inTEST (INTT) - 2019 Q2 - Quarterly Report

Orders and Market Performance - Total consolidated orders for Q2 2019 were $15.9 million, a decrease of 17% from $19.3 million in Q2 2018 and an increase of 34% from $11.9 million in Q1 2019[109] - Orders from Multi Markets accounted for $7.3 million, or 46% of total consolidated orders in Q2 2019, compared to 38% in Q2 2018[109] - The significant decrease in consolidated orders in Q2 2019 was primarily due to cyclical and seasonal softening in the Semi Market, which constitutes over half of the company's business[110] - The backlog of unfilled orders at June 30, 2019, was approximately $8.8 million, down from $13.6 million at June 30, 2018, reflecting weakness in the Semi Market[111] - Orders for the Thermal segment in Q2 2019 were $12.1 million, a 9% decrease from $13.3 million in Q2 2018[107] - Orders for the EMS segment in Q2 2019 were $3.8 million, a 36% decrease from $6.0 million in Q2 2018[107] - The Semi Market orders decreased by 28% to $8.6 million in Q2 2019 from $12.0 million in Q2 2018[107] - The company expects future orders and net revenues to be approximately equally split between the Semi Market and Multi Markets[99] - The company continues to diversify its served markets to reduce the impact of Semi Market volatility, focusing on sectors like automotive, telecommunications, and energy[106] - The company has observed a trend of increased demand in the second and third quarters, while the first and fourth quarters typically show weakened demand[102] Financial Performance - Total consolidated net revenues for the three months ended June 30, 2019 were $14.4 million, a decrease of $6.7 million, or 32%, compared to $21.1 million for the same period in 2018[114] - Net revenues from customers in Multi Markets for the three months ended June 30, 2019 were $6.7 million, representing 47% of total consolidated net revenues, compared to $8.1 million, or 38%, for the same period in 2018[115] - Consolidated gross margin was 47% of net revenues for the three months ended June 30, 2019, down from 52% for the same period in 2018, primarily due to an increase in fixed operating costs as a percentage of net revenues[118] - Selling expense decreased to $2.1 million for the three months ended June 30, 2019, a reduction of $451,000, or 18%, compared to $2.5 million for the same period in 2018[119] - General and administrative expense increased to $3.7 million for the three months ended June 30, 2019, an increase of $383,000, or 12%, compared to $3.3 million for the same period in 2018[121] - Net revenues for the six months ended June 30, 2019 were $32.4 million, a decrease of $7.6 million, or 19%, compared to $40.0 million for the same period in 2018[124] - Consolidated gross margin for the six months ended June 30, 2019 was 48% of net revenues, down from 51% for the same period in 2018[125] Cash Flow and Working Capital - Cash and cash equivalents as of June 30, 2019 were $7.6 million, down from $17.9 million as of December 31, 2018[133] - Working capital increased to $15.4 million as of June 30, 2019, compared to $14.2 million as of December 31, 2018[133] - The company expects to repatriate between $1.5 million and $1.8 million from its subsidiary in Germany during the third quarter of 2019[133] - Net cash used in operations for the six months ended June 30, 2019 was $10.0 million, with net earnings recorded at $951,000[134] - Accounts receivable decreased by $1.4 million compared to December 31, 2018, while inventories and accounts payable increased by $908,000 and $626,000 respectively[134] - Purchases of property and equipment during the six months ended June 30, 2019 were $298,000, with no significant capital expenditure commitments for the remainder of 2019[135] - Non-cash charges for depreciation and amortization totaled $1.6 million, including $601,000 related to right-of-use assets[134] - Accrued wages and benefits declined by $941,000, primarily due to the payout of profit-related bonuses accrued at December 31, 2018[134] - Customer deposits and deferred revenue decreased by $542,000, reflecting changes in payment timing and revenue recognition[134] - Operating lease liabilities decreased by $668,000 due to payments made under lease agreements[134] Internal Controls and Compliance - There were no off-balance sheet arrangements during the six months ended June 30, 2019 that materially affected the financial condition[138] - Management concluded that the disclosure controls and procedures were effective at the reasonable assurance level as of the end of the reporting period[141] - No changes in internal control over financial reporting occurred during the reporting period that materially affected the internal control[142]