• Fourth Quarter Revenue: $36.6 million, including $8.5 million from Alfamation.
• Full-Year Revenue: $130.7 million, marking the third consecutive year of record revenue.
• Full-Year Sales Growth: 6%, driven by a $25 million contribution from the Alfamation acquisition.
• Gross Profit: $14.5 million in Q4, with a $1.6 million charge impacting gross margin.
• Gross Margin: 39.7% for Q4, impacted by a 430-basis-point charge related to inventory step-up.
• Net Earnings: $1.5 million or $0.12 per diluted share for Q4.
• Adjusted Net Earnings: $2.8 million or $0.23 per diluted share for Q4.
• Adjusted EBITDA: $4.4 million for Q4, representing a 12.1% margin.
• Operating Cash Flow: $2.6 million generated in Q4.
• Free Cash Flow: $2.4 million in Q4.
• Total Debt: $15 million at the end of Q4, with a leverage ratio of 1.4x.
• Cash and Equivalents: $19.8 million at the end of Q4, up $1.8 million from the previous quarter.
• Backlog: $39.5 million at the end of 2024, including $7.4 million from Alfamation.
• 2025 Revenue Outlook: $125 million to $135 million, with gradual profitability improvement expected.
• Q1 2025 Revenue Forecast: $27 million to $29 million, with a gross margin of approximately 41%.

• Warning! GuruFocus has detected 6 Warning Signs with INTT.

Release Date: March 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• inTest Corp (INTT) reported record fourth quarter revenue of $36.6 million and a third consecutive year of record revenue at $130.7 million for 2024.
• The company's strategy of market and customer diversification, along with a focus on innovation, has proven effective, particularly in the auto/EV and defense aerospace markets.
• The acquisition of Alfamation contributed significantly to revenue growth, particularly in the auto/EV sector, with advanced testing technologies for infotainment systems and battery packs.
• Fourth quarter orders increased by 11% year over year, with notable growth in semi-orders and life sciences demand more than doubling to a record $2.3 million.
• The company has a strong cash position with $19.8 million in cash and equivalents and a total debt leverage ratio of 1.4x, providing financial flexibility for future investments and acquisitions.

Negative Points

• The company experienced a 26% decline in the semiconductor market, which remains a significant headwind.
• Gross profit in the fourth quarter decreased sequentially due to a $1.6 million charge related to the Alfamation acquisition, impacting gross margin negatively.
• Backlog at the end of 2024 was $39.5 million, down $600,000 from the prior year period and $6 million sequentially, reflecting shipment timing issues.
• The outlook for 2025 is cautious, with expected full-year revenue of $125 million to $135 million, indicating potential stagnation compared to 2024.
• The company faces uncertainty related to tariffs and customer spending, which could impact market competitiveness and delay customer investments.

Q & A Highlights

Q: Are you seeing any cancellations in your pipeline due to pushouts into the second half? A: Richard Grant, President and CEO: We aren't seeing cancellations at this time. There have been some changes in product preferences, but it's primarily a timing issue.

Q: The life sciences business showed strong orders in Q4. Was this driven by a few customers or was it broad-based? A: Richard Grant, President and CEO: It was broad-based, with significant contributions from our induction heating solutions. The team is focusing on opportunities in this area due to the decline in front-end semi.

Q: Regarding your annual guidance, what would drive reaching the higher end of the range? A: Duncan Gilmour, CFO: The high end would be driven by the delivery of large pushouts from Q1 in the back half, continued improvement in back-end semi, and stabilization in broader industrial markets.

Q: Can you provide more color on the 2025 outlook, specifically the cadence of revenue by end market? A: Duncan Gilmour, CFO: We expect quarterly revenues to increase throughout 2025, with back-end semi stronger in the second half due to shipment delays. Other markets are harder to predict, but we anticipate improvement as economic conditions stabilize.

Q: How is the current environment affecting your M&A strategy? A: Richard Grant, President and CEO: M&A remains a key part of our strategy. We are actively building relationships and identifying targets. Current market conditions may present more favorable opportunities for us.

Q: With the flattish guidance for 2025, is there any reason to back away from the 2027 target of $200 million to $250 million? A: Richard Grant, President and CEO: We are not giving up on our targets. We believe there is room in our markets to achieve these goals, and we will discuss this further at our investor day.

Q: Are you satisfied with your product and competitive position despite tariff uncertainties? A: Richard Grant, President and CEO: Yes, our competitive position remains strong. We continue to innovate and provide value to our customers, staying ahead of the competition.

Q: Can you provide historical gross margin data for your segments to help restructure financial models? A: Duncan Gilmour, CFO: We manage segments based on divisional operating income rather than gross margin. We provide the required segment reporting details, but our focus is on overall profitability.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.