inTest Corp. (INTT, Financial) filed Quarterly Report for the period ended 2012-09-30.
Intest Corporation has a market cap of $25.2 million; its shares were traded at around $2.4202 with a P/E ratio of 8.3 and P/S ratio of 0.5.
During the first nine months of 2012, the level of demand experienced by our Thermal and Mechanical Products segments was less than that experienced during the same period in 2011. We believe the decline in the level of net revenues of our Thermal Products segment (when adjusted to eliminate the impact of the acquisition of Thermonics) reflects in part that this segment, which has historically lagged our other two product segments in regard to experiencing the impact of both increases and decreases in the levels of demand within the ATE industry, is now being impacted by the decline in demand in the ATE industry which we began to see impacting our Mechanical Products segment during the second quarter of 2011. In addition, our Thermal Products segment sells to industries outside of the ATE industry. This diversification has, in the past, helped to balance the impact of changing levels of demand in the ATE industry. However, in the first nine months of 2012, we have experienced weakened levels of demand in certain of these industries as well, which contributed to the overall level of decrease experienced by this product segment in the first nine months of 2012 as compared to the same period in 2011. We believe the decrease in the level of net revenues in our Mechanical Products segment reflects reduced demand within the ATE industry, which we had begun to see reflected in the level of our orders for this segment during the second quarter of 2011. This decline in demand was partially offset by increased demand during the first quarter of 2012 from one particular major customer that recently completed an acquisition and, as a result, has had higher than typical demand for certain of our equipment as a part of the process of integrating their post-acquisition operations. This same major customer also purchases products from our Electrical Products segment and we believe this also is responsible for a portion of the increase in the net revenues of our Electrical Products segment during the first nine months of 2012 as compared to the same period in 2011. We also attribute the increase in the net revenues of our Electrical Products segment to a significant increase in demand from one particular major OEM customer. However, the level of demand from this OEM customer weakened significantly during the third quarter of 2012 which we expect will result in a decline in the net revenues of our Electrical Products segment in the fourth quarter of 2012 as compared to the third quarter of 2012. Total orders for the quarter ended September 30, 2012 were $8.7 million compared to $11.8 million for the quarter ended June 30, 2012 and $10.5 million for the quarter ended September 30, 2011. Orders for the third quarter of 2012 include $1.2 million attributable to Thermonics. For the quarter ended September 30, 2012, orders for our Thermal, Mechanical and Electrical Products segments were $5.7 million, $1.7 million and $1.3 million, respectively, compared to $6.4 million, $2.3 million and $3.1 million for the quarter ended June 30, 2012, respectively, and $7.4 million, $2.3 million and $827,000 for the quarter ended September 30, 2011, respectively. Orders from customers in various industries outside of the ATE industry and those orders as a percentage of our total consolidated orders were $1.5 million or 17%, respectively, for the quarter ended September 30, 2012, compared to $1.2 million or 10%, respectively, for the quarter ended June 30, 2012, and $4.3 million or 41%, respectively, for the quarter ended September 30, 2011.We cannot be certain what the level of our orders or net revenues will be in any future period for any of our product segments. Backlog At September 30, 2012, our backlog of unfilled orders for all products was approximately $3.2 million compared with approximately $5.2 million at June 30, 2012 and $6.1 million at September 30, 2011. Our backlog at September 30, 2012 included approximately $545,000 that was attributable to Thermonics compared with approximately $744,000 at June 30, 2012. Our backlog includes customer orders which we have accepted, substantially all of which we expect to deliver in 2012. While backlog is calculated on the basis of firm purchase orders, a customer may cancel an order or accelerate or postpone currently scheduled delivery dates. Our backlog may be affected by the tendency of customers to rely on short lead times available from suppliers, including us, in periods of depressed demand. In periods of increased demand, there is a tendency towards longer lead times that has the effect of increasing backlog. As a result, our backlog at a particular date is not necessarily indicative of sales for any future period. Acquisition On January 16, 2012, Temptronic Corporation acquired substantially all of the assets and certain liabilities of Thermonics, a division of Test Enterprises, Inc., pursuant to the Asset Purchase Agreement dated December 9, 2011. Thermonics is engaged in the business of designing, manufacturing, selling and distributing temperature forcing systems used in the testing of various products under temperature controlled situations. The acquisition of the Thermonics business broadens the product line of inTEST's Thermal Products segment. The purchase price for the assets was approximately $3.8 million in cash, plus the assumption of specified liabilities. For further discussion of the acquisition, see Note 3 to our consolidated financial statements.
allowance was based on our current assessment that it is now more likely than not that we will be able to fully utilize these assets in the near future. Some of the key factors we considered in making our assessment included our profitability in both 2011 and 2010 and our level of certainty with regard to our forecasts of near term future profitability for the operations to which these assets relate. Nine Months Ended September 30, 2012 Compared to Nine Months Ended September 30, 2011 Net Revenues. Net revenues were $35.1 million for the nine months ended September 30, 2012 compared to $37.2 million for the same period in 2011, a decrease of $2.1 million or 6%. Net revenues (net of intersegment sales) of our Thermal and Mechanical Products segments decreased $942,000 or 5% and $5.0 million or 38%, respectively, while the net revenues (net of intersegment sales) of our Electrical Products segment increased $3.9 million or 90% as compared to the same period in 2011. During the nine months ended September 30, 2012, the net revenues of our Thermal Products segment included $3.5 million of net revenues attributable to Thermonics. We believe the decrease in our consolidated net revenues during the first nine months of 2012 primarily reflects the factors previously discussed in the Overview. During the nine months ended September 30, 2012, our net revenues from customers in the U.S. decreased 13% while our net revenues from foreign customers decreased 1% as compared to the same period in 2011. The impact of changes in foreign currency exchange rates on the change in net revenues from foreign customers was less than 1%. Gross Margin. Gross margin was 44% for the first nine months of 2012 compared to 49% for the same period in 2011. The decrease in gross margin was partly the result of an increase in our component material costs as a percentage of net revenues. Total component material costs represented 37% of net revenues for the first nine months of 2012 as compared to 35% for the same period in 2011. The increase in component material costs primarily reflects changes in customer mix in our Electrical Products segments. During the first nine months of 2012, a greater percentage of this segment's total net revenues were generated by sales to OEM customers where our margins are typically lower than for similar sales to End User customers. To a lesser extent, the decrease in gross margin is also the result of an increase in our charges for excess and obsolete inventory and our fixed operating costs for the first nine months of 2012 as compared to the same period in 2011. Our charges for excess and obsolete inventory increased $244,000 in absolute dollar terms during the first nine months of 2012 as compared to the same period in 2011. This increase indicates that more inventory items are falling into our standard excess and obsolete criteria in 2012, largely as a result of the continued reduced levels of demand in the ATE industry. For the nine months ended September 30, 2012, our fixed operating costs increased $163,000 in absolute dollar terms as compared to the same period in 2011. This increase primarily reflects increased salaries and benefits expense representing increased levels of staff in our Thermal Products segment. In addition, we had higher levels of depreciation reflecting a higher fixed asset base at September 30, 2012 as compared to September 30, 2011. These increases were partially offset by decreases in facilities related costs such as rent and utilities, reflecting that we have now completed the relocation of all three of our domestic operations to smaller facilities. Selling Expense. Selling expense was $4.3 million for the first nine months of 2012 compared to $4.4 million for the same period in 2011, a decrease of $150,000 or 3%. The decrease primarily represents lower levels of commissions in our Mechanical Products segment as a result of the lower net revenue levels in the first nine months of 2012 as compared to the same period in 2011. This decrease was partially offset by increases in advertising expense in our Mechanical and Electrical Products segments. Engineering and Product Development Expense. Engineering and product development expense was $2.9 million for the first nine months of 2012 compared to $2.4 million for the same period in 2011, an increase of $466,000 or 19%. The increase in engineering and product development expense reflects higher spending on materials used in new product development projects and an increase in the use of third party consultants, primarily in our Thermal Products segment, and the hiring of additional staff in our Thermal and Electrical Products segments. General and Administrative Expense. General and administrative expense was $5.1 million for the first nine months of 2012 compared to $4.7 million for the same period in 2011, an increase of $353,000 or 7%. During the first nine months of 2012, we recorded $337,000 in costs associated with the acquisition of Thermonics which was completed on January 16, 2012; there were no similar costs recorded in the first nine months of 2011. In addition, amortization expense related to our intangible assets increased $269,000 during the first nine months of 2012 as compared to the same period in 2011. This increase represents amortization of the intangible assets acquired as a part of the Thermonics transaction. These increases were partially offset by a decrease in accruals for profit-related bonuses in our Corporate, Mechanical Products and Thermal Products segments, reflecting the lower level of net earnings in the first nine months of 2012 as compared to the same period of 2011.
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Intest Corporation has a market cap of $25.2 million; its shares were traded at around $2.4202 with a P/E ratio of 8.3 and P/S ratio of 0.5.
Highlight of Business Operations:
Our consolidated net revenues for the quarter ended September 30, 2012 decreased $882,000 or 8% as compared to the same period in 2011. For the quarter ended September 30, 2012, net revenues (net of intersegment sales) of our Thermal and Mechanical Products segments decreased $1.5 million or 20% and $492,000 or 16%, respectively, while the net revenues (net of intersegment sales) of our Electrical Products segment increased $1.1 million or 122% as compared to the same period in 2011. During the quarter ended September 30, 2012, the net revenues of our Thermal Products segment included $1.4 million of net revenues attributable to Thermonics, Inc. ("Thermonics"), which we acquired on January 16, 2012 as discussed further under "Acquisition" below. Adjusted to eliminate the impact of the net revenues attributable to Thermonics, the net revenues (net of intersegment sales) of our Thermal Products segment for the third quarter of 2012 would have decreased $2.9 million or 39% as compared to the same period in 2011. Net revenues from customers in various industries outside of the ATE industry and those net revenues as a percentage of our total consolidated net revenues were $1.1 million or 10%, respectively, for the quarter ended September 30, 2012, compared to $1.8 million or 14%, respectively, for the quarter ended June 30, 2012, and $3.6 million or 31%, respectively, for the quarter ended September 30, 2011. Adjusted to eliminate the impact of the net revenues attributable to Thermonics, the net revenues from customers in various industries outside of the ATE industry and those net revenues as a percentage of our total consolidated net revenues were $1.1 million or 12%, respectively, for the quarter ended September 30, 2012 and $1.8 million or 15%, respectively, for the quarter ended June 30, 2012.During the first nine months of 2012, the level of demand experienced by our Thermal and Mechanical Products segments was less than that experienced during the same period in 2011. We believe the decline in the level of net revenues of our Thermal Products segment (when adjusted to eliminate the impact of the acquisition of Thermonics) reflects in part that this segment, which has historically lagged our other two product segments in regard to experiencing the impact of both increases and decreases in the levels of demand within the ATE industry, is now being impacted by the decline in demand in the ATE industry which we began to see impacting our Mechanical Products segment during the second quarter of 2011. In addition, our Thermal Products segment sells to industries outside of the ATE industry. This diversification has, in the past, helped to balance the impact of changing levels of demand in the ATE industry. However, in the first nine months of 2012, we have experienced weakened levels of demand in certain of these industries as well, which contributed to the overall level of decrease experienced by this product segment in the first nine months of 2012 as compared to the same period in 2011. We believe the decrease in the level of net revenues in our Mechanical Products segment reflects reduced demand within the ATE industry, which we had begun to see reflected in the level of our orders for this segment during the second quarter of 2011. This decline in demand was partially offset by increased demand during the first quarter of 2012 from one particular major customer that recently completed an acquisition and, as a result, has had higher than typical demand for certain of our equipment as a part of the process of integrating their post-acquisition operations. This same major customer also purchases products from our Electrical Products segment and we believe this also is responsible for a portion of the increase in the net revenues of our Electrical Products segment during the first nine months of 2012 as compared to the same period in 2011. We also attribute the increase in the net revenues of our Electrical Products segment to a significant increase in demand from one particular major OEM customer. However, the level of demand from this OEM customer weakened significantly during the third quarter of 2012 which we expect will result in a decline in the net revenues of our Electrical Products segment in the fourth quarter of 2012 as compared to the third quarter of 2012. Total orders for the quarter ended September 30, 2012 were $8.7 million compared to $11.8 million for the quarter ended June 30, 2012 and $10.5 million for the quarter ended September 30, 2011. Orders for the third quarter of 2012 include $1.2 million attributable to Thermonics. For the quarter ended September 30, 2012, orders for our Thermal, Mechanical and Electrical Products segments were $5.7 million, $1.7 million and $1.3 million, respectively, compared to $6.4 million, $2.3 million and $3.1 million for the quarter ended June 30, 2012, respectively, and $7.4 million, $2.3 million and $827,000 for the quarter ended September 30, 2011, respectively. Orders from customers in various industries outside of the ATE industry and those orders as a percentage of our total consolidated orders were $1.5 million or 17%, respectively, for the quarter ended September 30, 2012, compared to $1.2 million or 10%, respectively, for the quarter ended June 30, 2012, and $4.3 million or 41%, respectively, for the quarter ended September 30, 2011.We cannot be certain what the level of our orders or net revenues will be in any future period for any of our product segments. Backlog At September 30, 2012, our backlog of unfilled orders for all products was approximately $3.2 million compared with approximately $5.2 million at June 30, 2012 and $6.1 million at September 30, 2011. Our backlog at September 30, 2012 included approximately $545,000 that was attributable to Thermonics compared with approximately $744,000 at June 30, 2012. Our backlog includes customer orders which we have accepted, substantially all of which we expect to deliver in 2012. While backlog is calculated on the basis of firm purchase orders, a customer may cancel an order or accelerate or postpone currently scheduled delivery dates. Our backlog may be affected by the tendency of customers to rely on short lead times available from suppliers, including us, in periods of depressed demand. In periods of increased demand, there is a tendency towards longer lead times that has the effect of increasing backlog. As a result, our backlog at a particular date is not necessarily indicative of sales for any future period. Acquisition On January 16, 2012, Temptronic Corporation acquired substantially all of the assets and certain liabilities of Thermonics, a division of Test Enterprises, Inc., pursuant to the Asset Purchase Agreement dated December 9, 2011. Thermonics is engaged in the business of designing, manufacturing, selling and distributing temperature forcing systems used in the testing of various products under temperature controlled situations. The acquisition of the Thermonics business broadens the product line of inTEST's Thermal Products segment. The purchase price for the assets was approximately $3.8 million in cash, plus the assumption of specified liabilities. For further discussion of the acquisition, see Note 3 to our consolidated financial statements.
allowance was based on our current assessment that it is now more likely than not that we will be able to fully utilize these assets in the near future. Some of the key factors we considered in making our assessment included our profitability in both 2011 and 2010 and our level of certainty with regard to our forecasts of near term future profitability for the operations to which these assets relate. Nine Months Ended September 30, 2012 Compared to Nine Months Ended September 30, 2011 Net Revenues. Net revenues were $35.1 million for the nine months ended September 30, 2012 compared to $37.2 million for the same period in 2011, a decrease of $2.1 million or 6%. Net revenues (net of intersegment sales) of our Thermal and Mechanical Products segments decreased $942,000 or 5% and $5.0 million or 38%, respectively, while the net revenues (net of intersegment sales) of our Electrical Products segment increased $3.9 million or 90% as compared to the same period in 2011. During the nine months ended September 30, 2012, the net revenues of our Thermal Products segment included $3.5 million of net revenues attributable to Thermonics. We believe the decrease in our consolidated net revenues during the first nine months of 2012 primarily reflects the factors previously discussed in the Overview. During the nine months ended September 30, 2012, our net revenues from customers in the U.S. decreased 13% while our net revenues from foreign customers decreased 1% as compared to the same period in 2011. The impact of changes in foreign currency exchange rates on the change in net revenues from foreign customers was less than 1%. Gross Margin. Gross margin was 44% for the first nine months of 2012 compared to 49% for the same period in 2011. The decrease in gross margin was partly the result of an increase in our component material costs as a percentage of net revenues. Total component material costs represented 37% of net revenues for the first nine months of 2012 as compared to 35% for the same period in 2011. The increase in component material costs primarily reflects changes in customer mix in our Electrical Products segments. During the first nine months of 2012, a greater percentage of this segment's total net revenues were generated by sales to OEM customers where our margins are typically lower than for similar sales to End User customers. To a lesser extent, the decrease in gross margin is also the result of an increase in our charges for excess and obsolete inventory and our fixed operating costs for the first nine months of 2012 as compared to the same period in 2011. Our charges for excess and obsolete inventory increased $244,000 in absolute dollar terms during the first nine months of 2012 as compared to the same period in 2011. This increase indicates that more inventory items are falling into our standard excess and obsolete criteria in 2012, largely as a result of the continued reduced levels of demand in the ATE industry. For the nine months ended September 30, 2012, our fixed operating costs increased $163,000 in absolute dollar terms as compared to the same period in 2011. This increase primarily reflects increased salaries and benefits expense representing increased levels of staff in our Thermal Products segment. In addition, we had higher levels of depreciation reflecting a higher fixed asset base at September 30, 2012 as compared to September 30, 2011. These increases were partially offset by decreases in facilities related costs such as rent and utilities, reflecting that we have now completed the relocation of all three of our domestic operations to smaller facilities. Selling Expense. Selling expense was $4.3 million for the first nine months of 2012 compared to $4.4 million for the same period in 2011, a decrease of $150,000 or 3%. The decrease primarily represents lower levels of commissions in our Mechanical Products segment as a result of the lower net revenue levels in the first nine months of 2012 as compared to the same period in 2011. This decrease was partially offset by increases in advertising expense in our Mechanical and Electrical Products segments. Engineering and Product Development Expense. Engineering and product development expense was $2.9 million for the first nine months of 2012 compared to $2.4 million for the same period in 2011, an increase of $466,000 or 19%. The increase in engineering and product development expense reflects higher spending on materials used in new product development projects and an increase in the use of third party consultants, primarily in our Thermal Products segment, and the hiring of additional staff in our Thermal and Electrical Products segments. General and Administrative Expense. General and administrative expense was $5.1 million for the first nine months of 2012 compared to $4.7 million for the same period in 2011, an increase of $353,000 or 7%. During the first nine months of 2012, we recorded $337,000 in costs associated with the acquisition of Thermonics which was completed on January 16, 2012; there were no similar costs recorded in the first nine months of 2011. In addition, amortization expense related to our intangible assets increased $269,000 during the first nine months of 2012 as compared to the same period in 2011. This increase represents amortization of the intangible assets acquired as a part of the Thermonics transaction. These increases were partially offset by a decrease in accruals for profit-related bonuses in our Corporate, Mechanical Products and Thermal Products segments, reflecting the lower level of net earnings in the first nine months of 2012 as compared to the same period of 2011.
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