Exclusive Interview With The CEO: inTEST Corporation (INTT) - Robert E. Matthiessen
June 8, 2012 - The Wall Street Transcript has just published Semiconductors Report offering a timely review of the sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.
Robert E. Matthiessen was elected Chief Executive Officer of inTEST Corporation in August 1998. He was elected President and a Director of inTEST in February 1997. Mr. Matthiessen served as Chief Operating Officer of inTEST from December 1997 to August 1998. Before that, he served as Executive Vice President since joining the company in October 1984. Mr. Matthiessen has more than 25 years of experience in the automatic test equipment industry, including various positions in general management, marketing management and engineering management. In 1982, Mr. Matthiessen cofounded a company engaged in the production of video products for training, advertising and sales, and served as its President from inception to 1984. He is a Co-Inventor on several of the company's patents. He studied electrical engineering at Drexel University and business administration at Rutgers, The State University of New Jersey.
TWST: Please begin with a brief description of inTEST Corporation, its current operations and a history of the company.
Mr. Matthiessen: inTEST celebrated 30 years of innovation and service last year. Today, the company operates in three business segments. We have historically participated in the semiconductor test area, and within that we have a mechanical group, an electrical group and a thermal group. In recent years, we added our thermal group, which operates both inside and outside of the semiconductor arena.We started in the early 1980s as just a mechanical company, making test set manipulators and docking hardware. We added an electrical group that made interfaces for probers, and then after that we added a thermal group that made thermal conditioning equipment for the test floors. Today, we still have all of those businesses. If you're familiar at all with the semiconductor business, you know that it's a very cyclical business. A few years ago, we made a strategic decision to diversify our served markets, to look for businesses outside of that cyclicality that we could capitalize on by leveraging our technology. And since our mechanical and electrical groups are strongly semi related, we concluded that our thermal segment was the key to expansion outside of the semi space. In recent years, we have expanded our business outside of semi to mitigate the cyclicality that is so inherent in the semiconductor space. This is key to our strategy.
TWST: Is it safe to say today that this diversification strategy is helping the company to forge a new path? What new markets is inTEST addressing?
Mr. Matthiessen: Yes, it's definitely a new path. As I mentioned, we are expanding our thermal segment outside of the semi business to maybe 50% of our business in our foreseeable future. I'd say that within the next three years, we'd like to be a $100 million company, with at least half of our business outside of semi, and that business you can classify generally as industrial test in the thermal space. It's an understatement to say that as electronics have evolved, thermal testing requirements have undergone rapid changes. There is not a single electronic product that's used today that does not require some kind of thermal testing, especially those products that are used in hostile environments or the ubiquitous portable/mobile products like iPhones. And so there's a very sizable market in thermal testing outside of semiconductor, which we can address with the equipment that we have been selling within the semiconductor arena.
TWST: inTEST announced financial results this week. What were some of the highlights and what is driving the company's growth and confidence this year?
Mr. Matthiessen: There were a number of highlights for our first quarter of 2012. In fact, our results were better than we had expected. Our guidance for the first quarter had reflected the rather turbulent macroeconomic environment and resulting softness in semiconductor-related bookings that inTEST had experienced in the second half of 2011. In addition, there were costs related to the closing of the Thermonics acquisition. We had not factored in the more rapid recovery of our semiconductor business, driven by the increasing demand for mobility products. So all in all, highlights for the first quarter included bookings of $12.9 million, a 60% increase quarter over quarter, and revenue of $10.7 million that increased 6% sequentially and exceeded guidance by 2%. And lastly, our essentially breakeven net income exceeded our expectations. The overall trend that these results highlight was the fact that we got past the trough in the semi business. These are the cycles I'm talking about that we have to manage through - and while our bookings at the end of 2011 were down, our order flow has returned to more robust levels and the semiconductor recovery is well in hand.
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