inTEST (US:INTT)2024-03-29 17:51Financial Data and Key Metrics Changes - Revenue for the full year reached a record $123.3 million, up 6% or $6.5 million compared to the previous year, driven by increases in defense/aerospace and industrial markets [39][54] - Gross profit for the year increased 7% to $57 million, with a gross margin expansion of 50 basis points to 46.2% [5] - Fourth quarter revenue was down $4.5 million year-over-year and $3.1 million sequentially, primarily due to softness in the semi market [39][60] - Net income for the year was $9.3 million, the highest level in over a decade, with adjusted earnings per diluted share at $0.94 compared to $0.99 in 2022 [54][59] Business Line Data and Key Metrics Changes - Fourth quarter sales in the defense/aero market increased by 11%, with orders improving by 70% compared to the third quarter [2] - The industrial market saw sales growth of $3.7 million in the fourth quarter, driven by strong demand for innovative products [55] - The auto/EV market experienced a $1.2 million increase in sales, supported by the Environmental Technologies division [36] Market Data and Key Metrics Changes - Combined semi orders were down 10% year-over-year but improved sequentially by 3% to $13.3 million [41] - The backlog at year-end was $40.1 million, 14% lower than the prior year [41] - Non-semi markets combined share of revenue increased from around 35% in 2021 to 47% in 2023 [56] Company Strategy and Development Direction - The company is focused on diversifying its revenue streams and strengthening its presence in key target markets outside of semiconductors [56] - The acquisition of Alfamation is seen as a strategic fit to deepen the company's presence in auto/EV and life sciences markets [43] - The company aims to achieve a revenue goal of $200 million to $250 million by 2025 [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the demand in defense/aero and industrial markets, indicating a positive outlook for 2024 [2][10] - The company expects 2024 revenue to range from $145 million to $155 million, with a gross margin of approximately 45% to 46% [61] - Management acknowledged the challenges in the semi market but highlighted the resilience and stabilization in orders [66] Other Important Information - The company ended 2023 with $85 million in liquidity, including $45.3 million in cash [31] - Operating expenses for 2023 were up $3.8 million over 2022, driven primarily by higher corporate development expenses [30] - The effective tax rate is expected to be between 16% and 17% for the first quarter of 2024 [32] Q&A Session Summary Question: What have you seen from an order pattern perspective in Q1? - Management noted that orders were up sequentially in Q4 and anticipated that this trend would continue into Q1 [11][66] Question: Are there particular industrial markets that are more important than others? - Management highlighted the green initiative and induction heating solutions as key drivers in the industrial market [17][50] Question: What is the outlook for the security business given the drop in orders? - Management indicated that the drop was due to timing of orders and not a fundamental issue with demand [51][74] Question: Can you provide a timeline for the deferred revenue on the balance sheet? - Management estimated that about 40% of the deferred revenue would be recognized within 12 months, with the remainder beyond that [70]