INTT - Earnings call transcript Q2 2020

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Operator

Welcome to inTEST Corporation’s 2020 Second Quarter Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. A replay will be available – accessible at www.intest.com. I will now turn the call over to inTEST’s Investor Relations Consultant, Laura Guerrant. Please go ahead, ma’am.

Laura Guerrant

thank Financial joining Results and XXXX for Anna, Quarter Second Conference you, you us for inTEST’s Thank Call. With inTEST’s us CEO. Treasurer, Regan, Chief Financial today Officer and is Hugh interim and changes detailed inTEST’s results for for finally, the the the business and financial review quarter, discuss briefly highlights, current will company’s Hugh management we’ll the the XXXX quarter’s trends, quarter. in guidance third questions. time have then for any We’ll

they not If www.intest.com. a can releases, be received today’s website, obtained yet you’ve of inTEST’s on copy

have we from issued information In quarterly company’s the in addition shareholders release, to with time which call. information downloaded conference press of results and advance be Investor supplemental additional results call, advance provide and our supplemental of this offered The our in on to detail the is analysts our Relations for can page. website analyzing

formal Private predicted conference this the Before convey the we call meaning expressed Litigation statements. statements These potential information results begin but do subject management’s Securities are of that expectations. XXXX. events uncertainties Reform forward-looking current may the advised by or implied from future are statements company’s of upon risks statements within attorneys materially those could differ based that cause the historical remarks, contain These to and not Act that actual or such to to relate

to from refusal of our products our capital filings, liquidity, of unanticipated associated hereof employees, release a available pandemic; XX, interruptions, the in of but globally; subsequent call business, not current forth of conference Commission change and which pandemic evolving date to, the sufficiency of the our the conditions, quarterly in the of set deliveries costs we government-mandated during XX-Q based markets events. or circumstances of Form forward-looking limited requirements not closures, to in and In to addition as our other with any on this the and ended customers' update to capital on rates including acquisitions; quarterly anticipated ability supply and business including increases our raw is condition in and including our COVID-XX borrow is COVID-XX quarter pandemic; report working cycles only to and availability level undertake raise pandemic result as conditions the and of the domestically on factors inTEST of for this generally other markets product success made and pandemic; statements capital speaks mentioned operations acquisitions only semi success in March to the events on in funds operations; the or it general information for fabrication are made. indications by changes risk to result reports risks but health integration circumstances us serve, possibility annual to uncertainties reflect customers, including, impact reflect our date expenditures our to XX-Q. Any press Form currently and and the and chain market to We press address information our of as material time release, the include, the the Securities the semi the cash or changes on XX, timing development distribution a of or a business result for of by such market requirements; accept COVID-XX as and to Form the our results economic and in time demand in successful to report such a of COVID-XX a semiconductors potential dispositions changes public our of response the XXXX, financial acquired inability or of product as finance on result diversify market; by future programs; or entering outside XX-K strategy of the the the both obligation facility and December the ended as XXXX, in or no occurrence after to year in to, factors Exchange and limited of

today’s to reference call, During measures. we financial will non-GAAP make

page a these non-GAAP website, And conferences And markets. participating we and in Hugh www.intest.com. which let additional Lake posted ahead, call provided me virtual investor Please Dougherty press LD Regan. now have the with release, following of our comparable formerly We the Company, to and information turn to be go GAAP in September. Hugh. lastly, on will that, the reconciliation Street concerning measures, the in measure including Collier Investor is directly Capital Micro, over our

Hugh Regan

Thank welcome, XXXX everyone, you And you, joining quarter results and call. for thank Laura. conference second us for financial our

hope you of healthy all, families First I and of all and your safe. are

on meet road our that while back and to greatest as changed. results requirements areas brief to to On our of provide and I’d a customer like to These the their they for our maintaining results laid review, of normal, supply and And with being remain businesses, the priorities Before environment call, office. continue and items top demand to long-term the our encountered our are Operations to this continuity out sourcing challenging certain And in as there, major on importance we’ve want and it. disruptions. fortunately all well. technical largely and of our require drivers we I support safety, detail the quarterly maps. normal are navigate you up then with our holding meet to pandemic some here our liquidity and make continuing information transition products not update we we we first as to COVID-XX you how is the growth go we through assuring critical provide some into give capabilities and continued has customers to our QX response and COVID-XX abated, and pertain three not chain to our have underway CEO our shifts any not in of recovery respect

safety measures have risk in ensure our and and special a reduce to are disruption. operational safety our place the strong worldwide operating We to at all of with employees sites of the all measures place in of COVID-XX of

We I’d to the engineering possible team employees will behind are our to turn taking we manufacturing pandemic site, a while conservative, is and site-specific Until phased CEO and providing of to on to prioritizing workforce the this vigilant us, like And now customer our members be ensure safety transition. returning support. approach best our our teams.

his executive it he skills Grant, market record to refer Nick, as lot you by will been of to who appointed joining Directors has as President and prefers to CEO that the release spend Richard and of – of over than well August Rather of outstanding evening’s and that joining and company as the Board advise Jr., development. with discussion He transitions, be reviewing company, visionary the as to the number pleased of but be XX him replacing June believe XX. like will the company, our through We us executive well-respected for course as leader. second the since I I companies. quarter time to the service, will opportunity also the and Pelrin, the us are a many conducting I’d a are outstanding of a the very Board were the excited of thank XX. merely recently Board’s quite as potentials quite charismatic, years him as international move most within identified transition you acknowledge an our our of go and on number will for resume we three was months. to management to to will experience been to find President an the of from comes call over joining capable announce press new details over the And and our CEO, last worked that I search roles candidate continue customer prior to Board performance – on company long him He to Jim the in career, and products who a from has with well have CEO be effective with new three and a management industrial ended have company’s national years in would Directors, executive of to acquisitions decades consultant. XXXX. Jim with roles his with resigned the and now will impressive He’s with executive a say in to this today, us track when our like I the and product, his but financial quite Nick comes

profitability in light quarter growth. markets largely results both to COVID, expectations, Our semiconductor overall resulting we the challenging, in the we serve second And and the manufacturers. while they continues environment market for particularly positive exceeded serve, the seeing – relate to revenue be as signs are in we of

and bookings of EV just in defense/aerospace continued brands, quarter along level business activity. We are to second Technological and all business iTS' very steadily, Demand electric of EV signs with each million. revenues second our booked iTS growing no with million. to an X semi fact, year-to-date Strength is vehicles bringing market continues Sigma fast three advances chillers $X.XX of year-to-date process very both bolsters QX defense/aerospace Thermonics market. during is to bringing manufacturers and and for Thermonics. our in total softening. The for $X quarter, In reported the strong QX market the demand be have total units $XXX,XXX, bookings and our cryogenic the in in increased a on pace, developing uptick showing during a the $XXX,XXX to largest at Temptronic, over

defense/aerospace are difficulty] in While quarter advancements this our cannabis the we’ve making bookings strategic past, the chillers were XXX% in our the [Technical of market, highlighted

Operator

try this issue This is please unable we at to the our stay are audience, – operator; hear you online while audio time. we the To corrected. to telephone

Hugh Regan

hear you can me? Operator,

Operator

I yes. hear you now, can

Hugh Regan

quarter the good mobile in in where home people handset market support pandemic. for many and COVID-XX Thank working you. during or devices the power the A computing of part EMS' space growth second the been of management studying home has from are

need our customers in and seeing with production the the for sector, $XX.X in us were million which the more the consolidated test first consistent the strengthened, bookings of $XX.X you’ll has pandemic for million quarter, the see as at and third COVID We our onset they are specifically guidance from in quarter. reflected mixed-signal abilities the respective have can especially level than a order to flow for equipment of QX therefore world, reported unfolds. and companies, in general, plan analog in inTEST, realizing in did production pandemic they mode execute, higher and a of remain the confidence their restricted that are

the bookings million. basis, X% Market to X% Multi makes of a bookings for the end fact quarter, very period end to is the the that Semi diverse Multi we to quarterly Market first Multi sequential the applications difficult, comparison confirming Market at growth, of a increased orders business in was while in a On second long-term driving if meaningful. largely $X.X set strong basis, On For not which the due a bookings strategy. decline sequentially had $X.X our decreased our the came million, less that quarter, same

auto guidance been to predominantly our the increased XX% and XX% revenues sequentially quarter increased who X% levels. overall increased noted, consensus, million, manufacturers business as still market, open revenues not, are were down driven there above X% to defense/aerospace Multi by XX% for the million. a $X.X were during just customers Semi places has able are were and and our increasingly strength. have markets. were quarter $XX.X by well for mandate, essential revenues, $X.X normal consolidated of Breaking sequentially like closed fueled revenues most by number and I to and remained shown QX QX industrial semi of Market largely revenues by above which, Market are manipulator below or and down second who fabricators, business weld not million and integrators, have open, shops the While Multi

of As the goal is have in our Multi in that we to Market Semi the business is market. grow noted inherent to the impact past, volatility the ultimate reduce

certain consolidated This customers also Thermal manufacturing revenue, Multi turn and and during of typically all is our as of X% restrictions year negatively key beginning period, customers, contributed the business good, visits. The QX the has revenues. for gross to million with includes carbide silicon quarter the we applications million revenue the from now impacted applications segments, on-site third Thermal Despite prohibiting front-end ability which to which Thermal $X.X consolidated defense/aerospace to with to that provide responsible our close orders relatively growth. million ago ongoing our along travel service account expect revenues activity has driven reported was Semiconductors reduced as important XX% QX and as continue the Compared and automotive majority of for revenues iTS. backlog, several QX. two QX. result net a X% wafer are imposed medical. Semi consists for include of in Thermal, service down limited of and in by well thermal with our Thermal which compared well were has of XX%. Let’s net in pandemic turn, operating is Key $XX.X the with of with and business, quarter import the we bookings stronger margin. due packaging, up is to impacts revenue The consistent an And in market service this quarter. business. were projects entered to which, $X.X orders as test. of in with Ambrell COVID-XX, and will reported million continued Market approximately important continued our industrial, to of back-end the deposition crystal driver semiconductor remain These $XX.X

as and advanced technical We which well our to our continue segment, growth long-term our are Thermal to key focus diversification. as on within applications capabilities drivers advance

products XXX% QX serves increased with EMS production applications. – our EMS predominantly mixed-signal segment, sequentially semiconductor up semiconductor our much $X.X million for been X% to EMS turn has revenues of EMS which clear reflects. EMS test market to $X.X and the let’s analog were stronger Now bookings million, The recently business sequentially. which and clearly business

technology on is industries application to in maps, suite our technology and Our relationship. our a based with advance customers. best and partner building with them vendor most one array to their technology strong business and for preferred strategic of identifying leveraging is wide model towards significant opportunities a strengths all our and their markets of provide We road product the and

tools, is into aspect heating demand like They broad important industrial end sold in most semi the driver of Thermonics actively are a the things excited that And chiller our of chillers, more the gain within defense/aerospace, and cannabis as broader as a We’ve to commitment chillers, of integrators. cross-section growth business potential. Organic but seeing and we exciting addition One the brand be noteworthy becoming Thermal is continues This induction to OEMs, our of with, users segment. momentum of growth a to we can noted cannabis command. this believe we and the bit I and the business representing engaged as of requires customers have the we are markets such about growth. well as market, future but we related perseverance, its nature market. are earlier, by talked is myriad quite customers,

regarding but our you on will precluded we area. this progress in giving updated As details keep usual, we’re specific customers, from

last noted necessity, growth year, with uncertain economic conditions, we strategy, have seen COVID-XX taken we scarce to have, along M&A, resources not over As long-term to a our due change. by precedence relative and

detailed in While I’ll the in is our provided bookings strategy, activity earlier of there important the no or – me, course, second of my an component our has strategy financial and been M&A to I activity, now net while M&A our details call. turn growth excuse revenues of quarter. review.

product the decreased QX primarily to as as million from of absorption partially operations from well component reduced and consultants as reported offset spending $X.X grew decreased XX.X% driven product and first legal margin of reduced million, second of during second reflecting with expense. commission guidance $XX,XXX levels, fixed by for levels fees revenue Selling to the XX%. high income second the costs extent, which to to Engineering the for was a result use in in lesser rate. to benefit quarter, reduced compares tax higher XX.X% in rate came General XX% XX% the X% expense an margin $X.X administrative effective as first a salary or expense more lower benefit lower a booked XX% well reductions on decreased second manufacturing travel increased development we million fully in sequentially quarter, accruals. of costs a of development Our tax of costs and to was reflected quarter, benefit quarter tax quarter reflecting by and, both of our first range QX. decreased accrued and Fixed primarily and expense advertising in the third-party end professional quarters, favorable which and salary due at sequentially the This offset as We up X% patent reduced expense production which of expense tax a costs. was gross profit-related quarter, income for $X.X increased the in and $XXX,XXX and staff. material X% $XX,XXX by gross bonus at costs, effective by

that additional lower tax in XX% book of tax was by will expect to tax driven from through We to balance return our the XX% effective second XXXX. range rate adjustments. The quarter effective rate the

compared $X.XX per second quarter, reported quarter. first $XXX,XXX the for million For of we net share share $X.X the to or loss of diluted earnings per $X.XX a diluted or

outstanding for and quarter quarter. consensus share. the EPS estimates earnings second average second $X.XX per Diluted exceeded $X.XX our were million shares the Our EPS by by guidance $XX.X

the by Inventories cash March to increase $X.X $XXX,XXX and receivable increased compared XX,XXX at quarter, provided of with the was by We stock now XX, repurchase reduction from for turn X% we headcount million. EBITDA During and or and sequentially X sheet. $X.X X% shares. for balance of year-end, not Accounts or did of the second was currently second million flow any quarter. operations Consolidated from change stands issued at $XXX,XXX Cash expect a today, second and we as cash during $XXX,XXX where quarter. XX. no million June equivalents March. equivalents at to negative restricted XX quarter and we were million $XXX,XXX at had $X.X by DSOs, to first the at I’ll XX our shares $XXX,XXX the by for quarter grew second XXX, level cash and sequentially. $X.X the June increased to a was cash was cash

backlog from June up $X.X XX. Our at end of million, the March was million $X.X at

As as in release, noted the to both guiding EPS. are earnings for for revenue quarter, guidance, up our third we and

net diluted per to will non-GAAP diluted gross will for that from a in XX, range net share $X.XX GAAP our We XX%. quarter to $XX.X that our our financial ending earnings per net to from September expect On $XX.X share. share, and XX% per earnings the and will our revenues we currently margin of $X.XX of from to will range adjusted diluted basis, million expect be quarter $X.XX XXXX, results $X.XX range range the million third

guidance our the predicated business quarter. on as of is as Our currently the trends well balance we are for expectations seeing

it earlier, in We are are improvement And our being mode play from we the until we and general out. a they sense to will our customers. companies production still tone world. I of orders noted overall all the there are in and in the related encouraged by pandemic COVID-restricted cautiously resurgence remain is have realizing But a I optimistic can uncertainty believe how as in better

and firmly the the we remains by market is further our long-term intact. and remains of considerable related China, geopolitical base business, still of end our pandemic anchor to there compounded While diversification believe the our fundamentals the uncertainty uncertainty, customer

years dedicated to CFO Finally, Pelrin Corporation XX take service questions. him Operator, once concludes when thank to CEO keep of our welcoming Until Grant, I our we Jim again that he We for would to CEO, chair inTEST warm. or later look I’m And to forward happy incoming and now this formal Nick can month. then, remarks. new wish the joins us like his well.

Operator

with Litchfield [Operator Hills Instructions] Research. come will our first And Theodore question from O’Neill

Theodore O’Neill

Congratulations in the may have drop about you prepared on you addressed year-over-year, great Hugh, directly could a obliquely quarter. talk and quarter-to-quarter or remarks, that? but bookings your in this industrial

Hugh Regan

timing why are or our a is talked we component my are at that’s that that EASYHEATs quarter-over-quarter, and COVID. of off Year-over-year, really also off our as group, you’re Well, quarter well, earlier, a – are it’s Sure. about during conversation. off levels. business orders Thermal have I described do not is our business because it the business, customers of flow think that noted our And a revenues issues I we flow recurring year-over-year. function service because significant for was the remember, normal as what – which closed of operating first as that seeing revenues purchased those either Also, of

Theodore O’Neill

opportunity And at may any talked the times rollout XG about I past, have you – Is that in think you. for an comment have in as do area? you

Hugh Regan

No.

XG. talked during that specifically to in had the any about Jim past have really the we While attributable quarter, business didn’t

Operator

We’ll question Instructions] take Colliers. with [Operator Ryan from our now Dick next

Dick Ryan

think us were from you limited the assuming So, EV a up update of Fremont said with player. can down facility, EV what missed an was your what you bookings were. expectations about in of And the the you road you opening here kind I earlier but your facility I what Can Fremont said the quarter, on employees, clarify give you And bookings? it what I’m then your last conversation EV are?

Hugh Regan

follow-up I we Fremont facility actually that just question? The about. second talked $XXX,XXX, Fremont, EV hear not bookings quarter, to over I were booked bringing has apologize, our the The that. in group And as X to during were reopened just Ambrell million, there the they did what was while been manufacturers by Dick. the Sure. not

Dick Ryan

I just other going Or are to verticals Fremont serve facility that is And marketplace? to there just is mean, – serve? EV that that the

Hugh Regan

the the EV actually, serve doesn’t Fremont facility Well, market.

that’s and may heating You that, remember of induction that’s based Rochester. its tools, out Ambrell and

facilities are our Fremont facility. just interface Our

customers. semiconductor our supports that So

do than very discuss well customers group but a call, to it not and support. to at continues of wide liberty to that as that number the continues So those business – EVs variety were names quarter. induction driving mentioned other a I’m the I during customer but our during heating has it’s

Dick Ryan

When look Market your QX, side? and for at you are your Semi that? What you expectations how Okay. are splitting for Multi guidance

Hugh Regan

strong Well, we continue current that would that to and would be semi to for in seeing expectation be rates a my what with My with number we’re expectation that the is Multi see business. QX the that have. quarter in Semi, of our our strength we we’ll VLSI in seeing based currently third data various expected that very upon of from other Market in sources also a see result improvement Utilization are an as pursuing opportunities we’re business we’re customers.

Dick Ryan

you unlocking to happened? do? can bit attempting the What’s to they the said I What a the CEO what is on transition. release what know Board’s the And Okay. have view want hasn’t potential. more little Board like or something happened the talk of

Hugh Regan

today. some has Jim quite with company left us, you time think the know, and Well, I as for been

was think I leader. through acquisition. and very us company, and join having new visionary area brings Board move experience for a the company that a as growing level our it of take excited with long-term forward to and significant Nick the the looking in about strategy we’re its of leader him new to

in past the look forward really investors. personally, know acquisition can with the we’ve I discussed I and through working Nick with grow company hoping we to as that further So

Operator

to questions. remarks. presenter over to And or like back for appears our conference no further I’d turn the there Instructions] it closing [Operator any are telephone additional

Hugh Regan

Well, in thank your everyone. We listening appreciate you interest in. inTEST, for you

on don’t we report mentioned seeing when and Laura to the hesitate at quarter. results third conferences our good Laura have you me. stay to healthy, call further and If Everyone, you We online evening. have and forward earlier questions, to progress a you virtual the updating or safe our for look

inTEST (INTT) 8 Aug 202020 Q2 Earnings call transcript