inTEST (US:INTT)2023-08-04 18:22Financial Data and Key Metrics Changes - The company achieved record revenue of $32.6 million for Q2 2023, reflecting a 10.1% increase compared to the same period last year [9][18] - Gross margin improved to 46.2%, up 40 basis points year-over-year, driven by better product mix and improved pricing [19] - Net earnings increased by 32% to $2.8 million, or $0.24 per diluted share, compared to $2.1 million, or $0.20 per diluted share in Q2 2022 [22] Business Line Data and Key Metrics Changes - The thermal test solutions segment saw strong performance in the defense aerospace market, contributing to overall revenue growth [9] - The Electronic Test division reported robust sales due to new product wins, maintaining strong sales in the back-end semi space [12] - The Process Technologies division secured new customers, particularly in the utility industry, enhancing growth opportunities [13] Market Data and Key Metrics Changes - Orders for Q2 2023 totaled $31 million, up 2% sequentially, with strong demand in defense/aerospace, industrial, and security markets [15][27] - The backlog at the end of Q2 was approximately $45 million, reflecting a slight decline year-over-year and quarter-over-quarter due to normalizing supply chain trends [15][28] Company Strategy and Development Direction - The company is focused on executing a five-point strategy for growth, which includes diversifying into new markets and enhancing global presence [8][10] - The goal is to achieve revenue of $200 million to $250 million by 2025, with a combination of organic growth and strategic acquisitions [35][36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the remainder of 2023, expecting high single-digit to low double-digit organic growth [29] - The company anticipates continued strong demand across its technology offerings and is actively pursuing strategic acquisitions [31] Other Important Information - The company raised $19.2 million in net proceeds from an equity offering, enhancing its balance sheet and providing capital for growth [24][26] - Capital expenditures for 2023 are expected to be between 1% to 2% of sales, with a focus on organic and acquired growth [33] Q&A Session Summary Question: Supply chain pressures and demand - Management indicated no major impact from supply chain issues in the quarter and expects pressures to continue to normalize [44][47] Question: Momentum in the security market - The momentum is driven by new products, improved supply, and expanded distribution channels [48] Question: Pricing environment and potential increases - The company is constantly evaluating pricing in relation to input costs and is not limited to annual price increases [49] Question: Utility scale induction heating opportunity - The opportunity is significant, with sales ranging from $25,000 to $300,000 depending on the system [58] Question: Service side of the business - Service revenue is currently around 9% to 10% of sales, with a goal to increase it to 15% to 20% [60] Question: Acquisition strategy and capital flexibility - The company has sufficient capital raised to achieve acquisition goals without requiring dilutive capital in the near term [62][66] Question: Wage inflation and margin impacts - Wage costs are a significant line item, and the company is focused on maintaining fair compensation while managing margins [85]