inTest Corporation

Greetings and welcome to the Intest Corporation third quarter 2021 financial results. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Deb Palowski, Investor Relations for Intest Corporation. Thank you. You may begin.

Thanks, Melissa, and good morning, everyone. We certainly appreciate your time today and your interest in Intest Corporation. Here with me are Nick Grant, our President and CEO, and Duncan Gilmore, our Chief Financial Officer and Treasurer. You should have a copy of the third quarter 2021 financial results, which we released this morning before markets opened. If not, you can access the release as well as the slides that will accompany our conversation today at our website, www.intest.com. After our formal presentation, we will be opening the line for Q&A. If you'll turn to slide two in the deck, I will first review the Safe Harbor Statement. You should be aware that we may make some forward-looking statements during the formal discussions as well as during the Q&A session. These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from what is stated here today. These risks and uncertainties and other factors are provided in the earnings release as well as with other documents filed with the Securities and Exchange Commission. You can find these documents on our website or at sec.gov. During today's call, we will also discuss some non-GAAP financial measures. We believe these will be useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We have provided reconciliation of non-GAAP measures with comparable GAAP measures in the tables that accompany today's release and in the slides. So with that, if you would please turn to slide three, I will turn it over to Nick to begin. Nick?

Thank you, Deb, and good morning, everyone. We delivered solid third quarter results that we believe demonstrate the successful execution on our five-point strategy, which is focused on driving growth, diversifying our markets and customer base, while ensuring we have the right talent to execute. In the quarter, we achieved year-over-year net revenue growth of 46% to 21.1 million. As global demand for our semiconductors continued to show relative strength, and industrial sectors benefited from ongoing broad-based recovery. Of note, our multi-market revenue grew 22% sequentially. Like many others, we continue to face supply chain constraints and inflationary pressures. We had an estimated 500,000 of finished goods that were unable to ship in the quarter due to logistic challenges. Our teams have done an excellent job managing supplier and logistic challenges to fulfill orders. We continue to implement enhanced pricing to help overcome inflationary and expediting costs. The results of these efforts was reflected in our margins and profitability in the quarter, which were in our expected range. During the quarter, we generated $4.3 million of cash from operations, increasing our year-to-date total cash generated to $8.1 million. Cash on hand at the end of the quarter was nearly $19 million. And in support of our organic and inorganic growth initiatives, we announced a couple weeks ago that we executed a new extended and expanded credit agreement. Overall, this added liquidity allows us to capitalize on the attractive debt markets and provides additional financial flexibility to continue to pursue a robust pipeline of acquisition opportunities. Following that announcement, we successfully executed two acquisitions post third quarter close in October, Sea Sciences and Videology Imaging Solutions. Both acquisitions arose out of our M&A funnel generation program, that has been developed and refined over the last year. Slides four and five provide a brief overview of each. These Sciences was a small tuck-in asset acquisition which closed on October 6th and was funded with cash on hand. The acquisition is an ideal demonstration of our strategy to grow through innovative technologies with an eye towards fast-growing adjacent markets as it provided both a low-cost method for adding ultra-cold storage to our ultra-cold test solutions, and it allows us to gain a presence in a fragmented but fast-growing estimated $200 million addressable market. Their portfolio of high performance biomedical refrigerators and freezers are used to meet versatile applications, including ultra-cold storage solutions for biological sample banks, blood safety, vaccine safety, medical supplies, and reagent safety. Currently, there is little to no overlap in customer base as their products are largely sold to research institutions, university, pharmaceutical biotechnology manufacturers, and hospitals. While the current business has de minimis revenue, we believe we can build a scalable operation to accelerate growth and medical cold chain applications by leveraging our engineering expertise, manufacturing capabilities, and financial strength with targeted investments in sales and marketing as well as product innovation. Turning to slide five and our most recent acquisition, Videology, which we acquired last week on October 28th. The Videology acquisition is consistent with a number of our strategic initiatives. as it will help us expand our process technology solutions and diversify our reach into targeted life sciences and industrial markets, while also broadening our international footprint and customer base. Additionally, this aligns with enhancing automation capabilities, as we will look to add future product solutions with imaging data and analytical tools and valuable functionality and expertise as Intest strives to embrace opportunities created by the Internet of Things and making the most of artificial intelligent based tools. Their product set includes industrial grade circuit board mounted video digital cameras and related devices, systems, and software, which are used in a broad spectrum of applications. About 72% of their revenue is in the life sciences and security markets, but they also serve aerospace, machine vision, biometrics, and diagnostic imaging industries. Customers include Fortune 500 companies and government prime contractors, as well as midsize security, biotech, and machine vision OEMs and integrators. The company has a design and sales facility in the Netherlands and generates about 40% of the revenue from European customers. Similar to ZSciences space, this too is a highly fragmented market that is large and growing. It is important to note that this is not a camera acquisition. It is about image capture and data analysis that Videology brings. The company is similar to our other businesses in the sense that they develop highly valued engineered solutions. I want to briefly talk to a few application specific examples to give you a sense of the technology we are adding. Videology supplies cameras in the ophthalmology markets to capture images of the inner eye to examine patients for refractive correction, glaucoma, and other degenerative eye diseases. Another example is spectroscopy applications, which are commonly used in chemical analysis to provide a structural fingerprint by which molecules can be identified. Videology cameras are used by a leading Fortune 500 company in their handheld and tabletop devices providing this type of analysis. Finally, their small cameras are commonly used to inspect pipes of all diameters from large oil and gas pipes to small fiber optic applications. The medical applications for pipe inspections include medical intraoral endoscopes. What sets Videology apart from their competition is their design expertise and flexibility to work with customers on unique solutions. From a financial perspective, Videology's trailing 12-month revenue as of the end of September 21 was approximately $10 million and provided comparable gross margins with Intest. We expect the acquisition to be approximately $0.05 accretive to diluted earnings per share in the first year with Intest. This is net of one-time acquisition-related expenses of approximately $0.03 per diluted share, which will be recognized in the fourth quarter of 2021. While we financed the Videology transaction with a portion of our new credit facility, we still have the financial flexibility and resources to continue to pursue a robust pipeline of acquisition opportunities. Lastly, life sciences is a key target market for Intest. And both of these acquisitions bring technology and engineering know-how that enhances our medical offerings in that space. Importantly, with some incremental investments and operational support, we believe we can scale these businesses and benefit from secular tailwinds in the life sciences markets. These are exciting times for Intest as we drive change throughout the organization and build momentum by augmenting our deep industry knowledge, reputation, and expertise to develop and deliver more high-quality, innovative solutions to address our customers' complex requirements. With that, let me now turn it over to Duncan to review our third quarter financials in more detail. Duncan, over to you.

Thank you, Nick. Starting on slide six, we provide some detail regarding our top line. Revenue for the third quarter was $21.1 million a 46% increase over the same period last year and just above the midpoint of our guidance. Multi-market revenue grew 22% from the second quarter, fueled by strength in the industrial market, while our semi-business remains at historically high levels despite the sequential dip. We continue to see the benefit of our ongoing innovation and development efforts as our new product designs are being well received in our markets. We are gaining new customers and winning business from competitors. Moving to slide seven, our third quarter gross margin of 49.2% was in line with guidance and compares with 50.2% in the second quarter of 2021 and 44.7% a year ago. When compared with the second quarter, the change in gross margin reflected higher component material costs, not yet fully covered by price improvements, as well as changes in product mix and less favorable absorption of fixed manufacturing costs. We continue to actively manage ongoing challenges of supply chain constraints and expect to start seeing some positive impact from the price increases we have rolled out in the second and third quarters, although we do not expect the full benefit of these initiatives will be felt until next year. Slide eight details our operating expenses and expectations for the fourth quarter. Selling expense grew 9% sequentially to $2.8 million in the third quarter, driven by increased headcount, a return to more normal levels of travel as restrictions are lifted, and an increase in spending on new advertising initiatives. Engineering and product development expense remained relatively unchanged compared with the trailing period. General administrative expense decreased 4% sequentially to $3.6 million for the third quarter, Restructuring and other charges were $51,000 down from $197,000 in the second quarter. The third quarter included an increase in expenses related to M&A activities, but this was more than offset by the $324,000 reduction quarter-to-quarter related to non-recurring CFO transition costs in the second quarter, a sequential quarter reduction in costs associated with finalizing the integration of our EMS manufacturing operations, which is now complete, and a reduction in spend on non-M&A related initiatives as focus and spending on M&A activities has ramped up. We expect operating expenses to trend up significantly in the fourth quarter, reflecting the impact of the businesses acquired in October. In addition, we expect an incremental increase in costs related to acquisition activities of approximately $300,000, an incremental amortization related to acquired intangibles, of approximately $100,000. You can see our bottom line and adjusted EBITDA results on slide nine. We had net earnings of 2.2 million or 20 cents per diluted share for the third quarter, which was in line with guidance and compares with net earnings of 2.6 million or 24 cents per diluted share for the second quarter. We accrued income tax expense of $357,000 in the third quarter, reflecting a 14% effective tax rate. This compares with $447,000 of income tax expense accrued in the second quarter, which reflected an effective tax rate of 15%. We expect our effective tax rate in 2021 will range from 14% to 16%. Diluted average shares outstanding were 10.8 million to the third quarter of 2021. During the third quarter, we saw 3,435 option shares exercised, bringing the total for the nine months to 149,010, which has raised $1 million in cash proceeds this year. Adjusted EBITDA was $3.4 million for the third quarter, compared with $4 million for the second quarter and $1 million during the prior period. Beginning with the third quarter, we are reporting adjusted EBITDA which removes the impact of stock-based compensation from EBITDA. Stock-based compensation is a non-cash expense and as such does not impact our liquidity. Accordingly, we believe that our adjusted EBITDA is a better performance measure to assess strength of our cash generation than EBITDA alone. More detail on the calculation of adjusted EBITDA can be found under non-GAAP financial measures in our earnings release. Consolidated headcount at September 30th was 232, an increase of 10 staff from the level we had at June 30th. The increase was primarily in our thermal segment. I'll now turn to slide 10 for our capital structure and cash flow. As previously announced, on October 18th, we executed a new five-year credit agreement with M&T Bank, which includes a $25 million non-revolving delayed draw term loan and a $10 million revolving credit facility. This new agreement replaced our existing $10 million facility with M&T Bank, which had no borrowings at quarter end. On October the 28th, we used $12 million under the term note to finance the acquisition of Videology. Cash and cash equivalents increased by $4.1 million sequentially to $18.7 million. We generated $4.3 million of cash from operations during the third quarter. We currently expect cash and cash equivalents to increase throughout the balance of 2021, subject to any strategic investments we may choose to make. Accounts receivable declined $600,000 or 5% sequentially to $12.2 million at September 30th, with 53 DSO down from 54 DSO at June 30th. Inventories grew $657,000 or 8% sequentially to $9.4 million, primarily driven by raw material influx in our thermal segment to support the increased multi-market demand we are seeing. Capital expenditures during the third quarter were $114,000, up from $75,000 in the second quarter. We have no significant commitments for capital expenditures for the balance of 2021. However, depending upon changes in market demand or manufacturing and sales strategies, we may make purchases or investments as we deem necessary and appropriate. With that, I will now turn the call back over to Nick.

Thanks, Duncan. Flight 11 highlights our orders and backlog. Overall, demand for our products and solutions remains strong, and we continue to secure new orders in our targeted growth markets and are making inroads in working with OEMs to embed our solutions for broader market exposure. Orders for the third quarter were $21.1 million, a 47% increase over the same period last year, and was supported by growth in both multi-market and semi-market. The year-over-year increase in multi-market orders was primarily from the automotive industry, which includes the EV market. During the recent third quarter, we received a significant follow-on order for approximately $1 million from one of our EV customers, which we expect to ship over the next several quarters. As a reminder, in the second quarter of 2021, we received a record order for chillers from a key automotive OEM manufacturer for approximately $1.5 million. This order is also shipping over multiple quarters beginning in Q4. Note, this trend of placing larger orders that will ship over several quarters is one we are seeing with more frequency. We expect this may, at times, result in period-over-period fluctuations in order levels that are not necessarily indicative of changing demand, but rather reflect the timing of when these large orders were placed. Our backlog at quarter end was 20.4 million, approximately 75% of which is expected to convert to sales in the fourth quarter. Please turn to slide 12 and I will provide an update on our near-term expectations. We will continue to execute on our five-point strategy with a focus on driving growth and diversifying our markets and customer base. Our recent acquisitions have added to our product platform offerings and technical expertise and expanded our customer base to adjacent high-growth markets. Integration efforts are well underway on both businesses. As to guidance for the fourth quarter of 2021, we expect revenue to be in the range of $21.5 million to $22.5 million, while gross margins are expected to be consistent with what we achieved in the third quarter. Also, we are guiding to GAAP EPS of 10 cents to 14 cents per diluted share and adjusted non-GAAP EPS of 14 cents to 18 cents for diluted share for the fourth quarter of 2021. While we do not plan to provide specific detail around expenses each quarter, Duncan did provide our expectations for the fourth quarter operating expenses as we thought it was prudent to help our investor base understand the new run rates and costs associated with our recent acquisition activity. Our guidance is based on our current views with respect to operating and market conditions and customer forecasts, which are subject to change as well as our expectations for the balance of the quarter and are subject to any strategic investments we may choose to make. Actual results may differ materially as a result of, among other things, the factors described under forward-looking statements found in the materials that accompany this conference call, including the press release and the deck. Our M&A funnel development is still very active and we continue to be focused on programmatic acquisitions being a key element of our five-point strategy. Our team has identified a set of acquisition targets that we believe will bring differentiated or innovative technologies, provide complementary capabilities, or enable deeper and broader reach within our targeted industries and geographies. To support our focus in this area, we are pleased to have added Rich Rogoff as our vice president of corporate development at the start of the fourth quarter. Rich brings experience on the deal pursuit side and a strong operational background to support our integration activities. We also expect to grow organically through new product development, sales channel enhancements, and marketing prowess. We believe our efforts, combined with a robust pipeline of new customer opportunities, can provide further differentiation to our business and drive growth and profitability over the longer term. We are excited about what's happening at Intest and the path we have embarked on with our five-point strategy. Before I open up the lines for Q&A, I would like to thank the entire Intest team for delivering another truly solid quarter. The teams remain laser-focused on capturing growth and driving investments that will position us well long-term. With that, operator, let's now open the lines for questions.

Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Jason Schmidt with Lake Street Capital Markets. Please proceed with your question.

Hey guys, thanks for taking my questions. I just want to start with that Q4 guidance. Nick, I know you mentioned about $500,000 in orders that were unable to ship in Q3, but does guidance for Q4 assume you can ship to all of the demand, or is that still baking in some potential supply chain constraints?

Yeah, hey, good morning, Jason, and great question. As we commented, you know, supply chain constraints are abundant out there, and so what we've provided, we believe, fakes in the potential risk from the supply chain here in Q4. Duncan, any comment on that?

Yeah, no, no, totally agree. We certainly have assumed in that number the challenges that we see from a supply chain perspective and have factored that into the numbers.

Okay, that's really helpful. And I apologize if I missed it, but what sort of contribution do you expect from the acquisitions? I know you said ZScience is relatively de minimis revenue, but what sort of revenue contribution from the combined two purchases in Q4?

Yeah, we're looking at around a million and a half in that order of magnitude, all from Videology. ZSciences, there is some incremental cost associated with getting the ZSciences product line up and running in Q4, order of magnitude about penny, penny and a half, I'd say, associated with that. Videology, as I said, about a million and a half is baked into our assumption there, with no real bottom line contribution in the initial quarter. And we also have the M&A associated costs of the three cents that we have talked about and called out.

Okay, and just the last one for me, and I'll jump back into queue. Congrats on that $1 million EV order. Just curious if you could provide some color around why you think you're starting to see some of these larger orders get pulled over the finish line.

Yeah, it's a trend out there as customers are really working to ensure they've got a slot in the delivery pattern, if you will, given the supply chain constraints and that. So in this case, that EV customer really is building out their production lines, and they wanted to go ahead and get all the units on order for that line, which we'll deliver over the next few quarters. But I just think it's more risk management from the customer perspective.

Okay. That makes sense. Thanks a lot, guys. Thanks, Jason.

Thank you. Our next question comes from the line of Dick Ryan with Collier Securities. Please proceed with your question.

Thank you. Nick, you initiated a pretty aggressive marketing campaign in multi-market, I guess specifically at Ambrel, going after induction heating. Can you provide an update on how that's going? I know it was just kicked off, I think, last quarter, but you know, what are you seeing as far as potential customers or existing customers' response to that campaign?

Yeah. Hey, good morning, Dick. Great question there. And you're exactly right. We launched a couple aggressive campaigns. One at Ambro focused on the EV build-out and capturing as much opportunity as we can there. And the second one was in the cannabis space with our ITS business. And specific to Ambro, You know, the program itself has generated an attractive level of qualified leads. They've actually got programs underway with multiple new potential customers. As you saw during your visit up there, you know, we get these applications from these customers. We have to prove them out in our lab. And then from that point, it leads to implementation and production if they're satisfied with that. And that's exactly where we're at is doing the application vetting, if you will, and proving out this. So very confident these are going to pay off here in the quarters ahead.

Okay. Specifically on the SEMI side, I think last call you talked about the digestion, and we saw that in the September quarter. What's your view of your SEMI in Q4 and maybe going into Q1, both kind of the back-end legacy EMS, but also Ambrell's front-end opportunities?

Yeah, SEMI has got a number of positive secular trends and announced investment plans and everything else. So we're very bullish on SEMI going into 2022. We continue to see you know, solid activity on the front end side on silicon carbide. Even in our test piece on the back end side, the temperature test chambers are instruments that we provide high levels of activities there. And customers are, you know, more of our traditional test on the EMS side are ramping up their plans or laying out their plans for 2022, which we we're closely engaged with them on. So, you know, we feel good heading into 2022 on Semi.

Okay. And on the acquisitions, I think you talked about in both opportunities, scaling what these companies have, you know, developed and grown to this point. You know, some of these are new market touchpoints for you. How do you have the visibility that you can scale into some of these new market opportunities?

Yeah, great question. Absolutely, both of these acquisitions we completed really opens up some new markets for us and attractive markets. And, you know, the life sciences space is one that we targeted as an area we wanted to go after as part of a corporate growth program. And identifying these sciences, really a company with great technology, able to bring in an industry expert to help us penetrate this space with that acquisition and providing some low-cost manufacturing through an outsourced agreement there, you know, really positions us in a different place for our ITS business. But we believe our ultra-low temperature capabilities and know-how and our sales and marketing prowess, if you will, will drive this business to the levels that we can get to on there. And same for Videology. This is a bigger play around data capture, building out our automation capabilities, and further strengthening our footprint in life sciences. And so it's not a market that I'm unfamiliar with. While on my days at Ametek, I oversaw with a camera company, a video capture company. And so I know this space. I think we'll do quite well in it.

OK, great. Well, good luck and congratulations.

Thanks, Nick.

Thank you. Ladies and gentlemen, as a reminder, if you'd like to join the question queue, please press star 1 on your telephone keypad. Our next question comes from the line of Peter Wright with Interact, Inc. Please proceed with your question.

Thank you, guys, for taking my questions, and congratulations on what looks like $100 million years, Nick, for your first. So that's quite an accomplishment. My first question, Nick, for you, a two-parter, is... Um, you, you did signal no customer overlap and, and building on Dick's question, what is the go to market or sales strategy in life sciences? Is it direct? Are you working with distributors there? Um, and if you could comment on, um, what your belief of, of kind of the cross sale of your existing, you know, product into that kind of new market could be, how are you thinking about that from a size perspective? And then the second part of that question for you, Nick, is on the zSciences side, is that simply a technology acquisition, or do you have line of sight to first sales for that business? And then I have one follow-up for Duncan on the other side.

Yeah, great questions, Peter, and good morning. So the go-to market for these businesses, as we commented, really these markets are not ones that we currently have a strong presence in today. It's about leveraging their existing distributor base that they have built up, relative disease sciences, and adding direct sales channels investments to better get our message out there and build up a more robust supply of product in the regions out there. So we'll be making investments to really improve that and then provide our, you know, go-to-market expertise, if you will, around those businesses. Videology, similar story, but they go primarily through OEMs, and this is a huge market, a ridiculously huge market, and we believe just focusing on certain niches in this space, we can really make inroads there, but it's about getting our product embedded with OEMs in that area. So this is something we've launched initiatives on across our other businesses, and we believe we can execute in that space as well. Do you think... Oh, go ahead.

How much in 2022, or I don't want to give the timeframe, maybe you give the timeframe, but how much incremental sales do you think from your existing product portfolio pre-acquisition do you think that these two acquisitions are going to help sell into this channel?

You know, to be honest with you, there's not a lot of pull from our existing products into these channels. We're going to actually, you know, try to capture it if there are any, but, you know, in reality, these vaccine freezers and refrigerators and that are really not using, you know, EMS-type products or induction heating is also typically not in these universities and medical centers, pharmaceuticals. facilities, et cetera. But if something comes up, we're going to capture it. For us, it's more about growing the opportunities, identifying the leads, and expanding the footprint for these two companies.

Phenomenal. And then my two-parter, if I can, for Duncan, OpEx of 99.2, is that a full quarter of expenses for the two acquired businesses? I know you've got $300,000. Thanks for the breakdown on that, by the way, of deals. offset. So is that a good number to be thinking of going forward? And then the second part, if you could just check my math on the cash, you've got a 35 million line of credit, 12 drawn, which leaves about 23 available and about 20 ish million at the end of the year. Does that suggest about 40 million of liquidity exiting the year? And kind of what my question there is, if the math is right, then what is the minimum number of liquidity that you really need to be comfortable with it in testing?

Sure. I mean, let me take the first part. So in terms of expenses, it's almost fully loaded. We only really have two months of ideology in there versus the three. So, you know, there's another 100K, I would estimate, you know, 100 to 150 or so to also kind of add, you know, add into that kind of relatively broad range, quite honestly, of the 9 to 9.2. You know, I think I'd look at it in that 8.5 million kind of range. you know, when I kind of back out the deal cost we talk about, which just to be clear, we have an aggregate of $600,000 of M&A associated deal costs that are baked into the Q4, you know, number, a combination of the, you know, the number we call out associated specifically with videology as well as obviously there's other activities that have been going on tied to these sciences, et cetera, et cetera. So hopefully that helps a little bit with providing some color there. On the liquidity side, yes. I mean, obviously, the cash position around the $19 million exiting the quarter. We entered into the funding facility for the $25 million delayed draw piece, the $10 million. I mean, the $10 million credit facility was really just extending the time frame of our existing credit facility. We have drawn $12 million from the $25 million draw. I mean, the simple answer to the question, Peter, is that we're always looking for more liquidity. So to the extent we have opportunities to further extend credit lines, et cetera, then obviously we will be looking to do that. But I think we are off to a good start there in terms of the funding and the facilities that we set up here during the third quarter, or I guess in the beginning of the fourth quarter, sorry. Great quarter. Thank you, guys.

Thanks, Peter.

Thank you. Our next question comes from the line of Robert Marson with Penn Capital. Please proceed with your question.

Congratulations, guys, on another strong quarter of execution, particularly the cash flow numbers, which were exceptional.

Hey, thanks, Robert.

You got it. Assuming the semiconductor business plateaus at a fairly high level for the next year or so before resuming an uptrend in the following year as it digests this year's round of heavy capital, ramp-up capital investment. Do you think the efforts on your part to drive growth in the EMS business and the thermal business will generate any revenue growth this year? It's been about a year now since you've been on board and trying to change this corporate culture to more growth-driven. Can you quantify if there's any revenue above replacement management from your efforts? Kind of like goals saved above expectations in hockey.

Good question, and we laid out our five-point strategy, and we're driving that across all businesses, but EMS is really making some great inroads. Customer penetration, expansion into new customers, going into new markets with their high-voltage, high-current product out there, this power management integrated circuit space is an area they hadn't played in in the past and we're really making some good inroads there. So I truly believe what we're driving across the business, also some investments are planned and further geographic expansion for that business. So I believe we've got plenty of room to grow in that business, whether or not the overall market trends are moving up or down, if you will.

All right. Thank you. Congratulations again on, in a different matter, two very reasonable deals that seemed, price deals that seemed to have very significant longer-term opportunities. Would you be willing to give us a three-year outlook for sales for both of those businesses if you succeed?

At this stage, it's a little too early to give you that forecast. I mean, we absolutely expect to grow these. Hopefully you guys get the sense that I'm a growth guy and, you know, identifying these markets or these companies, as you said, very reasonable purchase prices that align with creating shareholder value. And, you know, I'm confident that the markets, the opportunities, the investments we've got identified will drive that top line for both businesses. But, you know, I think our investor day, which we're planning for Q1, the end of Q1 here now, we had to delay it out, you know, given the New York situation, et cetera. But we'll try to go into more details on the five-year strategic plan, expectation models, et cetera, during that timeframe.

Thank you. You gave us a TAM for – The healthcare for videology, did you give us a TAM for that? You gave us one for Z, I guess.

Yeah, Z Sciences, the total market is about half a billion, but our TAM, our SERP market, is really around 200 million there. And then this image capture, image product space is huge. It's over 20 billion. You know, the space that we play in with Videology is, you know, roughly $5 billion. But, you know, we believe just focusing on, you know, 10% of that market, we can make some great inroads. So, you know, it's moving our numbers substantially and a lot of growth opportunity.

Thank you. And my last question. At times, I guess when investors are concerned or foolish about the semiconductor cycle, the stock seems to sell off to stupidly low valuations. Have you guys considered having in your quiver a share repurchase program that could exploit these sudden declines in the stock and at least cover stock option issuance or something modest from a repurchase program? Thank you.

We've certainly done that in the past and we're always kind of looking at where would it make sense to perhaps do that. I mean, we do also need to be cognizant of cash requirements and looking at our pipelines and what we want to do with that. But absolutely, it's certainly something that's on our mind.

There's enough organic and inorganic growth opportunities. We don't want you to to use cash with a programmatic share repurchase program, I would assume most shareholders, I speak for them in that. But at times, if the stock just gets crazy cheap, it wouldn't hurt to have an availability to scarf some stock back at very low valuations when you will have, obviously, annual dilution from your stock comp packages.

Yeah, agreed. Agreed, Robert. And we actually do have a... open shareholder repurchase plan out there. It's just that we haven't engaged it, haven't activated it, if you will.

All right. Thank you very much.

Great, Robert. Thanks.

Thank you. Ladies and gentlemen, this concludes today's question and answer session. I'll turn the floor back to Mr. Grant for any final comments.

All right. Thank you. And thanks, everyone, for joining us on the call today and for your interest in Intest. For those of you interested, we will be participating in a few upcoming conferences. On November 18th, we will be at the virtual Ladenburg-Thalmann Technology Expo. On December 8th, we'll be at the CEO Summit at the St. Regis in San Francisco, which is coincident with the Semicon West exhibition that's going on. And then on December 15th, at the virtual DA Davidson Conference. As always, please feel free to reach out to us at any time, and we look forward to talking with all of you again in early March to report on our fourth quarter 2021 results. Thank you for your participation. Stay safe and have a great day.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.