 

(3,494

)

 

 

-

 

Sales of short term investments

 

 

3,494

 

 

 

-

 

Net cash used in investing activities

 

 

(1,173

)

 

 

(21,372

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from Term Note

 

 

-

 

 

 

20,500

 

Repayments of Term Note

 

 

(3,958

)

 

 

(400

)

Proceeds from stock options exercised

 

 

38

 

 

 

1,582

 

Proceeds from shares sold under Employee Stock Purchase Plan

 

 

197

 

 

 

43

 

Acquisition of treasury stock-shares surrendered by employees to satisfy tax liability

 

 

(10

)

 

 

-

 

Net cash provided by (used in) financing activities

 

 

(3,733

)

 

 

21,725

 

 

 

 

 

 

 

 

 

 

Effects of exchange rates on cash

 

 

(324

)

 

 

(277

)

Net cash provided by (used in) all activities

 

 

(6,619

)

 

 

10,918

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

21,195

 

 

 

10,277

 

Cash, cash equivalents and restricted cash at end of period

 

$

14,576

 

 

$

21,195

 

Cash payments for:

 

 

 

 

 

 

 

 

Domestic and foreign income taxes

 

$

3,924

 

 

$

1,322

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Issuance of unvested shares of restricted stock

 

$

1,138

 

 

$

1,541

 

Forfeiture of unvested shares of restricted stock

 

 

(54

)

 

 

(164

)

 

 

 

 

 

 

 

 

 

Details of acquisitions:

 

 

 

 

 

 

 

 

Fair value of assets acquired, net of cash

 

$

(49

)

 

$

17,717

 

Liabilities assumed

 

 

-

 

 

(3,849

)

Contingent consideration

 

 

500

 

 

(1,109

)

Goodwill resulting from acquisitions

 

 

(451

)

 

 

7,619

 

Net cash paid for acquisitions

 

$

-

 

 

$

20,378

 

inTEST CORPORATION

Revenue by Market

(In thousands)

(Unaudited)

 

($ in 000s)

Three Months Ended

Change

Change

12/31/2022

9/30/2022

$

%

12/31/2021

$

%

Revenue

Semi

$

19,453

60.0

%

$

19,170

62.3

%

$

283

 

1.5

%

$

12,284

54,9

%

$

7,169

58.4

%

Industrial

 

2,179

6.7

%

 

2,130

6.9

%

 

49

 

2.3

%

 

2,172

9.7

%

 

7

0.3

%

Auto/EV

 

2,805

8.7

%

 

1,621

5.3

%

 

1,184

 

73.0

%

 

2,697

12.1

%

 

108

4.0

%

Life Sciences

 

1,006

3.1

%

 

1,715

5.6

%

 

(709

)

-41.3

%

 

409

1.8

%

 

597

146.0

%

Defense/Aerospace

 

2,176

6.7

%

 

1,914

6.2

%

 

262

 

13.7

%

 

1,322

5.9

%

 

854

64.6

%

Security

 

1,002

3.1

%

 

871

2.8

%

 

131

 

15.0

%

 

693

3.1

%

 

309

44.6

%

Other

 

3,784

11.7

%

 

3,350

10.9

%

 

434

 

13.0

%

 

2,781

12.5

%

 

1,003

36.1

%

$

32,405

100.0

%

$

30,771

100.0

%

$

1,634

 

5.3

%

$

22,358

100.00

%

$

10,047

44.9

%

 

($ in 000s)

Years Ended

Change

12/31/2022

12/31/2021

$

%

Revenue

Semi

$

68,422

58.6

%

$

54,937

64.7

%

$

13,485

24.5

%

Industrial

 

10,038

8.6

%

 

7,314

8.6

%

 

2,724

37.2

%

Auto/EV

 

10,776

9.2

%

 

6,205

7.3

%

 

4,571

73.7

%

Life Sciences

 

4,589

3.9

%

 

2,353

2.8

%

 

2,236

95.0

%

Defense/Aerospace

 

7,006

6.0

%

 

5,043

6.0

%

 

1,963

38.9

%

Security

 

3,241

2.8

%

 

699

0.8

%

 

2,542

363.7

%

Other

 

12,756

10.9

%

 

8,327

9.8

%

 

4,429

53.2

%

$

116,828

100.0

%

$

84,878

100.0

%

$

31,950

37.6

%

inTEST CORPORATION

Orders by Market

(In thousands)

(Unaudited)

 

($ in 000s)

Three Months Ended

Change

Change

12/31/2022

9/30/2022

$

%

12/31/2021

$

%

Orders

Semi

$

14,775

47.2

%

$

19,181

58.7

%

$

(4,406

)

-23.0

%

$

21,386

70.2

%

$

(6,611

)

-30.9

%

Industrial

 

2,657

8.5

%

 

2,309

7.1

%

 

348

 

15.1

%

 

2,504

8.2

%

 

153

 

6.1

%

Auto/EV

 

1,660

5.3

%

 

2,870

8.8

%

 

(1,210

)

-42.2

%

 

1,413

4.7

%

 

247

 

17.5

%

Life Sciences

 

2,027

6.5

%

 

927

2.8

%

 

1,100

 

118.7

%

 

654

2.2

%

 

1,373

 

209.9

%

Defense/Aerospace

 

3,364

10.7

%

 

3,149

9.6

%

 

215

 

6.8

%

 

862

2.8

%

 

2,502

 

290.3

%

Security

 

2,172

6.9

%

 

1,072

3.3

%

 

1,100

 

102.6

%

 

1,620

5.3

%

 

552

 

34.1

%

Other

 

4,660

14.9

%

 

3,172

9.7

%

 

1,488

 

46.9

%

 

2,020

6.6

%

 

2,640

 

130.7

%

$

31,315

100.0

%

$

32,680

100.0

%

$

(1,365

)

-4.2

%

$

30,459

100.0

%

$

856

 

2.8

%

 

($ in 000s)

Years Ended

Change

12/31/2022

12/31/2021

$

%

Orders

Semi

$

73,070

56.4

%

$

68,464

67.2

%

$

4,606

6.7

%

Industrial

 

10,554

8.2

%

 

9,001

8.8

%

 

1,553

17.3

%

Auto/EV

 

9,899

7.6

%

 

7,466

7.3

%

 

2,433

32.6

%

Life Sciences

 

5,705

4.4

%

 

2,413

2.4

%

 

3,292

136.4

%

Defense/Aerospace

 

10,261

7.9

%

 

4,904

4.8

%

 

5,357

109.2

%

Security

 

4,386

3.4

%

 

1,691

1.7

%

 

2,695

159.4

%

Other

 

15,701

12.1

%

 

8,003

7.8

%

 

7,698

96.2

%

$

129,576

100.0

%

$

101,942

100.0

%

$

27,634

27.1

%

inTEST CORPORATION

Segment Data

(In thousands)

(Unaudited)

 

Beginning in the first quarter of 2022, the Company made a change to its reportable segments from two reportable segments to three reportable segments – Electronic Test, Environmental Technologies and Process Technologies. These segments, which operate as Divisions, align with how the Chief Executive Officer (CEO) who is also the Chief Operating Decision Maker (CODM) as defined under U.S. GAAP, allocates resources and assesses performance against the Company’s key growth strategies. Prior period reportable segment results and related disclosures have been restated to be consistent with the current year presentation.

 

 

Three Months Ended

December 31,

 

 

Years Ended

December 31,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

Electronic Test

$ 11,236

 

 

$ 6,851

 

 

$ 40,219

 

 

$ 32,509

 

Environmental Technologies

8,041

 

 

7,176

 

 

30,172

 

 

26,896

 

Process Technologies

13,128

 

 

8,331

 

 

46,437

 

 

25,473

 

Total Revenue

$ 32,405

 

 

$ 22,358

 

 

$116,828

 

 

$ 84,878

 

Division operating income:

 

 

 

 

 

 

 

 

 

 

 

Electronic Test

$ 3,445

 

 

$ 2,068

 

 

$ 9,931

 

 

$ 10,926

 

Environmental Technologies

924

 

 

1,110

 

 

3,817

 

 

4,236

 

Process Technologies

2,466

 

 

1,124

 

 

8,230

 

 

3,819

 

Total division operating income

6,835

 

 

4,302

 

 

21,978

 

 

18,981

 

Corporate expenses

(2,251

)

 

(3,485

)

 

(8,563

)

 

(9,082

)

Acquired intangible amortization

(552

)

 

(522

)

 

(2,694

)

 

(1,440

)

Other income (expense)

(151

)

 

(59

)

 

(576

)

 

(57

)

Earnings before income tax expense

$ 3,881

 

 

$ 236

 

 

$ 10,145

 

 

$ 8,402

 

Reconciliation of Non-GAAP Financial Measures

(In thousands, except percentage data)

(Unaudited)

 

Reconciliation of Revenue to Organic Revenue (Non-GAAP):

 

 

Three Months Ended

 

 

 

Change

 

12/31/2022

12/31/2021

$

%

Total revenue

$

32,405

 

$

22,358

$

10,047

44.9

%

Less: Acquired Revenue(1)

 

(3,778

)

 

n/a

 

 

Organic revenue (Non-GAAP)

$

28,627

 

$

22,358

$

6,269

28.0

%

(1)

Acquired businesses consist of Acculogic (December 2021), Videology (October 2021) and North Sciences (October 2021). The calculation of organic revenue excludes from current period revenue any Acquired Revenue. Acquired Revenue is revenue from any acquired business for months where that business was not owned for the full comparable prior period.

inTEST CORPORATION

Reconciliation of Non-GAAP Financial Measures

(In thousands, except per share and percentage data)

(Unaudited)

Reconciliation of Net Earnings to Adjusted Net Earnings (Non-GAAP) and

Earnings Per Share – Diluted to Adjusted Earnings Per Share – Diluted (Non-GAAP):

 

Three Months Ended

12/31/2022

 

12/31/2021

 

9/30/2022

 

 

Net earnings

$

3,244

 

$

287

 

$

2,524

 

Acquired intangible amortization

 

552

 

 

522

 

 

595

 

Tax adjustments

 

(89

)

 

(10

)

 

(103

)

Adjusted net earnings (Non-GAAP)

$

3,707

 

$

799

 

$

3,016

 

 

Diluted weighted average shares outstanding

 

10,928

 

 

10,836

 

 

10,865

 

Earnings per share – diluted:

Net earnings

$

0.30

 

$

0.03

 

$

0.23

 

Acquired intangible amortization

 

0.05

 

 

0.04

 

 

0.06

 

Tax adjustments

 

(0.01

)

 

-

 

 

(0.01

)

Adjusted earnings per share – diluted (Non-GAAP)

$

0.34

 

$

0.07

 

$

0.28

 

 

Years Ended

 

12/31/2022

 

12/31/2021

 

 

 

Net earnings

$

8,461

 

$

7,283

 

Acquired intangible amortization

 

2,694

 

 

1,440

 

Tax adjustments

 

(447

)

 

(22

)

Adjusted net earnings (Non-GAAP)

$

10,708

 

$

8,701

 

 

Diluted weighted average shares outstanding

 

10,863

 

 

10,730

 

Earnings per share – diluted:

Net earnings

$

0.78

 

$

0.68

 

Acquired intangible amortization

 

0.25

 

 

0.13

 

Tax adjustments

 

(0.04

)

 

-

 

Adjusted earnings per share – diluted (Non-GAAP)

$

0.99

 

$

0.81

 

Reconciliation of Net Earnings to Adjusted EBITDA (Non-GAAP) and

Adjusted EBITDA Margin (Non-GAAP):

 

Three Months Ended

12/31/2022

 

12/31/2021

 

9/30/2022

 

 

Net earnings

$

3,244

 

$

287

 

$

2,524

 

Acquired intangible amortization

 

552

 

 

522

 

 

595

 

Interest expense

 

164

 

 

83

 

 

166

 

Income tax expense (benefit)

 

637

 

 

(51

)

 

515

 

Depreciation

 

245

 

 

171

 

 

203

 

Non-cash stock-based compensation

 

414

 

 

356

 

 

450

 

Adjusted EBITDA (Non-GAAP)

$

5,256

 

$

1,368

 

$

4,453

 

Revenue

 

32,405

 

 

22,358

 

 

30,771

 

Adjusted EBITDA margin (Non-GAAP)

 

16.2

%

 

6.1

%

 

14.5

%

 

Years Ended

 

12/31/2022

 

12/31/2021

 

 

 

Net earnings

$

8,461

 

$

7,283

 

Acquired intangible amortization

 

2,694

 

 

1,440

 

Interest expense

 

600

 

 

89

 

Income tax expense

 

1,684

 

 

1,119

 

Depreciation

 

810

 

 

666

 

Non-cash stock-based compensation

 

1,787

 

 

1,450

 

Adjusted EBITDA (Non-GAAP)

$

16,036

 

$

12,047

 

Revenue

 

116,828

 

 

84,878

 

Adjusted EBITDA margin (Non-GAAP)

 

13.7

%

 

14.2

%

Reconciliation of First Quarter 2023 Estimated Earnings Per Share – Diluted to

Estimated Adjusted Earnings Per Share – Diluted (Non-GAAP):

 

 

Low

 

High

 

 

 

 

Estimated earnings per share – diluted

$

0.21

 

 

$

0.26

 

Estimated acquired intangible amortization

 

0.05

 

 

 

0.05

 

Estimated tax adjustments

 

(0.01

)

 

 

(0.01

)

Estimated adjusted earnings per share – diluted (Non-GAAP)

$

0.25

 

 

$

0.30

 

 

Contacts

inTEST Corporation

Duncan Gilmour

Chief Financial Officer and Treasurer

Tel: (856) 505-8999

Investors:

Deborah K. Pawlowski

Kei Advisors LLC

dpawlowski@keiadvisors.com

Tel: (716) 843-3908

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