Q3 2021 inTest Corp Earnings Call
Greetings and welcome to the Intest Corporation third quarter 2021 financial results at this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.
I'd now like to turn the conference over to your host Deb Pawlowski Investor Relations for Intest Corporation. Thank you you may begin.
Thanks, Melissa and good morning, everyone. We certainly appreciate your time today and your interest in Intest Corporation here with me are Nick Grant, our President and CEO and Duncan Gilmore, Our Chief Financial Officer, and Treasurer, you should have a copy of the third quarter 2021 financial results, which we released this morning before market opened.
If not you can access the release as well as the slides that will accompany our conversation today at our website www dot Intest dot com.
After our formal presentation, we will be opening the line for Q&A, if youll turn to slide two in the deck I will first review the Safe Harbor statement, you should be aware that we may make some forward looking statements during the formal discussions as well as during the Q&A session. These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual.
To differ materially from what is stated here today these risks and uncertainties and other factors are provided in the earnings release as well as with other documents filed with Securities and Exchange Commission you can find these documents on our website or at SEC Gov.
During today's call. We will also discuss some non-GAAP financial measures. We believe these will be useful in evaluating our performance you should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We have provided reconciliation of non-GAAP measures with comparable GAAP measures in the tables that accompanies.
In today's release and in the slides.
So with that if you would please turn to slide three I will turn it over to Nick to begin net.
Thank you Deb and good morning, everyone.
We delivered solid third quarter results that we believe demonstrate the successful execution on our five point strategy, which is focused on driving growth diversifying our markets and customer base, while ensuring we have the right talent to execute.
In the quarter, we achieved year over year net revenue growth of 46% to $21 1 million.
As global demand for our semiconductors continued to show relative strength and industrial sectors benefited from ongoing broad based recovery.
Of note, our multi market revenue grew 22% sequentially.
Like many others, we continue to face supply chain constraints and inflationary pressures.
We had an estimated 500000 of finished goods that were unable to ship in the quarter due to logistical challenges.
Our teams have done an excellent job managing supplier and logistics challenges to fulfill orders.
We continue to implement enhanced pricing help overcome inflationary and expediting cost.
The results of these efforts was reflected in our margins and profitability in the quarter, which were in our expected range.
During the quarter, we generated $4 3 million of cash from operations, increasing our year to date total cash generated to $8 1 million.
Cash on hand at the end of the quarter was nearly $19 million.
And in support of our organic and inorganic growth initiatives, we announced a couple weeks ago that we executed a new extended and expanded credit agreement.
Overall this added liquidity allows us to capitalize on the attractive debt markets and provides additional financial flexibility to continue to pursue a robust pipeline of acquisition opportunities.
Following that announcement, we successfully executed two acquisitions post third quarter close in October <unk> Sciences, and video <unk> imaging solutions.
Both acquisitions arose out of our M&A funnel generation program that has been developed and refined over the last year.
Slides four and five provide a brief overview of each.
These sciences was a small tuck in asset acquisition, which closed on October six and was funded with cash on hand.
The acquisition is an ideal demonstration of our strategy to grow through innovative technologies with an eye towards fast growing adjacent markets as it provided both a low cost method for adding ultra cold storage to our ultra cold test solutions and it allows us to gain a presence in a fragmented but <unk>.
Fast growing estimated $200 million addressable market.
Their portfolio of high performance biomedical refrigerators, and freezers are used to meet versatile applications, including ultra cold storage solutions for biological sample banks blood safety vaccine safety medical supplies and reagents safety.
Currently there is little to no overlap in customer base as their products are largely sold to research institutions University pharmaceutical biotechnology manufacturers and hospitals.
While the current business has de Minimis revenue, we believe we can build a scalable operation to accelerate growth and medical cold chain applications by leveraging our engineering expertise manufacturing capabilities and financial strength with targeted investments in sales and marketing as well as product innovation.
Turning to slide five in our most recent acquisition DDR <unk>, which we acquired last week on October 28.
The <unk> acquisition is consistent with a number of our strategic initiatives as it will help us expand our process technology solutions and diversify our reach into targeted life Sciences, and industrial markets, while also broadening our international footprint and customer base.
Additionally, this aligns with enhancing automation capabilities as we will look to add future product solutions with imaging data and analytical tools and valuable functionality and expertise as intest strives to embrace the opportunities created by the internet of things and making the most of artificial intelligence based tools.
Their product set includes industrial grade Circuit Board mounted video digital cameras and related devices systems and software, which are used in a broad spectrum of applications.
About 72% of the revenue was in the life Sciences and security markets, but they also serve aerospace machine vision.
Biometrics and diagnostic imaging industries.
Customers include Fortune, 500 companies and government prime contractors as well as mid sized security biotech in machine vision Oems and integrators.
The company has a design and sales facility in the Netherlands, and generates about 40% of the revenue from European customers.
Similar to <unk> Sciences space. This too is a highly fragmented market that is large and growing.
It is important to note that this is not a camera acquisition. It is about image capture and data analysis that <unk> brings the.
The company is similar to our other businesses in the sense that they develop highly valued engineered solutions.
I want to briefly talk to a few application specific examples to give you a sense of the technology, we are adding.
The geology supplies cameras in the ophthalmology markets to capture images of the MRI to examine patients for refractive correction glaucoma and other degenerative diseases.
Another example is spectroscopy applications, which are commonly used in chemical analysis to provide a structural fingerprint by which molecules can be identified.
So the LNG cameras are used by a leading fortune 500 company and their handheld and tabletop devices, providing this type of analysis.
Finally, there are small cameras are commonly used to inspect pipes of all diameters from large oil and gas pipes to small fiber optic applications.
The medical applications for pipe inspections include medical intra oral endoscopes.
What sets <unk> apart from the competition is there a design expertise and flexibility to work with customers on unique solutions.
From a financial perspective video <unk> trailing 12 month revenue as of the end of September 'twenty, one was approximately $10 million and provided comparable gross margins within test.
We expect the acquisition to be approximately <unk> <unk> accretive to diluted earnings per share in the first year with interest.
This is net of one time acquisition related expenses of approximately <unk> <unk> per diluted share, which will be recognized in the fourth quarter of 2021.
While we finance the video <unk> transaction with a portion of our new credit facility.
We still have the financial flexibility and resources to continue to pursue a robust pipeline of acquisition opportunities.
Lastly, life Sciences is a key target market for <unk> test and both of these acquisitions bring technology and engineering Knowhow that enhances our medical offerings in that space.
Importantly, with some incremental investments and operational support we believe we can scale these businesses and benefit from secular tailwind in the life Sciences markets.
These are exciting times for <unk> test as we drive change throughout the organization and build momentum by augmenting our deep industry knowledge reputation and expertise to develop and deliver more high quality innovative solutions to address our customers' complex requirements.
With that let me now turn it over to Duncan to review, our third quarter financials in more detail.
Duncan over to you.
Thank you Nick starting on slide six we provide some detail regarding our top line.
Revenue for the third quarter was $21 1 million or 46% increase over the same period last year and just above the midpoint of our guidance.
Multi market revenue grew 22% from the second quarter fueled by strength in the industrial market, while our semi business remains at historically high levels. Despite the sequential dip.
We continue to see the benefits of our ongoing innovation and development efforts as our new product designs are being well received in our markets.
We are gaining new customers and winning business from competitors.
Moving to slide seven our third quarter gross margin of 49, 2% was in line with guidance and compares with 52% in the second quarter, 2021, and 44, 7% a year ago.
When compared with the second quarter the change in gross margin reflected higher component material costs, not yet fully covered by price improvements as well as changes in product mix and less favorable absorption of fixed manufacturing costs. We continue to actively manage ongoing challenges of supply chain constraints and expect to start seeing.
Some positive impact from the price increases we have rolled out in the second and third quarters. Although we do not expect the full benefit of these initiatives will be felt until next year.
Slide eight details, our operating expenses and expectations for the fourth quarter.
<unk> expense grew 9% sequentially to $2 8 million in the third quarter driven by increased head count a return to more normal levels of travel as restrictions are lifted and an increase in spending on new advertising initiatives.
Engineering and product development expense remained relatively unchanged compared with the trailing period.
General administrative expense decreased 4% sequentially to $3 6 million for the third quarter restructuring.
Restructuring and other charges were $51000 down from 197000 in the second quarter.
The third quarter included an increase in expenses related to M&A activities, but this was more than offset by the 324000 reduction quarter to quarter related to nonrecurring CFO transition costs in the second quarter sequential quarter reduction in costs associated with finalizing the integration of our EMS manufacturing operations.
Which is now complete and a reduction in spend on non M&A related initiatives that focus on spending on M&A activities has ramped up.
We expect operating expenses to trend up significantly in the fourth quarter, reflecting the impact of businesses acquired in October. In addition, we expect an incremental increase in costs related to acquisition activities of approximately $300000 in incremental amortization related to inquired acquired.
<unk> of approximately $100000.
You can see our bottom line and adjusted EBITDA results on slide nine.
We had net earnings of $2 2 million or <unk> 20 per diluted share for the third quarter, which was in line with guidance and compares with net earnings of $2 6 million or <unk> 24 per diluted share for the second quarter.
We accrued income tax expense of $357000 in the third quarter, reflecting a 14% effective tax rate. This.
This compares with $447000 of income tax expense accrued in the second quarter, which reflected an effective tax rate of 15% we.
We expect our effective tax rate in 2021 will range from 14% to 16%.
Diluted average shares outstanding were $10 8 million to the third quarter of 2021 during the third quarter. We saw a 3435 option shares exercised bringing the total for the nine months to 149010, which has raised $1 billion in cash proceeds this year.
Adjusted EBITDA was $3 4 million for the third quarter compared with $4 million for the second quarter and $1 million during the prior period.
Beginning with the third quarter, we are reporting adjusted EBITDA, which removes the impact of stock based compensation from EBITDA.
Stock based compensation is a noncash expense and as such does not impact our liquidity. Accordingly, we believe that our adjusted EBITDA is a better performance measure to assess strength of our cash generation than EBITDA alone.
More detail on the calculation of adjusted EBITDA can be found under non-GAAP financial measures in our earnings release.
Consolidated headcount at September 30th was 232, an increase of 10 staff from the level. We had at June 30th the increase was primarily in our thermal segment.
I'll now turn to slide 10 for our capital structure and cash flow as previously announced on October 18th we executed a new five year credit agreement with <unk> Bank, which includes a $25 million non revolving delayed draw term loan and a $10 million revolving credit facility. This new agreement.
<unk> replaced our existing $10 million facility with <unk> Bank, which had no borrowings at quarter end on.
On October 28, we used $12 million under the term notes to finance the acquisition of the geology.
Cash and cash equivalents increased by $4 1 million sequentially to $18 7 million.
We generated $4 $3 million of cash from operations during the third quarter. We currently expect cash and cash equivalents to increase throughout the balance of 2021 subject to any strategic investments we may choose to make.
Accounts receivable declined $600000 or 5% sequentially to $12 2 million at September 30th with 53, DSO down from 54 DSO at June 30th.
Inventories grew $657000 or 8% sequentially to $9 4 million, primarily driven by raw material influx in our thermal segment to support the increased multi market demand we are seeing.
Capital expenditures during the third quarter were $114000 up from $75000 in the second quarter.
We have no significant commitments of capital expenditures for the balance of 2021, however, depending upon changes in market demand or manufacturing and sales strategies, we may make purchases or investments as we deem necessary and appropriate.
With that I will now turn the call back over to Nick.
Thanks Duncan.
Slide 11 highlights our orders and backlog.
Overall demand for our products and solutions remains strong and we continued to secure new orders in our targeted growth markets and are making inroads in working with Oems to embed our solutions for a broader market exposure.
Orders for the third quarter were $21 1 million, a 47% increase over the same period last year and was supported by growth in both multimarket and semi market.
The year over year increase in multi market orders was primarily from the automotive industry, which includes the EV market.
During the recent third quarter, we received a significant follow on order for approximately $1 million from one of our customers, which we expect to ship over the next several quarters.
As a reminder, in the second quarter of 2021, we've received a record order for Chillers from our key automotive OEM manufacturer for approximately $1 $5 million.
This order is also shipping over multiple quarters beginning in Q4.
Note this trend of placing larger orders that will ship over several quarters as one we are seeing with more frequency.
We expect this may at times result in period over period fluctuations and order levels that are not necessarily indicative of changing demand, but rather reflect the timing of when these large orders were placed.
Our backlog at quarter end was $24 million, approximately 75% of which is expected to convert to sales in the fourth quarter.
Please turn to slide 12, and I'll provide an update on our near term expectations.
We will continue to execute on our five point strategy with a focus on driving growth and diversifying our markets and customer base.
Our recent acquisitions have added to our product platform offerings, and technical expertise and expanded our customer base to adjacent high growth markets.
Integration efforts are well underway on both businesses.
As to guidance for the fourth quarter of 2021, we expect revenue to be in the range of $21 5 million to $22 5 million.
While gross margins are expected to be consistent with what we achieved in the third quarter.
Also we are guiding to GAAP EPS of <unk> 10.
To <unk> 14 per diluted share and adjusted non-GAAP EPS of 14 to 18.
Per diluted share for the fourth quarter of 2021.
While we do not plan to provide specific detail around expenses each quarter Duncan did provide our expectations for the fourth quarter operating expenses as we thought it prudent to help our investor base understand the new run rates and costs associated with our recent acquisition activity.
Our guidance is based on our current views with respect to operating and market conditions and customer forecast, which are subject to change as well as our expectations for the balance of the quarter and are subject to any strategic investments we may choose to make.
Actual results may differ materially as a result of among other things. The factors described under forward looking statements found in the materials that accompany this conference call, including the press release and the deck.
Our M&A funnel development is still very active and we continue to be focused on programmatic acquisitions being a key element of our five point strategy.
Our team has identified a set of acquisition targets that we believe will bring differentiated our innovative technologies provide complementary capabilities enabled.
Enable deeper and broader reach within our targeted industries and geographies.
To support our focus in this area. We are pleased to have added rich rogoff as our vice president of corporate development at the start of the fourth quarter.
Rich brings experience on the deal pursuit side.
And a strong operational background to support our integration activities.
We also expect to grow organically through new product development sales channel enhancements and marketing prowess.
We believe our efforts combined with a robust pipeline of new customer opportunities can provide further differentiation to our business and drive growth and profitability over the longer term.
We are excited about what's happening at <unk> test in the path, we have embarked on with our five point strategy.
Before I open up the lines for Q&A I would like to thank the entire intest team for delivering another truly solid quarter.
The teams remain laser focused on capturing growth in driving investments that will position us well long term.
With that operator, let's now open the lines for questions.
Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question. Kim You May press star two if you'd like to remove your question from the queue.
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Our first question comes from the line of Jason Smith with Lake Street Capital Markets. Please proceed with your question.
Hey, guys. Thanks for taking my questions just wanted to start with the Q4 guidance. Nick I know you mentioned about 500000 and orders that were unable to ship in Q3, but does guidance for Q4 I assume you can ship to all of the demand or is that still baking in some potential supply chain constraints.
Yeah, Hey, good morning, Jason Great question.
We commented supply chain constraints are abundant out there and so we've what we've provided we believe bakes in the.
Potential risks on the supply chain.
Here in Q4, Dunkin' any comment on that yeah, no I totally agree.
We certainly have assumed in that number.
The challenges that we see on us from a supply chain perspective, and have factored that into the numbers.
Okay, that's really helpful and apologize if I missed it but what sort of contribution do you expect from the acquisitions I know you said <unk>.
<unk> Sciences relatively de minimus revenue, but what's the revenue contribution from the combined two purchases in Q4.
Yes, we're looking at around 1 million and a half.
Order of magnitude all from <unk> <unk> Sciences.
There is some incremental cost associated with getting the <unk> product line up and running in Q4 order of magnitude about penny Penny and a half I'd say associated with that video allergy as I said about 1 million and a half is baked into our assumption there with no real bottom line contribution in the initial quarter.
And we also have the M&A associated costs of the <unk> that we that we've talked about and called out.
Okay, and just the last one for me and I'll jump back into queue. Congrats on that $1 million EV order. Just curious if you could provide some color around why youre thinking why do you think youre starting to see some of these larger orders get pulled over the finish line.
Yes.
A trend out there as <unk>.
Customers are.
Really working to ensure they've got a.
Slot in the delivery pattern, if you will given the supply chain constraints in that so in this case that EV customer really is building out there.
Production lines and they wanted to go ahead and get all the units on order for for that line, which will deliver over the next few quarters. So but I just think it's more of risk management from the customer perspective.
Okay that makes sense.
So a lot guys.
Thanks, Jason.
Thank you. Our next question comes from the line of <expletive> Ryan with <unk> Securities. Please proceed with your question.
Thank you.
<unk>.
So Nick you.
Initiated a pretty aggressive marketing campaign in multi market I guess, specifically at ambarella.
Going after induction heating can you provide an update.
How thats going I know, we just kicked off I think last quarter, but.
What are you seeing as far as potential customers or existing customers response to that campaign.
Yeah, Hey, good morning deck, Greg Great question, there and you are exactly right. We launched a couple of aggressive campaigns one wanted to ambarella.
Focused on the the EV.
<unk> out and capturing as much opportunity as we can there and the second one was in the cannabis space with our Ics business.
And specific to ambarella.
<unk>.
The program itself is generated.
The attractive level of qualified leads they've actually got programs underway with multiple new potential customers as you saw during your visit up there.
These applications from these customers we have to prove them out in our lab and and then from that point it leads to implementation and production. If they are satisfied with that and that's exactly where we're at is during doing the application.
Best Vetting, if you will and proving out. This so very confident these are going to pay off here in the quarters ahead.
Okay.
Specifically on the semi side I think last call you talked about the digestion and we saw that in the September quarter Whats. Your view of your semi in Q4, and maybe going into Q1, both kind of the back and legacy <unk>, but also <unk>.
<unk> front end opportunities.
Yes.
<unk> got a number of positive secular trends in.
The announced investment plans and everything else. So we're very bullish on semi going into 2022.
We continue to see.
Solid activity on the front end side on Silicon carbide.
And our test.
Piece on the back end side the temperature test chambers are instruments that we provide high levels of activity there and customers are more of our traditional test on the EMS side.
Wrapping up their plans are laying out their plans for 2022, which we were closely engaged with them on so.
We feel good heading into 2022 on semi.
Okay.
And on the acquisitions I think you talked about in both opportunities scaling what these companies.
Companies have.
Developed and grown to this point some of these are new market touch points for you. How do you how do you. How do you have the visibility that you can scale into some of these new new market opportunities.
Yes, great question, absolutely both of these.
Acquisitions, we completed really opens up some new markets for us and attractive markets.
And the life Sciences space is one that we targeted as an area. We wanted to go after as part of our corporate growth program and identifying the science is really a company with great technology.
Yes.
Able to bring in an industry expert to help us penetrate this space.
That acquisition and.
Providing some low cost manufacturing through one outsourced agreement there really positions us in a different place for our Ics business, but we believe R. R.
Ultra low temperature capabilities, and Knowhow and our sales and marketing prowess. If you will will drive this business to the levels that we can get to on there and same for video <unk>. This is a bigger play around data capture building out our automation capabilities and.
Further strengthening our footprint in life Sciences, and so it's.
It's not a market that <unk>.
Unfamiliar with.
My days at AMETEK I oversaw a camera company.
Video capture company and.
So I know the space I think we will do quite well in it.
Okay great.
Good luck and congratulations.
Thanks, Nick.
Yeah.
Thank you, ladies and gentlemen, as a reminder, if you'd like to join the question queue. Please press star one on your telephone keypad. Our next question comes from the line of Peter Wright with Interlock, Inc. Please proceed with your question.
Thank you guys for taking my questions and congratulations on what looks like a $100 million of years.
Nick for your first so thats quite an accomplishment.
My first question for you a two parter is.
You did signal no customer overlap and building on <unk> question. What is the go to market or sales strategy in life Sciences is it direct or are you working with distributors there.
And if you could comment on.
What your belief of kind of the cross sale of your existing product into that kind of new market could be how are you thinking about that from a size perspective, and then the second part of that question for you. Nick is on the <unk> Sciences side is that simply a technology.
Acquisition or do you have line of sight to first sales for that business and then I have one follow up for Duncan on the other side.
Yes, great question, Peter and good morning.
So the go to market for these these businesses as we commented really these markets are not ones that we currently have a strong presence in today. So it's about leveraging their existing distributor base.
Debt.
They have built up relative to <unk> sciences.
And adding direct sales channels.
Investments to better get our message out there and buildup.
They are more robust.
Supply of product in the regions out there. So we will be making investments to really improve that and then provide our.
Go to market expertise, if you will around the around those businesses.
<unk>.
Similar story, but they go primarily through Oems and this is a huge market.
Ridiculously huge market and we believe just focusing on certain niches in this space, we can really make inroads there, but it's about.
Getting our product embedded with Oems in that area. So this is something we've launched initiatives on across our other businesses and we believe we can execute in that space as well.
And do you think.
Oh go ahead.
In 2022, I don't want to give the timeframe, maybe you'll get the timeframe, but how much incremental sales do you think from your existing product.
Product portfolio pre acquisition do you think that these two acquisitions are going to help sell into this channel.
Be honest with you there's not a lot of pull from our existing products into these channels, we're going to actually try to capture it if there are any but.
In reality these vaccine.
Freezers and refrigerators and that are really not using.
At MFS.
Products. Our induction heating is also typically not in these universities and medical centers pharmaceutical.
Facilities et cetera, and that so, but if something comes up we're going to capture for us it's more about growing the opportunities identifying the leads and expanding the footprint for these for these two companies.
Phenomenal and then Mike My two parter, if I can for Dunkin' Opex of $99. Two is that a full quarter of expenses for the two acquired businesses I know you've got 300000, thanks for that.
Breakdown on that by the way a deal offset so is that a good number to be thinking of going forward.
And then the second part if you could just check my math on the cash.
You've got a $35 million line of credit 12 drawn which leaves about 23 available in about 20 ish million at the end of the year does that suggest about $40 million of liquidity.
<unk> the year and kind of what it might my question. There is if the math is right. Then what is the minimum number of liquidity that you really need to be comfortable with it and test.
Sure I mean, let me take the first part so in terms of expenses, it's almost fully loaded we only really have two months of ideology in there versus the three so.
There's another 100 K I would estimate 100 to 150 or so to also kind of that youll add into that kind of relatively broad range quite honestly of the 9% to nine two.
I think I'd look at it in that eight 5 million kind of range.
When I kind of back out the deal cost, we talk about which just to be clear we have.
An aggregate of $600000 of M&A associated deal costs that are baked into the Q4.
Youll number a combination of the number we call associated specifically with video allergy as well as obviously there is other activities that have been going on Titan Z sciences et cetera, et cetera. So hopefully that helps a little bit would provide some providing some color there on.
On the liquidity side.
Yes, I mean, obviously the cash position around the $19 million exiting the quarter, we entered into the the funding facility for the $25 million delayed draw piece the $10 million.
$10 million credit facility was really just extending the timeframe of our existing credit facility.
We have drawn $12 million from the $25 million.
I mean, the simple answer to the question Peter is that we're always looking for more liquidity.
No.
The extent, we have opportunities to further extend credit lines et cetera. Then obviously, we will be be looking to do that I think we are off to a good start there in terms of the funding and the facilities that we say up here.
During the third quarter.
I guess in the FERC beginning of the fourth quarter sorry.
Great quarter. Thank you guys.
Thanks Peter.
Thank you. Our next question comes from the line of Robert Martin with Penn Capital. Please proceed with your question.
Congratulations guys on another strong quarter of execution, particularly the cash flow numbers, which were exceptional.
Thanks Robert.
Got it assuming the semiconductor business plateaus.
And a fairly high level for the next year or so before resuming an uptrend in the following year is it digest this year's round of heavy capital in that ramp up capital investments.
You think the.
First on your part to drive growth in the EMS business and thermal business will generate any revenue growth. This year is there it's been about a year now since you've been on board and trying to change this.
Corporate culture to more gross growth driven.
Can you quantify if there is any revenue above replacement management from your efforts and goals saved above expectations.
Yes.
Good question.
We laid.
Played out our five point strategy.
And we're driving that.
Ross all businesses, but MF is really making some great inroads.
Customer penetration expansion and.
And to new customers going into new markets with their high voltage high current product out there this power management integrated circuit spaces.
An area they hadn't played in in the past and we're really making some good inroads there. So I truly believe what we're driving across the business.
So some investments that are planned and further geographic expansion for that business and so I believe.
We've got plenty of room to grow.
And that business, whether or not the overall market trends are moving up or down if you will.
Alright, thank you.
Congratulations again on a different manner to very reasonable deals that seem to place deals that seem to have.
Very significant longer term opportunities would you be willing to give us a three year outlook for sales for both of those businesses. If you succeed.
At this stage.
It's a little too early to give you that forecast and we absolutely expect to grow visa.
Hopefully you guys get the.
Since then im a growth guy.
Identifying these markets or these companies as you said very reasonable.
Purchase prices that are aligned with creating shareholder value.
And.
I am confident that the market the opportunities the investments we've got identified we'll drive that top line for both businesses, but I think our Investor day, which we're planning for Q1 at the end of Q1 here now we had to delay it out.
Given the.
New York situation et cetera, but we will try to go into more details on the full year outlook.
Five year strategic plan expectation models et cetera during that timeframe.
Thank you you gave us.
Tim for.
The healthcare business.
<unk> did you give us a tam for that you gave us one for Zee I guess, yes.
<unk> Sciences.
The total market is about a half a billion dollars but are.
Sam our served market is really around a $200 million there and then.
This image capture image.
Product space is is huge it's over $20 billion the space that we play in with <unk> is roughly $5 billion, but we believe just focusing on 10% of that market. We can make some great end roads. So.
Let's move on our numbers substantially and a lot of growth opportunity.
Thank you and my last question.
At times I guess, when investors are more concerned or foolish about the semiconductor cycle seems to somewhat stupidly low valuations.
Have you guys considered having.
In your in your quiver.
On the share repurchase program that can exploit these.
These declines in the stock and the lease for stock option issuance or something modest from a repurchase program. Thank you.
We've certainly done that in the past and we're always kind of looking at where does it where would it make sense to perhaps do that.
I mean, we do need also need to be cognizant of cash requirements and looking our pipelines and what we want to do with that but absolutely.
Certainly something thats.
On our mind.
Yes.
There is enough.
Organic and inorganic growth opportunities, we don't want to either.
To use.
Yes.
Programmatic share repurchase program I would assume most shareholders I speak further to that but.
If the stock gets crazy cheap it wouldn't hurt to have an availability to score some stock.
Very low valuations when you will have obviously annual dilution from your stock comp packages.
Agreed agreed Robert we actually do have a.
Open shareholder report our share repurchase plan out there. It's just that we haven't engaged haven't activated if you will.
Alright, Thank you very much great.
Great Robert Thanks.
Thank you ladies and gentlemen. This concludes today's question and answer session I will turn the floor back to Mr. Grant for any final comments.
Alright, Thank you and thanks, everyone for joining us on the call today and for your interest in Intest.
For those of you interested we will be participating in a few upcoming conferences on November 18th we will be at the virtual Ladenburg Thalmann technology Expo.
On December eight will be at the CEO summit at the St Regis and the San Francisco, which is coincident with the Semicon West.
Exhibition, that's going on and then on December 15th at the virtual da Davidson Conference.
As always please feel free to reach out to us at any time and we look forward to talking with all of you again in early March to report on our fourth quarter of 2021 results.
Thank you for your participation stay safe and have a great day.
Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.