To follow-up on my positive piece from yesterday on inTEST Corporation (NYSEMKT:INTT), below are several key points discussed in the company’s conference call that were not included in the press release and tell a much more positive, and precise, story.
Briefly, the company’s official press release states:
The Company expects continued improvements in net revenues and net income in the second quarter ending June 30, 2010 on both a sequential and year-over-year basis.
Positive I suppose, but not resoundingly good in light of 1Q bookings that were up 49% sequentially. The conference call however, was resoundingly good.
Key details from the conference call:
2Q Revenues likely to be $14mn (up 49% q/q) given management’s comment that previous quarter bookings are a good proxy for the next quarter’s sales.
Gross margins should increase to 51% in 2Q from 47% in 1Q based on the comment that incremental gross profit ranges from 50-65% depending on product mix and 60% is a good figure to use. A 60% fall-through on an incremental $4.5mn in sales is an additional $2.7mn in gross profit and increases GM to 51%, or gross profits of $7.16mn.
Operating expenses are expected to increase by up to $600k, reflecting a headcount increase from 107 to 117 at the end of the March quarter – most of the additions were late in the quarter – and also reflects the 401k plan matching. All this said, the company stated that the op-ex level will not exceed $4.0mn and that they could maintain this level of op-ex while supporting higher revenue levels in future quarters.
To summarize, the “continued improvement in net revenues and net incomes,” looks quite stellar:
click to enlarge
Click to enlargeFinally, management made two addition important points
1) they indicated that bookings quarter-to-date, now 6 weeks in, have remained strong and continue to demonstrate healthy momentum, and
2) the company is gaining booking in non-semiconductor segments that have not traditionally been meaningful areas and have the potential to be nice incremental growth avenues.
All of these conference call details bode well for a stock, that even after Wednesday’s run, is trading at just 3.5x annualized 2Q run-rate EPS estimates.
Disclosure: Long INTT