Intest Corporation · AMEX:INTT
Intest — Midwest IDEAS Conference 2024
38 slides from Intest's conference presentation, Aug 29, 2024
Slide 1: inTEST Corporation – Midwest IDEAS Conference
inTEST Corporation Midwest IDEAS Conference Nick Grant Duncan Gilmour President and CEO Chief Financial Officer August 29, 2024
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements do not convey historical information but relate to predicted or potential future events and financial results, suc
Slide 3: Unlocking The Potential
Unlocking The Potential Nick Grant Duncan Gilmour President and CEO Chief Financial Officer and Treasurer Vision To be the supplier of choice for innovative test and process technology solutions Leverage our deep industry knowledge & expertise to develop and deliver high quality, Mission innovative
Slide 4: Transforming inTEST
Transforming inTEST Transition from Components to Solutions Provider 1 Shift to Diversified Markets with Strong, Secular Tailwinds 2 Increase SAM with Multi-Billion Market Opportunity with Outsized Growth 3 New Organizational Structure Unlocking Potential 4 Track Record of Successful Acquisitions Re
Slide 5: Strong Foundation For Growth
Strong Foundation For Growth inTEST: Known for Highly-Engineered, Customer-Driven Solutions Growing and Diversified Markets Blue-Chip Global Customer Global Presence Blue-Chip Global Customer Base Base ➢ Semiconductor ➢ 2023 Revenue: $123.3M ➢ Industrial ▪ 39.9% Americas ➢ Automotive/EV ▪ 32.3% APAC
Slide 6: 5-Point Strategy Drives Long-Term Value
5-Point Strategy Drives Long-Term Value ✓ Growth Driven by ✓ Drive Innovation and Geographic Expansion, Technological Differentiation Global & Innovation & Increasing Customer Base, Market Differentiation Expansion Broader & Deeper Market Penetration Strategic Acquisitions & Service & Partnerships S
Slide 7: Acquired Alfamation in March 2024
Acquired Alfamation in March 2024 FY23 Sales by Industry Segment FY23 Customer Concentration • Headquarters; Milan, Italy 7% Others, 16% • Sales and service center in 3% 3% Suzhou City, China 3% 1% 3% 48% • ~130 employees 5% 89% • Founder owned business 5% • Staying on to execute growth 17% plans Au
Slide 8: Expands Electronic Test Capabilities
Expands Electronic Test Capabilities Consistent with 5-Point Strategy for Growth Cultural fit as an innovative engineering and technology solutions provider Strategic Fit: expands test capabilities and footprint in Europe + Deepens market reach in auto/EV, life sciences & consumer electronics Best-i
Slide 9: Significant Opportunity Set
Significant Opportunity Set ($ in millions) 2023 inTEST $2.2B+ SAM* Electronic Environmental Process Test Technologies Technologies ~$600M ~$600M ~$1.0B+ Serviceable Addressable Markets (SAM) $150 $200 $250 $200 $400 $350 $600+ Semi Test In-Circuit & Automated Thermal Cold Chain Induction Image Solu
Slide 10: Driving Market Leadership/Opportunities
Driving Market Leadership/Opportunities Targeting markets with strong, secular tailwinds inTEST Revenue by Market* Expected 5-Year Markets Market Growth** Continued Served 3% to 6% $84.9M $123.3M Diversification Semi Markets Industrial 3% to 6% Defense/Aero 3% to 6% 2025E 2023 Targeted Growth Market
Slide 11: Electronic Test Division
Electronic Test Division Engineering solutions for the toughest challenges in automated test ➢ Growth drivers: semi mixed-signal/analog focused, strength in Auto/EV market and growing presence in defense and life sciences ➢ Markets: Back-end Semi Test, Industrial, Auto/EV, Life Sciences, Defense/Aer
Slide 12: Environmental Technologies Division
Environmental Technologies Division Creating and controlling environmental conditions in test, process and storage applications ➢ Growth drivers: strong position in Back-end Semi Test/R&D, expanding in Defense, Auto/EV and Life Sciences ▪ Thermal testing/processing solutions that provide precise tem
Slide 13: Process Technologies Division
Process Technologies Division Technical expertise and customized solutions for industrial applications ➢ Growth drivers: ▪ Induction heating solutions for silicon carbide crystal growth and epitaxy as well as green solution to replace traditional fossil fuel heating processes with higher thermal eff
Slide 14: Making M&A a Core Competency
Making M&A a Core Competency Completed four acquisitions since implementing 5-Point Strategy M&A Eco-System Disciplined M&A Process Acquire quality businesses to drive shareholder value Expand into fast growing markets Offer broader portfolio of solutions Strategy M&A Development Execution Drive fur
Slide 15: Success Building Our Vision
Success Building Our Vision Innovative Test and Process Technology Solutions Acquisition Strategy: Scaling Divisions Electronic Test ▪ Broader and complementary technology/applications ▪ Diversify outside of Semi market ▪ Deepen geographic market reach in Europe, Asia, Latin America ▪ Expand custome
Slide 16: Financial Overview
Financial Overview 16
Slide 17: Orders and Backlog
Orders and Backlog(1) ($ in millions) Orders Years Quarters ➢ Q2 orders down 17% y/y $129.6 $101.9 $116.6 $103.4 $31.4 ▪ $3.7 million decline from semi $26.2 $22.8 ▪ $2.8 million combined decline from industrial and defense/aerospace ➢ Sequentially, orders up 15% ▪ Back-end semi improvement more tha
Slide 18: Revenue
Revenue ($ in millions) Years Quarters ➢ Record Q2 2024 revenue, up $1.4 million y/y ▪ $9.7 million from Alfamation $116.8 $123.3 $122.6 $32.6 $34.0 ▪ Auto/EV up $9.2 million, primarily from the $29.8 acquisition $84.9 ▪ $8.7 million decline in semi sales ▪ Life sciences market up $1.1 million due t
Slide 19: Gross Profit and Margin
Gross Profit and Margin ($ in millions) Years Quarters ➢ Q2 gross margin of 40.6% contracted 325 bps compared with Q1 2024 $57.0 $53.4 $53.8 $15.0 ▪ Margin contraction impacted by $13.1 $13.8 unfavorable product mix $41.2 ▪ Low volume in higher margin back-end Semi business ➢ Y/Y margin contraction
Slide 20: Operating Expenses
Operating Expenses Continuing to invest to support 5-Point Strategy for Growth ($ in millions) Operating expenses as a % of sales ➢ Q2 2024 operating expenses up $1.8 million versus Q2 2023 38.6% 36.6% 37.7% 40.3% 35.9% 42.2% 39.6% ▪ $2.4 million incremental operating Years Quarters expenses attribu
Slide 21: Earnings and Adjusted EBITDA
Earnings and Adjusted EBITDA(1) ($ in millions, except per share data) Net Earnings and Adjusted EBITDA/ (1) (1) EPS and Adjusted EPS Adjusted EBITDA Margin Quarters Quarters $0.28 $4.8 $0.24 $2.8 $0.10 $1.8 $2.2 $0.08 $0.05 $0.7 $0.02 $0.2 14.7% 6.1% 6.3% Q2 23 Q1 24 Q2 24 Q2 23 Q1 24 Q2 24 Years Y
Slide 22: Capital Structure and Cash Flow
Capital Structure and Cash Flow ($ in millions) Year Capitalization Cash Flow Three Months Ended Ended 6/30/24 12/31/23 6/30/24 6/30/23 12/31/23 Net cash (used) provided Cash and cash equivalents $ 20.4 $ 45.3 $ (5.1) $ 2.9 $ 16.2 by operating activities Total debt $ 21.1 $ 12.0 Capital expenditures
Slide 23: Capital Allocation Priorities
Capital Allocation Priorities Disciplined Approach To Capital Allocation Prioritizing Growth And Returns I. GROWTH Invest in engineering, Innovative Solutions and sales & marketing Market Expansion Continue programmatic M&A Acquisitions and Partnerships II. BALANCE SHEET Maintain Capital Expenditure
Slide 24: Updated Outlook for 2024
Updated Outlook for 2024 Third Quarter Outlook(1) Revenue: Slightly lower than Q2 5-Point Strategy Gross margin: Improved somewhat from Q2 Operating expenses: Similar to Q2 Intangible asset amortization expense: ~$0.9 million Amortization (after tax): ~$0.7 million Global & Innovation & Interest exp
Slide 25: Executing during Challenging Times
Executing during Challenging Times Managing headwinds from key markets • Front-end semi taking a pause with depressed production capacity additions in SiC, GaN and epitaxy • Sluggish Industrial activities driven by macro uncertainties • Deepening reach within existing customers and focus on adding n
Slide 26: inTEST Corporation
inTEST Corporation Midwest IDEAS Conference Nick Grant Duncan Gilmour President and CEO Chief Financial Officer August 29, 2024
Slide 27: inTEST Corporation Supplemental Information
inTEST Corporation Supplemental Information
Slide 28: Executing Our Growth Plan
Executing Our Growth Plan ($ in millions) 5 $200 to $250 202 0 to Potential Future 20 2 AG R Acquisitions + C ~30% $123 $128 to $133 $117 $85 $54 2020 2021 2022 2023 2024E 2025E Actual Revenue Estimated Revenue(1) (1) Estimated revenue, including estimated revenue from future potential acquisitions,
Slide 29: Driving Scale to Deliver Growth in Earnings
Driving Scale to Deliver Growth in Earnings ($ in millions) Division Operating Income(1) Adjusted EBITDA(2) Net Earnings ~ $40 + ~ $30 + ~ $20+ - $22 $23 + $19 $16 $16 $12 $9 $8 $7 22% 19% 18% ~20% 14% 14% 13% ~15% 9% 7% 8% ~10% ∕∕ (3) ∕∕ ∕∕ 2021 2022 2023 2025E 2021 2022 2023 2025E (3) 2021 2022 20
Slide 30: Competition
Competition Solutions / Markets Competitors Manipulators Advantest Corporation, Esmo AG, Reid-Ashman Manufacturing and Teradyne, Inc. Docking Hardware Advantest Corporation, Esmo AG, Reid-Ashman Manufacturing and Teradyne, Inc. Tester Interfaces Advantest Corporation, Esmo AG, Reid-Ashman Manufactur
Slide 31: Reconciliation of Net Earnings to Adjusted Net Earnings (Quarterly)
Reconciliation of Net Earnings to Adjusted Net Earnings (Non-GAAP) and Earnings Per Diluted Share to Adjusted Earnings Per Diluted Share (Non-GAAP) ($ in thousands, except per share amounts) Three Months Ended 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 Net earnings $ 2,793 $ 2,277 $ 1,455 $
Slide 32: Reconciliation of Net Earnings to Adjusted Net Earnings (Annual)
Reconciliation of Net Earnings to Adjusted Net Earnings (Non-GAAP) and Earnings Per Diluted Share to Adjusted Earnings Per Diluted Share (Non-GAAP) ($ in thousands, except per share amounts) Years Ended December 31, TTM Q2 2021 2022 2023 2024 Net earnings $ 7,283 $ 8,461 $ 9,342 $ 4,624 Acquired int
Slide 33: Reconciliation to Adjusted EBITDA (Quarterly)
Reconciliation of Net Earnings and Net Margin to Adjusted EBITDA (Non-GAAP) and Adjusted EBITDA Margin (Non-GAAP) ($ in thousands) Three Months Ended 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 Net earnings $ 2,793 $ 2,277 $ 1,455 $ 662 $ 230 Acquired intangible amortization 523 515 513 595 8
Slide 34: Reconciliation to Adjusted EBITDA (Annual)
Reconciliation of Net Earnings and Net Margin to Adjusted EBITDA (Non-GAAP) and Adjusted EBITDA Margin (Non-GAAP) ($ in thousands) Years Ended December 31, TTM Q2 2021 2022 2023 2024 Net earnings $ 7,283 $ 8,461 $ 9,342 $ 4,624 Acquired intangible amortization 1,440 2,694 2,095 2,520 Net interest ex
Slide 35: Reconciliation of Third Quarter 2024 Estimated EPS
Reconciliation of Third Quarter 2024 Estimated Earnings Per Diluted Share to Estimated Adjusted Earnings Per Diluted Share (Non-GAAP) Q3 2024E Estimated Estimated earnings per diluted share ~ $ 0.02 Estimated acquired intangible amortization 0.07 Estimated tax adjustments (0.01) Estimated adjusted e
Slide 36: Segment Reporting (Quarterly)
Segment Reporting (Quarterly) ($ in thousands) Three Months Ended 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 Electronic Test $ 10,993 $ 11,547 $ 8,105 $ 11,116 $ 16,159 Environmental Technologies 8,136 7,000 7,623 6,828 8,273 Process Technologies 13,429 12,394 12,156 11,880 9,559 Total Reven
Slide 37: Segment Reporting (12-Months)
Segment Reporting (12-Months) ($ in thousands) Years Ended TTM 12/31/2022 12/31/2023 6/30/2024 Electronic Test $ 40,219 $ 41,016 $ 46,927 Environmental Technologies 30,172 30,801 29,724 Process Technologies 46,437 51,485 45,989 Total Revenue $ 116,828 $ 123,302 $ 122,640 % of % of % of divisional di
Slide 38: inTEST Corporation
inTEST Corporation Midwest IDEAS Conference Nick Grant Duncan Gilmour President and CEO Chief Financial Officer August 29, 2024