inTEST Corporation (INTT) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call shows mixed signals. Basic financial performance is weak due to net losses, but cost-saving measures and debt reduction are positive. Product development and market strategy are promising with growth in orders and geographic expansion plans. However, uncertainties in the semi business rebound and vague guidance impact sentiment. Shareholder returns are not mentioned, and the Q&A reveals some management evasiveness. Overall, the stock is likely to remain stable, with a neutral sentiment.
Key Financial Performance
Revenue $28.1 million for Q2 2025, down $5.9 million year-over-year due to a $4.9 million decline in auto/EV sales and slight declines in life sciences, defense/aerospace, and other markets. This was partially offset by increases in industrial, safety/security, and semi markets.
Gross Profit $12 million for Q2 2025, decreased $1.8 million year-over-year due to reduced volume. However, gross margin improved by 200 basis points year-over-year to 42.6%, driven by a favorable product mix and cost reduction efforts.
Operating Expenses $12.9 million for Q2 2025, decreased $0.6 million year-over-year due to cost-saving actions, including headcount reductions and austerity measures.
Net Loss $0.5 million for Q2 2025, compared to a net gain in the prior year. Adjusted net earnings were $0.4 million, reflecting adjustments for intangible amortization and restructuring costs.
Adjusted EBITDA $1.3 million for Q2 2025, reflecting the company's cost-saving measures and operational adjustments.
Debt Reduction $1.7 million reduced in Q2 2025, with a year-to-date reduction of $4.9 million, bringing total debt to $10.1 million.
Cash and Equivalents $19.2 million at the end of Q2 2025, down $2.8 million from the end of Q1 2025 due to operational and financial adjustments.
Orders Nearly $28 million for Q2 2025, up 6% year-over-year. Auto/EV demand grew $2.3 million, life sciences grew $1.8 million, industrial rose $1.2 million, and safety/security increased to $1 million. These were partially offset by a $3.7 million decline in semi orders and a $1 million decline in other markets.
Backlog $37.9 million as of June 30, 2025, down $9.8 million year-over-year due to the prior year's large backlog from the Alfamation acquisition.
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Operating Highlights
New Products Sales: New products contributed $6 million in sales, representing over 20% of total sales. The company aims to increase this metric to 25% in the coming years.
Geographic Expansion: The company is building out a manufacturing facility in Malaysia, which is expected to begin production in the second half of 2025 and ramp up in 2026. This expansion aims to capitalize on a lower-cost supply chain and improve logistics.
Market Diversification: The company is focusing on active markets like defense/aero, auto/EV, and life sciences. Orders in auto/EV increased 40% sequentially to $7.1 million, and life sciences orders more than doubled to $2.9 million.
Cost Reduction: The company reduced debt by $1.7 million in Q2 and $5 million year-to-date, bringing total debt to approximately $10 million. Operating expenses decreased by $1 million sequentially due to cost-saving actions.
Profitability Improvements: Gross margin improved to 42.6%, driven by cost reductions and a favorable product mix. Operating expenses were reduced through headcount cuts and austerity measures.
VISION 2030 Strategy: The company is committed to driving innovation and geographic expansion to create greater scale. This includes the Malaysia facility and expanded manufacturing in Europe with Alfamation.
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Risk or Challenges
Global economic and tariff uncertainties: Ongoing global economic and tariff uncertainties are causing customer hesitancy in moving forward with larger capital projects, impacting revenue and growth.
Sluggish semi and industrial markets: Overall semi and industrial markets remain sluggish, leading to decreased demand and impacting revenue.
Debt levels and financial constraints: Although debt has been reduced, the company still holds $10 million in debt, and a covenant waiver agreement was required with the U.S.-based lender, indicating financial constraints.
Supply chain and tariff impacts: Potential tariff impacts and supply chain bottlenecks are challenges, though mitigated by the new Malaysia facility.
Limited visibility into order timing: Visibility into the timing of orders and shipments remains limited, creating uncertainty in revenue forecasting.
Weak market conditions for capital investment: Persistently weak market conditions for capital investment, especially in the digital/analog semi industry, are impacting growth.
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Guidance & Outlook
Revenue Forecast for Q3 2025: Revenue is forecasted to be $28 million to $30 million.
Gross Margins for Q3 2025: Gross margins are expected to be similar to Q2 2025.
Operating Expenses for Q3 2025: Operating expenses are projected to be $12.6 million to $13.1 million, excluding approximately $100,000 of restructuring expenses.
Amortization and Interest Expense for Q3 2025: Amortization and interest expense are projected to be consistent with Q2 2025.
Sequential Improvement in Top Line and Profitability: The company expects sequential improvement in top line and profitability through the year, although visibility into the timing of orders and shipments remains limited.
Long-term Fundamentals and Market Position: The company remains confident in the long-term fundamentals of its business and market position, with a customer pipeline at the highest level in the company's history.
New Product Sales Contribution: New products represented $6 million in sales during Q2 2025, accounting for over 20% of total sales. The company aims to increase this vitality metric to 25% in the coming years.
Capital Spending and Market Conditions: Visibility remains limited amid weak market conditions for capital investment, particularly in the digital/analog semi industry. Modest quarter-over-quarter improvement is expected throughout 2025.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Is the defense order from a new customer? Why did the company win the order?
A:The defense order is from an existing customer. The company delivered 3 systems in Q4 of 2024 as prototype units, and this is a follow-on order. The company has a long-standing relationship with the customer and has been involved in first-generation test systems, now ramping up next-gen systems and volumes.
Q:How have customer order patterns been in the first 6 weeks of the quarter?
A:The company is pleased with the order patterns, which typically start softer in the first month and improve throughout the quarter. The first few weeks of the quarter have been solid, with strong activity in the automotive industry for 2027 model year programs and a very active defense space.
Q:What is the capacity of the Malaysian facility?
A:The Malaysian facility is expected to generate $10 million to $15 million over time to support the Asian market. The facility will ramp up gradually, starting with identified products.
Q:Were the Q1 engineering challenges related to the defense side? What is the current status?
A:The Q1 engineering challenges were predominantly in industrial applications, with a minor impact on defense. Most issues were resolved and shipped shortly after the end of Q1. A new leader has been appointed to improve engineering coordination.
Q:What is the outlook for the front-end semi business in 2026?
A:The front-end semi business is expected to rebound in 2026, with timing (first half or second half) yet to be determined. The rebound will likely ramp throughout 2026, supported by improvements in the automotive industry.
Q:What is the outlook for Alfamation in the life sciences sector?
A:Alfamation is focusing on diversification, with follow-on orders in medical device electronics. The technology is well-suited for electronic testing in the medical space, and there is a strong pipeline of follow-on orders. The team is also targeting other applications.
Q:What are the leading indicators for growth in the business?
A:Leading indicators include new product traction, a strong pipeline at an all-time high, and customer readiness to initiate CapEx projects. Recent defense/aero orders and Alfamation activity in auto and life sciences are positive signs. The front-end semi space remains in discussion but is expected to pick up in 2026.
Q:Did the defense order occur in Q3?
A:Yes, the defense order was placed in Q3.
Q:What cost-saving measures have been implemented, and how permanent are they?
A:Cost-saving measures include headcount reductions (50 heads year-over-year, 15 heads from Q1 to Q2), reduced discretionary spending (travel, marketing, trade shows), and operational restructuring (e.g., Videology and executive team changes). Some savings are temporary and will return with volume growth, while others, like restructuring, are more permanent.
Q:What is the plan for the Malaysian operations, and how will it impact margins?
A:The Malaysian operations aim to drive growth by better serving the region, improving competitiveness, and leveraging lower costs. The focus is on growth rather than shifting operations from the U.S. The facility is expected to ramp up over 5 years to $10 million to $15 million in revenue. The impact on margins will depend on regional competitiveness and tariff adjustments.
Q:Review of Unclear Management Responses
A:Management avoided providing specific timing details for the rebound in the front-end semi business in 2026, using vague language like 'first half, second half, yet to be determined.' Additionally, the timeline for achieving $10 million to $15 million in revenue from the Malaysian facility was described as a 5-year plan, without precise milestones or clarity on intermediate progress.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Advisors LLC
Alfamation OEM
Alfamation need
Alfamation progress
Allen Ryan
Backlog quarter
CEO Director
CFO Secretary
Capital Markets
Defense aero
Demand auto
EV demand
Investor Relations
Research Division
Slide sale
Southard
auto EV
cost action
cost reduction
decline life
decrease
division
expansion
inTEST
loss
market diversification
reduction effort
safety security
sale decline
traction
visibility
volume cost
win
INTT Transcript
inTEST Corporation (INTT) Q3 2025 Earnings Call Transcript
Unknown11-5
The earnings call reveals mixed signals: strong order growth in key sectors and successful diversification efforts are positive, but revenue and gross profit declines, limited market recovery visibility, and flat guidance despite resolved challenges are concerning. The Q&A section highlights management's confidence, yet lacks clarity on guidance adjustments. Market conditions remain weak, especially in the semi sector, and margin declines further temper optimism. Overall, the sentiment remains neutral as positive long-term fundamentals balance short-term uncertainties and financial performance issues.
inTEST Corporation (INTT) Q2 2025 Earnings Call Transcript
Unknown8-6
The earnings call shows mixed signals. Basic financial performance is weak due to net losses, but cost-saving measures and debt reduction are positive. Product development and market strategy are promising with growth in orders and geographic expansion plans. However, uncertainties in the semi business rebound and vague guidance impact sentiment. Shareholder returns are not mentioned, and the Q&A reveals some management evasiveness. Overall, the stock is likely to remain stable, with a neutral sentiment.
inTEST Corporation (AMEX:INTT) Q1 2025 Earnings Call Transcript
Unknown5-3
The earnings call presents a mixed picture with several negative factors outweighing the positives. While there is growth in certain markets and a strong cash position, the company faces significant challenges, including a decline in revenue, engineering delays, tariff impacts, and economic uncertainty. The Q&A session revealed concerns about visibility, break-even levels, and management's lack of clarity on key metrics. Despite some positive developments like increased orders and debt repayment, the overall sentiment leans negative due to the substantial hurdles and uncertainties highlighted.
inTEST Corporation (INTT) Q1 2025 Earnings Call Transcript
Unknown5-2
The earnings call reveals several negative aspects: a decline in revenue and gross profit, increased operating expenses, and a net loss. Despite some positive developments such as cash generation and debt repayment, significant risks remain, including macroeconomic turmoil, supply chain challenges, and a backlog decline. The Q&A session highlighted uncertainties in customer demand and management's reluctance to provide specific guidance. These factors, combined with a weak semi market and engineering challenges, suggest a likely negative stock price reaction over the next two weeks.
INTT Slides
INTT Report
Frequently Asked Questions
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