Release Date: November 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- inTest Corp (INTT, Financial) achieved a gross margin of 46.3% on revenue of $30 million, despite $2 million in shipments being delayed into the fourth quarter.
- The acquisition of Alfamation contributed $5.4 million in revenue, strengthening inTest Corp's position in diversified markets such as automotive, life sciences, and consumer electronics.
- Sequential growth in backend semiconductor revenue outpaced the decline in frontend, indicating improving trends in the semiconductor market.
- The company has reduced headcount by 10% in its base businesses, aligning cost structures with current market conditions and improving operating margins.
- inTest Corp is seeing signs of stability in targeted industries, with an increased order pipeline reflecting gradual improvement in backend semiconductor demand and larger automotive projects.
Negative Points
- Revenue for the third quarter decreased by $0.7 million compared to Q3 2023, driven by a $7.1 million sales decline in the semiconductor sector.
- Approximately $2 million in shipments were delayed into the fourth quarter, impacting the current quarter's revenue.
- The frontend semiconductor market is currently paused, with expectations for improvement not anticipated until the second half of 2025.
- Operating expenses increased by $1.5 million year-over-year, reflecting the inclusion of Alfamation's operating expenses.
- Cash and equivalents decreased by $2 million from the trailing quarter, reflecting net debt repayments and share repurchases.
Q & A Highlights
Q: Can you provide details on the order pushouts you mentioned? Are they concentrated with specific customers or more broad-based, and which end market do they relate to?
A: The $2 million in pushouts from Q3 to Q4 were shipment delays that didn't reach customers by the end of Q3. These were more related to the front-end semiconductor market, where we've seen some customers request shipment delays.
Q: Regarding the front-end semiconductor market, when do you expect a pickup, or is visibility too clouded at this point?
A: We are hearing from customers that they anticipate needing additional deliveries in the second half of 2025. This timeline is based on current discussions with multiple customers.
Q: With the headcount reduction of 10% in base businesses, how will this impact financials, and when will we see the effects?
A: The headcount reduction has been a gradual process over the last nine months, aligning with demand softening. The benefits are already reflected in Q3's strong margins and will continue to be seen going forward. However, much of the margin improvement is due to favorable product mix.
Q: Can you provide more color on the back-end semiconductor market's improvement? Are there specific end markets or geographies driving this?
A: The improvement in the back-end semiconductor market is gradual, with more requests for quotes and growing pipelines. It's not specific to any end market or geography but reflects a general uptick in demand.
Q: Could you elaborate on Alfamation's role and its impact on your business, particularly in the automotive sector?
A: Alfamation primarily serves the automotive industry, which is undergoing shifts, such as moving towards centralized computing systems in vehicles. This shift requires new testing solutions, presenting opportunities for Alfamation. While orders can be lumpy, the pipeline is strong, and we are optimistic about future growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
