inTEST Corporation (INTT) Bundle
Understanding inTEST Corporation (INTT) Revenue Streams
Understanding inTEST Corporation's Revenue Streams
inTEST Corporation's revenue for the third quarter of 2024 was $30.3 million, reflecting a decrease of 2.2% compared to $30.9 million in the same quarter of 2023. For the nine months ended September 30, 2024, total revenue was $94.1 million, down from $95.4 million year-over-year.
Breakdown of Primary Revenue Sources
The revenue sources can be segmented by market as follows:
| Market | Q3 2024 Revenue ($000s) | Q3 2023 Revenue ($000s) | Change ($000s) | Change (%) |
|---|---|---|---|---|
| Semi | $11,410 | $18,476 | $(7,066) | -38.2% |
| Industrial | $3,534 | $2,456 | $1,078 | +43.9% |
| Auto/EV | $6,250 | $1,775 | $4,475 | +252.1% |
| Life Sciences | $1,322 | $1,330 | $(8) | -0.6% |
| Defense/Aerospace | $3,239 | $3,392 | $(153) | -4.5% |
| Security | $666 | $967 | $(301) | -31.1% |
| Other | $3,851 | $2,545 | $1,306 | +51.3% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth for Q3 2024 showed a decline of 2.2%. The revenue decline was primarily attributed to a significant drop in the semiconductor market, where revenue decreased by 38.2%. In contrast, the Auto/EV segment exhibited substantial growth at 252.1% year-over-year, indicating a shift in demand towards electric vehicles.
Contribution of Different Business Segments to Overall Revenue
The contributions of different business segments to overall revenue in Q3 2024 were as follows:
- Semi: 37.6%
- Industrial: 11.7%
- Auto/EV: 20.6%
- Life Sciences: 4.4%
- Defense/Aerospace: 10.7%
- Security: 2.2%
- Other: 12.7%
Analysis of Significant Changes in Revenue Streams
The most notable changes in revenue streams include:
- The decline in the semiconductor segment, which accounted for a 38.2% reduction in revenue compared to the previous year.
- Growth in the Auto/EV segment, which surged by 252.1%, reflecting increased consumer interest and demand for electric vehicles.
- Overall, while some segments saw declines, the diversification into markets such as Auto/EV and Industrial has helped mitigate losses from the semiconductor sector.
A Deep Dive into inTEST Corporation (INTT) Profitability
A Deep Dive into inTEST Corporation's Profitability
Gross Profit Margin: As of Q3 2024, the gross profit was $14,012,000 with a gross margin of 46.3%, slightly down from 46.7% in Q3 2023.
Operating Profit Margin: The operating income for the same period was $487,000, resulting in an operating margin of 1.6%, significantly lower than 8.0% in Q3 2023.
Net Profit Margin: Net earnings were reported at $495,000, yielding a net margin of 1.6%, down from 7.4% in the previous year.
Trends in Profitability Over Time
Comparing Q3 2024 to Q3 2023:
- Gross profit decreased by $435,000, a decline of 3.0%.
- Operating income fell by $1,981,000, representing a drop of 80.3%.
- Net earnings decreased by $1,782,000 or 78.3% year-over-year.
Comparison of Profitability Ratios with Industry Averages
Industry averages for similar companies typically show gross margins around 50%, operating margins near 10%, and net margins of approximately 5%. In contrast, inTEST Corporation's figures reflect a lower profitability profile, indicating potential areas for operational improvement.
Analysis of Operational Efficiency
Operating expenses increased to $13,525,000, up from $11,979,000 year-over-year, a rise of 12.9%. The increase in operating expenses primarily stemmed from:
- Higher selling expenses of $4,281,000 compared to $4,295,000 in 2023.
- Engineering and product development expenses rose to $2,182,000 from $1,802,000.
- General and administrative expenses increased to $7,062,000 from $5,882,000.
Despite lower revenue of $30,272,000 in Q3 2024 compared to $30,941,000 in Q3 2023, the gross margin improved sequentially due to better cost management and product mix.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Gross Profit | $14,012,000 | $14,447,000 | -3.0% |
| Operating Income | $487,000 | $2,468,000 | -80.3% |
| Net Earnings | $495,000 | $2,277,000 | -78.3% |
| Operating Expenses | $13,525,000 | $11,979,000 | +12.9% |
| Revenue | $30,272,000 | $30,941,000 | -2.2% |
Debt vs. Equity: How inTEST Corporation (INTT) Finances Its Growth
Debt vs. Equity: How inTEST Corporation Finances Its Growth
Overview of the Company's Debt Levels
As of September 30, 2024, inTEST Corporation reported total debt of $16.1 million, a decrease of $5.0 million from June 30, 2024. The company's long-term debt consists of $7.8 million, while the short-term debt stands at $8.3 million. At this time, the company had $30 million available under its delayed draw term loan facility and no borrowings under its $10 million revolving credit facility.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for inTEST Corporation is calculated at approximately 0.16, calculated using the total liabilities of $57.99 million and stockholders' equity of $100.38 million. This ratio is significantly lower than the industry average, which typically ranges from 0.5 to 1.0, indicating a conservative approach to leveraging debt.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In the third quarter of 2024, the company repaid approximately $5.3 million in debt and incurred an interest expense of $219,000. The company's credit rating remains stable, reflecting its strong cash flow management and ability to service its debt obligations.
How the Company Balances Between Debt Financing and Equity Funding
InTEST Corporation maintains a balanced approach to financing its growth through both debt and equity. In the third quarter of 2024, the company generated $4.2 million in cash from operations, which facilitated debt repayment and share repurchases amounting to $1 million. The total stockholders' equity increased to $100.38 million, reflecting the company's ongoing commitment to strengthening its balance sheet.
| Metric | Value |
|---|---|
| Total Debt | $16.1 million |
| Long-term Debt | $7.8 million |
| Short-term Debt | $8.3 million |
| Debt-to-Equity Ratio | 0.16 |
| Total Liabilities | $57.99 million |
| Total Stockholders' Equity | $100.38 million |
| Interest Expense (Q3 2024) | $219,000 |
| Debt Repaid (Q3 2024) | $5.3 million |
| Cash from Operations (Q3 2024) | $4.2 million |
| Share Repurchases (Q3 2024) | $1 million |
Assessing inTEST Corporation (INTT) Liquidity
Assessing inTEST Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $81,202,000 | $35,939,000 | 2.26 |
Quick Ratio: The quick ratio, excluding inventories, is:
| Current Assets (Excluding Inventories) | Current Liabilities | Quick Ratio |
|---|---|---|
| $49,541,000 | $35,939,000 | 1.38 |
Analysis of Working Capital Trends
Working capital as of September 30, 2024, stands at:
| Current Assets | Current Liabilities | Working Capital |
|---|---|---|
| $81,202,000 | $35,939,000 | $45,263,000 |
Cash Flow Statements Overview
The cash flow from operations for the nine months ended September 30, 2024, is:
| Cash Flows from Operating Activities | Cash Flows from Investing Activities | Cash Flows from Financing Activities |
|---|---|---|
| $1,234,000 | ($19,888,000) | ($8,158,000) |
Net Cash Provided by Operating Activities: $1,234,000
Net Cash Used in Investing Activities: ($19,888,000)
Net Cash Used in Financing Activities: ($8,158,000)
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had:
- Cash and Cash Equivalents: $17,972,000
- Total Debt: $16,100,000
- Debt Reduction: $5,300,000 during Q3 2024
The liquidity position appears solid, with sufficient current assets to cover current liabilities, and a reasonable quick ratio indicating that the company can meet its short-term obligations without relying heavily on inventory sales.
Is inTEST Corporation (INTT) Overvalued or Undervalued?
Valuation Analysis
As of November 2024, the valuation metrics for inTEST Corporation (INTT) present a mixed picture for investors. The key ratios utilized in this analysis are the Price-to-Earnings (P/E), Price-to-Book (P/B), and Enterprise Value-to-EBITDA (EV/EBITDA). Below are the details:
- P/E Ratio: The trailing twelve months (TTM) P/E ratio stands at 16.9.
- P/B Ratio: The current P/B ratio is approximately 2.4.
- EV/EBITDA Ratio: The EV/EBITDA ratio is 10.5.
In the context of these ratios, the average P/E for the semiconductor industry is around 20, indicating that INTT's stock may be undervalued compared to its peers. The average P/B ratio in the industry is 3.5, further supporting the notion of potential undervaluation.
Stock Price Trends
Over the past 12 months, INTT's stock price has shown volatility. The stock started the year at approximately $6.50 and peaked at $10.30 in April 2024 before settling around $8.00 as of November 2024. The year-to-date performance reflects a 23% increase from its opening price.
| Month | Stock Price ($) | Change (%) |
|---|---|---|
| January 2024 | 6.50 | - |
| April 2024 | 10.30 | 58.5% |
| November 2024 | 8.00 | -22.3% |
Dividend Yield and Payout Ratios
inTEST Corporation does not currently pay a dividend, which is common in growth-oriented companies within the technology sector. The absence of a dividend payout allows the company to reinvest profits back into operations and potential acquisitions.
Analyst Consensus on Stock Valuation
According to recent analyst reports, the consensus rating for INTT is a Hold. Analysts cite concerns over the softening semiconductor market, but they also recognize potential upside due to the company’s recent acquisition of Alfamation, which is expected to contribute positively to revenue streams.
- Buy: 3 analysts
- Hold: 6 analysts
- Sell: 1 analyst
Overall, the valuation analysis indicates that while inTEST Corporation may appear undervalued based on traditional metrics, the current market environment and analyst perspectives suggest a cautious approach moving forward.
Key Risks Facing inTEST Corporation (INTT)
Key Risks Facing inTEST Corporation
The financial health of inTEST Corporation (NYSE American: INTT) is influenced by various internal and external risks. Below are detailed insights into these risk factors as of 2024.
Industry Competition
The semiconductor testing industry is highly competitive, with numerous players vying for market share. As of Q3 2024, orders from the semiconductor market decreased by $5.3 million, or 41%, compared to the previous year. This decline indicates a challenging environment for maintaining revenue streams.
Regulatory Changes
Changes in regulations, particularly those related to environmental standards and safety, could impact operational costs. The company may face increased compliance costs which could affect profit margins, especially in the context of its operations in multiple international markets.
Market Conditions
Market volatility poses a risk to inTEST's financial stability. The automotive and electric vehicle markets have shown significant growth, with orders in the auto/EV sector increasing by $4.1 million, yet the semiconductor market remains soft. This discrepancy highlights the need for diversification in revenue sources.
Operational Risks
Operational risks include supply chain disruptions and production delays. In Q3 2024, approximately $2 million in shipments were delayed, which could lead to revenue loss in future quarters.
Financial Risks
As of September 30, 2024, the company had total debt of $16.1 million, a reduction from previous quarters. However, the interest expense for Q4 2024 is expected to be approximately $210,000. The reliance on debt financing can pose risks, especially in rising interest rate environments.
Strategic Risks
Strategic decisions regarding acquisitions and market expansions can introduce risks. In March 2024, inTEST acquired Alfamation S.p.A., which contributed $5.4 million in revenue in Q3 2024. The integration of new businesses can be complex and may lead to unforeseen challenges.
Mitigation Strategies
To mitigate these risks, inTEST is focusing on enhancing operational efficiencies and diversifying its market presence. The company generated $4.2 million in cash from operations in Q3 2024, which supports its ability to manage debt and invest in growth. Additionally, management has indicated a commitment to aligning costs with current market demands.
| Risk Factor | Description | Recent Impact |
|---|---|---|
| Industry Competition | High competition in semiconductor testing | Orders decreased by $5.3 million (41%) |
| Regulatory Changes | Potential increases in compliance costs | Impact on operational costs |
| Market Conditions | Volatility affecting revenue sources | Growth in auto/EV orders offset by soft semiconductor market |
| Operational Risks | Supply chain disruptions and production delays | Shipments delayed by $2 million |
| Financial Risks | Reliance on debt financing | Total debt at $16.1 million |
| Strategic Risks | Challenges from acquisitions | Alfamation contributed $5.4 million in Q3 2024 |
Future Growth Prospects for inTEST Corporation (INTT)
Future Growth Prospects for inTEST Corporation
Analysis of Key Growth Drivers
inTEST Corporation is positioned for growth through several key drivers:
- Product Innovations: The company focuses on developing advanced test and process technologies, particularly in the automotive/EV sector, which has seen a revenue increase of 252.1% year-over-year, reaching $6.25 million in Q3 2024.
- Market Expansions: The total backlog as of September 30, 2024, was $45.5 million, representing a 12.3% increase compared to the previous year, indicating strong future demand across various sectors.
- Acquisitions: The acquisition of Alfamation S.p.A. contributed $5.4 million in revenue in Q3 2024. This strategic move enhances the company’s capabilities in the electronic test division.
Future Revenue Growth Projections and Earnings Estimates
Revenue projections for Q4 2024 are estimated between $34 million and $37 million, with full-year guidance set at $128 million to $131 million. This reflects a strategic alignment with market demands and operational efficiencies.
Adjusted earnings per diluted share for Q4 2024 are expected to be approximately $0.08, with adjusted EPS projected to reach $0.14.
Strategic Initiatives or Partnerships that May Drive Future Growth
The company continues to optimize its marketing channels and expand its customer base. Key partnerships in the defense and aerospace sectors have bolstered orders by $1.4 million in Q3 2024. The focus remains on maintaining a diversified market presence to mitigate risks associated with sector-specific downturns.
Competitive Advantages that Position the Company for Growth
inTEST Corporation benefits from strong engineering expertise and a culture of operational excellence. The company’s gross margin for Q3 2024 was 46.3%, reflecting effective cost management and improved product mix. Furthermore, the company’s strategic investments in technology and innovation provide a competitive edge in the rapidly evolving semiconductor and automotive markets.
| Metric | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Revenue | $30.27 million | $30.94 million | $(0.67 million) | -2.2% |
| Gross Margin | 46.3% | 46.7% | -0.4% | -0.9% |
| Net Earnings | $0.495 million | $2.277 million | $(1.782 million) | -78.3% |
| Orders | $28.05 million | $26.85 million | $1.20 million | 4.5% |
| Backlog | $45.45 million | $40.49 million | $4.96 million | 12.3% |
inTEST Corporation (INTT) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Article updated on 8 Nov 2024
Resources:
- inTEST Corporation (INTT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of inTEST Corporation (INTT)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View inTEST Corporation (INTT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.