Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the inTEST Corporation First Quarter 2012 Financial Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Laura Guerrant, inTEST's Investor Relations Consultant. Please go ahead.

Thank you, operator. Joining us today from the company are Robert Matthiessen, President and Chief Executive Officer; Hugh Regan, Treasurer and Chief Financial Officer; and joining us for the first time is Jim Pelrin, Vice President and General Manager of inTEST Thermal Products segment. Mr. Matthiessen will briefly review highlights from the first quarter, as well as current business trends. Mr. Regan will then review inTEST's detailed financial results and discuss guidance for the second quarter of 2012. We'll then have time for any questions. If you have not yet received a copy of today's release, please e-mail me at laura@guerrantir.com or you can get a copy of the release on inTEST's website, www.intest.com. Before we begin the formal remarks, the company's attorneys advised 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, implementation of restructuring initiatives and other risk factors set forth from time to time in the company's SEC filings, included, 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. And with that, let me now turn the call over to Robert Matthiessen. Please go ahead, Bob.

Thanks, Laura. Welcome, everyone, to our 2012 quarter -- first quarter conference call. While Hugh will review the financial results in detail, I'd like to highlight some of our achievements. Let me start with financial results for the quarter, which were better than we had expected. What a difference a few months make. Recall that our Q1 guidance provided on March 7 reflected the turbulent macroeconomic environment and resulting softness in semiconductor-related bookings that the industry experienced in the second half of 2011, as well as costs related with the closing of the Thermonics acquisition. At the same time, though, we also noted that we were fairly certain that as we approached the end of the first quarter, we were through the trough in the semiconductor business, and we expected a continuation of the trend, which we have decidedly seen. To date, our order flow has returned to more robust levels, and Q1 bookings increased 60% quarter-over-quarter, a clear reflection of our customers' commitments to increase their overall test capacity. And I think it bears noting that although the softness in the semiconductor-related business of last year, of course, mainly impacted our Mechanical and Electrical Products segment, I am proud to note that a few weeks ago, that very same Mechanical and Electrical Products groups were recognized for excellence and awarded the Texas Instruments 2011 Supplier Excellence Award. Our results for the quarter were fueled by a continued recovery of our semiconductor business, driven by the increasing demand for mobility products, and demonstrate our focus and commitment to a differentiated product strategy. Over the last few years, we have been transforming inTEST through the strategic diversification of our Thermal Products segment, and we now address growth markets in both the semiconductor and non-semiconductor areas, including automotive, consumer electronics, defense/aerospace, telecommunications…

Thanks, Bob. Net revenues for the quarter ended March 31, 2012 were $10.7 million, increased 6% over the fourth quarter net revenues of $10.1 million and decreased when compared with the first quarter 2011 net revenues of $11.7 million. First quarter end user net revenues were $9.1 million or 85% of net revenues compared with fourth quarter end user net revenues of $9.2 million or 91% of net revenue. OEM net revenues were $1.6 million or 15% of net revenues compared with fourth quarter OEM net revenues of $894,000 or 9% of net revenues. Net revenues from markets outside of semiconductor tests were $2.4 million or 22% of net revenues compared with $4 million or 40% of net revenues in the fourth quarter. On a products segment basis, first quarter net revenues for the Mechanical Products segment were $2.5 million or 23% of net revenues as compared with fourth quarter Mechanical Products net revenues of $1.9 million or 19% of net revenue. Our Thermal Products segment had net revenues of $6.1 million or 57% of net revenues as compared with fourth quarter Thermal Products net revenue of $7.4 million or 73% of net revenues. Included in the first quarter, Thermal Products net revenues were $669,000 of revenues for Thermonics. Finally, our Electrical Products segment reported net revenues of $2.1 million or 20% of net revenues as compared with fourth quarter net revenues of $823,000 or 8% of net revenues. The company's overall gross margin for the first quarter was $4.6 million or 43% as compared with $4.9 million or 48% in the fourth quarter of 2011 and $5.1 million or 44% in the first quarter of 2011. The decline in gross margin is driven by a less favorable product mix in our Mechanical Products segment. Our consolidated material cost in…

[Operator Instructions] And our first question is from the line of Ken Nagy with Zacks Investment Research.

Just curious, if we can go back to the liquid-processed chiller contract for the nuclear power industry, is there an update on that? What would that look like in terms of is it scalable for other plants and industries? And when could we start to see revenues on it?

Jim, you want to handle it?

Certainly. The liquid-processed chiller is now in Phase 2 of a 4-phase development program. The development program is expected to take 23 months. The last 6 months of that is a pure run-time to prove the robustness of the chiller itself. It is scalable, the technology is scalable. It can be made smaller, it can be made larger. In that industry, the most important attributes are product reliability. It simply has to perform, and it has to continue to perform over long periods of time. Revenue expected from that is, in the first 3 years, probably around $3 million.

Okay. And that's probably not -- is that a 2014...

Yes. We would begin late 2013. We think we would begin seeing revenue.

Okay. And what do the margins look like on that? Are they higher than average?

The margins are -- if everything holds true, the margins are quite healthy.

[Operator Instructions] The next question is from the line of Benjamin Sexton with First Wilshire Securities Management.

I had 2 questions. The first kind of ties into margins for next quarter. You said material costs of about 38%?

Yes.

Okay. And then layering on the fixed costs, are those going to be around the $1.8 million that we saw this quarter? Or...

I would expect them to return to more historically normal levels of about $1.5 million to $1.6 million.

Okay. So is it fair to say that Q2 could see margins above what we've seen historically?

It's possible that you could see that, although with the trend up in material costs, I don't know that for sure. I mean, don't forget last year, we had a 53% margin in the third quarter, when you had sort of a perfect storm of very low material costs and fixed costs that were trending down at the time.

Okay. Do you have sort of a long-term mix that you'd like to have for Thermal versus Mechanical and Electrical?

We -- this is Bob Matthiessen. We originally said, "Why don't we try to make it a 50-50 mix?" And I don't see any reason to change that goal immediately. But if we see continued success in our attempts to create business outside of semi, why stop at 50-50 if that looks good? So the initial target is 50-50, but I wouldn't be surprised, if we get there in a reasonable time, that we'll continue to try to build on that outside semi space.

Our next question comes from the line of Bob DeLean with Red Rock Partners.

Hugh, I have a couple of housekeeping questions. What was on your receivables? You mentioned because the revenue rates were up. Your DSOs came in at 68 days. I would assume you had a lot of shipments late in the quarter?

Yes, we did. It was a rather back-end loaded quarter from a revenue perspective.

Okay. And those probably returned to the historic 55, 60 days, you think, on order [ph]?

As a matter of fact, at the very end of the quarter, our DSOs were just below 60.

Okay. With respect to CapEx, you say it was 0 for the Q1?

Yes, it was. We – what's rather unusual there is, we have an operation in Germany that acquires a system that it uses to lease, and those are netted against capital expenditures. So there were actually capital expenditures during the quarter. But you have the German acquisition of those assets offsetting it, or dispositions, I should say, of those assets offsetting it. And that's why it netted to a 0.

Okay. Fair enough. And what do you think CapEx will be for the year?

As we said previously, we're not a significant CapEx company. I would expect no more than $200,000 to $300,000 for the balance of the year.

Okay. And I think you said your D&A was up about $100,000 over last quarter. What was the D&A number for the quarter?

The G&A number for the quarter...

No, no, D&A, depreciation and amortization.

I'm sorry. Depreciation and amortization for the quarter came in -- depreciation expense was about $70,000, and amortization expense was about $150,000.

And so would that be a continuing number or, with California now closed, does that go back down?

It's going to go down. As I have mentioned before, the amortization related to the Thermonics intangibles on 2 of the major intangibles, we're using an accelerated depreciation method. In addition, there was one of the intangibles was a backlog, which was fully shipped during the first quarter. So we expect that number, as I have said before, I'm just looking for my prepared remarks, it's basically almost half by the time we get to the end of the year from the current level.

Okay. And I apologize for making you repeat that. It's hard on this end to write down all those numbers as you're rattling them off so fast.

No problem. I'll work to slow down a little bit on future calls.

And then I just have 1 other thing. With respect to employees, you said you finished at 140, same as at year-end. Would that imply you didn't keep anybody from the Thermonics acquisition?

In the Thermonics acquisition, we did keep 1 person out of the 26 employees that were there, but we had some reductions in our Mechanical segment. So the net was still at 140.

[Operator Instructions] And at this time, there are no further questions in queue. I'd like to turn the call back over to Mr. Matthiessen for closing remarks.

Okay. Thanks for your interest in inTEST. In closing, we remain confident in our business prospects. InTEST occupies a profitable lease [ph] space. We have a proven long-term history with customers across the globe and provide high-quality mission-critical products that perform in high stress environments. We will continue to work with our customers and drive innovations that allow us to continue being a leader in our target markets. So we thank you again, and we look forward to updating you on our progress when we report our second quarter results. Good evening.

Thank you, and good night.

And ladies and gentlemen, that does conclude our conference for today. We like to thank you for your participation, and you may now disconnect.