INTT - Earnings call transcript Q4 2021

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Operator

Greetings, and welcome to inTEST Corporation’s Fourth Quarter and Full Year 2021 Financial Results Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now turn to turn the call over to Deb Pawlowski of Investor Relations. you. Thank

begin. may You

Deb Pawlowski

morning certainly good today. your everyone. and appreciate We time Thanks,

CEO; our me full Nick call and quarter inTEST Grant, Duncan XXXX President Joining fourth conference year for and Financial Chief Officer financial results our and Treasurer. Gilmour, are

a access have fourth the website well that will the the we release, of results, opened. If will quarter before slides conversation our this as www.intest.com. morning line copy formal markets financial today accompany not, which presentation, should opening You be XXXX released for our you at our can Q&A. After as we the

If Safe the Harbor in you'll deck, the first review slide turn statement. to I two will

and may events as well should to session. the cause statements stated some as differ uncertainties, other with Q&A forward-looking materially formal that risks well can sec.gov. Securities is filed provided to statements what other and factors as as our factors and from other These You actual we during documents here on to These or apply with website uncertainties are results the release, be during aware These be subject future documents Commission. are make at could the that and in discussions, earnings that as the Exchange risks found today. as well

in we our performance. discuss today's We some useful also will will be evaluating During believe call, non-GAAP financial these measures.

as isolation GAAP. You substitute of should in additional results or a not prepared consider presentation accordance the for information in with this

slides. GAAP in release tables accompanied provided reconciliation today's measures with of the in in have non-GAAP the comparable We measures and that

to Nick? it to slide over please So with to I three. turn that, will if would turn begin. Nick you

Nick Grant

morning earnings And joining us Deb. for Thanks for you, good everyone. Thank our report. morning, this

have conflict. would I customer point our and diversifying this with we like am are want We been to thank ended our and progress talent the continued solid our ensuring company. world outstanding for achieve million in with throughout markets for occurring acknowledge growth, five XXXX year strategy. around of dedication XX% the exceptional extend and organization growth on right period. transformational and that our execution revenue we performance and to impacted with fourth but base had prayers everyone the a the inTEST thoughts our by has their We driving quarter strong challenging prior to begin, to for entire $XX.X the that year events I Before pleased goals. our I compared

in highest finished nearly to has company revenue achieved two year, this is the up over XX% decades. the For million, $XX which

can validate target results that there diversification quarter-to-quarter be our and variances While within markets, our the quarter strong the strategies. year growth believe our and we for very

marketing We more sales, have customer relationships. discipline around instituted and and accountability

greater to drive We Marcom also investing resources awareness in additional needed are activities and of effectively our offerings. the adding

deeper accounts customer go to our paying into and widen efforts base are Our off.

For of year, the for both quarter had front semiconductor precision and robust the in we particular industry. our with back-end end and strength demand the technologies,

former greater Our strengthen relationships, customers. new reignite share develop and we is to with customer our us products capture relationships enabling strategy market as

our solutions industry, by growth manufacturing electric the are believe We in vehicles. growth to process our our position sales the of also demonstrated heating test efforts We that induction is very strong automotive strengthening diversification which the crystal processes. used leading semiconductor well. process our around end for and front are is the technology, targeted working This of with markets including

automotive industry than more we fact, electric triple in In our the XXXX. saw double than in sales vehicle and bookings more

to a of in diversification chain few sciences. which some enhanced the pressures the gross Our We of not see constraints we three There which impacted in acquisitions, the in that primarily to life facing. expect immune security were everyone and improve. were added factors by margin, efforts million is supply revenue $X.X and inflationary course quarter, are

challenges This was mostly not relief through, year. to along actions contraction. expansions. earlier manipulators, end to the shifted we pricing improvements The was as reason with equipment, volume test cap back-end product had follow significant currently in anticipated for towards we of latter margin began fab moderated specifically industry mix the another change due While investments expect are in in the some focus for custom do the systems the improving, and half docking semi these front supply chain That year interfaces.

solutions diversifies Duncan the quarter. our our Our and the quarter atypical tremendous highest the solutions expands further back-end serve command offerings, the margins. this We that expanding space better our custom our impacting made solutions to generally some of tend three with our and acquisitions cost target regarding talk in margins progress engineered will our to further markets. portfolio in

the of December, Solutions. acquired In affiliates. quarter and we On call, its third the we October Inc. discussed acquisitions Imaging Videology Z-Sciences and Acculogic

the provides overview Acculogic Acculogic our of knowhow for interest Flying markets. If gained test us, of solutions test their you'll the slide circuit testing vehicle vehicle OEMs electric brief four, applications. and portfolio equipment. a battery is the and in early automated and solutions These this turn electric has specific electronic differentiated Of Company to to battery position manufacturers. Probe to products provides expand

we to automated that, deeper and to Duncan, that life you. over aerospace market in creating review With financials goes test it electronic markets. the in me differentiated penetration Duncan platform detail. let with are defense, more to an automotive, over addition the turn semiconductor beyond of science the this test equipment, With

Duncan Gilmour

Starting for the by below just over quarter Nick. semi second it’s you, recent million, record XXXX. in increase last detail $XX.X we Multimarket five, Thank our XX% levels a the quarter period in of year, line. Revenue end pulled automotive while strength as top from from near of XX% and revenue the grew third fueled back guidance. remains our fourth highs, even same quarter the market, provide business some the top was slide on regarding the our

wallets the to true accountability sales emphasis drive As new provided discipline also market instilled of the investments and Nick that noted, innovations, throughout sophistication customers. increased in renewed a semi of This all and the advantages. processes has a larger in our been operating with has especially customer the our being a of organization, in significant share and resulted tailwind marketing

market contributed the strategy a In million the about acquisition addition, for expansion in $X.X enabled and year. and successful revenue in quarter

with a and to acquisitions costs Moving production price despite timing the less sequential our lower margin volume XXXX XX.X% favorable in fourth inefficiencies, six, ago. slide higher to of contraction of mix, the quarter. lagged quarter within compares of the XX.X% margin gross reflected due fixed third and in The increases quarter manufacturing product the of year of absorption effect XX.X%

the new As our customer is strong spike product earlier a unusual and measurable the semi combination through our demand demand. reignited The Nick business we the back-end product that spike portfolio, and of year, pull in noted, business focus year for market the a for in most leadership the in relationships. benefited in was our and from lucrative has

financing from of production going more of rollouts up are expenses, consolidation, closing Operating and as $X.X expenses we the towards expense. the for in of periods supply third tail price acquisitions the the on on we business and was actively seven about brought The total. details to quarterly Total expansion actions atypical The December were to and trailing continuously the timing quarter million fourth related acquisitions increase relatively chain to catch with constraints to expenses effect intangible expect were proportionate intangible XXX incremental Slide manage expenses, regular mix lag related end slowdowns during production efficiencies to due and the to to inflation, first acquisition gained operating corrects the increases, and approximately $XXX,XXX Obviously amortization in flat have impact and operating operating of performance. incremental expense acquisitions, the our tended itself in atypical expenses and volume, related continue this amortization incremental margin quarter. in the acquisition million included into business $XXX,XXX pricing operations. back-end sequentially when Jersey and playing overhead on-going in to positive As $XX.X approximately quarter lagged our the million amortization Existing inefficiencies $X.X of aforementioned and semi operating million the of and and quarter-over-quarter. the refers quarter revenue. expenses included backlog. our costs expenses costs total challenges additional that $X.X and expectations intangible forward $XXX,XXX Year-over-year the New in basis $XXX,XXX. quarter gross November the holiday point consistent without financing product and was of total

amortization intangible full our to we The expect of incremental the to million of range estimate year. operating reflects of $XXX,XXX total about a to XXXX, businesses. quarterly $XX.X expenses operating $XX.X in throughout increase increasing million related includes expenses from costs quarterly current This For operating acquired quarter all expense.

remind line was our such found EBITDA volume strength items $X.X removes our the adjusted compensation. million adjusted $X.X tax non-cash be the quarter, non-GAAP well alone. results $X.XX the operational You $X.X in financial to of More adjust Beginning earnings the expense to benefit declined we Accordingly, third was for earnings million do $X.XX XX%. the or the in adjusted tax per out. measure up tax our the I'll quarter. year gross per EBITDA adjusted bottom a due is related of We net began compares after the to you atypical can net includes and not stock-based and stronger rate quarter, impact which as period compensation impact for and share. liquidity. XXXX third we per EBITDA quarter, already efficiencies, credits measures with with eight, as EBITDA costs The or EBITDA can of to $X.XX detail approximately our the with third impact as sales. a discussed, in cash assess share does margin an not prior share per this the than the amounts under primarily Adjusted on measurably of adjusted generation believe was earnings performance effective of which our we $X.XX see fourth million quarter, diluted negative share. diluted atypical EBITDA, diluted $XXX,XXX had the for release. quarter approximately On EBITDA on better basis, adjusted on of export cost that calculation contraction that which fourth slide EPS around reporting is in we from of the from compared Stock-based trailing

and Now turn flow. for to capital our nine cash structure slide

As which credit revolving million million facility. new five agreements, draw in October announced, previously delayed included a executed credit a non-revolving $XX and $XX term year we a loan

plenty had of cash the we facility During in we $XX.X better we million to loan We outstanding sheet leveraging the $XX.X our and used loan growth. no have to our At had than fourth end on $XX.X term believe, Cash year, are term under executing the historically, we million. the had of revolver. continue flexibility quarter, $XX.X the on finance financial the five acquisitions. drawn balance XXXX on our and point balance by strategy for to increased equivalents million and million

cash We generation strong the cash generated demonstrate capabilities quarter expenditures quarter. for from operations Capital to third in year. our continue the up from of the fourth were $XXX,XXX $XXX,XXX and $XX.X during million

and as year, approximately million expansion the investments For as included well was capacity and $X maintenance. CapEx

For annual revenue. to be around X% to X% capital of XXXX, expect expenditures we

as may changes With the I now However, investments and over in market make turn and depending strategies, we call or purchases deem appropriate. or Nick. to that, upon manufacturing sales will back we demand necessary

Nick Grant

Slide levels. and remains and quarter solution with year our Duncan. Overall, for orders robust, the record our highlights demand XX Thanks and backlog performance. products reaching orders for

While grow will our our is strategy market we faster welcome than served always point markets. to to execute our objective tailwinds, five

end relationships Orders semi We reach XX% year the ship million, industries. our order technologies outpacing and growth growth the include increased quarter large market due for a our ago to customer previous targeted demand while continue and XXXX. fourth to that deepening for surpassing was throughout $XX.X to extend over high. front markets This will a and our these across primarily

uplift the million reached acquired strong $XXX year from semi approximately we the markets, across for by electric of vehicles, some demand life orders especially and sciences, businesses. with record Additionally, driven along

expectations. We quarter markets point are we Please progress XXXX XX% outlook of also Our quarter base. first our to and drive year expand to to a five to expecting end and backlog XX. slide is the approximately at in will record expected quarter. strong and strategy provide which growth at first convert customer And had continue million, $XX.X diversify with our was levels as our I to sales of turn our at

all high our are customer base technical adjacent well Our and growth Integration to recent our businesses. and extended underway into acquisitions across added product markets. offerings efforts expertise three

issuing are full XXXX. for We year guidance

million ranging to revenue the and $XXX be XX% to expect throughout with We XX%. of year the $XXX million, in range between gross margins

expect also approximately interest We quarter. run per $XXX,XXX expense to

Our be effective to XX% between tax XX% rate for anticipated year. to is the

XXXX, we supply logistic For million in through continue of the range quarter as of be we to expect and first $XX million chain to challenges. $XX work the to revenue

be We expect GAAP share. $X.XX diluted per the to $X.XX per diluted in EPS share, range to and range to the non-GAAP EPS $X.XX adjusted of of $X.XX in

the quarter It forecasts, and well year, Our press make. views with as to we based may and the as on things, modestly in and assumes is guidance the other to balance half. of the chain including expectations and and Actual improve conference subject that result described found to choose the conditions investments are respect release this may current slides. materially for begin in supply operating differ the also our the accompany for unchanged materials market of any half customer forward-looking strategic call, are among as our change second to the to which under of first the subject challenges a remain statements factors results

takeaways XX. Let key me hit slide on now the

to for being expect with believe channel through Also, development on-going sales, and funnel is our We a our efforts organically can profitability further innovative provide new robust five of and our differentiation acquisitions key focused to continue point opportunities product drive M&A term. growth business marketing pipeline be enhancements and programmatic we the We element long a customer our prowess. over strategy. grow of on combined and

well and first continues made to potential deeper innovative to enable bring and strategy. technologies, We team progress believe We excellent unlocking company. way the or are in five Our transforming we provide within targets point true and reach test acquisition markets will broader our complementary the identify geographies. capabilities, we differentiated a that of year with or believe our our on as target

We and and value. us ultimately and to sales shareholder accelerated questions. our to investments open marketing and let's drive continue operational expect that, team, improvements, the With enable to acquisitions our strategies, growth line leadership for operator, build

Operator

session. proceed comes with Lake Thank the [Operator you. this Our At first a Jaeson question time, line Instructions] conducting we questions. of be question-and-answer your Schmidt from Please with will Street.

Jaeson Schmidt

questions. guys, Hey, taking thanks my for

so, missed I make just if to I that? there And it, to mind any quantifying Sorry, unable that sure ship but in Was want you didn't. if demand you were would QX?

Nick Grant

you? Hey, how Yes. Jason, are Great question.

All struggles in get make manner parts the to businesses are seeing right shipments. the timely of to our constant a

that. provided drive job the done with that really a the sources. finishing guidance, end the top And, were that they've Now of good towards the said, our on into to and levels anticipated gap quarter near locating we of fill able revenue guidance coming had the the of new

in how don't have sense had could I have there's could the much think absolutely been. I have shipped really the got parts we general, on going So, we that more

Duncan Gilmour

to find kind quarter we've numbers, the certain said, subsequent door products As last at couple teams as exact It’s chain explained respect did of a of weeks year, challenges amazing the jobs kind certainly with which Nick a percentage. the the cost, to to tremendous extent of supply margin overcome out get to of

and But been are to had constraints. tough seeing. of I say, think it, revenue you're kind more market pressures; the of kind an So of we certainly most put have that. zero talking participants very supply would shipped seeing number about yes, said could exact I it's kind That chain to been same there

we can't yes, I say more really to put number have fair a could done it. but on So

Jaeson Schmidt

that you half. total no, I the second sense. Okay, makes improvement know modest you supply in And chain indicated expected the a in

Just inflationary well? availability transport, of expect curious the etcetera, do if just that the components? you as to relates costs, Or moderate to logistics,

Duncan Gilmour

Absolutely. be as I And for on if half. needed. less Yes, of the with we'll able both. lessens, our out in position And, pressure should better trying bit in are the inflation fill a pressure say. to our it put freeze suppliers or components second supply to the A little would inventory we're there. deliver,

Jaeson Schmidt

then with the me, come how you've the integration across is sounds traction of these like last now and just had if queue. jump curious or going? each that you've with companies, is for acquisitions and selling It of back one Okay, I'll just and going positive into cross time any surprises the And negative? well, relatedly, more

Nick Grant

able Yes, great efforts that far. question. complete been the so with And quite pleased integration we've to

tracking a a say actually do what I'd really acquire process. out we It's of what we And sign plans we our acquiring once it we're with thorough diligence it. expected. want knowing So and integration there are as to due

nothing with uncovering and there, derails but So our no big these things plan and we what here plans surprises, do that to business.

Jaeson Schmidt

Thanks the guys. Okay, lot. Appreciate color perfect. a

Nick Grant

Absolutely.

Operator

Thank you.

the is of Collier Our line Please questions. your Securities. with next with question proceed Dick coming Ryan from

Dick Ryan

on I the a business front the that roughly for taking was end breakdown revenues How the side have rough semi XXXX. questions. there? in of of for Hey Nick, a million couple Do split back-end? Thanks got the you $XX

Nick Grant

little mean, can front Yes, you I end, on of and that. on Let's kind I we're roughly. see. low talking XXs low I XXs a do. back-end on give about bit

Dick Ryan

I'm to Okay, trying tie that...

Nick Grant

me let me Let that just sorry. clarify it put

Sorry, because I it up. pick

a So that I'm there like ends. forgetting was XX. sorry. in component I It's thinking front that more mid-teens there's the for

and front like of me correct XXs let on end. more me your kind let back-end mid-teens So high

Dick Ryan

or Is details for customers delivering, on any size? front that the Okay, talked us on you Is order order to color that it applications can to typical and it Enbrel’s more any little to the that? provide other give end? you then about the can large in a end, front you the trying tie your as to more

Nick Grant

Yes, sure.

So support is, say, XX seeing existing what out for throughout supply, with also size of what capacity, pipeline million but an we customer, I there semiconductor to traditional expansion obviously, of it securing was would XXXX. the flowing that really was is was world that that, support getting roughly their the capacity the that front saw and it's just seeing to driving, this the And to demand their end were placed, with the but in order that both all demand cover devices. we

XXXX. throughout will, So ship this, these products will

in we're to and So a that appropriately be their make and that we the to secure want bit planning And very able everything, support needs. appreciate sure to QX. pressures of, to given pleased they and supply and, the visibility, having components that that, order in that so

Dick Ryan

that that's finance largest had order, end. million in Is the versus seems them the outsized seen pretty, front what pretty I $XX you've expected

Nick Grant

owned record order front don't going that end since you. is with I we've it company, all Enbrel’s have honest details back it But believe I in to there, the on out be is. history, the that

Dick Ryan

Yes.

Nick Grant

I order period think And it's an to that's know, also deliver it’s of over going important to extended time. an

there's chain of past. kind what element the perspective, ahead getting of of customer a atypical from seen supply in So really which of a challenges, order that in is the and advance, kind an placing we've from of kind little

Dick Ryan

see moving bit of sounds market back-end. semi Okay, driver, your through XX? margin one on the how back-end products. Yes, do you more those kind a got that? little the on side. like of that you really what, That That's that's And gross on applause it

Nick Grant

mean, that. I Yes, can I take

in your I So, historic XXXX is strong and highs still strong record business in back-end moderated very from would has terms. the say

great. that's, do XXXX versus I in we that's so see XXXX. So mean,

what kind from that we're the in those back-end other pretty marketplace off in with of seeing space. line of coming You're in kind much there out highs, participants

Dick Ryan

Nick, me. did side, cannabis my one can maybe and and growth Okay, how and compares on EV Auto, you just you business about the for you EV in XXXX give talked related us last that even all one and to XXXX? the

Nick Grant

revenue we relative automotive/EV, the nice this a growth you little The talked provide market had comments we I doubled, really in so about. Sure, saw in know, on kind of to for XXXX. which us there

tripled. bookings driving EV kind that space what and of it's So we are around

a XXXX total So was bookings it the that business we're just twice of from million four, perspective our a portion perspective. almost EV roughly half roughly in was from were And that. automotive/EV revenue revenue X less of than

Dick Ryan

for at Okay, any business related year that XXXX? did what and of amount to the cannabis end the

Nick Grant

great we taking cannabis Yes, a flat from relatively would were, consolidations was I of space. that saw progress, in XXXX, say, in we revenue that, things, forward ramp industry to for will us strengthen a that in hampered that But, going chiller penetrating and portion and applications expect back us extraction we And here. continue for perspective. number up place -- investments our that it's We've made OEMs that there out portfolio.

Dick Ryan

Thank Okay. you.

Nick Grant

Absolutely, Dick.

Operator

of Instructions] [Operator next from with Our Peter Intro-Act. line you. question coming questions. the Please with is Thank proceed Wright your

Peter Wright

my congratulations question. And a Great, a thank and [ph]. you for guide fantastic on great taking quarter

Nick Grant

Hey, thanks, Peter. morning to you. Good

Peter Wright

structural more supply? is customer? new morning. touches first Is to is visibility? growth My Is kind you to is -- seven business? that there strong? I Is this in How at the or of your untypically look growth products? that's visibility is getting on the of question Is better sequential drive kind down it after, days? your year it full your behind in one quarters If is of the the guidance Good anything And the to visibility much timing traditional sales through kind of point turns demand? giving which What is other visibility. suggests that million What eight your And XX in for on it it of that just XX which better changing in backlog, mid-XXs, is closer that? it sequential the is year that is order? XX pushed there is,

Nick Grant

the and we back We're end global the QX service, as all you all we any that there. strategic five haven't our that. front of above obviously, to just know, and visibility better got expansion driving in reach that at that point going you investments driving order it's of innovation, And so order, our us. part mentioned shipped of Oh, plan for

little in quarters in throughout the our the very there. very, out with, shipping in most of in it that's very year or outer and backlog little flowing QX going So

the So that. go that, haven't that to out on and ship versus executing past convert that quarter focused on more we those you really book a in get of entering is given having had with, to us, much will orders, a if position just

our on So the all say the teams we it's I'd we making feverishly products, working about chain, components supply and build are, it's to to resources sure get execution. be have need, ensuring the and we able

in So of it's we you want of Duncan, to good they that. a give course a position as be head in acquisitions to here And make to XXXX. also part little… are

Duncan Gilmour

I no, mean, an large over No, covered that it. time, some question talked you've Obviously I first yes. order the think about of that delivering extended on we of your drive percentage, percentage. to period the

from that. there then bit a highs. both kind longer your the mean, on sector of record And further positive, aggregate to strong. end to give a demand still you're I acquisitions front more very of say, also semiconductor confidence back-end coming those numbers there. talked terms these And of confidence although down going about the piece, on over in, work, kind bit off again, Sammy You're is the back-end just I the projections side. also term additional The talking of I and and for the kind are of in very some likely some following we're the us as us moderating mean, helps sentiment Nick comfort line medium about your you coming revenue across would out gives degree the,

those of I that So degree us of think factors confidence. give all

Nick Grant

great I plans executing competence. year we our would there, see maturing, because remind the tractions. We're here. time we're company this made first this have guidance you business We out And developing. we and Yes, way a do where just is on the full that the everyone, really progress seeing giving like

Peter Wright

tools capacity that's you wonderful. demand buying thinking are Customers semi of new applications, his that much is capacity. some demand now context Can with question base? in it is new release, where versus is this tech. application press I'm either kind on how how and which us capacity driving be understand can the you what of field. on of is you the side, the kind us record frame the refer is And much of to kind My second tech or of is Now, technology helping may up utilization the right in

Nick Grant

adoption there. I of been that's technology the think it's out

application power the You crystal the fueling and more becoming growth is that and side of for management on the that's more core and think of end on growth predominantly us. that that's technology this things, front silicon and driving piece

been modules, on that we've to, testing high of current back-end, more voltage power support new products innovative around the On to high there. evaluate management driving side it

So we're entering adoption. new technology markets, we're benefiting from

So it's as doing should we targeted our the penetration be greater things all we in right spaces. after go

Peter Wright

bit of in if me, Very for quarter one for little can bumped If question a your last I in. squeeze as up percentage fourth a sales at obviously more I look operating expenses, the you highlighted forward? incrementally, feel something mid is we comfortable going the that you you that guide XXs maintaining expect year, the reasons in kind the that of gave for should that

Nick Grant

is right legacy investing going we're extended what to of in of deliver, QX. we the to sure potential kind path, business. those investing we're for the make see able as kind kind getting in to as over we're think is in bit to I a up Yes bump on great growth Peter well acquisitions, the going them what businesses, of is, horizon see time the

think we of a percentage. a terms I little in see bit So pop of a

up expectations higher to for kind the of work the gear QX a bit through that. if through QX for We full little numbers revenue you QX, your also, we versus also of we your in need terms have year. And

and stabilizes of your QX, the a the level percentage few into revenue, in there last So see kind your of the back and higher the seen the down at in quarters towards more higher we're back-end what projecting we've that kind you'll range as business that then as come that of year.

Peter Wright

call. Phenomenal and guide Thank you guys.

Nick Grant

Absolutely. Thanks Peter.

Operator

you. comments. any Thank turn over to questions time. call Grant I would at Nick like to further back closing no this are for the There

Nick Grant

joining thank entire this for Really supporting again today year, and organization more All for right. for us come. our driving I on like once progress to and would Thank inTEST. long And great to and everyone you, past term interest inTEST your in our transformation. the thanks, the call Darryl. and strategy

please For not to done our if day. already analysts and our investor institutional attend investors so, RSVP you've

have seen invites. You should

hosting We you results morning, investor hope first for us. forward QX join few a XX on March all are May. We time our day weeks Thank Philadelphia. to the can look in in this discussing and you analyst certainly in

Operator

appreciate Thank you. We This teleconference. participation. today's your does conclude

at great disconnect your weekend. time. Have You lines this may a

inTEST (INTT) 4 Mar 222021 Q4 Earnings call transcript