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Intest (INTT) 2 Aug 24 2024 Q2 Earnings call transcript

AInvestFriday, Aug 2, 2024 11:03 pm ET
2min read

InTEST Corporation, a leading provider of thermal management and test and measurement solutions, recently held its second quarter 2024 financial results call, offering valuable insights into the company's performance, strategic initiatives, and outlook. The call, led by Nick Grant, the company's President and CEO, and Duncan Gilmour, the Chief Financial Officer and Treasurer, provided a comprehensive overview of the company's financial health and strategic direction.

Financial Performance and Market Challenges

The call began with a review of the second quarter financial results, which showed a mixed performance. Despite recording a record revenue of $34 million, the company faced challenges in key markets such as semi, auto/EV, and industrials, which account for over 70% of its sales. The gross margin of 40.6% was lower than expected, driven primarily by lower volume and unfavorable mix, particularly in the semi market. However, cost management efforts and lower commission expenses helped to keep operating expenses below guidance.

One notable achievement was the contribution of Alfamation, a recent acquisition, which added $9.7 million in revenue and strengthened the company's position in the automotive industry. The integration of Alfamation is progressing well, with synergies already being captured across the businesses.

Strategic Initiatives and Future Outlook

InTEST Corporation is focused on diversifying its markets and leveraging its application expertise to manage through the current challenges. The company's 5-point strategy is aimed at driving growth through diversified markets, product innovation, and strategic acquisitions. The addition of Alfamation is a testament to this strategy, as it diversified the company's portfolio and expanded its reach into new markets.

Looking ahead, InTEST Corporation expects revenue for the third quarter to be slightly lower than the second quarter, with gross margins improving somewhat. The company is actively driving new product development and competitive displacement programs to gain market share, particularly in the semi market. The outlook for 2024 has been updated to reflect the current market conditions, with revenue expected to range from $128 million to $133 million.

Key Takeaways and Analyst Insights

During the call, key shareholders and analysts had the opportunity to ask questions, providing valuable insights into their concerns and expectations. Jaeson Schmidt of Lake Street Capital Markets asked about the linearity of orders in the quarter and the pushout of deliveries by customers. Nick Grant responded by noting the typical pattern of orders and the optimistic outlook for future trends. Edward Jackson of Northland Securities queried about the cost savings initiatives and the auto/EV business, particularly its dependence on unit volume. Nick Grant provided a detailed response, highlighting the mix of capacity expansion and efficiency upgrades, as well as the varying nature of the auto/EV business.

Conclusion

InTEST Corporation's second quarter 2024 financial results call provided a clear picture of the company's financial performance and strategic direction. Despite facing challenges in key markets, the company is focused on diversification, product innovation, and strategic acquisitions to drive growth. The integration of Alfamation is a significant step in this direction, and the company's outlook for the third quarter and 2024 as a whole remains cautiously optimistic. With a clear focus on cost management, new product development, and market diversification, InTEST Corporation is well-positioned to navigate the challenges of the current market environment and capitalize on opportunities for growth.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.