INTT 10-Q
Intest Corp (INTT)
10-Q
2026-05-11
For: 2026-03-31
View Original
Added on
May 11, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended March 31, 2026 or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from ___________ to ___________
Commission File Number 001-36117
(Exact Name of Registrant as Specified in its Charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | ||||
(Address of principal executive offices, including zip code)
(856 ) 505-8800
(Registrant's Telephone Number, including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer" "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | ☒ | |||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||||||||
| Emerging growth company | |||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
Number of shares of Common Stock, $0.01 par value, outstanding as of the close of business on April 30, 2026: 12,564,657
InTest CORPORATION
TABLE OF CONTENTS
| Page | ||||||||
Consolidated Balance Sheets as of March 31, 2026 (Unaudited) and December 31, 2025 | ||||||||
Unaudited Consolidated Statements of Operations for the three months ended March 31, 2026 and 2025 | ||||||||
Unaudited Consolidated Statements of Comprehensive Earnings (Loss) for the three months ended March 31, 2026 and 2025 | ||||||||
Unaudited Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2026 and 2025 | ||||||||
Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025 | ||||||||
PART I. FINANCIAL INFORMATION
Item 1.FINANCIAL STATEMENTS
InTest CORPORATION
CONSOLIDATED BALANCE SHEETS
| March 31, | December 31, | |||||||||||||
| 2026 | 2025 | |||||||||||||
| (In thousands, except share and per share data) | (Unaudited) | |||||||||||||
| ASSETS | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
| Restricted cash | ||||||||||||||
Trade accounts receivable, net of allowance for credit losses of $ | ||||||||||||||
| Inventories | ||||||||||||||
| Prepaid expenses and other current assets | ||||||||||||||
| Total current assets | ||||||||||||||
Property and equipment, net of accumulated depreciation of $ | ||||||||||||||
| Right-of-use assets, net | ||||||||||||||
| Goodwill | ||||||||||||||
| Intangible assets, net | ||||||||||||||
| Deferred tax assets | ||||||||||||||
| Other assets | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Current portion of long-term debt | $ | $ | ||||||||||||
| Current portion of operating lease liabilities | ||||||||||||||
| Accounts payable | ||||||||||||||
| Customer deposits and deferred revenue | ||||||||||||||
| Domestic and foreign income taxes payable | ||||||||||||||
| Accrued expenses and other current liabilities | ||||||||||||||
| Total current liabilities | ||||||||||||||
| Operating lease liabilities, net of current portion | ||||||||||||||
| Long-term debt, net of current portion | ||||||||||||||
| Contingent consideration, net of current portion | ||||||||||||||
| Deferred revenue, net of current portion | ||||||||||||||
| Other liabilities | ||||||||||||||
| Total liabilities | ||||||||||||||
| Commitments and Contingencies | ||||||||||||||
| Stockholders’ equity: | ||||||||||||||
Preferred stock, $ | ||||||||||||||
Common stock, $ | ||||||||||||||
| Additional paid-in capital | ||||||||||||||
| Retained earnings | ||||||||||||||
| Accumulated other comprehensive earnings | ||||||||||||||
Treasury stock, at cost; | ( | ( | ||||||||||||
| Total stockholders’ equity | ||||||||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||||||||
See accompanying Notes to Consolidated Financial Statements.
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InTest CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended | |||||||||||
| March 31, | |||||||||||
| (In thousands, except share and per share data) | 2026 | 2025 | |||||||||
| Revenue | $ | $ | |||||||||
| Cost of revenue | |||||||||||
| Gross profit | |||||||||||
| Operating expenses: | |||||||||||
| Selling expense | |||||||||||
| Engineering and product development expense | |||||||||||
| General and administrative expense | |||||||||||
| Amortization of acquired intangible assets | |||||||||||
| Restructuring costs | |||||||||||
| Total operating expenses | |||||||||||
| Operating income (loss) | ( | ||||||||||
| Interest expense | ( | ( | |||||||||
| Other income | |||||||||||
| Earnings (loss) before income tax (benefit) expense | ( | ||||||||||
| Income tax expense (benefit) | ( | ||||||||||
| Net earnings (loss) | $ | $ | ( | ||||||||
| Earnings (loss) per common share: | |||||||||||
| Basic | $ | $ | ( | ||||||||
| Diluted | $ | $ | ( | ||||||||
| Weighted average common shares outstanding: | |||||||||||
| Basic | |||||||||||
| Diluted | |||||||||||
See accompanying Notes to Consolidated Financial Statements.
- 2 -
InTest CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)
(Unaudited)
| Three Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| (In thousands) | ||||||||||||||
| Net earnings (loss) | $ | $ | ( | |||||||||||
| Other comprehensive (loss) earnings | ||||||||||||||
| Unrealized loss on interest rate swap agreement | ( | ( | ||||||||||||
| Foreign currency translation adjustments | ( | |||||||||||||
| Total other comprehensive (loss) earnings | ( | |||||||||||||
| Comprehensive earnings (loss) | $ | $ | ( | |||||||||||
See accompanying Notes to Consolidated Financial Statements.
- 3 -
| Common Stock | Treasury Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Earnings (Loss) | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||
| (In thousands, except share data) | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance, January 1, 2026 | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
| Comprehensive earnings (loss) | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Amortization of stock-based deferred compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of unvested shares of restricted stock | — | — | ( | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Forfeiture of unvested shares of restricted stock | ( | ( | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Stock options exercised | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued under Employee Stock Purchase Plan | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Shares surrendered by employees to satisfy tax liability at vesting of stock-based awards | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||
| Shares issued upon vesting of restricted stock units | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Shares withheld to satisfy tax liability at vesting of restricted stock units | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2026 | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Earnings | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||
| (In thousands, except share data) | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance, January 1, 2025 | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||
| Comprehensive (loss) earnings | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Amortization of stock-based deferred compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of unvested shares of restricted stock | — | — | ( | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Forfeiture of unvested shares of restricted stock | ( | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Stock options exercised | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Shares issued under Employee Stock Purchase Plan | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Shares surrendered by employees to satisfy tax liability at vesting of stock-based awards | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||
See accompanying Notes to Consolidated Financial Statements.
- 4 -
InTest CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| (In thousands) | 2026 | 2025 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Net earnings (loss) | $ | $ | ( | ||||||||
| Adjustments to reconcile net earnings (loss) to net cash (used in) provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Provision for excess and obsolete inventory | |||||||||||
| Amortization of deferred compensation related to stock-based awards | |||||||||||
| Deferred income tax (benefit) expense | ( | ||||||||||
| Other non-cash reconciling items | ( | ||||||||||
| Changes in assets and liabilities: | |||||||||||
| Trade accounts receivable | ( | ||||||||||
| Inventories | ( | ||||||||||
| Prepaid expenses and other current assets | ( | ( | |||||||||
| Other assets | ( | ( | |||||||||
| Operating lease liabilities | ( | ( | |||||||||
| Accounts payable | ( | ||||||||||
| Customer deposits and deferred revenue | ( | ||||||||||
| Domestic and foreign income taxes payable | ( | ||||||||||
| Deferred revenue, net of current portion | ( | ( | |||||||||
| Accrued expenses and other liabilities | ( | ( | |||||||||
| Net cash (used in) provided by operating activities | ( | ||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Purchases of property and equipment | ( | ( | |||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
| Short-term borrowings, net of repayments | ( | ||||||||||
| Repayments of long-term debt | ( | ( | |||||||||
| Proceeds from stock options exercised | |||||||||||
| Proceeds from shares sold under Employee Stock Purchase Plan | |||||||||||
| Settlement of employee tax liabilities in connection with treasury stock transaction | ( | ( | |||||||||
| Net cash provided by (used in) financing activities | ( | ||||||||||
| Effects of exchange rates on cash | ( | ||||||||||
| Net cash (used in) provided by all activities | ( | ||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Total cash, cash equivalents and restricted cash at end of period | $ | $ | |||||||||
| Cash (receipts) payments for: | |||||||||||
| Domestic and foreign income taxes, net of receipts | $ | ( | $ | ||||||||
| Interest | |||||||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | |||||||||||
| Issuance of unvested shares of restricted stock awards | |||||||||||
| Forfeiture of shares of unvested restricted stock awards | ( | ( | |||||||||
See accompanying Notes to Consolidated Financial Statements.
- 5 -
(1) NATURE OF OPERATIONS
InTest Corporation (“InTest,” “we,” “our,” “us” and the “Company”), a Delaware corporation headquartered in Mount Laurel, New Jersey, is a global supplier of innovative test and process technology solutions for use in manufacturing and testing across a wide range of markets including Semiconductors (“Semi”), Auto/Electric Vehicle (“EV”), Defense/Aerospace, Industrial, Life Sciences, Safety/Security and Other. We have three
The consolidated entity is comprised of InTest Corporation and our wholly-owned subsidiaries which comprise our six business: Electro Mechanical Semiconductor (“EMS”), Acculogic, Alfamation™, InTest Thermal Solutions (“ITS”), Ambrell® and Videology®. We manufacture our products in the U.S., Canada, Italy and Malaysia. Marketing and support activities are conducted worldwide from our facilities in the U.S., Canada, Italy, Germany, Singapore, Malaysia and the U.K. As of December 31, 2025, we have consolidated our Videology® Netherlands operations into our U.S. Videology® location. See “Note (15) Restructuring” for further discussion about this action. We operate our business worldwide and sell our products both domestically and internationally.
Founded in 1981, we completed our initial public offering in June 1997 and currently trade on the NYSE American stock exchange under the symbol “INTT.”
All of our operating segments have multiple products that we design, manufacture and market to our customers. Due to a number of factors, our products have varying levels of gross margin. The mix of products we sell in any period is ultimately determined by our customers’ needs. Therefore, the mix of products sold in any given period can change significantly from the prior period. In addition, we sell our products to a variety of different types of customers with varying levels of discounts and commission expense. As a result of changes in both the mix of products sold as well as customer mix in any given period, our consolidated gross margin can vary significantly from period to period.
The Semi market, which includes both the broader semiconductor market, as well as the more specialized automated test equipment (“ATE”) and wafer production sectors within the broader semiconductor market, has historically been the largest single market in which we operate. The Semi market is characterized by rapid technological change, competitive pricing pressures and cyclical as well as seasonal market patterns. The Semi market is also subject to periods of significant expansion or contraction in demand. In addition to the Semi market, we sell into a variety of other markets. Our intention is to continue diversifying our markets, our product offerings within the markets we serve and our customer base across all of our markets with the goal of reducing our dependence on any one market, product or customer. In particular, we are seeking to reduce the impact of volatility in the Semi market on our results of operations.
Our Electronic Test segment began with EMS and sells its products to semiconductor manufacturers and third-party test and assembly houses (end user sales) and to ATE manufacturers (original equipment manufacturers (“OEM”)), who ultimately resell our equipment with their equipment to both semiconductor manufacturers and third-party test and assembly houses. These sales all fall within the ATE sector of the Semi market. With the acquisition of Acculogic Inc. and its affiliates (“Acculogic”) in December 2021, and the March 2024 acquisition of Alfamation S.p.A. (“Alfamation™”), our Electronic Test segment also sells its products to customers in markets outside the Semi market including the Auto/EV, Defense/Aerospace, Industrial and Life Sciences markets. Our Environmental Technologies segment, which consists of ITS, sells its products to end users and OEMs within the ATE sector of the Semi market. It also sells its products to customers in a variety of markets other than the Semi market, including the Auto/EV, Defense/Aerospace, Industrial and Life Sciences markets. Our Process Technologies segment consists of Ambrell® and Videology® and sells its products to customers in the wafer production sector within the Semi market. It also sells its products to customers in a variety of markets other than the Semi market, including the Auto/EV, Defense/Aerospace, Industrial, Life Sciences and Safety/Security markets.
Our financial results are affected by a wide variety of factors, including, but not limited to, general economic conditions worldwide and in the markets in which we operate, economic conditions specific to the Semi market and the other markets we serve, downward pricing pressures from customers, our reliance on a relatively few number of customers for a significant portion of our sales and our ability to safeguard patented technology and intellectual property in a rapidly evolving market. In addition, we are exposed to the risk of obsolescence of our inventory depending on the mix of future business and technological changes within the markets that we serve. Part of our strategy for growth includes potential acquisitions that may cause us to incur substantial expense in reviewing and evaluating potential transactions. We may or may not be successful in locating suitable businesses to acquire and in closing acquisitions of businesses we pursue. In
- 6 -
InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
addition, we may not be able to successfully integrate any business we do acquire with our existing business and we may not be able to operate the acquired business profitably. As a result of these or other factors, we may experience significant period-to-period fluctuations in future operating results.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation and Use of Estimates
The accompanying Consolidated Financial Statements include our accounts and those of our wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated upon consolidation. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Certain of our accounts, including inventories, long-lived assets, goodwill, identifiable intangibles, contingent consideration liabilities and deferred tax assets and liabilities including related valuation allowances, are particularly impacted by estimates.
In the opinion of management, the accompanying unaudited Consolidated Financial Statements include all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position, results of operations, and changes in cash flows for the interim periods presented. Certain footnote information has been condensed or omitted from these Consolidated Financial Statements. Therefore, these Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and accompanying footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”) filed on March 12, 2026, with the Securities and Exchange Commission (“SEC”).
(b) Reclassifications
(c) Reportable Segments
We have three
Our management team, including our Chief Executive Officer (“CEO”) who is also our Chief Operating Decision Maker (“CODM”) as defined under U.S. GAAP, evaluates the performance of our operating segments primarily on income (loss) from divisional operations which represents earnings (loss) before income tax expense (benefit) and excludes interest expense, other income (expense), corporate expenses, restructuring costs and acquired intangible amortization. Other divisional costs represent engineering and product development costs, selling expenses, and general and administrative expenses directly attributable to the division.
Our Electronic Test segment sells its products to semiconductor manufacturers and third-party test and assembly houses (end user sales) and to ATE manufacturers (OEM sales), who ultimately resell our equipment with theirs to both semiconductor manufacturers and third-party test and assembly houses. These sales all fall within the ATE sector of the Semi market. With the December 2021 acquisition of Acculogic and the March 2024 acquisition of Alfamation™, our Electronic Test segment also sells its products to customers in markets outside the Semi market including the Auto/EV, Defense/Aerospace, Industrial and Life Sciences markets. Our Environmental Technologies segment sells its products to end users and OEMs within the ATE sector of the Semi market. It also sells its products to customers in a variety of markets other than the Semi market, including the Auto/EV, Defense/Aerospace, Industrial and Life Sciences markets. Our Process Technologies segment sells its products to customers in the wafer production sector within the Semi market.
- 7 -
InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
It also sells its products to customers in a variety of markets other than the Semi market, including the Auto/EV, Defense/Aerospace, Industrial, Life Sciences and Safety/Security markets.
(d) Business Combinations
Acquired businesses are accounted for using the purchase method of accounting, which requires that the purchase price be allocated to the net assets acquired at their respective fair values. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Fair values of intangible assets are estimated by valuation models prepared by our management and third-party advisors. The assets purchased and liabilities assumed have been reflected in our Consolidated Balance Sheets, and the operating results are included in the Consolidated Statements of Operations and Consolidated Statements of Cash Flows from the date of acquisition. Any change in the fair value of acquisition-related contingent consideration subsequent to the acquisition date, including changes from events after the acquisition date, will be recognized in the Consolidated Statements of Operations in the period of the estimated fair value change. Acquisition-related transaction costs, including legal and accounting fees and other external costs directly related to the acquisition, are recognized separately from the acquisition and expensed as incurred in general and administrative expense in the Consolidated Statements of Operations.
(e) Cash, Cash Equivalents and Restricted Cash
Short-term investments that have maturities of three months or less when purchased are considered to be cash equivalents and are carried at cost, which approximates fair value. Our cash balances, which are deposited with highly reputable financial institutions, at times may exceed the federally insured limits. We have not experienced any losses related to these cash balances and believe the credit risk to be minimal.
Periodically we have restricted cash which represents amounts deposited at our banks to support bank guarantees which certain of our customers require as a condition of paying large deposits on orders they place with us. Typically, the amount of the deposit and related guarantee declines as shipments are made against the order. As a condition of our Sixth Amendment to the Loan Agreement executed on August 5, 2025, as further described in “Note (9) Debt,” we have formally pledged cash holdings equal to our outstanding debt with M&T Bank, which we have presented as restricted cash on the face of our Consolidated Balance Sheet.
(f) Trade Accounts Receivable and Allowance for Credit Losses
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. We grant credit to customers and generally require no collateral. To minimize our risk, we perform ongoing credit evaluations of our customers’ financial condition. We follow the guidance in Accounting Standards Codification (“ASC”) Topic 326 - Financial Instruments – Credit Losses (“ASC 326”) in developing our estimate of the allowance for credit losses related to our accounts receivable. The allowance for credit losses is our best estimate of the amount of expected credit losses in our existing accounts receivable. In establishing the amount of allowance for credit losses, we consider all information available as of the reporting date including information related to past events, such as historical loss rates and actual incurred losses, as well as current conditions that may indicate future risk of loss and any other factors of which we are aware, that we believe could impact the ultimate collectability of the related receivables in future periods.
Changes to the allowance for credit losses are included as a component of general and administrative expenses. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. We do not have any significant off-balance sheet credit exposure related to our customers. Cash flows from accounts receivable are recorded in operating cash flows.
(g) Inventories
Inventories are generally valued at cost on a first-in, first-out basis, not in excess of net realizable value, except inventory acquired in a business combination, which is recorded at fair value. Cash flows from the sale of inventories are recorded in operating cash flows. On a quarterly basis, we review our inventories and record excess and obsolete inventory charges based upon our established objective excess and obsolete inventory criteria. Our criteria identify excess material as the quantity of material on hand that is greater than the average annual usage of that material over the prior three years . Our criteria identify obsolete material as material that has not been used in a work order during the prior 24 to 36 months depending on the product line. In certain cases, additional excess and obsolete inventory charges are recorded based upon current market conditions, anticipated product life cycles, new product introductions and expected future use
- 8 -
InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
of the inventory. The excess and obsolete inventory charges we record establish a new cost basis for the related inventories.
(h) Property and Equipment
Our property and equipment caption includes machinery, equipment and leasehold improvements which are stated at cost, except for machinery and equipment acquired in a business combination, which are stated at fair value at the time of acquisition. As disclosed in “(i) Goodwill, Intangible and Long-Lived Assets,” machinery and equipment that has been determined to be impaired is written down to its fair value at the time of the impairment. Depreciation is based upon the estimated useful life of the assets using the straight-line method. The estimated useful lives range from to ten years . Leasehold improvements are recorded at cost and amortized over the shorter of the lease term or the estimated useful life of the asset.
(i) Goodwill, Intangible and Long-Lived Assets
We have three
We account for goodwill and intangible assets in accordance with ASC Topic 350 - Intangibles - Goodwill and Other (“ASC 350”). Finite-lived intangible assets are amortized over their estimated useful economic life and are carried at cost less accumulated amortization. Goodwill is assessed for impairment annually at the beginning of the fourth quarter on a reporting unit basis, or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired. Goodwill is considered to be impaired if the fair value of a reporting unit is less than its carrying amount. As a part of the goodwill impairment assessment, we have the option to perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. If, as a result of our qualitative assessment, we determine that it is more-likely-than-not that the fair value of the reporting unit is greater than its carrying amount, a quantitative goodwill impairment test is not required. However, if, as a result of our qualitative assessment, we determine it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, or, if we choose not to perform a qualitative assessment, we are required to perform a quantitative goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment loss to be recognized.
The quantitative goodwill impairment test compares the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The goodwill impairment assessment is based upon the income approach, which estimates the fair value of our reporting units based upon a discounted cash flow approach. This fair value is then reconciled to our market capitalization at year end with an appropriate control premium. The determination of the fair value of our reporting units requires management to make significant estimates and assumptions including the selection of control premiums, discount rates, terminal growth rates, forecasts of revenue and expense growth rates, income tax rates, changes in working capital, depreciation, amortization and capital expenditures. Changes in assumptions concerning future financial results or other underlying assumptions could have a significant impact on either the fair value of the reporting unit or the amount of the goodwill impairment charge.
Indefinite-lived intangible assets are assessed for impairment annually at the beginning of the fourth quarter, or more frequently if events or changes in circumstances indicate that the asset might be impaired. As a part of the impairment assessment, we have the option to perform a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. If, as a result of our qualitative assessment, we determine that it is more-likely-than-not that the fair value of the indefinite-lived intangible asset is less than its carrying amount, the quantitative impairment test is required; otherwise, no further testing is required. The quantitative impairment test consists of a comparison of the fair value of the intangible asset with its carrying amount. If the carrying amount of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.
Long-lived assets, which consist of finite-lived intangible assets, property and equipment and right-of-use (“ROU”) assets, are assessed for impairment in accordance with ASC Topic 360 - Property, Plant and Equipment (“ASC 360”) whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the
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InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
estimated undiscounted cash flows to the recorded value of the asset group. If impairment is indicated, the asset group is written down to its estimated fair value. The cash flow estimates used to determine the impairment, if any, contain management’s best estimates using appropriate assumptions and projections at that time.
(j) Fair Value of Financial Instruments
ASC Topic 820 - Fair Value Measurement (“ASC 820”) establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and our own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances.
ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tier fair value hierarchy that distinguishes among the following:
Level 1: Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access.
Level 2: Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly.
Level 3: Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by us in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
(k) State and Local Grant Funds Received
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InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
(l) Leases
We account for leases in accordance with ASC Topic 842 - Leases (“ASC 842”). We determine if an arrangement is a lease at inception. A lease contract is within scope if the contract has an identified asset (property, plant or equipment) and grants the lessee the right to control the use of the asset during the lease term. The identified asset may be either explicitly or implicitly specified in the contract. In addition, the supplier must not have any practical ability to substitute a different asset and would not economically benefit from doing so for the lease contract to be in scope. The lessee’s right to control the use of the asset during the term of the lease must include the ability to obtain substantially all of the economic benefits from the use of the asset as well as decision-making authority over how the asset will be used. Leases are classified as either operating leases or finance leases based on the guidance in ASC 842. Operating leases are included in operating lease ROU assets and operating lease liabilities in our Consolidated Balance Sheets. Though we currently do not have any financing leases, our policy is to include finance leases in property and equipment and financing lease liabilities.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. None of our leases provide an implicit rate; therefore, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease. We include these options in the determination of the amount of the ROU asset and lease liability when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Certain of our operating leases contain predetermined fixed escalations of minimum rentals and rent holidays during the original lease terms. Rent holidays are periods during which we have control of the leased facility but are not obligated to pay rent. For these leases, our ROU asset and lease liability are calculated including any rent holiday in the determination of the life of the lease.
We have lease agreements which contain both lease and non-lease components, which are generally accounted for separately. In addition to the monthly rental payments due, most of our leases for our offices and warehouse facilities include non-lease components representing our portion of the common area maintenance, property taxes and insurance charges incurred by the landlord for the facilities which we occupy. These amounts are not included in the calculation of the ROU assets and lease liabilities as they are based on actual charges incurred in the periods to which they apply.
Operating lease payments are included in cash outflows from operating activities on our Consolidated Statements of Cash Flows. Amortization of ROU assets is presented separately from the change in operating lease liabilities and is included in Depreciation and Amortization on our Consolidated Statements of Cash Flows.
We have made an accounting policy election not to apply the recognition requirements of ASC 842 to short-term leases (leases with a term of one year or less at the commencement date of the lease). Lease expense for short-term lease payments is recognized on a straight-line basis over the lease term.
See “Note (8) Leases” for further disclosures regarding our leases.
(m) Interest Rate Swap Agreement
We are exposed to interest rate risk on our floating-rate debt. We have entered into an interest rate swap agreement to effectively convert our floating-rate debt to a fixed-rate basis for a portion of our floating rate debt, as discussed further in “Note (6) Fair Value Measurements” and “Note (9) Debt.” The principal objective of this agreement is to eliminate the variability of the cash flows for interest payments associated with a portion of our floating-rate debt, thus reducing the impact of interest rate changes on future interest payment cash flows. We have elected to apply the hedge accounting rules in accordance with ASC Topic 815 - Derivatives and Hedging. Further, we have determined that this agreement qualifies for the shortcut method of hedge accounting. Our interest rate swap is recorded at fair value as a component of other assets in our Consolidated Balance Sheets. Changes in the fair value of interest rate swap agreements designated as cash flow hedges are recorded as a component of accumulated other comprehensive income (loss) within stockholders’ equity and are amortized to interest expense over the term of the related debt. We recognize the change in the fair value of the interest rate swap as a component of the change in other assets in our Consolidated Statements of Cash Flows.
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InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
(n) Revenue Recognition
We recognize revenue in accordance with the guidance in ASC Topic 606 - Revenue from Contracts with Customers. We recognize revenue for the sale of products or services at the amount of consideration we expect to receive for those goods or services when our performance obligations under the terms of a contract with a customer are satisfied and control of the product or service has been transferred to the customer. Generally, this occurs when we ship a product or perform a service. In certain cases, recognition of revenue is deferred until the product is received by the customer or at some other point in the future when we have determined that we have satisfied our performance obligations under the contract. Our contracts with customers may include a combination of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. In addition to the sale of products and services, we also lease certain of our equipment to customers under short-term lease agreements. We recognize revenue from equipment leases on a straight-line basis over the lease term.
We do not have any material variable consideration arrangements, or any material payment terms with our customers other than standard payment terms which generally range from net 30 to net 90 days. We generally do not provide a right of return to our customers. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. Shipping and handling fees billed to customers are included in revenue, while shipping and handling costs are included in cost of revenue.
Nature of Products and Services
We are a global supplier of innovative test and process technology solutions for use in manufacturing and testing in targeted markets including Semi, Auto/EV, Defense/Aerospace, Industrial, Life Sciences, and Safety/Security. We sell semiconductor ATE interface solutions which include manipulators, docking hardware and electrical interface products. As a result of the acquisition of Acculogic, we sell robotics-based electronic production test equipment. We sell semiconductor ATE interface solutions and certain thermal management products to the Semi market. We sell thermal management products including ThermoStream®, ThermoChambers, process chillers, refrigerators and freezers, which we sell under our Temptronic®, Sigma, Thermonics® and North Sciences product lines, and Ambrell®’s precision induction heating systems, including EKOHEAT® and EASYHEAT™ products. As a result of the acquisition of Videology®, we sell industrial-grade circuit board mounted video digital cameras and related devices, systems and software. We also sell many of our products to various other markets including the Industrial, Auto/EV, Life Sciences, Defense/Aerospace and Safety/Security markets. We provide post-warranty service and support for the equipment we sell.
We lease certain of our equipment under short-term leasing agreements with original lease terms of six months or less. Our lease agreements do not contain purchase options. Occasionally we procure and sell materials/components on behalf of and to our customers.
Types of Contracts with Customers
Our contracts with customers are generally structured as individual purchase orders which specify the exact products or services being sold or equipment being leased along with the selling price, service fee or monthly lease amount for each individual item on the purchase order. Payment terms and any other customer-specific acceptance criteria are also specified on the purchase order. We generally do not have any customer-specific acceptance criteria, other than that the product performs within the agreed-upon specifications. We test substantially all products manufactured as part of our quality assurance process to determine that they comply with specifications prior to shipment to a customer.
Contract Balances
We record accounts receivable at the time of invoicing. Accounts receivable, net of the allowance for credit losses, is included in current assets on our Consolidated Balance Sheets. In certain instances, we also receive customer deposits in advance of invoicing and recording of accounts receivable. Customer deposits are included in current liabilities on our Consolidated Balance Sheets. To the extent that we do not recognize revenue at the same time as we invoice, we record a liability for deferred revenue. Deferred revenue estimated to be recognized within the next twelve months is included in current liabilities. Deferred revenue that we estimate will be recognized beyond twelve months is recorded in Other Liabilities on our Consolidated Balance Sheets. Any non-inventoriable costs associated with deferred revenue are also deferred and recorded in prepaid expenses and other current assets or other assets on our Consolidated Balance Sheets, depending on when the related deferred revenue is expected to be recognized.
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InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
As discussed above, we follow the guidance in ASC 326 in developing our estimate of the allowance for credit losses related to our accounts receivable. The allowance for credit losses is our best estimate of the amount of expected credit losses in our existing accounts receivable. We monitor the collectability of accounts receivable on an ongoing basis and record charges for bad debt expense in the period when we determine that a loss is expected to occur based on our assessment.
Costs to Obtain a Contract with a Customer
The only costs we incur associated with obtaining contracts with customers are sales commissions that we pay to our internal sales personnel or third-party sales representatives. These costs are calculated based on set percentages of the selling price of each product or service sold. Commissions are considered earned by our internal sales personnel at the time we recognize revenue for a particular transaction. Commissions are considered earned by third-party sales representatives at the time that revenue is recognized for a particular transaction. We record commission expense in our Consolidated Statements of Operations at the time the commission is earned. Commissions earned but not yet paid are included in current liabilities on our Consolidated Balance Sheets.
Product Warranties
In connection with the sale of our products, we generally provide standard - or two-year product warranties which are detailed in our terms and conditions and communicated to our customers. Our standard warranties are not offered for sale separately from our products; therefore, there is not a separate performance obligation related to our standard warranties. We record estimated warranty expense for our standard warranties at the time of sale based upon historical claims experience. We offer customers an option to separately purchase an extended warranty on certain products. In the case of extended warranties, we recognize revenue in the amount of the sale price for the extended warranty on a straight-line basis over the extended warranty period. We record costs incurred to provide service under an extended warranty at the time the service is provided. Warranty expense is included in selling expense in our Consolidated Statements of Operations.
See “Note (10) Revenue From Contracts With Customers” and “Note (17) Segment and Geographic Area Information” for further information about our revenue from contracts with customers.
(o) Earnings (Loss) Per Common Share
We compute net earnings (loss) per common share in accordance with ASC 260 - Earnings Per Share by dividing net earnings (loss) by the weighted average number of common shares outstanding during each period. Earnings (loss) per common share - diluted is computed by dividing earnings (loss) by the weighted average number of common shares and common share equivalents outstanding during each period. Common share equivalents represent unvested shares of restricted stock, performance-based restricted stock, restricted stock units and stock options and are calculated using the treasury stock method. Common share equivalents are excluded from the calculation if their effect is anti-dilutive.
(p) Stock-Based Compensation
Our stock-based compensation consists of stock options, restricted stock awards, performance-based restricted stock awards and restricted stock units granted under our stock-based compensation plans. Certain of our awards include vesting terms that are based on market conditions.
We account for stock-based compensation in accordance with ASC Topic 718 - Compensation—Stock Compensation which requires that share-based equity awards granted to employees or non-employee directors be accounted for based on the grant-date fair value of the i) entity’s equity instruments or ii) liabilities that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of such equity instruments. The costs of such instruments are then amortized to expense over the service periods. We recognize forfeitures of awards as they occur, recapturing any expense recorded for unvested awards.
No option may be granted with an exercise period in excess of ten years from the date of grant. Stock options are granted with an exercise price equal to the fair market value of our stock on the date of grant and will generally vest over four years .
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InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
Stock options without market conditions are valued on the date of grant using the Black-Scholes option pricing model, which requires the use of certain assumptions, including the expected volatility of our stock price, the expected term of the option, the risk-free rate of return and the expected dividend yield. Stock options that vest based on market conditions are valued on the date of grant using a Monte Carlo simulation model which also requires assumptions for grant date stock price, strike price, expected volatility, risk-free rate of return, the expected term of the option, the expected dividend yield and incorporates the probability of achieving the market conditions. Market conditions are reflected in the grant date fair value of these awards, therefore, compensation cost is recognized regardless of whether the market conditions are ultimately satisfied, provided the requisite service is rendered.
Restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) are valued based on the quoted market price of our stock at the grant date. RSAs and RSUs generally vest over four years for employees. Prior to 2025, RSAs granted to our independent directors vested 25 % at each of March 31, June 30, September 30, and December 31 of the year in which they were granted. In 2025, RSAs granted to our independent directors vest on the one-year anniversary of the grant date.
We also grant performance-based stock awards (“PSAs”) where the ultimate number of shares that vest can vary and is based on the achievement of specific performance metrics or the outcome of specified market conditions. The grant date fair value of PSAs without market conditions is based on the market price of our common stock on the grant date. We estimate an initial probable outcome for achievement of the performance metrics for PSAs without market conditions at the grant date and subsequently, at each future reporting period, we reassess the probable outcome for achievement for each individual grant against the relevant performance metrics and record an adjustment to the total fair value estimate as needed in the period in which there is a change in our assessment of the probable outcome for that grant. The grant date fair value of PSAs that vest based on market conditions is estimated using a Monte Carlo simulation model which also requires assumptions for grant date stock price, expected volatility, risk-free rate of return, the expected term of the award and incorporates the probability of achieving the market conditions. Market conditions are reflected in the grant date fair value of these awards, therefore, compensation cost is recognized regardless of whether the market condition is ultimately satisfied, provided the requisite service is rendered. We do not reassess the fair value of PSAs that vest based on market conditions in future periods. Vesting for PSAs is generally cliff vesting at the end of the service period. Compensation expense for PSAs is recorded on a straight-line basis over the service period.
Consistent with prior years, for any PSAs, including those with market conditions, where the final number of awards to be issued can vary depending upon the ultimate outcome of the specified performance or market conditions, we issue shares for PSAs at the 100 % achievement level (“target”) at the grant date. We also reserve additional shares in the event that the vesting of the PSAs occurs at the maximum levels.
From time to time, as RSAs, PSAs and RSUs vest, certain employees surrender their vested shares to satisfy their tax liability on vesting. The fair value of those shares on the vesting date is then used by us to pay those employees’ tax obligations. The shares surrendered are reported as treasury stock in our Consolidated Statements of Stockholders’ Equity.
See further disclosures related to our stock-based compensation plans in “Note (13) Stock-Based Compensation Plan.”
(q) Foreign Currency
(r) Income Taxes
We account for income taxes using the asset and liability method, as described in ASC Topic 740 – Income Taxes. Under this method, deferred tax assets and liabilities are recognized for operating loss and tax credit carryforwards and for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates
- 14 -
InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets if it is more likely than not that such assets will not be realized.
Deferred tax assets are analyzed to determine if there will be sufficient taxable income in the future in order to realize such assets. We assess all of the positive and negative evidence concerning the realizability of the deferred tax assets, including our historical results of operations for the recent past and our projections of future results of operations, in which we make subjective determinations of future events. If, after assessing all of the evidence, both positive and negative, a determination is made that the realizability of the deferred tax assets is not more likely than not, we establish a deferred tax valuation allowance for all or a portion of the deferred tax assets depending upon the specific facts. If any of the significant assumptions were changed, materially different results could occur, which could significantly change the amount of the deferred tax valuation allowance established.
Recognition and measurement of uncertain tax positions in our financial statements involves a determination of whether it is more likely than not that a tax position will be sustained upon examination with the presumption that the tax position will be examined by the appropriate taxing authority having full knowledge of all relevant information. Our policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the Consolidated Statements of Operations.
(s) Restructuring and Other Charges
In accordance with the guidance in ASC Topic 420 - Exit or Disposal Cost Obligations, we recognize a liability for restructuring costs at fair value only when the liability is incurred. Workforce-related charges, including those related to leadership transition actions, are accrued when it is determined that a liability has been incurred, which is generally after individuals have been notified of their termination dates and expected severance benefits. Depending on the timing of the termination dates, these charges may be recognized upon notification or ratably over the remaining required service period of the employees. Plans to consolidate excess facilities may result in lease termination fees and impairment charges related to our ROU assets that are associated with the leases for these facilities. Other long-lived assets that may be impaired as a result of restructuring consist of property and equipment, goodwill and intangible assets. Asset impairment charges included in restructuring and other charges are based on an estimate of the amounts and timing of future cash flows related to the expected future remaining use and ultimate sale or disposal of the asset, and, in the case of our ROU assets, would include expected future sublease rental income, if applicable. These estimates are derived using the guidance in ASC 842, ASC 360 and ASC 350.
(t) Effect of Recently Issued Amendments to Authoritative Accounting Guidance Not Yet Adopted
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow Scope Improvements (“ASU 2025-11”). This update improves the navigability of ASC 270 by consolidating interim disclosure requirements and adding a disclosure principle that requires disclosure of material events and changes since the end of the most recent annual reporting period. This ASU is effective for our interim periods in fiscal years beginning after December 15, 2027, with early adoption permitted. We are evaluating the impact of the amendments to our Consolidated Financial Statements and our footnote disclosures to our Consolidated Financial Statements.
In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities (“ASU 2025-10”). This update creates Topic 832 to provide guidance on recognition, measurement, presentation, and disclosure of government grants (monetary or tangible nonmonetary assets) received by business entities, excluding not-for-profit entities, tax items under ASC 740, below-market loans, and certain other transactions. Key provisions include policy elections for asset-related grants and requirements to disclose grant nature, accounting policies, line-item impacts, and significant terms/conditions. This ASU is effective for interim periods in fiscal years beginning after December 15, 2028, with early adoption permitted. We expect to adopt this update via the modified prospective transition approach. We are evaluating the impact of the amendments to our Consolidated Financial Statements and our footnote disclosures to our Consolidated Financial Statements.
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InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). This update removes references to prescriptive and sequential software development stages and introduces the “probable-to-complete” threshold for consideration of when to begin software capitalization. The update also requires the disclosure of the gross capitalized internal-use software balance, the accumulated amortization, the amortization for the period and a general description of the method used in computing amortization. The amendments may be adopted on a prospective, modified transition or retrospective basis and are effective for fiscal years beginning after December 15, 2027, with early adoption permitted. We are evaluating the impact of the amendments to our Consolidated Financial Statements and our footnote disclosures to our Consolidated Financial Statements.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). The amendments introduce a practical expedient related to applying Subtopic 326-20 to current accounts receivable and current contract assets. The practical expedient allows all entities to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset when developing reasonable and supportable forecasts as part of estimating expected credit losses. Under the practical expedient, historical loss information will be adjusted to reflect current conditions to the extent that historic information does not reflect current conditions. The amendments must be adopted on a prospective basis and are effective for fiscal years beginning after December 15, 2025, with early adoption permitted. We have evaluated the impact of the amendments and do not believe there is any material effect to our Consolidated Financial Statements or our footnote disclosures to our Consolidated Financial Statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”) that requires additional disclosure of certain costs and expenses, including amounts of inventory purchases, employee compensation, and depreciation and amortization included in each income statement line item. ASU 2024-03 also requires disclosure of the total amount of selling expenses and our definition of selling expenses. This update is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, and may be adopted on a prospective basis at the effective date or retrospectively applied to all periods presented. We do not believe there will be any impact on our Consolidated Statements of Operations and are evaluating the impact of the amendments on footnote disclosures to our Consolidated Financial Statements.
In March 2024, the SEC issued a new final rule in Release 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors, which requires the inclusion of climate-related information in registration statements and annual reports. Among other things, the new rule requires disclosure of material climate-related risks, activities related to adapting to or mitigating such risks, related oversight activities, and information on climate-related targets or goals. Information is also required of certain greenhouse gas emissions. Disclosure requirements were to begin phasing in for fiscal years beginning on or after January 1, 2025, however on April 4, 2024, the SEC issued a voluntary stay (SEC Release 33-11280) in response to pending litigation. Therefore, the implementation dates are currently on hold. We are monitoring SEC developments and evaluating the impact of the new rule on our Consolidated Financial Statements.
(3) INVENTORIES
Inventories held at March 31, 2026, and December 31, 2025, were comprised of the following:
| (in thousands) | March 31, 2026 | December 31, 2025 | ||||||||||||
| Raw materials | $ | $ | ||||||||||||
| Work in process | ||||||||||||||
| Inventory consigned to others | ||||||||||||||
| Finished goods | ||||||||||||||
| Total inventories | $ | $ | ||||||||||||
Total charges incurred for excess and obsolete inventory for the three months ended March 31, 2026 and 2025, were as follows:
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InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
| Three Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| (in thousands) | 2026 | 2025 | ||||||||||||
| Excess and obsolete inventory charges | $ | $ | ||||||||||||
(4) PROPERTY AND EQUIPMENT
Property and equipment included the following:
| (in thousands) | March 31, 2026 | December 31, 2025 | ||||||||||||
| Machinery and equipment | $ | $ | ||||||||||||
| Leasehold improvements | ||||||||||||||
| Gross property and equipment | ||||||||||||||
| Less: accumulated depreciation | ( | ( | ||||||||||||
| Net property and equipment | $ | $ | ||||||||||||
Depreciation expense related to property and equipment was as follows:
| Three Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| (in thousands) | 2026 | 2025 | ||||||||||||
| Depreciation | $ | $ | ||||||||||||
(5) GOODWILL AND INTANGIBLE ASSETS
We have three
Goodwill
Changes in the amount of the carrying value of goodwill for the three months ended March 31, 2026, are as follows:
| (in thousands) | ||||||||
| Balance - January 1, 2026 | $ | |||||||
| Impact of foreign currency translation adjustments | ( | |||||||
| Balance – March 31, 2026 | $ | |||||||
Goodwill was comprised of the following at March 31, 2026, and December 31, 2025:
| (in thousands) | March 31, 2026 | December 31, 2025 | ||||||||||||
| Electronic Test | $ | $ | ||||||||||||
| Environmental Technologies | ||||||||||||||
| Process Technologies | ||||||||||||||
| Total goodwill | $ | $ | ||||||||||||
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InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
Intangible Assets
Changes in the amount of the carrying value of our intangible assets for the three months ended March 31, 2026 were as follows:
| (in thousands) | Finite-Lived | Indefinite-Lived | ||||||||||||
| Balance - January 1, 2026 | $ | $ | ||||||||||||
| Impact of foreign currency translation adjustments | ( | ( | ||||||||||||
| Amortization | ( | — | ||||||||||||
| Balance – March 31, 2026 | $ | $ | ||||||||||||
The following tables provide further detail about our intangible assets as of March 31, 2026, and December 31, 2025:
| March 31, 2026 | ||||||||||||||||||||
| (in thousands) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||
| Finite-lived intangible assets: | ||||||||||||||||||||
| Customer relationships | $ | $ | $ | |||||||||||||||||
| Technology | ||||||||||||||||||||
| Patents | ||||||||||||||||||||
| Software | ||||||||||||||||||||
| Trade name | ||||||||||||||||||||
| Total finite-lived intangible assets | ||||||||||||||||||||
| Indefinite-lived intangible assets: | ||||||||||||||||||||
| Trademarks | — | |||||||||||||||||||
| Total intangible assets | $ | $ | $ | |||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||
| (in thousands) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||
| Finite-lived intangible assets: | ||||||||||||||||||||
| Customer relationships | $ | $ | $ | |||||||||||||||||
| Technology | ||||||||||||||||||||
| Patents | ||||||||||||||||||||
| Software | ||||||||||||||||||||
| Trade name | ||||||||||||||||||||
| Total finite-lived intangible assets | ||||||||||||||||||||
| Indefinite-lived intangible assets: | ||||||||||||||||||||
| Trademarks | — | |||||||||||||||||||
| Total intangible assets | $ | $ | $ | |||||||||||||||||
- 18 -
InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
The following table sets forth the estimated annual amortization expense for each of the next five years and thereafter:
| (in thousands) | ||||||||
| Remaining 2026 | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| Thereafter | ||||||||
| Total estimated amortization of finite-lived intangible assets | $ | |||||||
(6) FAIR VALUE MEASUREMENTS
Recurring Fair Value Measurements
The interest rate swap agreement we entered into in connection with our Term Note, as disclosed in “Note (2) Summary of Significant Accounting Policies; (m) Interest Rate Swap Agreement” and “Note (9) Debt,” is measured at fair value on a recurring basis using Level 2 inputs. The contingent consideration liability on our Consolidated Balance Sheet is measured at fair value on a recurring basis using Level 3 inputs.
Our contingent consideration liability is a result of our acquisition of Acculogic on December 21, 2021, and represents the estimated fair value of the additional cash consideration payable that is contingent upon sales to Electric Vehicle (“EV”) or battery customers. We may pay the seller up to an additional CAD $5.0 million in the five-year period from 2022 through 2026. The additional payments will be based on a percent of net invoices for which payments have been received on systems sold to EV or battery customers in excess of CAD $2.5 million per year in each of the five years . The maximum payment is capped at CAD $5.0 million, which equates to approximately $3.7 million at March 31, 2026. There were no 1.4 million. This amount was recorded as a contingent consideration liability and included in the purchase price as of the acquisition date. We reassess the estimated fair value of this liability annually using this same approach, or more frequently, if we determine that there have been material changes to the assumptions used in the calculation of the probable payout.
The following fair value hierarchy table presents information about assets and (liabilities) measured at fair value on a recurring basis:
| March 31, 2026 | ||||||||||||||||||||||||||
| Fair Value Measurement Using | ||||||||||||||||||||||||||
| (in thousands) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
| Interest rate swap | $ | $ | $ | $ | ||||||||||||||||||||||
| Contingent consideration - current | ( | ( | ||||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||
| Fair Value Measurement Using | ||||||||||||||||||||||||||
| (in thousands) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
| Interest rate swap | $ | $ | $ | $ | ||||||||||||||||||||||
| Contingent consideration - current | ( | ( | ||||||||||||||||||||||||
| Contingent consideration - long term | ( | ( | ||||||||||||||||||||||||
- 19 -
InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
Changes in the fair value of our Level 3 contingent consideration liabilities for the three months ended March 31, 2026 and 2025, were as follows:
| Three Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| (in thousands) | 2026 | 2025 | ||||||||||||
| Balance at beginning of period | $ | $ | ||||||||||||
| Cash payments | ( | ( | ||||||||||||
| Change in estimated fair value | ( | |||||||||||||
| Impact of foreign currency translation adjustments | ( | ( | ||||||||||||
| Balance at end of period | $ | $ | ||||||||||||
(7) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities included the following:
| (in thousands) | March 31, 2026 | December 31, 2025 | ||||||||||||
| Accrued wages and benefits | $ | $ | ||||||||||||
| Accrued professional fees | ||||||||||||||
| Accrued sales commissions | ||||||||||||||
| Accrued warranty | ||||||||||||||
| Other current liabilities | ||||||||||||||
| Total accrued expenses and other current liabilities | $ | $ | ||||||||||||
(8) LEASES
As disclosed in “Note (2) Summary of Significant Accounting Policies; (l) Leases,” we account for our leases in accordance with the guidance in ASC 842. We lease our offices, warehouse facilities and certain equipment under non-cancellable operating leases that expire at various dates through 2032. Total operating lease and short-term lease costs for the three months ended March 31, 2026 and 2025, respectively, were as follows:
| Three Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| (in thousands) | 2026 | 2025 | ||||||||||||
| Operating lease cost | $ | $ | ||||||||||||
| Short-term lease cost | ||||||||||||||
The following is additional information about our leases as of March 31, 2026:
| Range of remaining lease terms (in years) | to | |||||||||||||
| Weighted average remaining lease term (in years) | ||||||||||||||
| Weighted average discount rate | ||||||||||||||
- 20 -
InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
Maturities of lease liabilities as of March 31, 2026, were as follows:
| (in thousands) | ||||||||
| 2026 (remainder) | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| Thereafter | ||||||||
| Total lease payments | $ | |||||||
| Less imputed interest | ( | |||||||
| Total present value of lease liabilities | $ | |||||||
Cash Flow Information
| Three Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| (in thousands) | 2026 | 2025 | ||||||||||||
| Amortization of ROU assets | $ | $ | ||||||||||||
| ROU assets obtained in exchange for operating lease obligations | ||||||||||||||
As part of our Alfamation™ acquisition on March 12, 2024, we entered into the related-party Alfamation Lease Agreement for the seller-owned facility where Alfamation™ has its principal operations. The Alfamation Lease Agreement commenced on March 12, 2024 and the initial term was six years . It will automatically renew for the same period of time unless terminated by either party. The leased premises include warehouse and office space totaling approximately 52 thousand square feet. The semi-annual lease payments are €0.1 million, which at the date of the signing of the Alfamation Lease agreement equated to approximately $0.1 million per payment.
(9) DEBT
Letters of Credit
We have issued letters of credit as the security deposits for certain of our domestic leases. These letters of credit are secured by pledged certificates of deposit which are classified as other assets on our Consolidated Balance Sheets. The terms of our leases require us to renew these letters of credit at least 30 days prior to their expiration dates for successive terms of not less than one year until lease expiration. Our outstanding letters of credit at March 31, 2026, and December 31, 2025, consisted of the following:
| (in thousands) | L/C | Lease | Letters of Credit Amount Outstanding | |||||||||||||||||||||||||||||
| Facility | Original L/C Issue Date | Expiration Date | Expiration Date | Mar. 31, 2026 | Dec. 31, 2025 | |||||||||||||||||||||||||||
| Mt. Laurel, NJ | $ | $ | ||||||||||||||||||||||||||||||
| Mansfield, MA | ||||||||||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||||||||
Credit Facility
On October 15, 2021 (the “Closing Date”), we entered into an Amended and Restated Loan and Security Agreement with M&T Bank (“M&T”) which, was subsequently amended on October 28, 2021, December 30, 2021, September 20, 2022,
- 21 -
InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
May 2, 2024, December 18, 2024, and August 5, 2025 (together as amended, the “Loan Agreement”). The Loan Agreement includes a $50.5 million non-revolving delayed draw term note (the “Term Note”) and a $10.0 million revolving credit facility (the “Revolving Facility” and together with the Term Note, the “Credit Facility”). The available funding at March 31, 2026, under the Term Note was $30 million and we have not borrowed any amounts under the $10.0 million Revolving Facility. The Credit Facility has a five-year contract period that began on October 15, 2021, and, as amended, expires on May 2, 2031, and draws under the Term Note, as amended, are permissible until May 2, 2026.
The principal balance of the Revolving Facility and the principal balance of any amount drawn under the Term Note accrues interest based on the secured overnight financing rate for U.S. government securities (“SOFR”) or a bank-defined base rate plus an applicable margin, depending on leverage. Each draw under the Term Note will have an option for us of either (i) up to a five-year amortizing term loan with a balloon due at maturity, or (ii) up to a five-year term with up to seven years amortization with a balloon due at maturity. Any amortization greater than five years will be subject to an excess cash flow recapture. The Loan Agreement also allows us to enter into hedging contracts with M&T, including interest rate swap agreements, interest rate cap agreements, interest rate collar agreements, or any other agreements or that are designed to protect us against fluctuations in interest rates or currency exchange rates.
The Loan Agreement contains customary default provisions, including but not limited to the failure by us to repay obligations when due, violation of provisions or representations provided in the Loan Agreement, bankruptcy by us, suspension of our business or any of our subsidiaries and certain material judgments. After expiration of the contract period or if a continued event of default occurs, interest will accrue on the principal balance at a rate of 2 % in excess of the then applicable nondefault interest rate. The Loan Agreement includes customary affirmative, negative and financial covenants, including a maximum ratio of consolidated funded debt to consolidated EBITDA of not more than 3.0 to 1.0 and a fixed charge coverage ratio of not less than 1.25 to 1.0. Our obligations under the Loan Agreement are secured by liens on substantially all of our tangible and intangible assets that are owned as of the Closing Date or acquired thereafter.
On August 5, 2025, we executed the Sixth Amendment to the Loan Agreement, which formally waives the fixed charge coverage ratio financial covenant for periods ending June 30, 2025 through and including March 31, 2026. During the period of this waiver we are required to request consent from M&T if we wish to utilize our Revolving Facility and we formally pledged a portion of our cash holdings equal to our total outstanding debt with M&T. At March 31, 2026 we were holding $2.8 million of total debt with M&T. At March 31, 2026, we were in compliance with all covenants included in the Loan Agreement.
On October 28, 2021, we drew $12.0 million under the Term Note to finance the acquisition of Videology®. We also entered into an interest rate swap agreement with M&T as of this date which is designed to protect us against fluctuations in interest rates during the five-year repayment and amortization period. As a result, the annual interest rate we pay for this draw under the Term Note is fixed at approximately 3.2 % based on current leverage.
On December 29, 2021, we drew $8.5 million under the Term Note to finance the acquisition of Acculogic. We did not enter into an interest rate swap agreement with M&T related to this draw. The annual interest rate for this draw under the Term Note is variable. At March 31, 2026, it was approximately 5.8 % based on current leverage.
As of March 31, 2026, the remainder of our Term note matures in 2026. On May 4, 2026, we amended the Credit Facility, effective as of April 30, 2026, to extend our ability to draw on the Term Note through August 28, 2026.
Alfamation™ Debt
In connection with the acquisition of Alfamation™, we assumed debt which totaled $11.3 million as of the acquisition date. At March 31, 2026, Alfamation™’s total debt amounted to $5.7 million. This debt is comprised of both fixed and variable rate bank issued term loans as well as $3.4 million of short-term variable rate financing backed by Alfamation™’s accounts receivable. This debt is spread across several different institutions with monthly, quarterly or semi-annual repayment schedules. The short-term variable financing rate at March 31, 2026, was 3.2 %. At March 31, 2026, the weighted average interest rate payable on the bank issued term loans was 0.7 % for fixed rate debt and 4.0 % for variable rate debt and the overall weighted average interest rate for the bank issued term loans was 3.3 %.
- 22 -
InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
As of March 31, 2026, the remaining maturities of the Alfamation™ debt are as follows:
| (in thousands) | ||||||||
| 2026 (remainder) | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
Total remaining maturities of our Alfamation™ Debt | $ | |||||||
(10) REVENUE FROM CONTRACTS WITH CUSTOMERS
Disaggregation of Revenue
The following tables provide additional information about our revenue from contracts with customers, including revenue by customer and product type and revenue by market. See “Note (17) Segment and Geographic Area Information” for information about revenue by operating segment and geographic region.
| Three Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| (in thousands) | 2026 | 2025 | ||||||||||||
| Revenue by customer type: | ||||||||||||||
| End user | $ | $ | ||||||||||||
| OEM/Integrator | ||||||||||||||
| $ | $ | |||||||||||||
| Three Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| (in thousands) | 2026 | 2025 | ||||||||||||
| Revenue by product type: | ||||||||||||||
| Thermal test | $ | $ | ||||||||||||
| Thermal process | ||||||||||||||
| Semiconductor test | ||||||||||||||
| Video imaging | ||||||||||||||
| Flying probe and in-circuit testers | ||||||||||||||
Alfamation™ products | ||||||||||||||
| Service/other | ||||||||||||||
| $ | — | $ | ||||||||||||
- 23 -
InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
| Three Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| (in thousands) | 2026 | 2025 | ||||||||||||
| Revenue by market: | ||||||||||||||
| Semi | $ | $ | ||||||||||||
| Auto/EV | ||||||||||||||
| Defense/Aerospace | ||||||||||||||
| Industrial | ||||||||||||||
| Life Sciences | ||||||||||||||
| Safety/Security | ||||||||||||||
| Other | ||||||||||||||
| $ | $ | |||||||||||||
Major Customers
During the three months ended March 31, 2026, two customers exceeded 10% of our consolidated revenue. Customer “A” accounted for 14 % and Customer “B” accounted for 10 %. During the three months ended March 31, 2025, Customer “B” was the only customer exceeding 10%, with 13 %, of our consolidated revenue. These revenues in the periods presented were generated by our Electronic Test segment.
Contract Liabilities
As of March 31, 2026, and December 31, 2025, we had total contract liabilities of $7.6 million and $7.4 million, respectively. Our contract liabilities consist of our customer deposits and deferred revenue as well as deferred revenue net of current portion on our Consolidated Balance Sheets. For the three months ended March 31, 2026, the amount recognized as revenue from the contract liabilities balance as of December 31, 2025, was $3.2 million, while for the three months ended March 31, 2025, the amount recognized as revenue from the contract liabilities balance as of December 31, 2024, was $3.0 million.
Allowance for Credit Losses
Activity related to our allowance for credit losses was as follows:
| Three Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| (in thousands) | 2026 | 2025 | ||||||||||||
| Beginning balance | $ | $ | ||||||||||||
| Credit loss expense, net of release of unused allowance | ( | ( | ||||||||||||
| Write-offs | ( | |||||||||||||
| Foreign currency translation impact | ( | |||||||||||||
| Ending balance | $ | $ | ||||||||||||
- 24 -
InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
(11) EARNINGS (LOSS) PER SHARE
The table below sets forth, for the periods indicated, a reconciliation of weighted average common shares outstanding - basic to weighted average common shares and common share equivalents outstanding - diluted and the average number of potentially dilutive securities that were excluded from the calculation of diluted earnings (loss) per share because their effect was anti-dilutive:
| Three Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Weighted average common shares outstanding - basic | ||||||||||||||
| Potentially dilutive securities: | ||||||||||||||
| Unvested shares of restricted stock and employee stock options | ||||||||||||||
| Weighted average common shares and common share equivalents outstanding - diluted | ||||||||||||||
| Average number of potentially dilutive securities excluded from calculation because their effect was anti-dilutive during the period | ||||||||||||||
(12) EQUITY
On March 5, 2025, our Board of Directors authorized the renewal of our previously expired share repurchase plan (the “Repurchase Plan”), whereby we may repurchase shares of our common stock on the open market with a total aggregate repurchase amount of up to $10.0 million. As of the renewal date, we had approximately $9.0 million available for repurchases under the Repurchase Plan. We are not obligated to purchase any common stock under the Repurchase Plan. Further, the Repurchase Plan may be suspended or discontinued at any time without prior notice.
(13) STOCK-BASED COMPENSATION PLAN
As of March 31, 2026, we had unvested stock options, restricted stock awards, performance-based restricted stock awards and restricted stock units granted under our stock-based compensation plans. Certain of our awards contain vesting terms based on market conditions. On June 21, 2023, our stockholders approved the InTest Corporation 2023 Stock Incentive Plan (the “2023 Plan”) which replaced the Fourth Amended and Restated 2014 Stock Plan (the “2014 Plan”). No further awards can be granted under the 2014 Plan. The maximum number of shares of common stock available for grant and issuance under the 2023 Plan is (a) 350,000 , plus (b) the number of shares of common stock available for issuance under the 2014 Plan on the date the 2023 Plan was approved by stockholders, plus (c) any shares of common stock that are subject to awards granted under the 2014 Plan that expire, are forfeited or canceled or terminate for any other reason on or after the date the 2023 Plan was approved by stockholders, without the issuance of shares. The number of shares available to be issued under the 2023 Plan as of the date of its approval was 1,117,942 . At March 31, 2026, as a result of current year’s activity with regard to performance-based restricted stock awards (grants and forfeitures), and stock option awards with vesting terms based on market conditions, we had 26,287 shares reserved in aggregate for performance in excess of target as of March 31, 2026. As of March 31, 2026, the remaining authorization for issue under the 2023 Plan was 90,655 .
- 25 -
InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
The following table summarizes the compensation expense we recorded during the three months ended March 31, 2026 and 2025, related to unvested stock-based awards:
| Three Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| (in thousands) | 2026 | 2025 | ||||||||||||
| Cost of revenues | $ | ( | $ | |||||||||||
| Selling expense | ||||||||||||||
| Engineering and product development expense | ( | |||||||||||||
| General and administrative expense | ||||||||||||||
| Total stock-based compensation expense | $ | $ | ||||||||||||
As of March 31, 2026, total compensation expense to be recognized in future periods was $6.3 million. The weighted average period over which this expense is expected to be recognized was 2.8 years. There was no
Stock Options
The fair value for stock options without market conditions granted during the three months ended March 31, 2026 and 2025 were estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:
| Three Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Risk-free interest rate | % | % | ||||||||||||
| Dividend yield | % | % | ||||||||||||
| Expected common stock market price volatility factor | ||||||||||||||
| Weighted average expected life of stock options (years) | ||||||||||||||
The following table summarizes the activity related to stock options without market conditions for the three months ended March 31, 2026:
| Stock Options | Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (yrs) | Aggregate Intrinsic Value (in thousands) | ||||||||||||||||||||||
Options outstanding, January 1, 2026 | $ | |||||||||||||||||||||||||
| Granted | ||||||||||||||||||||||||||
| Exercised | ( | |||||||||||||||||||||||||
| Forfeited | ( | |||||||||||||||||||||||||
Options outstanding, March 31, 2026 | $ | $ | ||||||||||||||||||||||||
| Exercisable | $ | $ | ||||||||||||||||||||||||
| Expected to vest | $ | $ | ||||||||||||||||||||||||
- 26 -
InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
The table below summarizes certain additional information with respect to our options without market conditions:
| Three Months Ended | |||||||||||
| March 31, | |||||||||||
| (in thousands, except per option amounts) | 2026 | 2025 | |||||||||
| Weighted average grant date fair value per option | $ | $ | |||||||||
| Aggregate intrinsic value of options exercised | $ | $ | |||||||||
Stock Options with Vesting Based on Market Conditions
On March 31, 2026, our newly appointed President and Chief Executive Officer was awarded a grant of performance-based stock options (the “Performance Options”). The grant is for up to 300,000 options with an exercise price per share of $13.65 , equal to the closing price of a share of common stock on March 31, 2026, and a term of 10 years from date of grant. The final vesting percentage will be based on the achievement of a performance goal relating to the common stock during a three-year performance period that begins on date of grant and ends on the third anniversary of the grant (the “PSO Performance Period”). The performance goal will provide for vesting based on the volume weighted average price (“VWAP”) of our common stock over the final 20 consecutive trading days of the PSO Performance Period (“20-Day VWAP”), with an aggregate of:
(a)50,000 of the Performance Options eligible to vest if the 20-Day VWAP equals or exceeds $20.00 per share;
(b)100,000 of the Performance Options eligible to vest if the 20-Day VWAP equals or exceeds $25.00 per share;
(c)200,000 of the Performance Options eligible to vest if the 20-Day VWAP equals or exceeds $30.00 per share;
(d)250,000 of the Performance Options eligible to vest if the 20-Day VWAP equals or exceeds $35.00 per share; or
(e)300,000 of the Performance Options eligible to vest if the 20-Day VWAP equals or exceeds $40.00 per share.
The vesting terms based on the 20-Day VWAP is a market condition. As of March 31, 2026, we have estimated the total grant-date fair value of these options that vest based on market conditions to be $1.5 million which will be recognized over the year service period. The Monte Carlo simulation model used the following estimates to determine this fair value at the grant date: expected volatility of 58 %, a risk-free rate of return of 4.1 %, an expected term of 6.5 years and an expected dividend yield of 0 %. As of March 31, 2026, no forfeitures have been assumed for these Performance Options and since these were granted on the last day of the quarter, we have not recognized any compensation costs for the three months ended March 31, 2026.
Restricted Stock Awards
The following table summarizes the activity related to unvested restricted stock awards for the three months ended March 31, 2026:
| Restricted Stock Awards | Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||||
Unvested shares outstanding, January 1, 2026 | $ | |||||||||||||
| Granted | ||||||||||||||
| Vested | ( | |||||||||||||
| Forfeited | ( | |||||||||||||
Unvested shares outstanding, March 31, 2026 | $ | |||||||||||||
- 27 -
InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
Additional information about our restricted stock awards is summarized as follows:
| Three Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| (in thousands) | 2026 | 2025 | ||||||||||||
| Aggregate market value of RSA’s vested | $ | $ | ||||||||||||
Performance-Based Restricted Stock Awards
On March 16, 2026, our former CEO, CFO and the then current Division Presidents of our three operating segments received PSAs which vest based on market conditions, totaling 26,264 shares valued at $0.3 million as of the date of grant. The Monte Carlo simulation model used the following estimates to determine this fair value at the grant date: expected volatility of 55 %, a risk-free rate of return of 3.7 % and an expected term of 2.8 years. These PSAs vest on the third anniversary of the grant date at a vesting percentage that could range from 0 % to 150 % of the number of PSAs awarded on March 16, 2026. The final vesting percentage will be based on the achievement of certain performance metrics related to the enterprise value as of December 31, 2028, as determined by the Compensation Committee of our Board of Directors. On March 31, 2026, our former CEO separated from the Company. At March 31, 2026, 12,442 PSAs remain outstanding for the remaining four participants.
On March 31, 2026, Richard N. Grant, Jr. stepped down as President and Chief Executive Officer of InTest. Mr. Grant had the following PSAs outstanding at his termination date: 17,652 PSAs granted at target on March 6, 2024 with a probability of 0 % immediately before termination, 25,840 PSAs granted at target on March 17, 2025 with a probability of 100 % immediately before termination and 13,822 PSAs granted at target on March 16, 2026 with a market vesting condition. Due to his separation, none of the performance criteria were achieved and therefore all 57,314 PSAs issued were forfeited. The adjustment for these awards was recorded during the three months ended March 31, 2026 in general and administrative expense in our Consolidated Statements of Operations.
On March 17, 2025, our former CEO, CFO and the then current Division Presidents of our three operating segments received PSAs totaling 49,098 shares valued at $0.4 million as of the date of grant. These PSAs vest on the third anniversary of the grant date at a vesting percentage that could range from 0 % to 150 % of the number of shares awarded on March 17, 2025. These awards do not contain market conditions. The final vesting percentage will be based on the achievement of certain performance metrics related to the percentage of revenue received by us generated by recurring revenue streams for the year ended December 31, 2027, as determined by the Compensation Committee of our Board of Directors. At March 31, 2026, 18,951 PSAs remain outstanding for the remaining three participants and we have estimated that these PSAs will vest at 100 % of the original amount based on our assessment of the probable achievement against the relevant performance metrics.
On March 6, 2024, our former CEO, CFO and the then current Division Presidents of our three 33,539 shares valued at $0.4 million as of the date of grant. These PSAs vest on the third anniversary of the grant date at a vesting percentage that could range from 0 % to 150 % of the number of shares awarded on March 6, 2024. These awards do not contain market conditions. The final vesting percentage will be based on the achievement of certain performance metrics related to adjusted EBITDA for the year ended December 31, 2026, as determined by the Compensation Committee of our Board of Directors. At March 31, 2026, 12,945 PSAs remain outstanding and this probability estimate remains at 0 % for the remaining three participants based on our current projections for the performance metrics for the relevant measurement period. The adjustment for this award was recorded in general and administrative expense in our Consolidated Statements of Operations.
On January 16, 2024, the newly appointed president of our Process Technologies segment received PSAs totaling 8,231 shares valued at $0.1 million as of the date of grant. These PSAs vest on the third anniversary of the grant date at a vesting percentage that could range from 0 % to 150 % of the number of shares awarded on January 16, 2024. This award does not contain market conditions. The final vesting percentage will be based on the achievement of certain performance metrics including revenue and income from operations for the year ending December 31, 2026. At March 31, 2026, the probability estimate remains at 0 % based on our current projections for the performance metrics for the relevant measurement period. The adjustment for this award was recorded in general and administrative expense in our Consolidated Statements of Operations.
- 28 -
InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
On March 8, 2023, our former CEO, CFO and certain other members of our senior management received PSAs, of which 16,605 shares remained as of December 31, 2025. These awards did not contain market conditions. The performance criteria was based on the achievement of a revenue metric for the year ending December 31, 2025. That revenue metric was not achieved as of December 31, 2025 and on March 4, 2026, these PSAs were forfeited.
The following table summarizes the activity related to unvested PSAs for the three months ended March 31, 2026:
| Performance-based Stock Awards | Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||||
Unvested shares outstanding, January 1, 2026 | $ | |||||||||||||
| Granted | ||||||||||||||
| Vested | ||||||||||||||
| Forfeited | ( | |||||||||||||
Unvested shares outstanding, March 31, 2026 | $ | |||||||||||||
There were no PSAs that vested in 2026 or 2025.
Restricted Stock Units
We began issuing restricted stock units to certain employees in 2025. The following table summarizes the activity related to unvested restricted stock units for the three months ended March 31, 2026:
| Restricted Stock Units | Number of Units | Weighted Average Grant Date Fair Value | ||||||||||||
Unvested units outstanding, January 1, 2026 | $ | |||||||||||||
| Granted | ||||||||||||||
| Vested | ( | |||||||||||||
| Forfeited | ( | |||||||||||||
Unvested units outstanding, March 31, 2026 | $ | |||||||||||||
Additional information about our restricted stock units is summarized as follows:
| Three Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| (in thousands) | 2026 | 2025 | ||||||||||||
| Aggregate market value of RSU’s vested | $ | $ | ||||||||||||
(14) EMPLOYEE STOCK PURCHASE PLAN
The InTest Corporation Employee Stock Purchase Plan (the “ESPP”) was adopted by the Board in April 2021 subject to approval by our stockholders, which occurred on June 23, 2021, at our Annual Meeting of Stockholders and became effective on October 1, 2021.
The ESPP provides our eligible employees with an opportunity to purchase common stock through accumulated payroll deductions at a 15 % discount from the closing market price on the purchase date. The discount is recorded as a
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InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
component of compensation expense in our Consolidated Statements of Operations. The ESPP provides that an aggregate of up to 250,000 shares of our common stock will be available for issuance under the ESPP. The shares of our common stock purchasable under the ESPP will be shares of authorized but unissued or reacquired shares, including shares repurchased by us on the open market.
The activity in our ESPP was as follows:
| Three Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| (in thousands except shares) | 2026 | 2025 | ||||||||||||
| Shares purchased | ||||||||||||||
| Total cost of shares | $ | $ | ||||||||||||
| Total discount - compensation expense | $ | $ | ||||||||||||
The per share prices related to the ESPP purchases were as follows:
| Closing Market Price | Purchase Price | |||||||||||||
| March 31, 2026 | ||||||||||||||
| March 31, 2025 | ||||||||||||||
(15) RESTRUCTURING
CEO Transition
On March 31, 2026, Richard N. Grant, Jr. stepped down as President and Chief Executive Officer of InTest. In connection with Mr. Grant’s separation from the Company, and in accordance with his offer letter dated July 24, 2020, Mr. Grant is entitled to severance equal to 12 months base salary paid in accordance with the Company’s customary payroll practices, which is expressly conditioned upon his execution and non-revocation of a confidential separation agreement and general release of claims in a form acceptable to the Company. Mr. Grant has executed both the separation agreement and general release and has not revoked.
As a result of this action, we incurred severance, payroll tax and payroll related, professional fees and other costs through March 31, 2026 in our Corporate & Other segment. We expect to incur an immaterial amount of additional costs related to professional fees and other costs incurred in the second quarter of 2026 related to this action.
Videology Consolidation
On February 25, 2025, we notified employees of our wholly-owned subsidiary, Videology Imaging Corporation, of our intention to consolidate all operations in the Netherlands into our facility located in Mansfield, Massachusetts (the “Videology Consolidation”). Videology® is included in our Process Technologies segment. This plan resulted in the closure of the Netherlands facility and the termination of certain employees at that location. The Videology Consolidation of the Netherlands operations was undertaken to increase efficiencies and lower operating costs associated with the current operation of Videology® and was substantially completed by the end of 2025, at which point we vacated the Netherlands facility. While we have substantially completed the Videology Consolidation, we expected to incur facility costs on the remaining operating lease until the earlier of lease termination or expiry of approximately $0.3 million.
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InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
We have recognized restructuring expenses related to these actions as follows:
| Three Months Ended | ||||||||||||||
| (in thousands) | March 31, 2026 | March 31, 2025 | ||||||||||||
| CEO Transition | ||||||||||||||
| Severance | $ | $ | ||||||||||||
| Payroll taxes and payroll related | ||||||||||||||
| Professional fees | ||||||||||||||
| Other | ||||||||||||||
| Total CEO Transition restructuring charges | $ | $ | ||||||||||||
| Videology Consolidation: | ||||||||||||||
| Severance | $ | $ | ||||||||||||
| Retention | ||||||||||||||
| Payroll taxes and payroll related | ||||||||||||||
| Other | ||||||||||||||
| Total Process Technologies restructuring charges | $ | $ | ||||||||||||
| Total consolidated restructuring charges | $ | $ | ||||||||||||
Our restructuring accrual is included as a component of accrued expenses and other current liabilities:
| Three Months Ended | ||||||||
| (in thousands) | March 31, 2026 | |||||||
| Beginning balance | $ | |||||||
| Charges | ||||||||
| Cash payments | ( | |||||||
| Impact of foreign currency translation adjustments | ( | |||||||
| Ending balance | $ | |||||||
(16) EMPLOYEE BENEFIT PLANS
The InTest Corporation Incentive Savings Plan is a defined contribution 401(k) plan for our employees who work in the U.S. (the “InTest Savings Plan”). As of March 31, 2026, all permanent employees of Acculogic Ltd, Ambrell®, InTest Corporation, InTest EMS LLC, Temptronic Corporation and Videology®, who are at least 18 years of age, are eligible to participate in the InTest Savings Plan. We match employee contributions dollar for dollar up to 10 % of the employee's annual compensation, with a maximum limit of $5 thousand. Employer contributions vest ratably over four years . Matching contributions are discretionary.
We recorded expense for matching contributions as follows:
| Three Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| (in thousands) | 2026 | 2025 | ||||||||||||
| Discretionary employer matching contributions | $ | $ | ||||||||||||
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InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
Employees of Alfamation™ in Italy are entitled to Trattamento di Fine Rapporto (“TFR”), commonly referred to as an employee leaving indemnity, which represents deferred compensation for employees. Under Italian law, an entity is obligated to accrue for TFR on an individual employee basis payable to each individual upon termination of employment (including both voluntary and involuntary dismissal). The expense is recognized as a component of payroll-related costs in our Consolidated Statements of Operations and the required accrual is included in other liabilities on our Consolidated Balance Sheets. At March 31, 2026, the amount recorded in other liabilities for TFR was $1.5 million.
(17) SEGMENT AND GEOGRAPHIC AREA INFORMATION
The following tables present our results of operations by reportable segment as reconciled to consolidated net earnings (loss) before income tax expense (benefit):
| Three Months Ended March 31, 2026 | |||||||||||||||||||||||||||||
| (in thousands) | Electronic Test | Environmental Technologies | Process Technologies | Corporate & Other | Consolidated | ||||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | — | $ | |||||||||||||||||||||||
| Cost of revenue | — | ||||||||||||||||||||||||||||
| Other divisional costs | — | ||||||||||||||||||||||||||||
| Division operating income | — | ||||||||||||||||||||||||||||
| Acquired intangible amortization | |||||||||||||||||||||||||||||
| Restructuring costs | |||||||||||||||||||||||||||||
Corporate expenses | |||||||||||||||||||||||||||||
| Operating income (loss) | ( | ||||||||||||||||||||||||||||
Interest expense | ( | ( | |||||||||||||||||||||||||||
| Other income | |||||||||||||||||||||||||||||
| Earnings (loss) before income tax expense | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
| Supplemental Disclosures: | |||||||||||||||||||||||||||||
| Depreciation | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Stock-based compensation | ( | ||||||||||||||||||||||||||||
| Capital expenditures | |||||||||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
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InTest CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||||||||
| (in thousands) | Electronic Test | Environmental Technologies | Process Technologies | Corporate & Other | Consolidated | ||||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | — | $ | |||||||||||||||||||||||
| Cost of revenue | — | ||||||||||||||||||||||||||||
| Other divisional costs | — | ||||||||||||||||||||||||||||
| Division operating income (loss) | ( | — | |||||||||||||||||||||||||||
| Acquired intangible amortization | |||||||||||||||||||||||||||||
| Restructuring costs | |||||||||||||||||||||||||||||
Corporate expenses | |||||||||||||||||||||||||||||
| Operating (loss) income | ( | ( | ( | ||||||||||||||||||||||||||
Interest expense | ( | ( | |||||||||||||||||||||||||||
| Other income | |||||||||||||||||||||||||||||
| (Loss) earnings before income tax (benefit) expense | $ | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||||
| Supplemental Disclosures: | |||||||||||||||||||||||||||||
| Depreciation | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Stock-based compensation | ( | ||||||||||||||||||||||||||||
| Capital expenditures | |||||||||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
The following tables provide information about our geographic areas of operation. Revenue is based on the location to which the goods are shipped.
| Three Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| (in thousands) | 2026 | 2025 | ||||||||||||
| Revenue: | ||||||||||||||
| U.S. | $ | $ | ||||||||||||
| Foreign | ||||||||||||||
| $ | $ | |||||||||||||
| (in thousands) | March 31, 2026 | December 31, 2025 | ||||||||||||
| Property and equipment: | ||||||||||||||
| U.S. | $ | $ | ||||||||||||
| Foreign | ||||||||||||||
| $ | $ | |||||||||||||
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Item 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Risk Factors and Forward-Looking Statements
In addition to historical information, this Quarterly Report on Form 10-Q for the period ended March 31, 2026 (this “Report”), including this management’s discussion and analysis (“MD&A”), contains statements that are considered “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, such as statements of our plans, strategies and intentions, or our future performance or goals, projections of revenue, taxable earnings (loss), net earnings (loss), net earnings (loss) per share, capital expenditures and other financial items, that are based on management’s current expectations and estimates. Our forward-looking statements can often be identified by the use of forward-looking terminology such as “believe,” “continue,” “expect,” “may,” “could,” “will,” “plans,” “depending,” “seeking,” “anticipates,” “goal,” “objective,” “target,” “estimates,” “future,” “strategy,” “intended,” or variations of such words or similar terminology. Investors and prospective investors are cautioned that such forward-looking statements are only projections based on current expectations and estimates. These statements involve risks and uncertainties and are based upon various assumptions. Such risks and uncertainties include, but are not limited to:
•our ability to execute on our VISION 2030 Strategy;
•our ability to grow our presence in the Auto/Electric Vehicle (“EV”), Defense/Aerospace, Industrial, Life Sciences, Safety/Security and international markets;
•the possibility of future acquisitions or dispositions and the successful integration of any acquired operations;
•the success of our strategy to diversify our business by entering markets outside the semiconductor automated test equipment (“ATE”) market;
•indications of a change in the market cycles in the semiconductor (“Semi”) market, or other markets we serve;
•developments and trends in the Semi market, including changes in the demand for semiconductors;
•our ability to convert backlog to sales and to ship product in a timely manner;
•the loss of any one or more of our largest customers, or a reduction in orders by a major customer;
•the availability of materials used to manufacture our products;
•the impact of interruptions in our supply chain caused by external factors;
•the sufficiency of cash balances, lines of credit and net cash from operations;
•stock price fluctuations;
•the ability to borrow funds or raise capital to finance potential acquisitions or for working capital;
•changes in the rate of, and timing of, capital expenditures by our customers;
•effects of exchange rate fluctuations;
•progress of product development programs;
•the anticipated market for our products;
•our failure to maintain a proper and effective system of disclosure controls and internal control over financial reporting;
•the availability of and retention of key personnel or our ability to hire personnel at anticipated costs;
•changes in U.S. and/or foreign trade policy and/or general economic conditions both domestically and globally; and
•other risk factors included in “Part II; Item 1A. Risk Factors” in this Report and in “Part I; Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”).
These risks and uncertainties, among others, could cause our actual future results to differ materially from those described in our forward-looking statements or from our prior results. Any forward-looking statement made by us in this Report is based only on information currently available to us and speaks to circumstances only as of the date on which it is made. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Report to conform these statements to actual results or to changes in our expectations, except as required by law.
Overview
This MD&A should be read in conjunction with our accompanying Consolidated Financial Statements. In addition, please refer to the discussion of our business and markets contained in “Part I; Item 1. Business,” of our 2025 Form 10-K.
We are a global supplier of innovative test and process technology solutions for use in manufacturing and testing across a wide range of markets including Semi, Auto/EV, Defense/Aerospace, Industrial, Life Sciences, Safety/Security and Other. We operate our business worldwide, sell our products both domestically and internationally and manufacture our products
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in the U.S., Canada, Italy and began limited manufacturing in Malaysia in the fourth quarter of 2025. Marketing and support activities are conducted worldwide from our facilities in the U.S., Canada, Italy, Germany, Singapore, Malaysia, and the U.K. We have three reportable segments which are also our reporting units: Electronic Test, (which includes our semiconductor test equipment, flying probe and in-circuit testers), Environmental Technologies (which includes our thermal test, process and storage products) and Process Technologies (which includes our induction heating and video imaging products).
All of our operating segments have multiple products that we design, manufacture and market to our customers. Due to a number of factors, our products have varying levels of gross margin. These factors include, for example, the amount of engineering time required to develop the product, the market or customer to which we sell the product and the level of competing products available from other suppliers. The needs of our customers ultimately determine the products that we sell in a given time period. Therefore, the mix of products sold in a given period can change significantly when compared against the prior period. As a result, our consolidated gross margin may be significantly impacted by a change in the mix of products sold in a particular period.
Markets
As discussed further in “Part I; Item 1. Business; Markets” of our 2025 Form 10-K, we are focused on specific target markets which include Auto/EV, Defense/Aerospace, Industrial, Life Sciences, Safety/Security as well as both the front-end and back-end of the semiconductor manufacturing industry. The Semi market, which includes both the broader semiconductor market, as well as the more specialized ATE and wafer production sectors within the broader semiconductor market, has historically been the largest single market in which we operate. The Semi market is characterized by rapid technological change, competitive pricing pressures and cyclical market patterns and is subject to periods of significant expansion or contraction in demand. Our intention is to continue diversifying our markets, our product offerings within the markets we serve and our customer base across all of our markets with the goal of reducing our dependence on any one market, product or customer. In particular, we are seeking to reduce the impact of volatility in the Semi market on our results of operations.
The portion of our business that is derived from the Semi market is substantially dependent upon the demand for ATE by semiconductor manufacturers and companies that specialize in the testing of integrated circuits (“ICs”) and, for our induction heating products, the demand for wafer production equipment. Demand for ATE or wafer production equipment is primarily driven by semiconductor manufacturers that are opening new, or expanding existing, semiconductor fabrication facilities or upgrading equipment, which in turn is dependent upon the current and anticipated market demand for ICs and products incorporating ICs. Such market demand can be the result of market expansion, development of new technologies or redesigned products to incorporate new features, or the replacement of aging equipment.
The Semi market is highly cyclical with recurring periods of oversupply, which often severely impact the Semi market's demand for the products we manufacture and sell into the market. This cyclicality can cause wide fluctuations in both our orders and revenue and, depending on our ability to react quickly to these shifts in demand, can significantly impact our results of operations. Market cycles are difficult to predict and, because they are generally characterized by sequential periods of growth or declines in orders and revenue during each cycle, year-over-year comparisons of operating results may not always be as meaningful as comparisons of periods at similar points in either up or down cycles. These periods of heightened or reduced demand can shift depending on various factors impacting both our customers and the markets that they serve. In addition, during both downward and upward cycles in the Semi market, in any given quarter, the trend in both our orders and revenue can be erratic. This can occur, for example, when orders are canceled or currently scheduled delivery dates are accelerated or postponed by a significant customer or when customer forecasts and general business conditions fluctuate during a quarter.
While a significant portion of our orders and revenue are derived from the Semi market, and our operating results generally follow the overall trend in the Semi market, in any given period we may experience anomalies that cause the trend in our revenue from the Semi market to deviate from the overall trend in the market. We believe that these anomalies may be driven by a variety of factors within the Semi market, including, for example, changing product requirements, longer periods between new product offerings by OEMs and changes in customer buying patterns. In addition, in recent periods, we have seen instances when demand within the Semi market is not consistent for each of our operating segments or for any given product within a particular operating segment. This inconsistency in demand can be driven by a number of factors but, in most cases, we have found that the primary reason is unique customer-specific changes in demand for certain products driven by the needs of their customers or markets served. Recently this has
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become more pronounced for our sales into the wafer production sector within the broader semiconductor market due to the limited market penetration we have into this sector and the variability of orders we have experienced from the few customers we support. These shifts in market practices and customer-specific needs have had, and may continue to have, varying levels of impact on our operating results and are difficult to quantify or predict from period to period. Management has taken, and will continue to take, such actions it deems appropriate to adjust our strategies, products and operations to counter such shifts in market practices as they become evident.
As discussed further in “Part I; Item 1. Business; Strategy” of our 2025 Form 10-K, although the Semi market remains our largest market, as part of our strategy to grow our business, we are focused on several other key target markets where we believe our products address test and process requirements and where we believe there is significant potential for growth. These key target markets include the Auto/EV, Defense/Aerospace, Industrial, Life Sciences and Safety/Security markets. We believe that these markets are usually less cyclical than the Semi market. While market share statistics exist for some of these markets, due to the nature of our highly specialized product offerings in these markets, we do not expect broad market penetration in many of these markets and, therefore, do not anticipate developing meaningful market shares in most of these markets.
In addition, because of our limited market share, our orders and revenue in any given period in these markets do not necessarily reflect the overall trends in these markets. Consequently, we are continuing to evaluate buying patterns and opportunities for growth in these, and other, markets that may affect our performance. The level of our orders and revenue in all of the markets we serve has varied in the past, and we expect will vary significantly in the future, as we work to build our presence in our current markets and establish new markets for our products.
Known Trends
Debt Covenants
As noted in “Part I; Item 1; Financial Statements; Notes to Consolidated Financial Statements; Note (9) Debt,” our Loan Agreement with M&T Bank (“M&T”) contains financial covenants, including a fixed charge coverage ratio of not less than 1.25 to 1.0. The fixed charge coverage ratio is calculated over the trailing twelve months, so the net loss reported in the first, second and third quarters impacts our ability to meet this covenant in future periods notwithstanding our strong cash position. On August 5, 2025, we executed the Sixth Amendment to the Loan Agreement, which formally waives the fixed charge coverage ratio financial covenant for periods ending June 30, 2025 through and including March 31, 2026. During the period of this waiver we are required to request consent from M&T if we wish to utilize our Revolving Facility and we formally pledged a portion of our cash holdings equal to our total outstanding debt with M&T. At March 31, 2026 we had total debt of $2.8 million with M&T, held $2.8 million of restricted cash with M&T, and were in compliance with all covenants included in the Loan Agreement. By June 30, 2026 we project having less than $2.0 million total debt outstanding with M&T.
Tariffs
We continue to monitor recent macroeconomic factors, including but not limited to changes in global trade policy, tariffs and related reciprocal or retaliatory trade actions announced by the U.S., China and other countries. The degree to which changes in global trade policy, tariffs and other related actions will impact our business, financial condition and results of operations depends on future developments, which are uncertain. Changes in global trade policies, tariffs and other related actions may negatively impact demand, pricing and cost for our products and technologies, contribute to the inherent uncertainties in estimating future customer demand and increase our material costs, any of which could negatively impacting our results of operations and cash flows.
Global Supply Chain Constraints
In early October 2023, Hamas attacked Israel and Israel formally declared war in response to the attack. Although a cease-fire was declared in October 2025, hostilities continue. On February 28, 2026, the U.S. and Israel launched a coordinated military operation against Iran, and Iran has responded with attacks affecting certain Persian Gulf states as well as Israel. It is unclear when these continuing conflicts will end and these conflicts are likely to cause regional instability that could materially adversely affect global trade, regional economies and the global economy, which could materially adversely affect our financial condition and results of operations. Ambrell® has a sole source supplier of capacitors used in certain of our induction heating products that is located in Israel. This supplier is the sole source
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supplier of capacitors for numerous induction companies, and currently there are no viable alternatives available. We have been in frequent contact with our supplier since the conflicts with Hamas and in Iran began and have been advised that their operations are currently uninterrupted. We maintain a two-to-three month safety stock on these items. As of March 31, 2026, our supplier has indicated that they have large stock available at more than one facility in Israel, so they believe they have redundancies in place that will help ensure that the supply chain to their customers is uninterrupted. We continue to monitor the situation closely and are staying in close contact with our supplier. However, there can be no assurance that the situation will not worsen which could impact our ability to ship certain of our induction heating products which could have a material impact on our future results of operations.
Acculogic Inc. (“Acculogic”) has historically purchased certain parts from a key sole-source supplier in Belarus, which is bordered by Russia to the east and northeast and Ukraine to the south. As a result of the ongoing war between Russia and Ukraine, in August 2024, the United States, Canada and the European Union added additional sanctions on Belarus, which included adding this supplier to a list of prohibited entities. We have not received materials from this supplier since the issuance of Executive Order 14038. During the first half of 2025, the majority of our remaining supply of these materials was depleted.
We have qualified a new supplier for these materials and have a supply of these materials on hand to support new production. Our first system incorporating these new materials shipped to one of our customers at the end of the second quarter 2025.
Additionally, we have applied to the U.S Department of Treasury’s Office of Foreign Asset Control (“OFAC”) and Global Affairs Canada for permission to purchase materials from the Belarus supplier to support repairs and warranty claims for the existing units already in service with our customers. As of March 31, 2026, we have not yet received such permission from Global Affairs Canada. In December 2025, we received a license from OFAC allowing us to purchase a specified dollar amount of these parts from this supplier through June 30, 2026. Late in the first quarter of 2026, we determined that our license needed to be amended to include a director of this supplier who was also listed individually as a prohibited party by the U.S. government. We have requested this amendment as well as an extension of the license to allow purchases through the end of 2027. There can be no assurance that these amendments will be approved by OFAC or what the timing of any such approval would be.
A significant portion of the additional purchases from the Belarus supplier are intended to support spare parts used for repairs and warranty claims for the existing units already in service with our customers. Those specific parts from the new supplier are not compatible with those existing units. There can be no assurance that we will be granted a license by OFAC or Global Affairs Canada in a timely manner or at all, or that if granted a license by OFAC or Global Affairs Canada that such supplier in Belarus will be willing or able to provide these parts on reasonable commercial terms or at all.
In addition, while the supply chain and logistics challenges that we encountered throughout 2022 have eased, uncertainty in the global trade environment remains. As a result, we expect that we may continue to experience increased prices, lack of availability and logistics delays from time to time for the foreseeable future. The actions we have taken and are continuing to take to mitigate these risks include qualifying new vendors as alternate sources in our supply chain, increasing our inventory of raw materials and ordering further in advance of when we expect to need materials than has been our practice in the past. We have also increased the prices that we charge our customers, where appropriate, and continue to work with our customers to find alternate options for the shipment of products where they control aspects of the logistics process. However, the environment in which we operate is dynamic and shifts rapidly at times, and the success of our efforts to mitigate and address the impacts on our business may not be successful. As a result, we could see increases in our costs or reduced revenues which would impact the level of our earnings in future periods.
Please refer to “Part I; Item 1A. Risk Factors” of our 2025 Form 10-K for further discussion of the risks associated with our business operations, including risks associated with foreign operations.
Critical Accounting Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to inventories, long-lived assets, goodwill, identifiable intangibles, contingent consideration liabilities and deferred income tax valuation allowances. We base our estimates on historical
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experience and on appropriate and customary assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Some of these accounting estimates and assumptions are particularly sensitive because of their significance to our Consolidated Financial Statements and because of the possibility that future events affecting them may differ markedly from what had been assumed when the financial statements were prepared.
During the three months ended March 31, 2026, we granted performance-based restricted stock awards and performance-based stock options, both of which contain market conditions. These awards with market conditions have not been traditionally awarded by the Company and their grant date fair values were determined using a Monte Carlo simulation model. These Monte Carlo simulation models use estimates for expected volatility, risk-free rate of return, expected term and expected dividend yield and also incorporates the probability of achieving the market conditions. Unlike our other awards, compensation costs for awards with market conditions are recognized regardless of whether the market conditions are satisfied, provided that the requisite service is rendered.
As of March 31, 2026, except for the estimates considered for our awards with market conditions, there have been no significant changes to the accounting estimates that we have deemed critical. Our critical accounting estimates are more fully described in “Part I; Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations; Critical Accounting Estimates” in our 2025 Form 10-K.
Results of Operations
The results of operations for our three operating segments are generally affected by the same factors described in the “Overview” section above. The discussion and analysis that follows, therefore, is presented on a consolidated basis and includes discussion of factors unique to a particular operating segment where significant to an understanding of that segment.
Three Months Ended March 31, 2026, Compared to Three Months Ended March 31, 2025
Revenue
| Three Months Ended | ||||||||||||||||||||||||||
| March 31, | Change | |||||||||||||||||||||||||
| (in thousands except percentages) | 2026 | 2025 | $ | % | ||||||||||||||||||||||
| Electronic Test | $ | 17,341 | $ | 13,259 | $ | 4,082 | 30.8 | % | ||||||||||||||||||
| Environmental Technologies | 8,351 | 6,268 | 2,083 | 33.2 | % | |||||||||||||||||||||
| Process Technologies | 8,194 | 7,110 | 1,084 | 15.2 | % | |||||||||||||||||||||
| Total revenue | $ | 33,886 | $ | 26,637 | $ | 7,249 | 27.2 | % | ||||||||||||||||||
The following table sets forth, for the periods indicated, a breakdown of revenue by market:
| Revenue | Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Change | Change | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands except percentages) | March 31, 2026 | March 31, 2025 | $ | % | December 31, 2025 | $ | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Semi | $ | 10,507 | 31.0 | % | $ | 8,995 | 33.8 | % | $ | 1,512 | 16.8 | % | $ | 6,941 | 21.1 | % | $ | 3,566 | 51.4 | % | ||||||||||||||||||||||||||||||||||||||||||
| Auto/EV | 7,487 | 22.1 | % | 5,959 | 22.4 | % | 1,528 | 25.6 | % | 5,933 | 18.1 | % | 1,554 | 26.2 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Defense/Aerospace | 5,822 | 17.2 | % | 2,828 | 10.6 | % | 2,994 | 105.9 | % | 5,537 | 16.9 | % | 285 | 5.1 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Industrial | 3,242 | 9.6 | % | 3,021 | 11.3 | % | 221 | 7.3 | % | 6,937 | 21.1 | % | (3,695) | (53.3) | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Life Sciences | 3,572 | 10.5 | % | 1,688 | 6.3 | % | 1,884 | 111.6 | % | 4,043 | 12.3 | % | (471) | (11.6) | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Safety/Security | 1,112 | 3.3 | % | 564 | 2.1 | % | 548 | 97.2 | % | 503 | 1.5 | % | 609 | 121.1 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Other | 2,144 | 6.3 | % | 3,582 | 13.4 | % | (1,438) | (40.1) | % | 2,928 | 8.9 | % | (784) | (26.8) | % | |||||||||||||||||||||||||||||||||||||||||||||||
| $ | 33,886 | 100.0 | % | $ | 26,637 | 100.0 | % | $ | 7,249 | 27.2 | % | $ | 32,822 | 100.0 | % | $ | 1,064 | 3.2 | % | |||||||||||||||||||||||||||||||||||||||||||
* Percentages may not add up due to rounding
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Compared with the prior-year period, revenue for the first quarter increased due primarily to growth in Defense/Aerospace, Life Sciences, Auto/EV and Semi, partially offset by a decrease in Other. Sequentially, revenue increased compared to the trailing fourth quarter, due primarily to increases in Semi and Auto/EV, offset partially by a decrease in Industrial following a stronger than normal fourth quarter.
Orders and Backlog
We use orders and backlog as key performance metrics to analyze and measure our financial performance and results of operations. We define orders as purchase orders that we have accepted from our customers. Orders are recorded based on the date received and accepted by us. We believe tracking orders is useful in planning for future production needs and staffing levels and we use information about the level of our orders to make decisions about resource allocation, including appropriate levels of inventory purchases and the balance of inventory we carry at any given time. Another important operational measure used is backlog. Backlog is a common measurement used in industries with extended lead times for order fulfillment, like those in which we operate. Backlog at any given date represents the amount of net revenue that we expect to realize for unfilled orders received as of that date. We believe backlog is useful and use this information for similar reasons to those detailed above for orders. The majority of our backlog at any given time is expected to be fulfilled within the next twelve months. Depending on the terms of the purchase orders we have accepted, customers may have the ability to cancel an order or accelerate or postpone currently scheduled delivery dates. In some cases, we may have the ability to charge a cancellation fee if a purchase order we have accepted is later cancelled by a customer. Given that both orders and backlog are operational measures and our methodology for calculating orders and backlog do not meet the definition of a non-GAAP measure, as that term is defined by the SEC, a quantitative reconciliation for each is not required or provided.
The following table sets forth, for the periods indicated, a breakdown of the orders received by market:
| Orders | Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Change | Change | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands except percentages) | March 31, 2026 | March 31, 2025 | $ | % | December 31, 2025 | $ | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Semi | $ | 7,677 | 24.2 | % | $ | 9,640 | 38.0 | % | $ | (1,963) | (20.4 | %) | $ | 9,446 | 25.2 | % | $ | (1,769) | (18.7 | %) | ||||||||||||||||||||||||||||||||||||||||||
| Auto/EV | 10,744 | 33.8 | % | 5,061 | 20.0 | % | 5,683 | 112.3 | % | 9,857 | 26.3 | % | 887 | 9.0 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Defense/Aerospace | 5,918 | 18.6 | % | 2,083 | 8.2 | % | 3,835 | 184.1 | % | 5,232 | 14.0 | % | 686 | 13.1 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Industrial | 4,123 | 13.0 | % | 4,551 | 18.0 | % | (428) | (9.4 | %) | 3,305 | 8.8 | % | 818 | 24.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Life Sciences | 1,587 | 5.0 | % | 1,232 | 4.9 | % | 355 | 28.8 | % | 5,379 | 14.4 | % | (3,792) | (70.5 | %) | |||||||||||||||||||||||||||||||||||||||||||||||
| Safety/Security | 260 | 0.8 | % | 675 | 2.7 | % | (415) | (61.5 | %) | 1,087 | 2.9 | % | (827) | (76.1 | %) | |||||||||||||||||||||||||||||||||||||||||||||||
| Other | 1,476 | 4.6 | % | 2,107 | 8.3 | % | (631) | (29.9 | %) | 3,165 | 8.4 | % | (1,689) | (53.4 | %) | |||||||||||||||||||||||||||||||||||||||||||||||
| $ | 31,785 | 100.0 | % | $ | 25,349 | 100.0 | % | $ | 6,436 | 25.4 | % | $ | 37,471 | 100.0 | % | $ | (5,686) | (15.2 | %) | |||||||||||||||||||||||||||||||||||||||||||
* Percentages may not add up due to rounding
Compared with the prior-year period, orders for the first quarter increased primarily in Auto/EV and Defense/Aerospace partially offset by the decline in Semi. Sequentially, orders decreased primarily in Life Sciences, Semi, Other and Safety/Security.
At March 31, 2026, our backlog of unfilled orders for all products was $51.8 million compared to $38.2 million at March 31, 2025, and $53.9 million at December 31, 2025. Our backlog includes customer orders that we have accepted, substantially all of which we expect to deliver in the next twelve months. While backlog is calculated on the basis of firm purchase orders, a customer may cancel an order or accelerate or postpone currently scheduled delivery dates. Our backlog may be affected by the tendency of customers to rely on short lead times available from suppliers, including us, in periods of depressed demand. In periods of increased demand, there is a tendency towards longer lead times that has the effect of increasing backlog. As a result, our backlog at a particular date is not necessarily indicative of sales for any future period.
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Gross Margin
| Three Months Ended | ||||||||||||||||||||||||||
| March 31, | Change | |||||||||||||||||||||||||
| (in thousands except percentages) | 2026 | 2025 | $ | % | ||||||||||||||||||||||
| Gross profit | $ | 15,408 | $ | 11,056 | $ | 4,352 | 39.4 | % | ||||||||||||||||||
| Gross margin | 45.5 | % | 41.5 | % | ||||||||||||||||||||||
Gross margin increased 400 basis points in the three months ended March 31, 2026, compared to the same prior year period due to higher volume, favorable product mix and manufacturing efficiency initiatives.
Selling Expense
| Three Months Ended | ||||||||||||||||||||||||||
| March 31, | Change | |||||||||||||||||||||||||
| (in thousands except percentages) | 2026 | 2025 | $ | % | ||||||||||||||||||||||
| Selling expense | $ | 4,220 | $ | 4,547 | $ | (327) | (7.2) | % | ||||||||||||||||||
| Percentage of revenue | 12.5 | % | 17.1 | % | ||||||||||||||||||||||
Selling expense for the three months ended March 31, 2026, declined compared to the prior year period due primarily to a decline in warranty expense.
Engineering and Product Development Expense
| Three Months Ended | ||||||||||||||||||||||||||
| March 31, | Change | |||||||||||||||||||||||||
| (in thousands except percentages) | 2026 | 2025 | $ | % | ||||||||||||||||||||||
| Engineering and product development expense | $ | 2,588 | $ | 2,448 | $ | 140 | 5.7 | % | ||||||||||||||||||
| Percentage of revenue | 7.6 | % | 9.2 | % | ||||||||||||||||||||||
Engineering and product development expense for the three months ended March 31, 2026, increased nominally compared to the prior year period due primarily to an increase in payroll and payroll related costs.
General and Administrative Expense
| Three Months Ended | ||||||||||||||||||||||||||
| March 31, | Change | |||||||||||||||||||||||||
| (in thousands except percentages) | 2026 | 2025 | $ | % | ||||||||||||||||||||||
| General and administrative expense | $ | 6,124 | $ | 5,816 | $ | 308 | 5.3 | % | ||||||||||||||||||
| Percentage of revenue | 18.1 | % | 21.8 | % | ||||||||||||||||||||||
General and administrative expense for the three months ended March 31, 2026, increased compared to the prior year period due primarily to an increase in payroll and payroll related costs.
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Amortization of Acquired Intangible Assets
| Three Months Ended | ||||||||||||||||||||||||||
| March 31, | Change | |||||||||||||||||||||||||
| (in thousands except percentages) | 2026 | 2025 | $ | % | ||||||||||||||||||||||
| Amortization of acquired intangible assets | $ | 778 | $ | 813 | $ | (35) | (4.3) | % | ||||||||||||||||||
| Percentage of revenue | 2.3 | % | 3.1 | % | ||||||||||||||||||||||
Amortization of acquired intangible assets for the three months ended March 31, 2026, decreased compared to the prior year period due to the declining pattern of benefit for the assets, offset partially by the impact of changes in foreign exchange rates.
Restructuring Costs
| Three Months Ended | ||||||||||||||||||||||||||
| March 31, | Change | |||||||||||||||||||||||||
| (in thousands except percentages) | 2026 | 2025 | $ | % | ||||||||||||||||||||||
| Restructuring costs | $ | 744 | $ | 313 | $ | 431 | 137.7% | |||||||||||||||||||
| Percentage of revenue | 2.2 | % | 1.2 | % | ||||||||||||||||||||||
Restructuring costs for the three months ended March 31, 2026, are primarily the costs associated with our CEO transition. The costs for the three months ended March 31, 2025 represent severance and retention accruals along with the payroll-related costs recognized for the Videology Consolidation of the Netherlands operations into our US operations in Mansfield, MA. See “Part I; Item 1. Financial Statements; Notes to Consolidated Financial Statements; Note (15) Restructuring” for further details.
Income Tax Expense (Benefit)
| Three Months Ended | ||||||||||||||||||||||||||
| March 31, | Change | |||||||||||||||||||||||||
| (in thousands except percentages) | 2026 | 2025 | $ | % | ||||||||||||||||||||||
| Income tax expense (benefit) | $ | 188 | $ | (460) | $ | 648 | (140.9) | % | ||||||||||||||||||
| Effective tax rate | 19.2 | % | 16.5 | % | ||||||||||||||||||||||
On a quarterly basis, we record income tax expense or (benefit) based on the expected annualized effective tax rate for the various taxing jurisdictions in which we operate our businesses. For the three months ended March 31, 2026, we recorded a tax expense based on our pre-tax earnings and expected annualized rate, whereas in the comparable period we reported a pre-tax loss. The increase in the effective tax rate for the current year period is due to limitations on certain current year deductions related to the prior year's net operating loss carry-over applied to current year taxable income. There were no unusual tax adjustments recorded in either period.
Liquidity and Capital Resources
As discussed more fully in the “Overview” section above, our business and results of operations are substantially dependent upon the demand for ATE and wafer production equipment by semiconductor manufacturers and companies that specialize in the testing of ICs. The cyclical and volatile nature of demand for this equipment makes estimates of future revenues, results of operations and net cash flows difficult.
Our primary historical source of liquidity and capital resources has been cash flow generated by our operations. In 2021, we also utilized our Credit Facility, which is discussed below, to fund our acquisitions. We manage our businesses to maximize operating cash flows as our primary source of liquidity for our short-term cash requirements, as discussed below. We use cash to fund growth in our operating assets, for new product research and development, for acquisitions
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and for stock repurchases. We currently anticipate that any additional long-term cash requirements related to our strategy would be funded through a combination of our cash and cash equivalents, our Credit Facility or by issuing equity.
Credit Facility
As discussed in “Note (9) Debt” to our Consolidated Financial Statements in this Report, on October 15, 2021, we entered into an Amended and Restated Loan and Security Agreement with M&T which, was subsequently amended on October 28, 2021, December 30, 2021, September 20, 2022, May 2, 2024, December 18, 2024 and August 5, 2025 (as amended, the “Loan Agreement”). The Loan Agreement includes a $50.5 million non-revolving delayed draw term note (the “Term Note”) and a $10.0 million revolving credit facility (the “Revolving Facility” and together with the Term Note, the “Credit Facility”). The Credit Facility has a five-year contract period that began on October 15, 2021, and, as amended, expires on May 2, 2031, and draws under the Term Note, as amended, are permissible until May 2, 2026. On May 4, 2026, we amended the Credit Facility, effective as of April 30, 2026, to extend our ability to draw on the Term Note through August 28, 2026.
At March 31, 2026, we have not borrowed any amounts under the $10.0 million Revolving Facility. Our borrowings under the Term Note are discussed below and our available drawing capacity under the Term Note at March 31, 2026, was $30.0 million. The principal balance of the Revolving Facility and the principal balance of any amount drawn under the Term Note accrues interest based on the Secured Overnight Financing Rate or a bank-defined base rate plus an applicable margin, depending on leverage. The Loan Agreement includes customary affirmative, negative and financial covenants, including a maximum ratio of consolidated funded debt to consolidated EBITDA of not more than 3.0 to 1.0 and a fixed charge coverage ratio of not less than 1.25 to 1.0. Our obligations under the Loan Agreement are secured by liens on substantially all of our tangible and intangible assets.
On August 5, 2025, we executed the Sixth Amendment to the Loan Agreement, which formally waives the fixed charge coverage ratio financial covenant for periods ending June 30, 2025 through and including March 31, 2026. During the period of this waiver we are required to request consent from M&T if we wish to utilize our Revolving Facility and we formally pledged a portion of our cash holdings equal to our total outstanding debt with M&T. At March 31, 2026 we were holding $2.8 million of total debt with M&T. At March 31, 2026, we were in compliance with all of the covenants included in the Loan Agreement.
On October 28, 2021, we drew $12 million under the Term Note to finance the acquisition of Videology®. We also entered into an interest rate swap agreement with M&T as of this date which is designed to protect us against fluctuations in interest rates during the five-year repayment and amortization period. As a result, the annual interest rate we expect to pay for this draw under the Term Note is fixed at approximately 3.2% based on current leverage.
On December 29, 2021, we drew $8.5 million under the Term Note to finance the acquisition of Acculogic. We did not enter into an interest rate swap agreement with M&T related to this draw. The annual interest rate we expect to pay for this draw under the Term Note is variable. At March 31, 2026, it was 5.8% based on current leverage.
Alfamation™ Debt
We assumed debt with the acquisition of Alfamation™ which totaled $11.3 million as of the acquisition date. The debt acquired is comprised of both fixed and variable rate bank issued term loans as well as short-term variable rate financing backed by Alfamation™’s accounts receivable. This debt is spread across several different institutions with monthly, quarterly or semi-annual repayment schedules.
At March 31, 2026, Alfamation™’s debt was $5.7 million, including $3.4 million that is backed by Alfamation™’s accounts receivable. The reduction since the acquisition date represents repayments of short-term instruments and principal payments on long-term debt, net of new borrowings that are backed by Alfamation™’s accounts receivable. The short-term variable financing rate at March 31, 2026, was 3.2%. At March 31, 2026, the weighted average interest rate payable on the bank issued term loans was 0.7% for fixed rate debt and 4.0% for variable rate debt and the overall weighted average interest rate for the bank issued term loans was 3.3%.
Total interest expense for the three months ended March 31, 2026 and 2025, related to our various debt arrangements was $0.1 million and $0.2 million, respectively.
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Liquidity
Our cash, cash equivalents, restricted cash and working capital were as follows:
| (in thousands) | March 31, 2026 | December 31, 2025 | ||||||||||||
| Cash and cash equivalents | $ | 12,867 | $ | 14,216 | ||||||||||
| Restricted cash | 2,817 | 3,842 | ||||||||||||
| Working capital | $ | 43,793 | $ | 42,883 | ||||||||||
As of March 31, 2026, $9.7 million, or 76%, of our cash and cash equivalents was held by our foreign subsidiaries. We currently expect our cash and cash equivalents, in combination with the borrowing capacity available under our Revolving Facility and the anticipated net cash to be provided by our operations in the next twelve months to be sufficient to support our short-term working capital requirements and other corporate requirements. Our Revolving Facility is discussed in “Note (9) Debt” to our Consolidated Financial Statements in this Report.
Our material short-term cash requirements include payments due under our various lease agreements, recurring payroll and benefits obligations to our employees, purchase commitments for materials that we use in the products we sell and principal and interest payments on our debt. We estimate that our short-term working capital requirements currently range between $8.0 million and $10.0 million. We expect our current cash and cash equivalents, in combination with the borrowing capacity available under our Revolving Facility and the anticipated net cash to be provided by our operations to be sufficient to support these additional investments as well as our current short-term cash requirements. As discussed above in “Credit Facility” and in “Note (9) Debt”, on August 5, 2025 we formally pledged a portion of our cash holdings equal to our total outstanding debt with M&T. At March 31, 2026 we were holding $2.8 million of total debt with M&T. On May 4, 2026, we amended the Credit Facility,effective as of April 30, 2026, to extend our ability to draw on the Term Note through August 28, 2026.
Our current strategy for growth includes pursuing acquisition opportunities for complementary businesses, technologies or products. As previously discussed, we currently anticipate that any additional long-term cash requirements related to our strategy would be funded through a combination of our cash and cash equivalents, the remaining availability under the Term Note or by issuing equity. The borrowing availability under the Term Note was expanded in September 2022 as discussed above and in “Note (9) Debt” to our Consolidated Financial Statements in this Report.
Cash Flows
Operating Activities: Net cash used in operating activities for the three months ended March 31, 2026, was $3.3 million, an increased usage of $8.9 million compared to the prior year period. The increase was driven primarily by the changes in accounts receivable, driven by increased revenue outpacing the rate of collections period-over-period, along with the change in accounts payable, offset partially by the increase in net earnings from the comparative period and the increase in the change in domestic and foreign taxes payable.
Investing Activities: Net cash used in investing activities for the three months ended March 31, 2026, was $0.6 million, an increased usage of $0.4 million compared to the prior year period. Capital expenditures for property and equipment were consistent in both periods.
Financing Activities: Net cash provided by financing activities for the three months ended March 31, 2026, was $1.7 million, whereas we reported a cash usage in financing activities of $3.4 million for the prior year period. During the three months ended March 31, 2026, we reported short term borrowings, net of repayments, of $2.2 million, which is related to the short-term variable financing used at Alfamation™. We did not have any stock repurchases under the March 5, 2025 renewal of the previously expired share repurchase plan in either the current year or prior year periods. As a result of our stock price increase between January 1, 2026 and March 31, 2026, we saw an increase in stock option exercise activity, which resulted in an increased cash inflow of $0.5 million compared to the prior year period.
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New or Recently Adopted Accounting Standards
See “Part I; Item 1. Financial Statements; Notes to Consolidated Financial Statements; Note (2) Summary of Significant Accounting Policies and (t) Effect of Recently Issued Amendments to Authoritative Accounting Guidance Not Yet Adopted” for information concerning the implementation and impact of new or recently adopted accounting standards.
Off-Balance Sheet Arrangements
There were no off-balance sheet arrangements during the three months ended March 31, 2026, that have or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our interests.
Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
This disclosure is not required for a smaller reporting company.
Item 4.CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Exchange Act of 1934, as amended, (the “Exchange Act”). Because there are inherent limitations in all control systems, a control system, no matter how well conceived and operated, can provide only reasonable, as opposed to absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Our management, including the CEO and CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all error and all fraud. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Accordingly, our management has designed the disclosure controls and procedures to provide reasonable assurance that the objectives of the control system were met.
CEO/CFO Conclusions about the Effectiveness of the Disclosure Controls and Procedures
As required by Rule 13a-15(b) of the Exchange Act, InTest management, including our CEO and CFO, conducted an evaluation as of the end of the period covered by this Report, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, our CEO and CFO concluded that, as of the end of the period covered by this Report, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1.Legal Proceedings
From time to time, we may be a party to legal proceedings occurring in the ordinary course of business. We are not currently involved in any material legal proceedings.
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Item 1A. Risk Factors
Information regarding the primary risks and uncertainties that could materially and adversely affect our future performance or could cause actual results to differ materially from those expressed or implied in our forward-looking statements, appears in “Part I; Item 1A; Risk Factors” of our 2025 Form 10-K. There have been no material changes from the risk factors set forth in our 2025 Form 10-K or subsequent Quarterly Reports on Form 10-Q.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information with respect to purchases made by or on behalf of the Company or any “affiliated purchaser” as defined in Rule 10b-18(a)(3) under the Exchange Act, of our common stock during the three months ended March 31, 2026, including shares of common stock surrendered to us by employees to cover tax withholdings under the net settlement provisions of our restricted stock awards and those made pursuant to publicly announced plans or programs and those not made pursuant to publicly announced plans or programs.
| Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs | ||||||||||||||||||||||
| January 1-31 | — | $ | — | — | — | |||||||||||||||||||||
| February 1-28 | — | $ | — | — | — | |||||||||||||||||||||
| March 1-31 | 2,682 | $ | 13.47 | — | — | |||||||||||||||||||||
| Total | 2,682 | — | ||||||||||||||||||||||||
On March 5, 2025, our Board of Directors authorized the renewal of our previously expired share repurchase plan (the “Repurchase Plan”) whereby we may repurchase shares of our common stock on the open market with a total aggregate repurchase amount of up to $10.0 million. As of the renewal date, we had approximately $9.0 million available for repurchases under the Repurchase Plan. The Repurchase Plan may be suspended or discontinued at any time without prior notice.
There were no repurchases of shares under the Repurchase Plan during the three months ended March 31, 2026. As of March 31, 2026, we had repurchased 141,117 shares under the Repurchase Plan at a fair value of $1.0 million. All of the shares repurchased pursuant to the Repurchase Plan have been retired.
Item 3.Defaults Upon Senior Securities
None.
Item 4.Mine Safety Disclosures
Not applicable.
Item 5.Other Information
During the first quarter ended March 31, 2026, none of the Company's directors or officers (as defined in Section 16 of the Securities Exchange Act of 1934) adopted terminated
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Item 6.Exhibits
| Exhibit Number | Description | Form | File No. | Exhibit | Filing Date | ||||||||||||
10.1*#^ | 8-K | 001-36117 | 10.1 | April 2, 2026 | |||||||||||||
| 10.2 | 8-K | 001-36117 | 10.1 | May 5, 2026 | |||||||||||||
10.3†*# | |||||||||||||||||
31.1† | |||||||||||||||||
31.2† | |||||||||||||||||
32.1+ | |||||||||||||||||
32.2+ | |||||||||||||||||
101.INS† | Inline XBRL Taxonomy Instance Document | ||||||||||||||||
101.SCH† | Inline XBRL Taxonomy Extension Schema Document | ||||||||||||||||
101.CAL† | Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||||||||||||||||
101.DEF† | Inline XBRL Taxonomy Extension Definition Linkbase Document | ||||||||||||||||
101.LAB† | Inline XBRL Taxonomy Extension Label Linkbase Document | ||||||||||||||||
101.PRE† | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||||||||||||||||
104† | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | ||||||||||||||||
† | Filed herewith | ||||||||||||||||
| + | Furnished herewith | ||||||||||||||||
* | Indicates a management plan or compensatory plan or arrangement. | ||||||||||||||||
# | Certain information has been omitted from this exhibit in reliance upon Item 601(a)(5) of Regulation S-K and will be furnished to the Securities and Exchange Commission upon request. | ||||||||||||||||
^ | Certain portions of this exhibit have been omitted (indicated by asterisks) pursuant to Item 601(b) of Regulation S-K because the omitted information is (i) not material and (ii) the type of information that the Company treats as private or confidential. | ||||||||||||||||
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| InTest Corporation | ||||||||
| Date: | May 11, 2026 | /s/ Richard Rogoff | ||||||
| Richard Rogoff | ||||||||
| President and Chief Executive Officer | ||||||||
| (Principal Executive Officer) | ||||||||
| Date: | May 11, 2026 | /s/ Duncan Gilmour | ||||||
| Duncan Gilmour | ||||||||
| Chief Financial Officer, Treasurer and Secretary | ||||||||
| (Principal Financial Officer) | ||||||||
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