On August 2, 2024, inTest Corp (INTT, Financial) released its 8-K filing for the second quarter of 2024. inTest Corp, a global supplier of test and process solutions for various industries, reported a 4% increase in revenue for Q2 2024, despite facing significant market headwinds.
Company Overview
inTest Corp is a supplier of test and process solutions for use in manufacturing and testing across a range of markets including automotive, defense/aerospace, industrial, medical, semiconductor, and telecommunications. The company operates through three segments: Electronic Test, Environmental Technologies, and Process Technologies. They manage their business worldwide, selling products both domestically and internationally.
Performance and Challenges
inTest Corp reported Q2 2024 revenue of $33.99 million, a 4.4% increase from $32.56 million in Q2 2023, but below the analyst estimate of $34.93 million. The company’s gross profit decreased by 8.2% year-over-year to $13.80 million, with a gross margin contraction to 40.6% from 46.2% in the prior year. Operating income dropped significantly by 90% to $0.34 million, and net earnings fell by 91.8% to $0.23 million, or $0.02 per diluted share, missing the analyst estimate of $0.04 per share.
Financial Achievements and Industry Impact
The acquisition of Alfamation contributed $9.7 million in revenue, offsetting a 46% year-over-year decline in semiconductor market sales. The automotive/EV segment saw a $9.2 million increase in revenue, primarily due to the acquisition. Despite these gains, the semiconductor market's weakness, particularly in the front-end segment, posed significant challenges.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 | Change |
|---|---|---|---|
| Revenue | $33.99M | $32.56M | 4.4% |
| Gross Profit | $13.80M | $15.03M | -8.2% |
| Operating Income | $0.34M | $3.34M | -90.0% |
| Net Earnings | $0.23M | $2.79M | -91.8% |
| EPS (Diluted) | $0.02 | $0.24 | -91.7% |
Balance Sheet and Cash Flow
inTest Corp ended Q2 2024 with $20.4 million in cash and cash equivalents, down from $45.26 million at the end of Q1 2024. The company used $5.1 million in cash from operations during the quarter. Total debt increased to $21.1 million, reflecting the incremental debt from the Alfamation acquisition.
Orders and Backlog
Orders for Q2 2024 were $26.18 million, a 16.7% decrease from Q2 2023 but a 14.8% increase from Q1 2024. The backlog at the end of Q2 2024 was $47.67 million, up 6.9% year-over-year but down 14.1% sequentially.
Management Commentary
Nick Grant, President and CEO, commented, “While we are focused on innovating with new products, expanding our channels to market and adding new customers, we are nonetheless facing challenging market headwinds that now appear to be more persistent than we had anticipated earlier this year. We benefitted from the addition of Alfamation in the quarter which contributed $9.7 million in revenue. This was an unusually strong quarter for the acquisition given the timing of the sizeable backlog we acquired. We are very pleased with the integration progress and the synergies we are already beginning to realize. The teams are working on several opportunities with technology sharing and cross selling across our businesses. The addition of Alfamation more than offset the weakness in the semiconductor industry, and specifically the dramatic slowdown in the front-end semi market that we have experienced this year. Sales in the semi market were down 46%, or $8.7 million, year-over-year and 32%, or $4.8 million sequentially.”
Analysis
inTest Corp's Q2 2024 results highlight the mixed impact of strategic acquisitions and market challenges. The Alfamation acquisition significantly boosted revenue, particularly in the automotive/EV segment, but the persistent weakness in the semiconductor market weighed heavily on overall performance. The company's proactive cost reduction measures and focus on operational efficiencies are crucial as it navigates these headwinds.
For more detailed insights and analysis, visit GuruFocus.com.
Explore the complete 8-K earnings release (here) from inTest Corp for further details.
