Daily Disruptor: $INTT, record chip test orders not yet in revenue

The 30 second version

• inTEST builds the hardware that sits around a chip tester: chillers and thermal systems that hold a chip at temperature, and the manipulators and docking gear that position the heavy test head.
• Its newer high power chillers and advanced manipulators are at Liftoff: chipmakers adding test capacity for power conversion and mixed signal chips are ordering again after two quiet years.
• The evidence: preliminary third quarter orders of $48 to $50 million, a company record led by back end semiconductor test, against revenue of about $35 million. Backlog rose to $58 to $60 million.
• The test is one week away: full third quarter results and fourth quarter guidance on Friday, November 6.
• It breaks if final orders come in below $45 million, semiconductor orders slip, or gross margin misses guidance a second time.

inTEST took in roughly $49 million of new orders in the three months to September. That is about 70% more than it booked in the quarter before, and more than in any quarter in its history. The company says back end semiconductor test led the jump, with its newer chillers and manipulators for high power chips doing much of the work.

For five straight quarters, from early 2025 into this spring, chipmakers ordered between $7 million and $10 million a quarter from inTEST. Revenue grew anyway because carmakers and defence customers kept buying. That balance has now flipped, and the results due a week from today will show how far.

None of those orders is in reported revenue yet. The market is pricing the company on the revenue it has shipped, while the order book has already moved to a higher level.

What just happened

On October 5 inTEST published preliminary numbers for the September quarter. Orders of $48 to $50 million were 28% to 33% above the $37.6 million of a year earlier, a figure that was itself the best in three years when it was reported. Revenue landed at the top of the $33 to $35 million guide, more than 30% above the $26.2 million of the same quarter in 2025. Backlog finished at $58 to $60 million, up from $45.4 million at the end of June, and the company put its book to bill above 1.3.

Chief executive Rich Rogoff tied the order surge to customer capacity spending, driven in part by AI data centres, and said the newer products are “contributing substantially by addressing customers’ rising power conversion requirements”. He also guided full year revenue to the top of the $135 to $140 million range.

This matters because the previous quarter told the opposite story. Second quarter orders fell to $28.9 million, growth came mostly from lower margin auto and EV projects, and gross margin hit 40.5% against a guide of about 45%. It also cut first quarter gross profit by about $750,000 after a new ERP system at its Alfamation unit overstated inventory, and disclosed a material weakness in internal controls. The third quarter swings the mix back toward the work inTEST earns the most on.

The business

inTEST sells capital equipment in three segments to six end markets: semiconductors, automotive and EV, defence and aerospace, industrial, life sciences, and security. In chip test, a manipulator holds and moves the test head, docking hardware locks it to the wafer prober or package handler, and the thermal products (the Temptronic ThermoStream line, Sigma chambers and Thermonics chillers) heat or cool the device while it is tested. Outside chips it sells induction heating and, through Alfamation and Acculogic, automated test for car electronics.

The economics depend on mix more than volume. Operating costs run around $14 million a quarter and barely move, so incremental gross profit falls almost straight to EBITDA. In the first quarter of 2026 revenue rose $7.2 million from a year earlier and adjusted EBITDA rose about $3.3 million. In the second quarter revenue again rose $7.2 million, but adjusted EBITDA rose only $0.9 million, because the growth was Alfamation project work at thinner margins.

A detail from the filings: the 10-K notes that the Thermonics name, once a line of temperature forcing systems, is now used for a family of process chillers for test and industrial use. Chillers are one of the two product lines management now credits with the semiconductor wins. Another: about $2 million of thermal revenue slipped from the second quarter into the third because of a supply problem, which helped tip the Environmental Technologies segment into a small loss in the June quarter.

Competition comes from small specialists and from tester makers’ own handling hardware. Our read is that customers pick inTEST mostly on installed base and on thermal range: a chip maker that already docks its test cells with inTEST gear tends to reorder it when it adds cells. We found no published price per system.

Where it sits on our curve

Our Disruption Map places semiconductor test and burn in at Flight, because test spending for AI accelerators is already scaling. The thesis here rests on something narrower: high power chillers and heavier, more precise manipulators for testing power conversion and mixed signal chips. Those products sit at Liftoff. The binding constraint is test cell capacity for chips that dissipate far more heat than older test setups can remove, and the buyer acts when its own production ramp leaves it short of cells.

The furthest step on the evidence sequence is paid deployment. Orders booked in earlier quarters are now shipping, and two quarters in a row of rising semiconductor orders (up 56% from the first quarter to the second, then a record in the third) is the start of repeat buying. What we do not have yet is the customer count. If one or two large buyers placed most of September’s orders, this is a big order, not a curve.

The strongest alternative is plain cyclical restocking. Chipmakers held back on test capacity through 2025, and catch up buying would look exactly like this for a quarter or two. The observation that separates the two is the next two quarters: if orders hold above about $40 million with semiconductors and the newer products taking a growing share, it is adoption. If orders sink back toward the $29 to $38 million of the past year, it was a refill.

The numbers

Revenue climbed for three quarters running and then held: $26.2 million in the third quarter of 2025, then $32.8 million, $33.9 million and $35.3 million, and about $35 million in the September quarter just ended. Orders tell a jumpier story, at $37.6 million, $37.5 million, $31.8 million and $28.9 million before the jump. Over the four quarters to September it booked about $147 million of orders against full year revenue guidance of $135 to $140 million.

Semiconductor revenue was only 26% of the total in the second quarter, down from 36% a year earlier. Semiconductor orders, though, were 41% of second quarter orders. As that gap closes, mix should lift gross margin, which has slid from 45.4% at the end of 2025 to 40.5% in the June quarter. Management guided the third quarter to about 44% and the year to about 43%.

Profit is thin but real. Adjusted EBITDA was $3.2 million in the fourth quarter of 2025, $2.4 million in the first quarter as revised, and $2.2 million in the second, a 6.2% margin. Net earnings have been positive three quarters running. Cash was $22.1 million at the end of June against $6.2 million of debt, with an undrawn $10 million revolver, and operating activities brought in $6.3 million in the second quarter alone.

Diluted shares were 12.58 million in the second quarter, 3.0% more than a year earlier, mostly from option exercises. The full year guide implies fourth quarter revenue of roughly $35 to $36 million at the top end. The street’s 2027 revenue estimate sits near $149 million, about 7% growth, a figure we could not confirm in any primary source.

What the price already requires

At about $15.80 a share, inTEST is worth roughly $202 million. Net of June’s cash and debt, enterprise value is about $186 million. If a profitable small equipment maker coming off a downturn deserves around 14 times EBITDA, today’s price needs about $13 million of adjusted EBITDA in 2027. On our cost assumptions (cash operating costs near $50 million and a 43% gross margin), that takes about $147 million of revenue, roughly what the company has already booked in orders over the past year.

Our downside case is $135 million of 2027 revenue at a 41% gross margin, which gives about $6 million of EBITDA and does not support the price. The central case is $155 million at 43%: about $16 million of EBITDA, near 12 times. It needs orders near $39 million a quarter next year, starting from a backlog close to $60 million. The upside case, $170 million at 44%, gives about $23 million, near 8 times.

The gap is the mix. The price treats inTEST as a diversified test supplier growing in single digits on 6% to 9% EBITDA margins. The order book says the semiconductor share of revenue is about to rise. Management’s own guide shows what that is worth: about 44% gross margin for the quarter semiconductors came back, against 40.5% for one led by auto projects. A few points of margin on $155 million of revenue is several million dollars of EBITDA the consensus revenue line never shows.

What breaks it

We will treat any of these as a broken thesis on November 6: final third quarter orders below $45 million, backlog below $55 million, any semiconductor order cancelled or pushed out, or a fourth quarter revenue guide with a midpoint under $34 million. Gross margin is the other line. A third quarter print below 41% against a guide of about 44% would be a second straight miss and would say the mix shift is not reaching the income statement.

The next most likely failure is control, not demand. The Alfamation error came from a system rollout, and management says the weakness is fixed but will only show it works by year end. Anyone who has lived through an ERP migration knows the tail can be long. Financing is not the risk: inTEST funds itself, holds more cash than debt, and needs no new money to reach any test listed here.

What we are watching

• November 6, 2026, third quarter results. Strengthens: orders of at least $48 million, backlog of at least $58 million, gross margin of 43% or more, a fourth quarter guide of at least $37 million, and semiconductor at 40% or more of orders. Breaks: orders under $45 million, backlog under $55 million, or gross margin under 41%.
• Mid November 2026, the 10-Q. Strengthens: no new customer concentration and a clean update on the control weakness. Breaks: a single buyer emerging as a large share of revenue, or any further revision of reported figures.
• Late February or early March 2027, fourth quarter results and 2027 guidance. Strengthens: fourth quarter orders above $40 million and 2027 framed above $150 million. Breaks: orders back near $30 million, or a 10-K that still reports the material weakness.
• Early May 2027, first quarter results. Strengthens: a third straight quarter of semiconductor orders above second quarter 2026’s $12 million. Breaks: semiconductor orders back in the $7 to $10 million range of 2025.

Not financial advice.

References

1. InTest Corporation. InTest Expects Record Orders for Q3 2026 and Revenue at High End of Guidance Range for Q3 and Full Year 2026 (Form 8-K, Exhibit 99.1). US Securities and Exchange Commission. Published October 5, 2026. Accessed October 29, 2026. https://www.sec.gov/Archives/edgar/data/0001036262/000103626226000057/intt-20261005xpaexx991.htm
2. InTest Corporation. InTest Reports Strong First Quarter 2026 Revenue of $33.9 Million (Form 8-K, Exhibit 99.1). US Securities and Exchange Commission. Published May 5, 2026. Accessed October 29, 2026. https://www.sec.gov/Archives/edgar/data/0001036262/000103626226000029/intt-20260505xexx991.htm
3. InTest Corporation. InTest Reports Third Quarter 2025 Results (Form 8-K, Exhibit 99.1). US Securities and Exchange Commission. Published November 5, 2025. Accessed October 29, 2026. https://www.sec.gov/Archives/edgar/data/1036262/000103626225000026/intt-20251105xexx991.htm
4. InTest Corporation. InTest Reports Strong Second Quarter 2026 Revenue of $35.3 Million (Form 8-K, Exhibit 99.1). US Securities and Exchange Commission. Published August 10, 2026. Accessed October 29, 2026. https://www.sec.gov/Archives/edgar/data/0001036262/000103626226000042/intt-20260810xexx991.htm
5. InTest Corporation. InTest Reports Preliminary Second Quarter 2026 Results (Form 8-K, Exhibit 99.1). US Securities and Exchange Commission. Published July 31, 2026. Accessed October 29, 2026. https://www.sec.gov/Archives/edgar/data/0001036262/000103626226000040/intt-20260731xpaexx991.htm
6. InTest Corporation. Form 10-K for the fiscal year ended December 31, 2025. US Securities and Exchange Commission. Published 2026. Accessed October 29, 2026. https://www.sec.gov/Archives/edgar/data/1036262/000103626226000012/intt-20251231.htm