INTEST CORP (INTT)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 revenue of $26.6M and gross margin of 41.5% came in below S&P Global consensus revenue ($28.1M*) and modestly below Primary EPS consensus (adj. EPS -$0.11 vs -$0.10*) as engineering delays pushed ~$1.5M of shipments and semi/industrial softness weighed on volume .
• Orders rose 11% YoY to $25.3M, led by auto/EV (Alfamation) and industrial (one $1.5M induction heating order), but fell 17% QoQ on semi weakness and broader uncertainty; backlog ended at $38.2M (48% expected to ship beyond Q2) .
• Management withdrew full-year outlook and shifted to forward-quarter guidance: Q2 revenue $27–$29M, ~42% GM, and OpEx $13.0–$13.5M (excl. ~$0.2M restructuring), citing tariff-driven uncertainty and customer pushouts .
• Sequential gross margin expanded 180 bps on the absence of Q4’s inventory step-up charge; cost actions (headcount reductions, austerity, consolidations) and Malaysia manufacturing (H2’25) aim to protect profitability and regionalize supply amid tariff volatility .

What Went Well and What Went Wrong

• What Went Well

  • Orders +11% YoY to $25.3M; strength in industrial (incl. a $1.5M returning customer order for induction heating) and auto/EV (Alfamation) offset weakness in semi; pipeline at historic highs per management .
  • Sequential GM improvement to 41.5% (+180 bps vs Q4) as Q4 was impacted by a 430 bps inventory step-up charge; disciplined cost controls underway (headcount, consolidations, discretionary spend) .
  • Strong cash generation: $5.5M CFO, cash up $2.2M QoQ to $22.0M; debt reduced to $11.8M (down $3.2M QoQ) .
  • “We believe we are well positioned for when markets recover… building presence… accelerating new product introductions” – Nick Grant (CEO) .

• What Went Wrong

  • Revenue declined 11% YoY and 27% QoQ to $26.6M; GAAP net loss -$2.3M (EPS -$0.19), reflecting under-absorption on lower volume and semi/industrial weakness .
  • Engineering delays in Environmental Technologies pushed ~$1.5M of shipments out of the quarter, contributing to the miss versus consensus revenue .
  • Orders -17% QoQ (semi orders -$6M QoQ) and backlog down 31% YoY to $38.2M; visibility reduced by tariff uncertainty, prompting withdrawal of full-year guidance .

Financial Results

Headline metrics vs prior periods and S&P Global consensus

• Values retrieved from S&P Global.

• Management drivers: YoY GM compression (-230 bps) due to under-absorption; sequential GM +180 bps as Q4 carried a 430 bps inventory step-up charge .
• YoY revenue down $3.2M: semi -$6.0M and industrial -$1.2M, partially offset by auto/EV +$2.0M, life sciences +$1.0M, other +$1.3M; sequential revenue -$10.0M .

Segment breakdown (revenue)

KPIs and balance sheet

Guidance Changes

Rationale: slowdown in order receipts, customer shipment pushouts, and tariff uncertainty reducing visibility, despite expectations for modest sequential improvement and cost reductions .

Earnings Call Themes & Trends

Management Commentary

• “We believe we are well positioned for when markets recover… leading market positions… winning new applications… accelerating new product introductions… Malaysia operation… on schedule for H2 2025” – Nick Grant, CEO .
• “Revenue was negatively impacted when approximately $1.5 million of shipments at the end of the quarter were not fulfilled… expected to ship in the coming weeks” .
• “We are fairly insulated from direct [tariff] impacts… supply chain mostly localized… expect to pass on any incremental costs to customers” .
• “Opportunity funnel is at a historic peak” and “we generated $5.5 million of cash from operations… repaid ~$3.2 million of debt” – Duncan Gilmour, CFO .

Q&A Highlights

• Timing of slowdown: Customers slowed orders “mid-quarter”; shipment pushouts recognized mid-quarter; biggest miss tied to late engineering performance; would have been within $27–$29M guide absent delays .
• Swing factors: Semi and auto cited as the largest potential swing factors; back-end semi had shown recovery; front-end remains paused .
• Breakeven level: Historically around ~$30M quarterly revenue; “bringing that down a hair” with cost actions; Q2 guide ($27–$29M) gets “closer to breakeven, but not quite” at midpoint .
• Industrial order color: $1.5M returning customer order (utility pole induction heating) expands capacity; application heats poles to precondition welds for quality/yield gains .
• Engineering delays: New, complex chillers/chambers; mix of existing/new customers; multiple systems slipped but expected to ship shortly .

Estimates Context

• Revenue: $26.64M actual vs $28.07M consensus (miss by ~$1.43M; ~5%) ; estimate value from S&P Global*.
• EPS (Adjusted/Primary): -$0.11 (actual adjusted) vs -$0.10 S&P Primary EPS consensus (slight miss) ; estimate value from S&P Global*.
• Coverage depth: 3 estimates for both revenue and EPS in Q1 2025; results and current guide suggest near-term estimate reductions likely until tariff/ordering clarity improves (estimate counts from S&P Global*).

• Values retrieved from S&P Global.

Key Takeaways for Investors

• Near-term softness persists: revenue down 11% YoY and 27% QoQ; adjusted EPS and revenue slightly below S&P consensus on shipment delays and semi/industrial weakness .
• Tariff uncertainty is the core overhang: management withdrew FY outlook and is guiding quarter-to-quarter; Malaysia H2’25 manufacturing is a structural hedge and potential margin/cycle-time benefit .
• Orders/pipe constructive: orders +11% YoY with notable auto/EV (Alfamation) and industrial wins; opportunity funnel at a record supports sequential improvement narrative if policy backdrop stabilizes .
• Cost discipline provides downside protection: headcount actions, consolidations (Videology), and austerity reduce breakeven; Q2 OpEx targeted $0.3M below Q1 (excl. restructuring) .
• Watch the semi split: back-end steadier, front-end remains weak; a front-end recovery would be a key upside catalyst; semi and auto cited as swing factors .
• Trading setup: quarter-only guidance and tariff headlines likely to drive volatility; shipment catch-up of ~$1.5M and sequential GM improvement are near-term support, but sustained estimate raises await clearer demand acceleration .
• Medium-term thesis: VISION 2030, new product velocity (17% of sales), and regional manufacturing strategy underpin longer-term growth and margin aspirations once macro/trade stabilize .