Adjustments for Non-Cash Items (USD, thousands)

Stock-Based Compensation (USD, thousands)

Changes in Working Capital (USD, thousands)

Capital Expenditures (CapEx) (USD, thousands)

Proceeds from / Repayments of Debt (USD, thousands)

Share Repurchases (USD, thousands)

Dividend Payments (USD, thousands)

Net Change in Cash (USD, thousands)

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The significantly low operating income in Q4 2023 was attributed to several factors. **Lower revenue** played a major role, with a decline from **$32,405 thousand** in Q4 2022 to **$27,884 thousand** in Q4 2023—partially driven by an **$8.7 million decrease in sales to the semiconductor market**. In addition, there was a **gross margin contraction** from **46.2%** to **44.6%**, influenced by lower volumes and an unfavorable product mix, and **higher operating expenses** increased by **$391 thousand (+3.6%)**. These elements combined led to a significant drop in operating income for the quarter.  **[0001437749-24-009635_ex_645875.htm:1]** **[0001437749-24-009635_ex_645875.htm:10]** 

Why was Operating income so low in Q4 2023?

Operating income turned negative in Q2 2024 **primarily because increased operating expenses and a lower gross profit margin outweighed revenue inflows**. Specifically, the company incurred **additional operating expenses of about $2.4 million** from the Alfamation acquisition (including **$0.4 million** in amortization costs), and its gross margin contracted from **46.2% to 40.6%**. At the same time, there was a **decline in semiconductor revenue by approximately $8.7 million** due to weak market demand, collectively contributing to a roughly **90.0% drop** in operating income compared to the previous year.  **[0001437749-24-024365_ex_707064.htm:2]** **[0001437749-24-025878_intt20240630_10q.htm:39]** **[0001437749-24-025878_intt20240630_10q.htm:43]** 

Why did Operating income turn negative in Q2 2024?

The **significant lower revenue in Q4 2023** was primarily driven by a sharp **decline in semiconductor market revenue**. Specifically, revenue from the semiconductor market decreased by **$8.7 million (-44.8% YoY)** and by **$7.7 million (-41.9% sequentially)** due to a cyclical slowdown that affected both front-end and back-end sectors. This downturn outweighed the positive contributions from the industrial, auto/EV, and defense/aerospace markets, which only partially offset the loss in the semiconductor segment.  **[0001437749-24-009635_ex_645875.htm:1]** **[0001437749-24-009635_ex_645875.htm:10]** 

Why was Revenue significantly lower in Q4 2023?

The **EPS turned negative in Q2 2024** because of several compounding factors. **Sales in the semiconductor market dropped by 46% year-over-year**, which significantly reduced earnings despite record revenue largely driven by an acquisition. In addition, the **gross margin contracted from 46.2% to 40.6%** due to less favorable product mix and lower volume in higher-margin segments, while **operating expenses increased by 15.2%** as a result of incremental expenses related to the Alfamation acquisition. These factors, combined with higher interest expenses and a sharp decline in net earnings from **$2.793 million to $230,000**, led to the EPS turning negative in Q2 2024.  **[0001437749-24-024365_ex_707064.htm:2]** **[0001437749-24-024365_ex_707064.htm:8]** **[0001437749-24-024365_ex_707064.htm:1]** 

Why did EPS turn negative in Q2 2024?

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The significant drop in **Cash and cash equivalents** in Q1 2024 was primarily caused by the **acquisition of Alfamation**, which consumed approximately **$19 million** in cash. This major outflow was further compounded by a net cash outflow from investing activities of **$(19,244) thousand**, as well as additional cash used for financing activities of **$(874) thousand**, partly offset by operating cash inflows of **$2,075 thousand**.  **[0001437749-24-014830_ex_667815.htm:2]** **[0001437749-24-015682_intt20240331_10q.htm:6]** 

What caused the significant drop in Cash and cash equivalents in Q1 2024?

The sharp increase in Total Assets in Q1 2024 was primarily driven by the acquisition of **Alfamation S.p.A.** on March 12, 2024, which involved a **$21.76 million** purchase (comprising **$19 million** in cash and shares valued at **$2.086 million**) and led to significant increases in **Goodwill** (from **$21,728 thousand** to **$33,278 thousand**) and **Intangible Assets, net** (from **$16,596 thousand** to **$28,819 thousand**).  **[0001437749-24-015682_intt20240331_10q.htm:7]**  Additionally, increases in **Inventories** (from **$20,089 thousand** to **$31,331 thousand**), **Trade Accounts Receivable, net** (from **$18,175 thousand** to **$22,859 thousand**), and **Right-of-Use Assets, net** (from **$4,987 thousand** to **$6,270 thousand**) further contributed to the asset growth, despite a reduction in **Cash and Cash Equivalents** due to the cash payment.  **[0001437749-24-014830_ex_667815.htm:9]** **[0001437749-24-015682_intt20240331_10q.htm:3]** 

What drove the sharp increase in Total assets in Q1 2024?

The **current portion of the debt nearly doubled** in Q1 2024 because the company assumed additional debt in connection with the acquisition of Alfamation, which included both fixed and variable rate bank-issued term loans as well as short-term variable rate financing backed by Alfamation's accounts receivable.  **[0001437749-24-015682_intt20240331_10q.htm:3]** **[0001437749-24-014830_ex_667815.htm:9]** **[0001437749-24-015682_intt20240331_10q.htm:25]** 

Why did the current debt portion nearly double in Q1 2024?

The **abrupt rise** in total liabilities in Q1 2024 was primarily driven by the **acquisition of Alfamation S.p.A.**, which added **$9,418 thousand** in assumed debt along with additional acquisition-related liabilities (such as contingent consideration and deferred revenue adjustments).  **[0001437749-24-015682_intt20240331_10q.htm:7]**  This increase was further compounded by higher **current liabilities**—including a rise in accounts payable, accrued wages and benefits, and customer deposits—as well as an increase in **long-term debt** and the recording of a new **deferred tax liability of $1,126 thousand**.  **[0001437749-24-015682_intt20240331_10q.htm:3]** 

What explains the abrupt rise in Total liabilities in Q1 2024?

The large increase in Goodwill in Q1 2024 was primarily driven by **the acquisition of Alfamation S.p.A. on March 12, 2024**, which added **$11,796** to Goodwill. Additionally, there was a minor reduction of **$246** due to the impact of **foreign currency translation adjustments** in the quarter.  **[0001437749-24-015682_intt20240331_10q.htm:21]** **[0001437749-24-015682_intt20240331_10q.htm:7]** 

What factors led to the large increase in Goodwill in Q1 2024?

e6e9f68c0cf72c4cf0ee5ca086f5d05391edaca8adf9439ea064d285c88ade36

inTest Corp (INTT)

Financials