inTEST (US:INTT)2025-03-07 15:23Financial Data and Key Metrics Changes - The company reported record fourth quarter revenue of $36.6 million and full-year revenue of $130.7 million, marking the third consecutive year of record revenue [9][10] - Full-year sales growth was 6%, driven by a $25 million contribution from the AlfaMation acquisition and strong demand in various markets, despite a 26% decline in the semiconductor sector [10][11] - Gross profit for the fourth quarter was $14.5 million, with a gross margin of 39.7%, reflecting a sequential contraction of 660 basis points and a year-over-year contraction of 490 basis points [22][23] Business Line Data and Key Metrics Changes - Revenue growth in the auto EV sector was driven by advanced testing technologies acquired from AlfaMation, contributing $7.9 million in growth [19][11] - Defense aerospace revenue increased by $2.7 million, while semi revenue improved by $1.5 million, offsetting a $3.7 million decline in industrial sales [19][20] - Life sciences orders more than doubled to a record $2.3 million, reflecting strong demand for induction heating solutions [16][19] Market Data and Key Metrics Changes - Orders for the fourth quarter increased by 11% year-over-year, with significant growth in life sciences and a $2.4 million increase in overall semi orders [15][16] - Backlog at the end of 2024 was $39.5 million, down $600,000 from the prior year and $6 million sequentially, influenced by the timing of AlfaMation shipments [17][18] - Demand in the auto EV market showed signs of slowing, reflecting continued softness in the end market [16] Company Strategy and Development Direction - The company aims to evolve into a more diversified test and process technology solutions business, focusing on innovation and market diversification [10][11] - Plans to consolidate the Videology Netherlands facility into the Mansfield, Massachusetts location to streamline operations and reduce costs [37] - The company is actively exploring M&A opportunities while maintaining a cautious approach due to market uncertainties [61][62] Management's Comments on Operating Environment and Future Outlook - Management expressed caution for 2025, expecting full-year revenue between $125 million and $135 million, with gradual profitability improvements [29][30] - The uncertainty related to tariffs and customer investment delays is impacting the business environment, particularly in the semiconductor sector [33][34] - The company remains confident in its competitive position and innovation strategy, aiming to achieve long-term growth targets [78][80] Other Important Information - The company generated $2.6 million in operating cash during the quarter, with total debt of $15 million and cash and equivalents of $19.8 million at the end of the quarter [27][28] - A stock repurchase plan was renewed, reflecting confidence in long-term value creation [41] Q&A Session Summary Question: Are there any cancellations in the pipeline? - Management indicated that there are no cancellations, only timing issues with some customers changing product types [46] Question: Was the strong life sciences business driven by a few customers or broad-based? - The strong orders were driven by broad demand for induction heating solutions across multiple customers [48] Question: What is the outlook for revenue guidance? - The high end of the revenue guidance is expected to be driven by backlog deliveries in the second half of the year, with gradual improvements anticipated [50][51] Question: Can you provide more detail on the revenue cadence for 2025? - Management expects stronger performance in the second half of 2025, particularly in the back end market, while other markets remain uncertain [56][58] Question: What is the status of the M&A pipeline? - The company remains active in the M&A market, looking for strategic opportunities while being cautious about valuations [61][62] Question: Will the 2027 growth targets be discussed in the upcoming investor day? - Management confirmed that the 2027 targets will be discussed, and they remain committed to achieving those goals despite current market challenges [78]