inTEST (US:INTT)2025-05-08 20:05PART I. FINANCIAL INFORMATION Item 1. Financial Statements The company reported a Q1 2025 net loss of $2.3 million, a significant downturn from a $0.7 million net earning in Q1 2024 Consolidated Balance Sheets Total assets decreased to $148.0 million as of March 31, 2025, mainly due to a reduction in trade accounts receivable Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $22,048 | $19,830 | | Trade accounts receivable, net | $21,178 | $29,495 | | Inventories | $27,608 | $26,837 | | Goodwill | $31,236 | $30,744 | | Total Assets | $148,027 | $152,288 | | Liabilities & Equity | | | | Current portion of long-term debt | $6,876 | $7,494 | | Long-term debt, net | $4,952 | $7,538 | | Total Liabilities | $48,632 | $52,498 | | Total Stockholders' Equity | $99,395 | $99,790 | Consolidated Statements of Operations Q1 2025 revenue decreased 10.7% year-over-year, resulting in a net loss of $2.3 million versus a prior-year net earning Q1 2025 vs. Q1 2024 Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $26,637 | $29,824 | | Gross Profit | $11,056 | $13,076 | | Operating (Loss) Income | $(2,881) | $492 | | Net (Loss) Earnings | $(2,329) | $662 | | Diluted (Loss) Earnings Per Share | $(0.19) | $0.05 | Consolidated Statements of Cash Flows Net cash from operations improved to $5.5 million in Q1 2025, driven by a significant decrease in accounts receivable Q1 2025 vs. Q1 2024 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $5,535 | $2,075 | | Net cash used in investing activities | $(229) | $(19,244) | | Net cash used in financing activities | $(3,406) | $(874) | | Net cash provided by (used in) all activities | $2,218 | $(17,929) | | Cash and cash equivalents at end of period | $22,048 | $27,331 | Notes to Consolidated Financial Statements Notes detail segment performance, the Alfamation acquisition, a restructuring plan, and a significant debt covenant breach - The company operates through three segments: Electronic Test, Environmental Technologies, and Process Technologies, with a strategic focus on diversifying away from the volatile semiconductor market into areas like auto/EV, defense/aerospace, and life sciences212425 - On March 12, 2024, the company acquired Alfamation S.p.A. for an aggregate purchase price of approximately €20.0 million ($21.9 million), consisting of cash and stock9194 - The company is in breach of its fixed charge coverage ratio covenant (0.99 to 1.0 vs. required 1.25 to 1.0) as of March 31, 2025, and anticipates non-compliance for Q2 2025127189236 - In February 2025, a restructuring plan was initiated to consolidate Videology Imaging Corporation's Netherlands operations, resulting in $313 thousand of restructuring charges in Q1 2025162163 Revenue by Segment (in thousands) | Segment | Q1 2025 Revenue | Q1 2024 Revenue | | :--- | :--- | :--- | | Electronic Test | $13,259 | $11,116 | | Environmental Technologies | $6,268 | $6,828 | | Process Technologies | $7,110 | $11,880 | | Total | $26,637 | $29,824 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the revenue decline to the semi market, discusses margin contraction, and highlights a debt covenant breach Results of Operations Q1 2025 revenue fell 10.7% due to a semi market decline, while the Alfamation acquisition drove Electronic Test segment growth Revenue by Market (in thousands) | Market | Q1 2025 | Q1 2024 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | Semi | $8,995 | $14,967 | $(5,972) | (39.9)% | | Auto/EV | $5,959 | $3,958 | $2,001 | 50.6% | | Defense/aerospace | $2,828 | $3,239 | $(411) | (12.7)% | | Industrial | $3,021 | $4,187 | $(1,166) | (27.8)% | | Life Sciences | $1,688 | $653 | $1,035 | 158.5% | | Total Revenue | $26,637 | $29,824 | $(3,187) | (10.7)% | - Q1 2025 orders increased 11.2% year-over-year to $25.3 million, driven by strength in industrial, auto/EV, and life science markets199200 - Backlog of unfilled orders was $38.2 million at March 31, 2025, down from $55.5 million at March 31, 2024202 - Gross margin decreased by 230 basis points to 41.5% due to lower absorption of fixed costs on lower sales volumes and an unfavorable product mix203 - Operating expenses increased, with Engineering and Product Development up 23.5% and G&A up 7.4%, primarily due to the Alfamation acquisition206207 Liquidity and Capital Resources The company maintains solid liquidity but breached a key debt covenant, for which it obtained a waiver but expects future non-compliance Liquidity Snapshot (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $22,048 | $19,830 | | Working capital | $43,594 | $46,864 | - The company was not in compliance with its fixed charge coverage ratio covenant (0.99 to 1.0) for Q1 2025 and received a one-time waiver215 - As of March 31, 2025, $12.0 million (55%) of cash and cash equivalents was held by foreign subsidiaries220 - Cash from operating activities increased to $5.5 million in Q1 2025 from $2.1 million in Q1 2024, driven by improved collections of accounts receivable224 Item 3. Quantitative and Qualitative Disclosures About Market Risk This disclosure is not required as the company qualifies as a smaller reporting company - As a smaller reporting company, InTest Corporation is not required to provide this disclosure229 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of the quarter-end with no material changes - The CEO and CFO concluded that as of the end of the reporting period, the company's disclosure controls and procedures were effective at the reasonable assurance level231 - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting232 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings - The company is not currently a party to any material legal proceedings234 Item 1A. Risk Factors Key risks include the impact of restrictive debt covenants and potential disruptions from U.S. and foreign trade policies - A key risk is the potential adverse impact of credit facility covenants, as the company was not in compliance with its fixed charge coverage ratio at March 31, 2025235236 - U.S. tariff policies and global retaliatory measures pose a significant risk, as approximately 52% of Q1 2025 revenue was from shipments outside the United States237238 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company renewed its $10.0 million share repurchase plan but made no repurchases during the quarter - On March 5, 2025, the Board renewed the share repurchase plan, authorizing up to $10.0 million in repurchases, with about $9.0 million available240 - No shares were repurchased under the plan in Q1 2025, though 646 shares were acquired from employees to satisfy tax liabilities on vested stock awards240241 Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None242 Item 4. Mine Safety Disclosures This section is not applicable to the company's operations - Not applicable243 Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the first quarter - No directors or officers adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement in Q1 2025244 Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including certifications and XBRL data files Signatures Signatures The report was duly signed by the company's Principal Executive Officer and Principal Financial Officer - The report is signed by the Principal Executive Officer and Principal Financial Officer249