inTest Corp (INTT) 2013 Q4 法說會逐字稿

Welcome to inTEST Corporation's 2013 fourth-quarter and year-end financial results conference call. (Operator Instructions) As a reminder, this conference is being recorded today. A replay will be accessible at www.inTEST.com.

I would now like to turn the call over to Laura Guerrant, inTEST's investor relations consultant. Please go ahead.

Thank you, Camille, and thank you for joining us for inTEST's 2013 fourth-quarter and year-end financial results conference call. With us today are Hugh Regan, Treasurer and Chief Financial Officer; Jim Pelrin, Vice President and General Manager of inTEST's Thermal Products segment; and Dan Graham, Senior Vice President and General Manager of inTEST's Electrical and Mechanical Products segments.

Mr. Regan will briefly review highlights from the fourth quarter as well as current business trends, and then will review inTEST's detailed financial results and discuss guidance for the first quarter of 2014. We will then have time for any questions. If you have not yet received a copy of today's release, a copy may be obtained on inTEST's website, at www.inTEST.com.

Before we begin the formal remarks, the Company's attorneys advise that this conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements do not convey historical information, but relate to predicted or potential future events that are based upon management's current expectations.

These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, changes in business conditions in the economy, changes in the demand for semiconductors, changes in the rates of and timing of capital expenditures by semiconductor manufacturers, progress of product development programs, increases in raw material and fabrication costs associated with our products, and other risk factors set forth from time to time in the Company's SEC filings including, but not limited to, inTEST's periodic reports on Form 10-K and Form 10-Q.

The Company undertakes no obligation to update the information on today's conference call to reflect events or circumstances after the date hereof or to reflect the occurrence of anticipated or unanticipated events.

With that, let me now turn the call over to Hugh Regan. Please go ahead, Hugh.

Thank you, Laura. I would like to welcome everyone to our 2013 fourth-quarter and year-end results conference call.

Before I begin today's remarks I want to explain Bob Matthiessen's absence from the call this afternoon. Bob had surgery this past Friday and is currently recovering and will be back to join us for the next quarterly conference call when we release Q1 2014 results on May 1, 2014. We all wish him a speedy recovery.

2013 was decidedly a challenging year for the backend semiconductor equipment industry, particularly in the second half of the year. Despite this we delivered solid operating results. As we have said many times, we have structured our business to make money even during challenging times and our operating results mark inTEST's fourth consecutive year of profitability as well as our 17th consecutive quarter.

As forecasted, our orders in the second half of 2013 were stronger by those in the first half by 5%. 2013 gross margin expanded to 48% from 44% a year ago and net earnings for the year of $0.30 per diluted share increased by $0.09 over 2012 net earnings.

The industry weakness as well as seasonal softening negatively compounded results for the fourth quarter. Fourth-quarter 2013 bookings were $9.3 million compared with third-quarter 2013 bookings of $10.4 million and consistent with fourth-quarter 2012 bookings.

23% of Q4 2013 bookings were derived from non-semiconductor test. Recall that at the end of the second quarter we revised the non-semi-related historical bookings and revenue figures to include service which previously had not been included.

Q4 net revenues of $9.3 million were at the high end of our guidance range, and while they were down compared with the $9.9 million for Q3 2013, they improved $1.1 million over fourth-quarter 2012 net revenues of $8.3 million. 22% of fourth-quarter 2013 net revenues were derived from non-semiconductor test.

Fourth-quarter gross margin of 50% increased 48% from the previous quarter and 42% versus a year ago. Net earnings for the quarter of $0.07 per diluted share exceeded our guidance. They were down quarter over quarter compared with the $0.10 per share in Q3 2013, but were substantially increased on a year-over-year basis compared with the $0.02 per share recorded in the fourth quarter of 2012.

In addition, we reported a positive book-to-bill ratio for the quarter, have a solid balance sheet, and we continue our trend of generating cash and carrying no debt.

Now let me turn to the segments in which we operate. Our Thermal Product segment is the segment providing inTEST with significant growth opportunities in the future. We specialize in delivering semicustom thermal test solutions that can be readily adapted to markets outside of the semiconductor market, including automotive, consumer electronics, defense, aerospace, energy, industrial, and telecommunications.

Thermal segment bookings for the fourth quarter were $5.4 million compared with bookings for the third quarter of $6.5 million. The reduced bookings in the fourth quarter were driven by weakened demand from customers in the Asian transceiver market for our thermal products as well as the aforementioned soft semi demand that impacted all three of our product segments.

In spite of this weak demand, Thermal bookings in the second half of 2013 were up 18% compared to the first half. The growth in bookings in the second half did not translate into increased revenues in the fourth quarter, though, and Thermal segment revenues for the fourth quarter were $5.4 million compared with $5.8 million in the third quarter.

During the fourth quarter, a large order for four Sigma chambers was received from a manufacturer of medical devices for testing pacemakers. Thermal platform activity increased, driven by demand in military and microwave markets. Looking forward in 2014, a large military contractor has advised us to expect significant orders for Sigma thermal engines, both current generation and next generation, whose development is now in discussion.

The outlook for business at Sigma's historically largest customer is improving. For the last two years this company has been recovering from capacity constraint caused by supply issues from Asia. They are in the process of commissioning a new manufacturing facility in the Midwest and have begun discussions with us to identify thermal test requirements.

Asia has once again become active in Q1 and large orders received from Hakuto for China and Japan with additional orders expected late in the first quarter or early in the second quarter from Chinese customers which could total 20 systems. The OEM chiller project for applications in the energy industry has been completed. We are now on the approved vendor list with first orders expected in the second quarter of 2014 for delivery by year-end.

Turning to the Mechanical Products segment, bookings in the fourth quarter were $2.4 million, up from $1.8 million in the third quarter. Fourth-quarter Mechanical sales were $2.2 million, consistent with the third quarter.

We continued working with a major IDM on manipulator docking and interface products for a new internal test system. Scheduled release of this new test system was at the end of 2013, but they are currently behind schedule.

During the quarter we evaluated several countries for offshore manufacturing of certain products manufactured by the Mechanical Products segment and did much preparation work on that front. Our goal is to reduce operating costs for this segment, initially for our best-selling manipulator family, but we expect to expand on that if we are successful.

Other 2013 achievements for Mechanical include the development of a new dock for higher-end applications requiring more automation. This was sent for evaluation to a major customer before year-end and has been well received. We are making some minor changes and are ready to announce this product before the end of Q1 2014.

We successfully proliferated the PIB direct docking at several sites. We installed a Cobal 500 for a SPEA tester at a Korean customer, which was our first Korean sale to an end user. This was the result of new sales representation there. Our Cobal 250 manipulator is now available for over 20 different test systems, while our Cobal 500 manipulator is now available for 10 different test systems.

2013 revenues for this segment were up slightly from 2012, but remained disappointing. We currently expect more significant growth in revenues in this segment in 2014. First-quarter 2014 orders are comparatively strong and broad-based.

In addition, we just received orders for a leasing of three manipulators from a large European IDM. A follow-on order is likely, although the first three have not yet been installed. Incidentally, this is the same customer who has leased substantial equipment from our thermal division.

Now let me turn to our Electrical segment. Bookings for the fourth quarter were $1.6 million compared with $2 million for the third quarter and Q4 Electrical revenues were $1.7 million compared with $1.9 million last year. We had initially seen strong orders in this segment early on in the quarter, but that did not continue due to the aforementioned softness in the semi market as well as the seasonal reduction in demand in the fourth quarter we have seen in recent years.

2013 achievements for the Electrical Products segment include the development of a new wafer probe interface at the request of a major IDM. This was field tested and approved at the start of the year and we installed about 45 of these at various sites for this IDM in 2013. We have named this product [Lonestar].

We've developed our own in-house tester codenamed [Lynx] to replace an aging commercial unit that had become obsolete. This is currently configured with over 15,000 measurement pins, but the switch matrix can be expanded to 65,000 pins. In high resolution mode, the pins can be paired to achieve measurement accuracy better than 10 milliohms.

The major advantage is that the entire interface can be measured in one pass, plus the cost of fixturings for each interface is greatly reduced. This is not something that our customers see directly, but it does save time and costs. Finally, we are designing a new range of interfaces for a major family of testers and will have first articles available within a few weeks for field testing at customer sites plus internal evaluation.

Let me now provide a review of Q4 financial results.

Fourth-quarter 2013 end-user net revenues were $7.9 million, or 85% of net revenues, compared with third-quarter end-user net revenues of $8.7 million. OEM net revenues were $1.4, or 15% of net revenues, compared with third-quarter OEM net revenues of $1.2 million. As noted earlier, net revenues for markets outside of semiconductor test were $2 million, or 22% of net revenues, compared with $3.6 million, or 37% of net revenues, in the third quarter.

The Company's gross margin for the fourth quarter was $4.7 million, or 50%, as compared with $4.8 million, or 48%, in the third quarter. The improvement in the gross margin was primarily the result of a decrease in our component material costs, which declined from 33.0% in the third quarter to 31.9% in the fourth quarter.

Also contributing to the improvement in our Q4 gross margin was a decrease in our fixed manufacturing costs, which decreased from $1.5 million in Q3 to $1.4 million in Q4. Our Electrical and Thermal Products segments both experienced reductions in their component material costs during the fourth quarter. Our Electrical Products segments component material costs decreased from 41.3% in Q3 the 36.9% in Q4, while our Thermal Products segment saw its component material costs decline from 28.2% in Q3 to 26.9% in Q4.

The decreases in component material costs in our Electrical Products segment was driven by changes in customer mix while the reduction in our Thermal Products segment was due to product mix. Offsetting these decreases was an increase in the component material costs of our mechanical product segment, which increased from 38.7% in Q3 to 40.2% in Q4 due to both product and customer mix.

I will now discuss the breakdown of operating expenses for the quarter. Selling expense for the fourth quarter was $1.4 million compared with $1.3 million for the third quarter, an increase of $168,000 or 13%. The increase was primarily due to increased salary and benefits expense due to recent additions of staff in our Thermal and Electrical Products segments, as well as higher levels of sales commission expense in the same segments.

Engineering and product developed expense was $817,000 for Q4 compared to $945,000 for Q3, a decrease of $128,000, or 14%, driven primarily by reduced spending on product development initiatives in the fourth quarter. To a lesser extent there were also reductions in patent legal costs.

General and administrative expense for the fourth quarter was $1.4 million compared to $1.5 million in the third quarter, a decrease of $42,000, or 3%. The decrease was primarily driven by reduced costs associated with our year-end audit, salary and benefit costs, and intangible amortization. These decreases were partially offset by increases in investor relations and corporate legal expenses.

Other income was $15,000 for the fourth quarter compared to $24,000 for the third quarter and we accrued income tax expense of $345,000 during the fourth quarter compared to $24,000 booked in the third quarter. Our effective tax rate of 33% in the fourth quarter increased significantly from the 2% recorded in third quarter.

The abnormally low tax rate in the third quarter was primarily driven by the impact of booking the favorable results of the completion of a tax authority audit of our German deferred tax assets where we had a significant valuation allowance. To a lesser extent, we had a tax credit true-up based upon the finalization of our 2012 tax return. We expect our effective tax rate will range from 30% to 33% during 2014.

At December 31, 2013, we had a total deferred tax asset of $1.7 million, down $317,000 from September 30.

Fourth-quarter net income was $692,000, or $0.07 per diluted share, compared with third-quarter net income of $1.1 million, or $0.10 per diluted share. Average shares outstanding were 10.435 million at December 31. Amortization and depreciation expense was $207,000 for the fourth quarter and EBITDA was $1.2 million for the fourth quarter.

For 2013 net revenues were $39.4 million compared to $43.4 million in 2012, a reduction of $4 million, or 9%, due properly to the softness in the semiconductor markets in 2013 compared to 2012. However, due to an improved margin in 2013, 48% versus 44% in 2012, and a $1 million reduction in operating expenses year over year, which were inflated in the first half of 2012 due to the acquisition of Thermonics and costs related to the movement of our Silicon Valley operations, our net income for 2013 of $3.1 million, or $0.30 per diluted share, was $921,000, or $0.09 per share, rater than the comparable prior period.

Consolidated headcount at the end of December, which includes temporary staff, was 129, a decrease of two individuals during the fourth quarter in our Mechanical Products segment. I will now turn to our balance sheet.

Cash and cash equivalents at the end of the fourth quarter were $19 million, up $2.3 million from September 30. We currently expect cash and cash equivalents to increase throughout 2014.

Accounts receivable decreased $5.7 million at December 31, down $1.7 million since September 30. Inventory also decreased slightly by $241,000 to $3.2 million at the end of December.

Capital expenditures during the fourth quarter were $167,000 compared to $162,000 in the third quarter. The additions were in our Thermal Products segment and represented additions to our lease system. For 2013, capital expenditures were $424,000 compared to $431,000 in 2012.

I provided the consolidated segment booking data earlier in the call, but the backlog at the end of December was $3.1 million, relatively unchanged from the end of September.

In terms of our financial outlook, as noted in our earnings release, due to seasonably lower demand we typically experience at the beginning of each year, we expect that net revenues for the quarter ended March 31, 2014, will be in the range of $8.5 million to $9.5 million with net earnings ranging from $0.02 to $0.06 per diluted share. We currently expect that our Q1 2014 product mix will be slightly less favorable than the fourth quarter of 2013 and that the first-quarter gross margin will range from 46% to 48%.

Gartner has forecast that the 8 (technical difficulty) and we continue to be encouraged by quote activity and momentum which gives us a positive outlook. We see revenue growth resuming in the second quarter of 2014 and, overall, we expect that 2014 will be stronger for inTEST than 2013.

As Bob has noted in our prior earnings calls, our long-term objective is to grow and transform inTEST into a broad-based thermal solutions test company while continuing to supply our valued customers in the semiconductor test arena. Today, inTEST has evolved into a thermal test solutions provider, offering a comprehensive product portfolio capable of addressing growth markets in both the semiconductor and non-semiconductor markets, which include automotive, consumer electronics, defense aerospace, energy, industrial, and telecommunications. We believe the conditions for our long-term success remain firmly in place.

Operator, that concludes our formal remarks. We can now take questions.

(Operator Instructions) Theodore O'Neill, Litchfield Hills Research.

Thanks very much. Hugh, if I've done the math right here, the semi-related revenues dropped sequentially from Q3 to Q4 and you are guiding to a sort of flattish outlook into Q1. Can you talk about what you are seeing on the semiconductor side in terms of activity? And do you think that any of these orders -- any official business is waiting until the end of March or it's just getting pushed into April?

It's funny, Theodore -- and we have got both Dan Graham and Jim Pelrin on the call who can offer additional comments. But we started the quarter off rather robust and it has slowed down a little bit or taken somewhat of a pause.

As we have said in the past, our bookings are not always linear. They can be lumpy and we can have either a frontend loaded, backend loaded, or all over the place quarter, and that seems to be what's happening. It has slowed down, but we -- the orders that we've had, at least in the semi side, have been very broad-based from a large number of customers.

Another observation would be that customers that historically have been very large for us are not as large for us this year, which provides sort of a better diversification. Dan and Jim, I don't know whether you've got any other color that you would like to add.

Only to say that certain non-semi-markets we have seen some recent softness in that has affected us, particularly for production applications in Asia. And that has definitely affected it.

This is Dan, by the way. Speaking for the Mechanical and Electrical sides of our business, in recent years there has been a softness at the end of every year. We believe that is caused in large part by the increasing percentage of semi chips going into consumer products. And of course, they have to be ready for the Christmas market so typically Q4 actually does turn down.

Okay. Hugh, you've mentioned on the energy side that OEM chiller products that you would hope to see orders in the second quarter and revenue at year-end. Does that mean that the revenue really won't hit until 2015?

No, at this point we are optimistic that we will have fourth-quarter revenues. I think we will be able to guide better on this, Theodore, as we move through Q2 and beyond and actually receive the order from the customer. I think -- Jim, I don't know whether you've got any further color on that that you would like to add.

No, I think that's exactly right.

Can you talk about either the ASPs or the unit volume, or both?

Jim, do you want to respond to that question?

That is actually a difficult question for us to answer and the reason is that we have just gained formal approval. We are now an approved vendor and we are now just in a position to begin talking with the customers. So we are in the very, very early stages of that and we don't have a good feel for it.

We do know that some of the projects that are involved with it that are opportunities for us are somewhat slower than expected because of lots of things going on with nuclear power generation. But we really, as Hugh said, we really need to wait before we can give you any better information now that we are talking directly to the customer.

Okay, thanks very much.

Les Sulewski, Sidoti & Company.

Good evening, guys. Thank you for taking my questions. Hugh, you mentioned some decrease in cost and material costs, and manufacturing cost improving gross margin. Do you expect 2014 to benefit from that as well?

Well, I think the primary reduction -- we had almost a $1 million reduction in operating expenses year over year. Was driven primarily by the fact that we did not have one-time costs related to the acquisition of Thermonics in our results in 2013 that we had in 2012.

Clearly, we are not going to have that type of reduction in 2014. To be frank, as you know, as we have described in previous conference calls, we are very focused on acquisitions. So to the extent that we have an acquisition occur at some point in 2014 I would expect that we would have, again, one-time costs related to that acquisition included in our results this year.

So you possibly have the strong possibility that operating costs will actually increase in 2014 relative to 2013 because of that. But, ex an acquisition, we expect our operating costs to remain relatively constant relative to where they were in 2013.

Okay. Looking at semi, are talks still positive on the recovery?

If you look at the earnings releases of others in the ATE space, you see varied results. In other words, I think the market is beginning to open up for all of us, just at a different pace for certain of us versus others depending on the customers that you serve and the end-user products that those customers bring to market.

SEMI is calling -- our trade organization is calling for a 20% to 25% increase in the ATE space this year. I think that might be a little optimistic, but I think we would hope to see at least half that level this year and increase if not a little bit more.

And as we've mentioned, we -- quote activity is very strong right now. We did see very strong booking activity earlier in the quarter and we've still got a third of the quarter basically left at this point, so I would not be surprised if we were to see that pickup again.

Thank you. Then shifting to non-semi; is non-semi kind of playing out how you would like? Any changes you think that you can implement? What's your take on the non-semi side?

I will say a few words and then I will turn it over to Jim. I think -- one thing that we always remind people is we are a relatively new market entrant in these markets, so I don't think you can draw significant conclusions from the variability of that percentage quarter over quarter. For instance, it went from approximately 35% to approximately 22%.

I don't know that that is an indication that we are losing market share there as much as it's an indication that the semi orders relative to our regular orders declined, to be honest with you. I think our goal there is to continue to expand our presence in those various verticals outside of semi. And Jim has added some members to his team to help him achieve that goal and continues to work towards doing that.

Jim, I don't know whether you've got anything else you would add.

I think that our overall strategy is to -- is simple. Not simply, but to gain wider exposure within the electronic test industry. We suffer from few people knowing about us and knowing what our capabilities are because we grew out of the semi industry.

So in the greater electronic test industry we have programs in place that we are -- initiatives that we are in the process of implementing to really gain some exposure in the industry.

Perhaps maybe you could do a brief breakdown of what you're seeing from each market?

Regarding semi or --?

No, not semi. Thermal especially.

Maybe, Jim, what you could do is describe the markets where you see the greatest opportunity at the current time?

Sure. Obviously, semi is a big component of thermal. Outside of semi, the next largest market is in the optical transceiver industry. We are serving production customers where orders typically can be five, 10, 15, or 20 units. A factory floor could have 100-plus of our tools on the floor.

That is a market that we have been serving for four or five years now. As the fiber optic industry matures they require more and more temperature testing. In fact, that is the market that is primarily in Asia and has slowed a bit, softened a bit because of demand.

We are also active in the automotive industry and -- to a lesser extent, but also very active in the mil aerospace. And in the mil aerospace industry we definitely see softness. Military funding is just not what it was. We're not losing business to anyone, but our customers are having trouble finding the funding for certain projects and other projects are just not being awarded.

Thank you for that color and I appreciate that. Hugh, one more for me and I will get back in the queue. Can you provide us the update on the offshoring of the manipulators?

You know, I think -- well, as I mentioned in the call, we are still in the process of working through certain operational aspects related to doing that. I would expect that a final decision on that will be made at some point in the second quarter concerning timing. These things always take a little longer than I think one originally estimates when we start this process.

But, Dan, I don't know whether you would have anything you would want to add at this point to that.

No, I think that you said is correct, Hugh. Basically, we are quite familiar with all the countries in which we might want to do this from a point of view of their culture and their capabilities and their tax structures and that sort of thing.

We have zeroed in on a couple of countries and we are in the process of getting detailed quotations from companies there. That is an ongoing process and, as Hugh said, I would expect to have something within the next two to three months.

Great, thank you guys.

Les, I think we can probably comment on that further, like I said, on the next call.

No problem, thank you.

(Operator Instructions) Srini Sundararajan, Summit Research.

Thank you for taking my question. I just want you guys to take a step back.

I feel that you guys have a lot of intellectual property and assets in different areas. If somebody were to give you the opportunity to have a master plan or to think more ambitiously than you are doing now, then where would you or what area would you like to concentrate on more among the areas that you are concentrating now? And potentially where could we be three to four years from now? What is the master plan? That's kind of my question.

Well, I will speak for Bob, who isn't here this evening, who drives this strategy for the Company and for the Board. Our goal is to try and double our size. Actually more than double it; get to $100 million in three years, Srini.

And our goal to do that is through not only organic growth of our existing businesses, primarily further expansion into the verticals that we are expanding into outside of semi, but through at least one, if not two, strategic acquisitions of businesses that would be oriented towards thermal technologies. And again with an orientation towards markets outside of semi test to further diversify our revenue stream with the goal there also of trying to get ourselves to about 50% of our revenues outside of the semi space on a consistent basis.

So we reduced some of the cyclical aspect of riding on this roller coaster in the semi business. As far as what particular technologies we are looking at in the thermal area, as well as nonthermal technologies, our M&A search is very focused but we are looking in some different technologies as well. And we are looking at public companies as well as private companies.

So I think we are -- the one thing I can tell you is we are very focused at this point and active. We have been working with a boutique M&A firm and have recently, since January 1, stepped up our activity with this company in evaluating opportunities and seeking them out. We are optimistic that we would hope to have some transaction at some point to move forward with in 2014, but at this point there's nothing definitive in our pipeline that we can talk about further.

Okay. Just a follow-up, my point was like what megatrend would you guys be trying to follow? Would it be like the digital home or the big data revolution or the Internet of Things?

If you manage to ride on one of these things, then you could have the growth that you seek and more. But within your areas do you see some ways by which you can hop onto one of these megatrends that's going to happen?

I think actually several of those megatrends you mentioned are things that we are looking at as we evaluate opportunities. I don't know that at this point we are necessarily ready to commit to one or the other, and I would be somewhat reticent to make that statement without my CEO in the room.

So I think at this point we will hold on that, but I am happy to raise that issue with him and have that be a focus of our Q1 conference call to discuss where we see those strategies going forward. I can make that commitment to you.

Thank you and hope that you all have good health.

Well, thank you. We do as well, and on that regard, the CEO is recovering nicely. We spoke with him earlier today and he looks forward to being back in his seat soon.

Great.

George Melas, MKH Management.

Good afternoon, guys. I have a question I think is more for Jim. Jim, can you discuss a little bit your go-to-market strategy on the non-semi thermal side, if you've been able to add a few people and how you are going about both the marketing piece and the sales piece?

We have added a business development component that is actually revamping our website. We are actually doing direct marketing to the electronic test industry on several fronts. We have changed our sales channel wherever necessary.

At one time we were very highly dependent upon representatives and distributors that were semiconductor related only. They were very semiconductor-centric, so over the past couple of years we have changed that sales channel to more general electronic test reps so that we get better representation and better insight into the general electronic test industry.

In addition, we have some things going on that I am really not prepared to talk about in any detail. But in terms of product development that could get us some significant business, not specifically in electronic test but in the process industry. So we have several things going on and with that we have a separate marketing effort. Separate from the electronic test marketing effort, so we are putting quite a bit of energy into the marketing channels.

Okay. Are you somewhat constrained by resources there? Because if your sales were a bit higher would you be able to put more resources in the sales and marketing; are you constrained there because of the results?

The answer to that is always yes, but in fact, I think we have adequate resources.

Okay, very good. Best of luck this year.

(Operator Instructions) Theodore O'Neill, Litchfield Hills Research.

Just a follow-up question on the acquisition front. You are on track to almost doubling your cash balance from 2011 to 2014 and so I am wondering is there a sense of urgency in trying to deploy that.

I would say there is a sense of urgency, Theodore. Cash at December 31% represents over 50% of our total assets, so clearly we wish to deploy that cash. And as we have publicly discussed in the past on this call as well as in investor meetings or conferences that we have attended that have been webcast, that we -- that's our primary goal. Our Board feels that is a better use of cash than other capital market allocation strategies such as dividends or stock buybacks.

That said, we recognize that if an acquisition is not completed in a timely basis, the Board will look at other capital allocation strategies in the interim. But the goal is to be able to use these funds to grow the top line through the acquisition of additional technologies.

Okay, great. Thank you.

There are no further questions at this time. I would now like to turn the call back over to Mr. Regan for closing remarks.

Thank you very much. Thank you for your interest in inTEST and we look forward to updating you on our progress when we report our first-quarter results on May 1, 2014. Have a good evening.

Ladies and gentlemen, that does conclude the inTEST Corporation 2013 fourth-quarter and year-end financial results conference call. Thank you for your participation. You may now disconnect.