inTest Corporation

Greetings and welcome to Intesh Corporation second quarter 2024 financial results call. At this time, all participants are in a listen-only mode. A brief 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 has been recorded. It is now my pleasure to introduce your host, Craig Maholick. Thank you. You may begin.

Good morning, everyone. We certainly appreciate your interest in Intest Corporation, and thank you for sharing your time with us today. Joining me on the call are Nick Grant, our President and Chief Executive Officer, and Duncan Gilmore, our Chief Financial Officer and Treasurer. You should have the earnings release, which went out this morning, as well as the slides that will accompany our conversation today. If not, you can find these documents on the investor relations section of our website and edintest.com. Please turn to slide two, and I'll review the safe harbor statement. During this call, management may make some forward-looking statements about our current plans, beliefs, and expectations. These statements apply to future events that are subject to risks and uncertainties, as well as those that could cause actual results that differ materially from what is stated here today. These risks, uncertainties, and other factors are provided in the earnings release as well as with documents filed by the company with the Securities and Exchange Commission. These documents can be found at our website or at FCC.gov. Also, management will refer to some non-GAAP financial measures today. 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. You can find reconciliations of non-GAAP measures with comparable GAAP measures in the tables that accompany today's release and slides. Now, please turn to slide three, and I'll turn the call over to Nick. Nick?

Thank you, Craig, and good morning, everyone. Thanks for joining us for our second quarter 2024 earnings call. First, I would like to thank the entire Intest team for their efforts in a relatively tough environment. As expected, the first half proved challenging as we continued to see weakness in our key markets of semi, auto EV, and industrials. These three markets typically account for over 70% of our sales. Overall, the quarter was mixed with some aspects coming in as we expected and others falling short. We did achieve record revenue of $34 million, which came in at the low end of our guidance range. while gross margin of 40.6% was much lower than expected, driven primarily by the volume coming in at the low end of the range and a less favorable mix. Lower commission expenses, reduced bonus accruals, and our cost management efforts resulted in operating expenses coming in below our prior guidance. As a result, EPS came in at 2 cents per diluted share, and 8 cents per diluted share on an adjusted basis. Alclimation, which we acquired very late in the first quarter, contributed 9.7 million in revenue that more than offset the ongoing weakness in SEMI. This was a record revenue quarter for that business, which was supported by the timing of shipments from the large backlog we acquired. We expect their shipment levels to normalize for the next few quarters. Across the organization, we continue to execute our five-point strategy, focusing our growth efforts on diversified markets, product innovation, and leveraging our application expertise. These efforts are helping as we manage through the current semiconductor cycle and the near-term sluggishness we're seeing in auto EV and industrial markets. As a reminder, the addition of Alphamation strengthened and diversified our position in the automotive industry. where they provide test equipment for electronics and entertainment systems. In addition, it strengthened our position in life sciences and consumer electronics. The integration of Alphamation is progressing to plan, and it's great to see the teams already embracing numerous synergies across the businesses. These synergies range from product and technology sharing to supply chain leveraging to joint trade show participation and customer visits. One success captured in the quarter was a customer order received for a new AcuLogic system with the Alphamation Supernova software included. It was the combination of the two technologies that won us the order. I look forward to seeing many more of these types of wins. Turning to slide four, I'll review orders and backlog. As we have been communicating for the last eight months or so, the first half of 2024 was expected to be weaker than the second half of the year. Although second quarter orders did improve off of a weak first quarter comparable, the ramp in order trends we anticipated for the second half looks to be more tempered, further impacting our outlook for the year. In addition, we have seen certain customers push out deliveries. However, we are not seeing any cancellations as these customers are indicating they are confident their end market demand will improve in the coming months. Encouragingly, for the second consecutive quarter, back-end semi-orders were up sequentially, showing further signs of coming out of the trough. This improvement helped to offset the continued notable decline in front-end orders, given the current pause in manufacturing capacity expansion for silicon carbide and gallium nitride. Our long-term perspectives for the adoption of these technologies remains bullish. During the second quarter, our backlog declined as we worked through a portion of the $22.8 million in acquired backlog from Alphamation. As mentioned in the past, Alphamation's orders can be lumpy as timing of their large multi-system projects can vary quarter to quarter. While orders for that business were relatively soft in the second quarter at $3.2 million, This came after booking more than 11 million in the first quarter of the year. Looking more broadly across our businesses, our pipelines remain healthy. It's just the rate of conversion of these opportunities to new orders which remains slow. With that, let me turn it over to Duncan to review the financials and outlook in more detail. Duncan, over to you.