inTest Corp Q3 2023 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jaeson Schmidt - Lake Street Capital Markets, LLC - Analyst : Yes, thanks for taking my questions. I just want to start on your comments regarding slowing customer demand. I know you highlighted the industrial and semi markets as sort of being the culprits, but just curious if this is broad based or were concentrated at a few customers within each end market?

Question: Jaeson Schmidt - Lake Street Capital Markets, LLC - Analyst : Okay. That's fair. And then just following up on that, I mean, obviously, there's some delays in purchasing decisions, but are you seeing order cancellations at all?

Question: Jaeson Schmidt - Lake Street Capital Markets, LLC - Analyst : Okay. That makes sense. And then just the last one for me and I'll jump back in the queue. Following up on your comments on M&A, you guys always have a pretty active funnel, but curious if you're seeing valuations starting to come in a bit or if just the number of opportunities is increasing out there.

Question: Jaeson Schmidt - Lake Street Capital Markets, LLC - Analyst : Okay, perfect. Appreciate the color, guys. Thanks a lot. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 03, 2023 / 12:30PM, INTT.A - Q3 2023 inTest Corp Earnings Call

Question: Peter Wright - Intro-act, Inc. - Analyst : Great. Good morning, and thank you for taking my question. Good job maintaining good operating leverage in an increasingly difficult environment.

Question: Peter Wright - Intro-act, Inc. - Analyst : Nick, my first question -- I have two questions for you and a question for Duncan. The first question for you is if you if you look into the crystal ball and the conversations you're having with your sales guys, do you think that the softness that you experienced in 3Q is more and from the procurement departments being proactively risk off? Or do you think that they've already experienced kind of a softening in demand that they're reacting to? And that question is kind of in light of your comment that there's already been some rebooking in the fourth quarter. So I'm looking at kind of the duration risk that you see from your sales force if they have any color on that for how long this could last. The second question for you is on your new cameras. Can you share anything about the ASP or how you're looking at kind of a true value proposition, whether it be margin mix, or how should we look at how the new products are creating incremental value for inTEST if there's any story there? And then, Duncan, on the operating leverage side, I see you're not reacting to the softness yet holding up operating expenses where you'd expect them to be in the fourth quarter. Can you just remind us if breakeven is still $26 million-ish, and what would it take for you maybe to react on that side? And then one little follow up for you is do you expect free cash flow to be positive in the fourth quarter? And can you give us a target for free cash flow for the year? That's all.

Question: Peter Wright - Intro-act, Inc. - Analyst : Wonderful, guys. Thank you very much. If I could have one last follow up, on the Videology cameras that you have, what is driving the new generations that you're producing? Is it new markets or is it improved manufacturing and margin profile? What is driving it?

Question: Peter Wright - Intro-act, Inc. - Analyst : Wonderful. Great. Thank you, guys.

Question: Ted Jackson - Northland Securities, Inc. - Analyst : Thanks. Good morning, Nick. Good morning, Duncan. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 03, 2023 / 12:30PM, INTT.A - Q3 2023 inTest Corp Earnings Call

Question: Ted Jackson - Northland Securities, Inc. - Analyst : I just have one question. Everything I had on my list got checked off. But we've got a weaker fourth quarter, and again, you are correct. You are not the only company that is seeing this kind of slowdown, cautiousness within their business. Plenty of companies have had made very similar comments and taken very similar actions with regards to guidance. But my question for you is now that we're having this disruption in the business, if you would, with regards to the fourth quarter, does it impact? I know you're not providing guidance for '24, but I mean, does it change the seasonality that's typical in the business? I mean, would we still expect, based upon your fourth-quarter guidance this year, for first quarter down sequentially from fourth quarter? That's really my only question.

Question: Ted Jackson - Northland Securities, Inc. - Analyst : Well, I mean, if I look at it -- I mean, the last few couple of years, it seems like generally that absent acquisitions, the first quarter has not been the stronger of your quarters. So that's -- but you're -- so no, you're not saying that you don't have an answer for me on that?

Question: Ted Jackson - Northland Securities, Inc. - Analyst : Okay. That's it for me. Thank you.