Solid Margins Despite Order Pullback - Analyst Blog

Written by Ken Nagy, CFA

inTEST Corporation ( INTT ) is a designer, manufacturer and marketer of mechanical, thermal and electrical products that are used by semiconductor manufacturers in conjunction with automatic test equipment, (ATE), in the testing of integrated circuits, (ICs). Beyond its blue chip portfolio of semiconductor manufacturers, the acquisition of Sigma has propelled the firm to diversify into non-semi thermal testing products. This has the effect of diversifying revenues and opens the company up to new markets. In the test equipment world change is good; be it the broad switch to mobile computing, the march to finer geometries, or the growth of electronic content in automobiles more chip content means more testing for inTEST.

On November 3rd 2010 INTT announced results for the third quarter of fiscal year 2010 ending September 2010. Revenue for the period was $11.3 million down 26.1% sequentially from $15.3 million and up 88.3% year over year.

Despite the sequential pullback in orders and bookings (consistent with trends seen in the broader semiconductor equipment sector) the firm was able to maintain a 48% gross margin in the third quarter of 2010 (the same as the second quarter), despite the lower revenues. INTT benefited from a more favorable product mix and continued to manage product material costs as well as operating expenses quite well.