inTEST (US:INTT)2025-11-06 21:28Financial Performance - Total revenue for the three months ended September 30, 2025, was $26.236 million, a decrease of $4.036 million or 13.3% compared to $30.272 million in the same period of 2024[211]. - Revenue from the Electronic Test segment decreased by 21.8% to $12.099 million, while Environmental Technologies increased by 11.2% to $7.490 million[211]. - Total revenue for the nine months ended September 30, 2025, was $81,003,000, a decrease of $13,084,000 or 13.9% compared to $94,087,000 in the same period of 2024[224]. - Revenue from the Semi market decreased by 20.5% to $29,029,000, while Auto/EV revenue fell by 19.9% to $16,785,000[225]. - Gross profit for the three months ended September 30, 2025, was $10.992 million, resulting in a gross margin of 41.9%, down from 46.3% in the prior year[217]. - Gross profit for the nine months ended September 30, 2025, was $34,021,000, down 16.8% from $40,885,000 in 2024, with a gross margin of 42.0%[228]. Orders and Backlog - Orders for the third quarter of 2025 increased by 34.2% to $37.642 million compared to $28.054 million in the same period of 2024, driven primarily by Auto/EV and Defense/Aerospace segments[213]. - Backlog of unfilled orders as of September 30, 2025, was $49.3 million, up from $45.5 million a year earlier[216]. - Orders received for the nine months ended September 30, 2025, increased by 17.7% to $90,689,000, driven by strong performance in Auto/EV and Life Sciences[227]. Expenses and Costs - Selling expenses decreased by 12.1% to $3.765 million, representing 14.4% of revenue[218]. - General and administrative expenses decreased by 16.2% to $5.128 million, accounting for 19.5% of revenue[220]. - Engineering and product development expenses increased by 7.0% to $2.335 million, representing 8.9% of revenue[219]. - Restructuring costs recognized in the third quarter of 2025 amounted to $116,000, representing 0.4% of revenue[222]. - Amortization of acquired intangible assets decreased by 10.9% to $841,000, accounting for 3.2% of revenue[221]. - Selling expenses decreased by 6.4% to $12,141,000, representing 15.0% of total revenue[229]. - Engineering and product development expenses increased by 10.1% to $7,028,000, accounting for 8.7% of revenue[230]. - General and administrative expenses decreased by 6.0% to $16,704,000, representing 20.6% of revenue[231]. - Restructuring costs of $645,000 were recognized for the consolidation of operations, representing 0.8% of revenue[233]. Debt and Financing - The company reported a total debt of $4.9 million with M&T Bank as of September 30, 2025, and projects to reduce this to less than $2.0 million by June 30, 2026[199]. - The company has a Credit Facility with a $50.5 million non-revolving delayed draw term note and a $10.0 million revolving credit facility, with available drawing capacity of $30.0 million as of September 30, 2025[238]. - The company drew $12 million under the Term Note at a fixed annual interest rate of approximately 3.2% for the acquisition of Videology, and $8.5 million at a variable rate of 6.4% for Acculogic[240]. - Alfamation's debt as of September 30, 2025, was $4.0 million, with a weighted average interest rate of 3.2% for bank-issued term loans[241]. Cash Flow and Working Capital - Cash and cash equivalents decreased from $19.83 million on December 31, 2024, to $16.23 million on September 30, 2025[242]. - The company estimates short-term working capital requirements between $8.0 million and $10.0 million, supported by cash and borrowing capacity[243]. - Net cash provided by operating activities for the nine months ended September 30, 2025, was $8.3 million, an increase of $7.1 million compared to the prior year[245]. - Net cash used in investing activities decreased by $18.8 million to $1.1 million for the nine months ended September 30, 2025, with no acquisitions in the current year[245]. - Net cash used in financing activities was $6.8 million, a decrease of $1.3 million compared to the prior year, with no stock repurchases in the current year[245]. Market and Strategic Focus - The company is focused on diversifying its markets, including Auto/EV, Defense/Aerospace, Industrial, Life Sciences, and Safety/Security, to reduce dependence on the semiconductor market[192]. - The semiconductor market remains the largest market for the company, characterized by cyclical demand and significant fluctuations in orders and revenue[194]. - The company has qualified a new supplier for materials previously sourced from a sole-source supplier in Belarus, with the first system incorporating these new materials shipped at the end of Q2 2025[203]. - The company maintains a two-to-three month safety stock of capacitors from its sole-source supplier in Israel, which is currently believed to have redundancies in place[201]. - The company continues to monitor global trade policies and tariffs, which may negatively impact demand, pricing, and costs for its products[200]. - The company has increased prices charged to customers where appropriate to mitigate supply chain and logistics challenges[206]. - The company is experiencing increased prices and logistics delays, which may impact future earnings[206]. - The company is committed to adjusting strategies and operations in response to shifts in market practices and customer demands[196]. - The company is pursuing acquisition opportunities for complementary businesses and technologies, with funding expected from cash, Term Note availability, or equity issuance[244].