| (5 | ) | Semi Market: These amounts include all bookings and net revenues from the semiconductor market. |
| (6 | ) | Multimarket: Formerly referred to as “Non Semi Bookings” and “Non Semi Net Revenues.” These amounts include all bookings and net revenues from markets other than the semiconductor market. |
| (7 | ) | For the year ended December 31, 2018, Net Earnings (GAAP) and Net Earnings per diluted share (GAAP) include the impact of an increase in the liability for contingent consideration of $6.9 million and the reversal of the $476,000 Federal transition tax payable that was estimated during the quarter ended December 31, 2017 under new tax legislation. During the year ended December 31, 2018, we determined that this tax was not due. |
| (8 | ) | There were no adjustments for contingent consideration in 2019. Further information can be found under “Non-GAAP Results.” See also the reconciliation of GAAP financial measures to non-GAAP financial measures that accompanies this earnings release. |
2019 Fiscal Year Highlights
- 2019 Thermal segment highlights included:
- Defense/aerospace continued to play an important role, with applications identified for a variety of products intended for satellite, tactical, and secure communications applications, including Thermonics® Chillers and Sigma test products, which drove Multimarket business.
- We continue to find new applications for Thermostreams®; a new medical customer uses the system for testing of electronics for defibrillators, a critical component in treating cardiac arrest, and a new customer employs the equipment in thermal testing for long wave infrared cameras.
- Chillers had a record bookings year for 2019 and continued to gain traction in the expanding cannabis industry, with eight new customers placing orders during the year.
- Significant EKOHEAT™ induction heating equipment systems orders continued; an Original Equipment Manufacturer (OEM) placed orders for use in automotive preheating applications, becoming our third largest induction heating customer. In addition, an integrator placed an induction heating tool order for a production cell being delivered to an electric vehicle manufacturer.
- The personal healthcare market continues to present solid opportunities, with important orders for induction heating tools received for the packaging of personal care products.
- 2019 EMS segment highlights included:
- EMS partnered with an OEM to support its development of a new 5G test system.
- Significant probe docking system orders were placed by a major US-based fabless semiconductor manufacturer.
- An OEM in automotive applications test placed a large manipulator order, further demonstrating our value to the semiconductor related automotive industry.
inTEST President & CEO James Pelrin commented, “Fourth quarter results reflect the challenging headwinds our semiconductor customers continue to experience. Consolidated net revenues were below our expectations, due primarily to continued weakness in the analog production test portion of our semiconductor business. Despite the reduction in revenue, gross margin and GAAP EPS were both within guidance; and with our continued focus on operational efficiency as well as cost controls, we delivered favorable GAAP net earnings per diluted share.”
Mr. Pelrin continued, “A major driver of our Thermal business is the defense/aerospace industry; and we are seeing an uptick across many applications including front-end related Semiconductors, specifically silicon carbide related crystal growth and deposition.”
2020 First Quarter Financial Outlook
inTEST’s guidance for the 2020 first quarter includes both GAAP and non-GAAP estimates. A reconciliation between these GAAP and non-GAAP financial measures is included below.
Actual results may differ materially as a result of, among other things, the factors described under “Forward-Looking Statements” below.
inTEST expects that net revenues for the first quarter of 2020 will be in the range of $11.0 million to $12.5 million and that we will incur a net loss per diluted share ranging from $(0.07) to $(0.14). On a non-GAAP basis, adjusted net loss per diluted share is expected to be in the range of $(0.04) to $(0.11). In addition, we expect that gross margin will range from 43% to 44%. This outlook is based on the Company’s current views with respect to operating and market conditions and customers’ forecasts, which are subject to change.
“Our guidance reflects the continued softness in the analog production test sector as well as the evolving uncertainty surrounding the coronavirus outbreak,” noted Mr. Pelrin. “We are closely monitoring this outbreak and its impact on our customers and our operating results.”
Mr. Pelrin concluded, “While Semi market related variabilities are an inherent aspect of our business, we are confident in our long-term diversification strategy of maximizing our Semi business while expanding inTEST’s Multimarket footprint. Our customer base continues to grow, testament to the value of our technologies and the demand for our products. We continue to strive to excel with our capabilities to deliver precision-engineered thermal, mechanical and electronic solutions, and believe we are well positioned to participate as the semiconductor industry rebounds.”
2019 Fourth Quarter and Year-Ended Supplemental Information and Conference Call Details
inTEST is providing Supplemental Information (“Information”) in combination with its press release. This Information is offered to provide shareholders and analysts with additional time and detail for analyzing the Company’s financial results in advance of the Company’s quarterly conference call. The Information will be available in conjunction with the press release at inTEST’s website
www.intest.com, under the “Investors” section.
inTEST management will host a conference call on Friday, February 28, 2020 at 8:30 am Eastern Standard Time. The conference call will address the Company’s 2019 fourth quarter financial results, and management’s current expectations and views of the industry. The call may also include discussion of strategic, operating, product initiatives or developments, or other matters relating to the Company’s current or future performance. To access the live conference call, please dial (323) 794-2598 or (800) 458-4121. The passcode for the conference call is 1878028. Please reference the inTEST 2019 Q4 and Year-End Financial Results Conference Call.
2019 Fourth Quarter and Year-End Live Webcast Details
inTEST Corporation will provide a webcast in conjunction with the conference call. To access the live webcast, please visit inTEST’s website
www.intest.com under the “Investors” section.
2019 Fourth Quarter and Year-End Replay Details (Webcast)
A replay of the webcast will be available on inTEST’s website for one year following the live broadcast. To access the webcast replay, please visit inTEST’s website
www.intest.com under the “Investors” section.
Submit Questions
In advance of the conference call, and for those investors accessing the webcast, inTEST Corporation welcomes individual investors to submit their questions via email to
Email Contact.
Non-GAAP Results
In addition to disclosing results that are determined in accordance with GAAP, we also disclose non-GAAP financial measures. These non-GAAP financial measures include adjusted net earnings (loss), adjusted net earnings (loss) per diluted share, EBITDA and adjusted EBITDA. Adjusted net earnings (loss) is derived by adding acquired intangible amortization, adjusted for the related income tax expense (benefit), to net earnings (loss) and removing any change in the fair value of our contingent consideration liability from net earnings (loss). Adjusted net earnings (loss) per diluted share is derived by dividing adjusted net earnings (loss) by diluted weighted average shares outstanding. EBITDA is derived by adding acquired intangible amortization, interest expense, income tax expense, and depreciation to net earnings (loss). Adjusted EBITDA is derived by removing any change in the fair value of our contingent consideration liability from EBITDA. These results are provided as a complement to the results provided in accordance with GAAP. Adjusted net earnings (loss), adjusted net earnings (loss) per diluted share, EBITDA and adjusted EBITDA are non-GAAP financial measures presented to provide investors with meaningful, supplemental information regarding our baseline performance before acquired intangible amortization charges and changes in the estimate of future consideration that may be paid out related to prior acquisitions as these expenses or income items may not be indicative of our current core business or future outlook. These non-GAAP financial measures are used by management to make operational decisions, to forecast future operational results, and for comparison with our business plan, historical operating results and the operating results of our peers. A reconciliation from net earnings (loss) and net earnings (loss) per diluted share to adjusted net earnings (loss) and adjusted net earnings (loss) per diluted share and from net earnings (loss) to EBITDA and adjusted EBITDA, which are discussed in this earnings release, is contained in the tables below. The non-GAAP financial measures discussed in this earnings release may not be comparable to similarly titled measures used by other companies. The presentation of non-GAAP financial measures is not meant to be considered in isolation, as a substitute for, or superior to, financial measures or information provided in accordance with GAAP.
