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Fourth Quarter 2024 Review (see revenue by market and by segments in accompanying tables)

Sequentially, revenue was up $6.3 million. Revenue from auto/EV, defense/aerospace, and security markets increased compared with the trailing third quarter. Also of note, there was a modest improvement in the semi market based on timing of front-end shipments out of backlog and improving demand for the Company’s back-end solutions. These improvements more than offset the decline in the industrial market.

Sequentially, gross profit of $14.5 million increased on higher revenue despite the $1.6 million charge to cost of goods sold related to inventory step-up expense. Higher sales of back-end semi test equipment, battery and flying probe automated test systems as well as improved operating efficiencies across most businesses contributed to stronger gross profit. Gross margin of 39.7% included the negative 430 basis point impact from the inventory step-up. Operating income increased significantly from higher gross profit combined with cost actions taken during the year and an amortization credit of $0.8 million in the quarter.

Year-over-year, fourth quarter revenue increased $8.7 million. Alfamation contributed $8.5 million in revenue. Auto/EV, defense/aerospace and semi were the primary markets behind the improved revenue, overcoming the decrease in the industrial market.

Year-over-year, gross margin contracted 490-basis points primarily due to the 430 basis points related to the inventory step-up charge. Operating expenses increased $1.1 million over the prior-year period reflecting the addition of Alfamation which added $1.5 million in costs. Alfamation operating expenses benefitted from the $0.8 million amortization credit in the current quarter. Overall, the increase in costs due to the addition of Alfamation were partially offset by cost reduction efforts and operational improvements. Total operating expenses declined to 34.0% of sales compared with 40.7% in the fourth quarter of 2023.

Net earnings for the quarter of $1.5 million, or $0.12 per diluted share, improved 3% and flat, respectively. Adjusted net earnings (Non-GAAP)⁵ grew to $2.8 million, or $0.23 adjusted EPS (Non-GAAP) ⁵.

2024 Review (see revenue by market and by segments in accompanying tables)

2024 revenue increased $7.4 million over 2023. Alfamation contributed $25.0 million in revenue primarily in auto/EV, more than offsetting the softness we saw in our core business, primarily driven by our semi markets. Gross margin contracted 380 basis points primarily due to higher fixed operating costs, increased direct labor as a result of Alfamation, and changes in product sales mix. In addition, the inventory step-up charge negatively impacted gross margin by 120 basis points. Operating expenses increased $5.5 million over 2023 reflecting $6.7 million in costs from the addition of Alfamation offset by cost reduction efforts and operational improvements.

Mr. Grant concluded, "While 2024 was challenging, it represents our third consecutive year of record revenue for inTEST since launching our 5-Point Strategy in 2021. We have made measurable progress since then by increasing exposure to our targeted markets, expanding our customer base and driving innovative solutions to better serve our customers. We have built a team that is driven to excel and evolved the culture of the organization to one with a sense of urgency for continuous improvement. We believe we have positioned the Company well to deliver long-term growth while maintaining the strong margin profile and cash generation for which inTEST is known."

Balance Sheet and Cash Flow Review

During the quarter, the Company generated $2.6 million in cash from operations. Cash and cash equivalents at the end of the fourth quarter of 2024 were $19.8 million, up $1.9 million from the end of the third quarter. During the quarter, the Company repaid approximately $1.1 million in debt. Capital expenditures were $0.2 million in the fourth quarter of 2024, lower than previous quarters due to the timing of projects.

At quarter end, total debt was $15.0 million, down $1.1 million from September 30, 2024, which included the impact of the change in foreign exchange rates. At December 31, 2024, the Company had $30 million available under its delayed draw term loan facility and no borrowings under the $10 million revolving credit facility.

Fourth Quarter 2024 Orders and Backlog⁶ (see orders by market in accompanying tables)

Fourth quarter orders of $30.7 million grew 11% versus the prior-year period, and improved 9%, or $2.6 million, compared with the third quarter of 2024. The year-over-year increase reflects strength in the semi, auto/EV and life sciences markets while orders slowed in defense/aerospace and industrial markets. Specifically, orders from semi increased $2.4 million as demand for back-end solutions more than offset the decline in demand from front-end semi, while demand from auto/EV grew $1.7 million primarily driven by $1.1 million in Alfamation orders and life sciences demand grew $1.5 million.

Sequentially, the 9% increase in orders was the result of higher demand from semi and life sciences which more than offset weakness in auto/EV, security and other markets. Alfamation contributed $1.2 million in orders in the fourth quarter reflecting a slowing in their run-rate and amid auto/EV market softness.

Backlog at December 31, 2024, was $39.5 million and included $7.4 million of backlog associated with Alfamation. Approximately 50% of the backlog is expected to ship beyond the first quarter of 2025.

First Quarter and Full Year 2025 Outlook

Given the Company’s cautious outlook for 2025, inTEST expects full year 2025 revenue to be approximately $125 million to $135 million and expect profitability to gradually improve throughout the year. Amortization expense for 2025 is expected to be $3.4 million. The effective tax rate for the year is expected to be approximately 18%. Capital expenditures for 2025 are planned to be approximately 1% to 2% of revenue.

First quarter 2025 revenue is forecasted to be $27 million to $29 million with gross margin of approximately 41% and operating expenses of $13.6 million to $14.0 million, which excludes approximately $0.2 million in Videology related restructuring expenses and reflects the typical higher levels in the first quarter. The Company’s expectations for the quarter reflect recent customer delivery pushouts of orders in backlog to the latter half of the year as well as the slowing receipt of orders due to the uncertainty in end markets as a result of recent and impending tariffs.

The foregoing guidance is based on management’s current views with respect to operating and market conditions and customers’ forecasts. It also assumes macroeconomic conditions remain unchanged through the end of the year. Actual results may differ materially from what is provided here today as a result of, among other things, the factors described under "Forward-Looking Statements" below.

Conference Call and Webcast

The Company will host a conference call and webcast today at 8:30 a.m. ET. During the conference call, management will review the financial and operating results and discuss inTEST’s corporate strategy and outlook. A question-and-answer session will follow. To listen to the live call, dial (201) 689-8263. In addition, the webcast and slide presentation may be found at intest.com/investor-relations.

A telephonic replay will be available from 12:30 p.m. ET on the day of the call through Friday, March 14, 2025. To listen to the archived call, dial (412) 317-6671 and enter replay pin number 13751127. The webcast replay can be accessed via the investor relations section of intest.com, where a transcript will also be posted once available.

About inTEST Corporation

inTEST Corporation is a global supplier of innovative test and process technology solutions for use in manufacturing and testing in key target markets including both the front-end and back-end of the semiconductor manufacturing industry, industrial, automotive/EV, life sciences, defense/aerospace, and security. Backed by decades of engineering expertise and a culture of operational excellence, inTEST solves difficult thermal, mechanical, and electronic challenges for customers worldwide while generating strong cash flow and profits. inTEST’s strategy leverages these strengths to grow organically and with acquisitions through the addition of innovative technologies, deeper and broader geographic reach, and market expansion. For more information, visit https://www.intest.com/.

Non-GAAP Financial Measures

In addition to disclosing results that are determined in accordance with generally accepted accounting practices in the United States ("GAAP"), we also disclose non-GAAP financial measures. These non-GAAP financial measures consist of adjusted net earnings, adjusted earnings per diluted share ("adjusted EPS"), adjusted EBITDA, and adjusted EBITDA margin.

Definition of Non-GAAP Measures

The Company defines these non-GAAP measures as follows:

• Adjusted net earnings is derived by adding acquired intangible amortization and acquired inventory step-up expense adjusted for the related income tax expense (benefit), to net earnings.

• Adjusted earnings per diluted share ("adjusted EPS") is derived by dividing adjusted net earnings by diluted weighted average shares outstanding.

• Adjusted EBITDA is derived by adding acquired intangible amortization, acquired inventory step-up expense, net interest expense, income tax expense, depreciation, and stock-based compensation expense to net earnings.

• Adjusted EBITDA margin is derived by dividing adjusted EBITDA by revenue.

These results are provided as a complement to the results provided in accordance with GAAP. Adjusted net earnings and adjusted earnings per diluted share (adjusted EPS) are non-GAAP financial measures presented to provide investors with meaningful, supplemental information regarding our baseline performance before acquired intangible amortization and inventory step-up charges as management believes this expense may not be indicative of our underlying operating performance. Adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures presented primarily as a measure of liquidity as they exclude non-cash charges for acquired intangible amortization, acquired inventory step-up, depreciation and stock-based compensation. In addition, adjusted EBITDA and adjusted EBITDA margin also exclude the impact of interest income or expense and income tax expense or benefit, as management believes these expenses may not be indicative of our underlying operating performance.

Management’s Use of Non-GAAP Measures

The non-GAAP financial measures presented in this press release 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. Reconciliations from net earnings and earnings per diluted share (EPS) to adjusted net earnings and adjusted earnings per diluted share (adjusted EPS) and from net earnings and net margin to adjusted EBITDA and adjusted EBITDA margin, are contained in the tables below.

Limitations of adjusted net earnings, adjusted earnings per diluted share (adjusted EPS), adjusted EBITDA, and adjusted EBITDA margin

Each of our non-GAAP measures have limitations as analytical tools. They should not be viewed in isolation or as a substitute for GAAP measures of earnings or cash flows. Limitations may include the cash portion of interest expense, income tax (benefit) provision, charges related to intangible asset amortization and stock-based compensation expense. These items could significantly affect our financial results.

Management believes these Non-GAAP financial measures are important in evaluating our performance, results of operations, and financial position. We use non-GAAP financial measures to supplement our GAAP results to provide a more complete understanding of the factors and trends affecting our business.

Adjusted net earnings, adjusted earnings per diluted share (adjusted EPS), adjusted EBITDA, and adjusted EBITDA margin are not alternatives to net earnings, earnings per diluted share or margin as calculated and presented in accordance with GAAP. As such, they should not be considered or relied upon as substitutes or alternatives for any such GAAP financial measure. We strongly urge you to review the reconciliations of adjusted net earnings, adjusted earnings per diluted share (adjusted EPS), adjusted EBITDA, and adjusted EBITDA margin along with our financial statements included elsewhere in this press release. We also strongly urge you not to rely on any single financial measure to evaluate our business. In addition, because adjusted net earnings, adjusted earnings per diluted share (adjusted EPS), adjusted EBITDA, and adjusted EBITDA margin are not measures of financial performance under GAAP and are susceptible to varying calculations, the adjusted net earnings, adjusted earnings per diluted share (adjusted EPS), adjusted EBITDA, and adjusted EBITDA margin measures as presented in this press release may differ from and may not be comparable to similarly titled measures used by other companies.

Key Performance Indicators

In addition to the foregoing non-GAAP measures, management uses orders and backlog as key performance metrics to analyze and measure the Company’s financial performance and results of operations. Management uses orders and backlog as measures of current and future business and financial performance, and these may not be comparable with measures provided by other companies. Orders represent written communications received from customers requesting the Company to provide products and/or services. Backlog is calculated based on firm purchase orders we receive for which revenue has not yet been recognized. Management believes tracking orders and backlog are useful as it often is a leading indicator of future performance. In accordance with industry practice, contracts may include provisions for cancellation, termination, or suspension at the discretion of the customer.

Given that each of orders and backlog are operational measures and that the Company’s methodology for calculating orders and backlog does not meet the definition of a non-GAAP measure, as that term is defined by the U.S. Securities and Exchange Commission, a quantitative reconciliation for each is not required or provided.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements do not convey historical information but relate to predicted or potential future events and financial results, such as statements of the Company’s plans, strategies and intentions, or our future performance or goals, that are based upon management’s current expectations. These forward-looking statements can often be identified by the use of forward-looking terminology such as "appears," "believe," "continue," "could," "expects," "guidance," "may," "outlook," "will," "should," "plan," "potential," "forecasts," "target," "estimates," or similar terminology. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, any mentioned in this press release as well as the Company’s ability to execute on its 5-Point Strategy, realize the potential benefits of acquisitions and successfully integrate any acquired operations, grow the Company’s presence in its key target and international markets, manage supply chain challenges, convert backlog to sales and to ship product in a timely manner; the success of the Company’s strategy to diversify its markets; the impact of inflation on the Company’s business and financial condition; indications of a change in the market cycles in the semi market or other markets served; changes in business conditions and general economic conditions both domestically and globally including rising interest rates and fluctuation in foreign currency exchange rates; changes in the demand for semiconductors; access to capital and the ability to borrow funds or raise capital to finance potential acquisitions or for working capital; changes in the rates and timing of capital expenditures by the Company’s customers; and other risk factors set forth from time to time in the Company’s Securities and Exchange Commission filings, including, but not limited to, the Annual Report on Form 10-K for the year ended December 31, 2023. Any forward-looking statement made by the Company in this press release is based only on information currently available to management and speaks to circumstances only as of the date on which it is made. The Company undertakes no obligation to update the information in this press release to reflect events or circumstances after the date hereof or to reflect the occurrence of anticipated or unanticipated events, except as required by law.

– FINANCIAL TABLES FOLLOW –