INTT - Earnings call transcript Q2 2024

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Operator

Greetings, and welcome to inTEST Corporation Second Quarter 2024 Financial Results. [Operator Instructions]

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, [ Craig Mihalik ]. Thank you.

begin. may You

Unknown Executive

We and everyone. us your in interest Good you certainly for Corporation thank with sharing inTEST morning, appreciate your today. time

President and on Nick Financial me call and Treasurer. our Chief Joining Officer and Executive Gilmour, Duncan the Officer; our Chief Grant, are

as and today. on have well website If of turn can these earnings documents not, Investor X, review morning the will Relations and our that should statement. the which went we slides You this to Slide safe accompany the section out intest.com. Please release, as the our conversation I'll find harbor

release During some statements differ those cause actual current apply is our from management These by These the as in our sec.gov. Also, uncertainties factors subject this well These today. events that plans, evaluating with could to risks, as management what provided be and uncertainties will future and call, can will documents and filed documents website as are Securities financial that may forward-looking these useful on refer be statements found other materially stated well the or are to We measures to non-GAAP performance. our expectations. results in at with here to make beliefs today. and company Exchange earnings risks some about as the believe Commission.

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

comparable non-GAAP with release tables of GAAP reconciliations slides. accompany find measures and in can measures today's You that the

and the Nick? I'll call turn over Now Nick. please turn Slide to X, to

Nick Grant

XXXX us earnings joining Thanks quarter and call. second Thank good you, Craig, everyone. our for morning, for

their entire a the efforts in tough First, I relatively would like thank inTEST environment. team to for

short. markets expected key quarter see coming account we for in of we was expected, XX% guidance guidance. X in half and our the while coming as revenue falling with expenses, bonus expected, the in auto/EV of range did cost semi, which over some management was of achieve end $XX industrials. and We our expenses at record end XX.X% volume our accruals of range, proved first As These mixed favorable others lower sales. Overall, million, Lower margin than aspects continued low less low the markets the commission typically as a mix. of resulted came to the challenging gross reduced in of at efforts the and in prior driven in and primarily coming below our our by much operating weakness

came $X.XX an result, a that first diluted adjusted large on than in acquired. the As EPS more semi. a we in per for acquired late record very weakness and in which from $X.X basis. Alfamation, $X.XX business, at which quarter, the diluted This share we the share per million contributed backlog revenue was offset ongoing of quarter timing shipments revenue supported was the by in that

we near-term shipment continue markets. leveraging for These product normalize our to organization, current and industrial as few We auto/EV manage our efforts markets, the next expect our seeing sluggishness their levels innovation focusing strategy, through and efforts are to cycle the execute growth in diversified the we're semiconductor and expertise. X-point application helping the on quarters. Across we

provide Alfamation the and position where and diversified reminder, industry systems. automotive for strengthened of the a our they electronics As addition in equipment infotainment test

of sharing and synergies supply integration customer participation range to numerous embracing Life technology the teams it's plan, position and from in strengthened In see addition, Sciences trade the Alfamation businesses. and consumer to is leveraging, our great to joint to progressing chain product and These show it electronics. across The visits. synergies already

to us system with Supernova was X of more for look the new a the Acculogic of customer was that wins. software types included. forward received a won technologies of combination quarter the in these many captured success Alfamation seeing the order. It the I One order

to Turning review I'll orders backlog. and Slide X,

of first have the communicating expected the or XXXX months weaker second been we X so, last for As to was of year. the be half half the than

did orders anticipated we for the order tempered, year. comparable, a weak off quarter half be second in further our ramp improve outlook of Although first the to looks quarter for impacting the trends more second

In have addition, out seen we push customers certain deliveries.

signs orders However, for are end sequentially, coming continued demand current expansion were out will the cancellations the pause we back-end and any in offset capacity of helped the coming are for second nitride. the the market to these of are manufacturing not silicon consecutive trough. customers carbide months. Encouragingly, This in as improve they front-end seeing indicating their quarter, decline confident further given gallium showing notable orders improvement in semi up

of the perspective adoption long-term for technologies these remains bullish. Our

quarter, During of the declined as portion backlog acquired Alfamation. work we through our million $XX.X in backlog second the a from

of As timing as past, mentioned in orders can the large be vary Alfamation's our lumpy quarter-to-quarter. projects can multisystem

than quarter more While booking million the soft relatively million, quarter came at orders after $X.X for year. this first of business the second that in in $XX the were

to Looking that, more to outlook turn broadly of the more our to Duncan over financials it new let of opportunities review It's me healthy. conversion in rate which the remain orders, to just businesses, our Duncan, across you. and these detail. pipelines remains over slow. With

Duncan Gilmour

Starting you, Thank Nick. X. on Slide

acquisition. $X.X $X.X fell increased with was from Alfamation from increase driven primarily decline million. up than Revenue compared in that offset more $X.X than Semi revenue the from auto/EV Sequentially, markets second $X.X noted, Alfamation. $X.X auto/EV quarter or million, including Life quarter sales million more million, acquisition. million sales $X.X decline. with was of revenue million and for XXXX second offset As The This XX% $X.X growth benefited QX $X.X up million Both revenue Sciences semi. by from Nick in million the $XX the million. the

the contracted of on also Gross comparison, sequentially, X. margin XXX $XX.X Slide million product sales, lower was profit gross of for quarter by by mix our business basis XX.X% weakness lower in volume with drop a significantly semi to Moving On mix. XX-month contraction points driven the margin product XX.X% the sales. year-over-year reflecting was offset impacted or being semi acquisition. from basis, higher-margin a the our gross margin higher-margin trailing revenue with On

on As million you incorporated nearly acquisition. cost acquisition's year, we $X.X increase full $X Sequentially, during million the as expenses quarter from Slide of lowered $X can operating operating our a expenses. prior the compared X, business and by reductions the the with quarter were million sequential offset see partially OpEx the legacy up

to whereas incorporated QX sales, percent in QX the acquisition quarter reminder, total of operating weeks. just were as a points As was XXX while included operating a costs, Sequentially, full decline X over up $XXX,XXX a of expenses XX.X%. basis

our adjusted EBITDA and can X, results. Slide you bottom to see line Turning

This share in quarter, second back were our (sic) were XXXX net acquired per flow. EBITDA prior cash quarter for were diluted cash $X.X from On adjusted we end about estimated $X.X per the exchange year in tax and $XXX,XXX the quarter. equivalents QX half earnings $X.XX million, $XXX,XXX of representing payments, with $X.XX free share. [$X.XX] operating [$XXX,XXX] foreign for outflows With and margin. Slide payments million. and million, EPS combined and Adjusted a X.Xx. (sic) second basis, approximately outflow a unchanged the quarter, reflects X down the end net per share. For or the after-tax capital XXXX of million period the an bonus Adjusted the from diluted debt ramp second resultant our reflects cash shows were repayments was leverage used with million. combined $X.X $XX.X X.X% structure cash shipments Cash at outflow amortization. quarter. approximately the during quarter, Capital $X.XX first debt the $XXX,XXX debt intangible and the was or quarter million adding total of net the ratio in Adjusted or trailing cash acquired the impacts. We $XXX,XXX amortization expenditures quarter $X with reflecting to $XX.X intangible total EBITDA a free towards of of tax-effected earnings ended amounted diluted

we the of approximately million During repaid quarter, debt. $X.X

have $XX available loan $XX with our and our million term continue draw available to revolver. delayed incremental million under We

years these May, and May was X facilities in by May reminder, X period a maturity the drawdown date extended we to years XXXX extended XXXX. on to As the

our XXXX. as XX we Slide to Turn review outlook for

lower quarter, gross margins revenue somewhat. slightly we second the the quarter are improving expecting with For to be third than

intangible tax or after quarter Third expected be to total per to QX, $XXX,XXX expected similar $X.XX are is amortization to approximately including asset amortization, expenses, about operating and $XXX,XXX share. approximately be

EPS adjusted similar We are be quarter the expecting and EPS the to for third quarter. second to

As for we reminder, amortization adjust expense. a tax-effected simply

order million reflect market $XXX the full $X.X million. basis. $XX have is be or expenses intangible recent a XXXX and expect approximately asset on Nick amortization $XXX conditions to range operating million approximately for to updated of XXXX expected from XX% revenue We discussed. We margin trends, million. expense Gross to approximately expected with This includes million now outlook to year $X.X tax-adjusted XX% to our of

at rate of XX% about to to tax expect We run expected Our X% effective XX%. XXXX capital in X% our expenditures sales. between to remains still

guidance development does impact if acquisitions Nick. occur back nor to to corporate potential nonoperating to now it make. With additional XX, that our may may time we Slide usual, over the as turn you will the include does the impact As such potential turn that, from expenses not from will time, any from I include call any

Nick Grant

our macro their our Thanks, executing Duncan. and a team is tough keeping environment, down In head plan.

in market, face notably As the front-end noted, some we headwinds to the segment. heavy continue semi

of demand that is the to semi and result silicon taken gallium for we remain actions which business, recent solutions expectation carbide $X.X have should million subdued our front-end result, a the XXXX. Accordingly, nitride into As supporting will in savings. annualized rightsize

as advance to displacement We new share. to product gain drive market well teams competitive development continue to as the execute programs

our will In us Increasing pleased customer position increased customers. markets addition, during time spending the intimacy improve. of when slow amount teams sales times with with are better I'm only face

channel drive our lead addition, approach, teams constantly to pricing, are and go-to-market competition, our our of generation partners the evaluating In performance effectiveness growth.

in efforts stop. optimization these will never Our areas

that are us our diversification progress with mentioned, Alfamation that and captured. headway serving is teams being the pleased making synergies and I'm well, the on the integration of are As

better pursuits, our I'm that, remain our for future. us excited addition, would questions. which With on of about active our further expand the we customers. In lines portfolio allowing can operator, solutions, we M&A open to serve

Operator

The Instructions] [Operator Capital Jaeson Lake from first Schmidt comes Markets. Street with question

Jaeson Schmidt

you in orders if quarter. the about could linearity talk of guys curious the Just

at a Just more wondering point? Or broad-based just if particular of quarter? sort turn softness if it the things throughout was

Nick Grant

I month a improving soft Jaeson, our then strongest the order out our third in in followed being month pattern quarter typical we typically and the first patterns, the where second say the being would and relatively see there.

So -- are continues. off starts month that out slower. just able of deals with teams to there that trend of the kind of optimistic the towards the But the is close first the quarter think end more then the normal I and that,

Jaeson Schmidt

impacting obviously indication deliveries Okay. year, if of into That of given dates this makes things sense. some then more you you noted been have on just an pushed general, it's 'XX customers but something? or And if kind have delivery wondering pushout these more specific

Nick Grant

we've pushing want the yes, haven't I of year. into seen XXXX. was it's really there. Most it year the of so much into QX out they that Yes. out end before The the seen within where move there. -- and of And the QX, still more

Jaeson Schmidt

I'll Got and back me, it. then And queue. just the into one for last jump

You noted integration Alfamation track. in is

Just curious lifting if largely more done? point to there's completed at are if or things some this be

Nick Grant

integration get still and integrated. X.X, fully X yes, the I'd we're but takes to progressing to with time the I pleased No. on these in progressing Yes. just commented is on, really But got it's making. do It coming as we progress work that, well, now. -- guys months been it's say

Operator

comes The Ted Jackson Securities. Northland question from next with

Edward Jackson

that statements And can the on done weakness front-end you savings Ambrell meat put kind of the the am cost that lines question around semi, work. guys some -- in given the first of you and the its then efforts million is you ] for how have? you in [ correct the see my the the I there, are efforts time put here that of financial that business and bones find way terms into in some So on $X.X we'll

Duncan Gilmour

of of than certainly kind the yes, been Yes. that business, to the which softer To answer has part, we're highlighting part tied second expected.

We're the not of portion million mean that. QX, $X.X terms In a number. good I to linear it's but that an mean But annualized is -- commencing see QX. of full that's annualized fairly impact linearity, a so going commencing I linear in

Edward Jackson

auto the you're auto terms industry. all into of, mean talks comment you've a mean you when of How the EVs the like business? slowdown did on mean two, auto/EV slowdown in a I I the activity. slowed to and it. Number you consumer tied about it, you terms I like Cool. would, for call business, of operating unit bit the it's -- in I time. mean How is in volume, autos, seen your about -- if press in kind demand get

that the I guess maybe ramp you And acquisition the a now and sector kind think it as for this fold it the in as that business I they for you? about because around drive sector it up, mean does that. is I of to like mean, down, everything auto how a have you like how read go kind big units just as does color it's like from a macro we industry's of little think kind of press less? to and drive about that

Nick Grant

Yes.

businesses. really And is auto auto/EV our process as mix the efficiency of heating. certainly larger expansion of well lines upgrades So now segment or associated technologies as of across portion a is of to capacity welders more with it you that. the as for from The varies us with moving traditional on induction Alfamation kind furnaces a pointed,

So our is we impacted geared would electronic slower, like that get say, platforms have testers of more out Those that's our, volumes battery a as we there. both -- of with little Acculogic. our And some I the demand of bit test production towards there. are course,

that more computing the then demand see -- space, and that. new on So onboard ] upgrades are the systems in electronics product Alfamation you tied programs and year of impacted [ around their of there. And as out slowdown model from Dash most a launches, will an perspective, is

So much of next the but to, those tied release, of et -- the some not the the of year on and cetera, cars it say, is program more so I'd increase an around volumes there, tied it projects. towards model

So little less a if you bit volume dependent, will.

Edward Jackson

auto/EV year-to-date. the me, the to were more much were I -- to if how production is it's at And and and call mean business you but tied you business mean, would? look to of super I let's things say I if to, How kind -- that? to tied launches much look it, product a -- moving don't of we is interesting know, if the So but obviously, like it's volume, of business in car,

Nick Grant

Yes.

was it year latter but more -- I exact numbers, us Alfamation, the model purely on Before Alfamation's towards that. have the and skews don't much more

volume level, high releases, don't year say it's I So gut hard got on be would feel, to -- model my any be just that, at numbers have but a would I X/X thoughts X/X production Ted. Duncan, sense. make

Edward Jackson

little efforts On more last last interesting strategy them with energy since you my fun. maybe the little XX couple That's of stuff, it's some hit and part then endeavors, presentation, for the customer of around And kind question, the a lot Okay. an And a it's Alfamation it some of maybe a each on a that's provide and your some color partner application and expansion, in examples and important a inTEST. synergies your Alfamation more diversification space and of but green and channel highlighted of little on Slide maybe bit you synergies my one. of presentation, each some -- take minutes of of expansion. of

Nick Grant

Yes, sure.

accountability partners -- of of say, kind really management geographic as and and implementing a more have some last building really we actually a the channel I'd of and business -- there. And with job network to upgrades got leaders we've -- made proper year, expansion the out starting channel on program into great there. brought done, ensure this channel So coverage new year number aligning we teams partner appropriately start really a the the to channel

The certain see success. areas we there. to we're continuing ensure to some area optimizing expand space is continue our go-to-market So commercial in to

are applications. Our image solutions of number in capture a space used

cetera. heating Our well. And there, gaining furnace, a thermal testing targeting really message And had and nice out et from that nice gas to this then the has as alternative really chambers a seeing we being some around induction green it's there activity our nice some done green some perspective, in space. job traction wins team induction

I say looks sign-offs hurdles, by healthy higher a so general, of just projects, type [ of those had of more there, and around flowing industrial pipeline been the programs in driven But pretty I ], are comment getting applications. sluggish, would these Our as project more But cetera, seeing start on we'll clear the et delays capital, et lump and seeing cetera. through here. think a cost

Operator

Nick like are to turn Grant to [Operator no Instructions] There would back floor closing I for this comments. over at questions time. the further

Nick Grant

of questions your further Thank Zico. appreciate regarding the this On the upcoming conference you to answer thank with a a details list may at participating welcome we hope find meet a replay you, two. Thanks opportunity and of in. participating, can a or have. for events again We we us and have call be you any the to Slide for I day. and you chance will have joining you XX, and today, you to great time,

Operator

This concludes today's you. teleconference. Thank

Thank your this you You lines may time. your participation. for disconnect at

inTEST (INTT) 2 Aug 242024 Q2 Earnings call transcript