inTEST (INTT) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Record fourth quarter revenue of $36.6 million and full-year revenue of$130.7 million, marking the third consecutive year of record revenue [9][10] - Full-year sales growth of 6% driven by a $25 million contribution from the AlfaMation acquisition, offsetting a 26$14.5 million, with a gross margin of 39.7%, reflecting a 430 basis point contraction sequentially and 490 basis points year over year [22][23] Business Line Data and Key Metrics Changes - Revenue growth in auto EV driven by advanced testing technologies from AlfaMation, with a notable increase in demand for battery pack testing [11][19] - Life sciences orders more than doubled to a record $2.3 million, reflecting strong demand for induction heating solutions [16][19] - Industrial sales decreased by$3.7 million due to market softness and project timing [20] Market Data and Key Metrics Changes - Fourth quarter orders increased by 11% year over year, with significant growth in life sciences and auto EV markets [15][16] - Backlog at the end of 2024 was $39.5 million, down$600,000 from the prior year period and down $6 million sequentially [17] Company Strategy and Development Direction - The company is focused on diversifying its market and customer base, with a strategy to evolve into a more diversified test and process technology solutions business [10][39] - Plans to consolidate the Videology Netherlands facility into the Mansfield, Massachusetts location to streamline operations and reduce costs [37] - The company aims to achieve long-term goals outlined in Vision 2030, with a target of reaching over$200 million in revenue by 2027 [78] Management's Comments on Operating Environment and Future Outlook - Management expressed caution for 2025, expecting full-year revenue between $125 million to$135 million, with gradual profitability improvements [29][31] - The uncertainty related to tariffs and customer spending is being closely monitored, with expectations of passing cost increases onto customers if necessary [34][36] - The front-end semiconductor market is expected to remain paused throughout the year, while back-end applications are anticipated to improve [39] Other Important Information - The company generated $2.6 million of operating cash during the quarter, with total debt of$15 million and cash and equivalents of $19.8 million at the end of Q4 [27][28] - A renewed stock repurchase plan was announced, reflecting confidence in long-term value creation [41] Q&A Session Summary Question: Are there any cancellations in the pipeline? - Management indicated that there are no cancellations, only timing issues with some customers changing products [46] Question: Was the strong performance in life sciences driven by a few customers or broad-based? - The strong orders were driven by broad-based demand for induction heating solutions [48] Question: What is the outlook for revenue guidance? - The higher end of the revenue guidance is expected to be driven by backlog deliveries in the second half of the year, with gradual improvements anticipated [50][51] Question: Can you provide more detail on the cadence of revenue by end market for 2025? - Management expects stronger performance in the second half of 2025, particularly in back-end markets, while the auto sector remains uncertain [56][58] Question: What is the status of the M&A pipeline? - The company remains active in the M&A market, looking for strategic opportunities while being cautious about valuations [61][62] Question: Will the aspirational 2027 revenue target be discussed in the upcoming investor day? - Management confirmed that they will discuss the 2027 target and their belief in achieving it during the investor day [78]