InTest Q2 2026 earnings: Auto/EV growth pressures gross margin

InTest Corporation (NYSE American: INTT) reported Q2 2026 revenue of $35.3 million, up 25.5% from $28.1 million a year earlier, while diluted GAAP EPS improved to $0.04 from a loss of $0.04. Auto/EV project deliveries drove most of the growth, but the shift toward lower-margin volume reduced gross margin to 40.5%; adjusted EBITDA nevertheless increased 73.7% to $2.2 million. Operating cash flow was $6.3 million, and quarter-end backlog reached $45.4 million.

Core earnings data

Revenue grew faster than operating expenses, which increased 8.0% year over year, allowing InTest to return to positive GAAP operating income despite lower gross margin. Net earnings also benefited from a $0.2 million income tax benefit.

Adjusted results improved substantially from the prior-year quarter, although adjusted EPS and adjusted EBITDA declined sequentially as the product mix weighed on profitability.

End-market performance

Auto/EV became InTest’s largest end market, generating 38.1% of quarterly revenue. Its $7.6 million year-over-year increase exceeded the company’s total revenue increase because declines in Semi, Safety/Security and Other partially offset that growth. Management said non-semiconductor markets represented approximately 74% of revenue.

The order picture was more mixed. Total orders were $28.9 million, up 4.0% year over year but down 9.2% sequentially as lower Auto/EV and Defense/Aerospace orders outweighed much of the improvement in Semi. Semiconductor orders rose approximately 56% sequentially and 64% year over year, marking the strongest Semi order intake in six quarters, even though Semi revenue remained lower on both comparisons.

Backlog ended the quarter at $45.4 million, 19.8% above the prior-year level but 12.4% below March 31, 2026. Approximately 45% of that backlog is expected to ship after the third quarter.

Auto/EV volume drove revenue faster than gross profit

The quarter’s central trade-off was the combination of higher Auto/EV volume and lower profitability per dollar of revenue. Revenue increased 25.5%, but gross profit grew 19.4% as the higher-volume, lower-margin Auto/EV mix reduced gross margin by 210 basis points year over year and 280 basis points sequentially.

Operating expense growth remained below revenue growth, helping operating margin improve to 1.0% from negative 3.3% and adjusted EBITDA margin rise to 6.2% from 4.5% a year earlier. Sequentially, however, adjusted EBITDA declined 9.2% even as revenue increased 4.2%, showing that product mix remains important to InTest’s operating leverage.

Cash flow and balance sheet

InTest generated $6.3 million of operating cash flow during the quarter and spent $0.4 million on capital expenditures, leaving approximately $5.9 million of operating cash flow after capital spending. Cash and cash equivalents increased by $6.4 million sequentially to $22.1 million, while the company reduced term debt by $1.0 million.

At quarter-end, InTest had no borrowings under its $10.0 million revolving credit facility and had $30.0 million available under its delayed-draw term loan facility. The company reported compliance with all loan covenants as of June 30, 2026.

Earnings guidance

InTest reaffirmed the full-year outlook it had updated on July 31 rather than raising it again with this release. The updated full-year revenue midpoint implies approximately 21% growth from 2025 revenue of $113.8 million, while the expected gross margin is approximately 43%.

Full-year amortization expense is expected to be $2.6 million, with interest expense of $0.3 million. Management expects backlog, improving order flow and a more favorable second-half product mix to support the outlook, while its stated focus is converting commercial momentum into steadier adjusted EBITDA growth.

Risks investors should monitor

• Product mix could continue to pressure margins. Auto/EV drove the revenue increase but carries lower margins, creating a gap between revenue and gross-profit growth.
• Orders and backlog weakened sequentially. Orders were below quarterly revenue, while backlog declined 12.4% from the first quarter. Backlog can also be canceled, terminated or suspended by customers.
• The semiconductor recovery has not yet appeared in revenue. Semi orders improved sharply, but Semi revenue declined 11.1% year over year and 13.8% sequentially. The timing and conversion of those orders will be important.
• Previously reported Q1 figures were revised. InTest said it was revising first-quarter inventory, cost of revenue, gross profit, gross margin, tax expense, net earnings and EPS. The release marked its Q1 comparison figures as revised but did not quantify the difference from the originally reported amounts.

Summary

InTest’s second quarter combined rapid Auto/EV-led revenue growth with a return to GAAP profitability and stronger cash generation. The main constraint was the lower-margin sales mix, which limited gross-profit growth and reduced adjusted EBITDA sequentially. Investors’ next focus will be whether stronger semiconductor orders convert into revenue, whether backlog stabilizes, and whether the anticipated second-half mix improvement supports the company’s full-year margin and operating-leverage goals.