inTEST Corporation Announces Strong Q3 2024 Performance with Margin Expansion, Strategic Cost Management, and Increased Orders Across Key Markets
inTEST Corporation (NYSE American: INTT), a leader in innovative test and process technology solutions, has released its financial results for the third quarter of 2024, highlighting robust gross margin growth, effective cost management, and strategic gains in target markets including automotive/EV, defense/aerospace, industrial, and semiconductor.
Q3 2024 Financial and Operational Highlights
- Revenue and Gross Margin: Gross margin expanded by 570 basis points to 46.3%, reflecting disciplined cost control, efficient operational execution, and favorable mix even with slightly lower revenue of $30.3 million. Sequential revenue decline was driven primarily by shipment delays that are expected to be recognized in Q4 2024.
- Operating Income Growth: Sequentially, operating income grew by $0.2 million with a 60-basis-point increase in operating margin. The improvement reflects a more favorable mix, cost-saving initiatives, and strategic alignment with market conditions.
- Increased Orders: Orders for the quarter rose by 5% year-over-year to $28.1 million, up 7% sequentially. Notably, orders for Alfamation, acquired earlier in 2024, jumped 21% from the previous quarter, underscoring inTEST’s successful integration and expansion strategy.
- Earnings per Share: Reported EPS stood at $0.04 per diluted share, with adjusted EPS reaching $0.10, underscoring inTEST’s focus on shareholder value.
- Cash Generation and Debt Reduction: The company generated $4.2 million in cash from operations. Strong cash flows enabled inTEST to repay $5.3 million in debt and repurchase $1 million in shares, reinforcing a balanced approach to capital allocation.
Strategic Market and Segment Highlights
- Revenue Trends and Market Dynamics: Year-over-year, revenue showed a slight decline of $0.7 million, offset by a $5.4 million contribution from Alfamation, primarily in the electronics test division. Strength in automotive/EV, defense/aerospace, and industrial markets compensated for continued softness in the semiconductor sector.
- Cost Optimization and Profitability: Operating expenses rose $1.5 million from Q3 2023, with Alfamation and added amortization accounting for much of this increase. Nonetheless, cost containment efforts contributed to steady profitability.
- Orders by Market: Orders grew significantly across target markets, with year-over-year increases in automotive/EV by $4.1 million, defense/aerospace by $1.4 million, and other industrial markets by $1.9 million. This broad-based demand signals resilience and diversification in inTEST’s market strategy.
Q4 and Full-Year 2024 Guidance
- Revenue Expectations: Q4 revenue guidance is set between $34 million and $37 million, with full-year 2024 revenue projected at $128 million to $131 million, reflecting stability and a potential upturn in shipments.
- Margin and Expense Outlook: Gross margin for Q4 is expected at approximately 42%, with operating expenses around $13.5 million. The company’s disciplined approach to margin management is anticipated to sustain earnings momentum in the coming quarters.
Nick Grant, inTEST’s President and CEO, commented, “We delivered a solid quarter despite revenue headwinds. Strategic cost control, focus on favorable product mix, and our investments in operational efficiency drove margin gains beyond expectations. Our flexibility allowed us to generate substantial cash flow, reduce debt, and initiate share repurchases, reaffirming our commitment to long-term value creation.”
Grant further emphasized that inTEST’s diversified market approach has bolstered stability in revenue and profitability through industry cycles. The company remains focused on capturing demand in high-growth sectors, particularly as industries like automotive, defense, and advanced industrial markets show gradual signs of stabilization.
With an eye on sustainable growth, inTEST is strategically positioned to capitalize on future opportunities, bolstered by its engineering expertise, customer diversification, and track record of successfully integrating acquisitions like Alfamation. As macroeconomic conditions stabilize, inTEST anticipates a steady increase in demand across its technology solutions, providing a strong foundation for ongoing expansion and enhanced shareholder value.
