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Transcat Reports Second Quarter Results with Growth in Revenue and Gross Profit

  • Consolidated Revenue grew 8% compared to prior year
  • Distribution Gross Profit grew 10% on double-digit Revenue growth
  • Services Gross Profit grew 4% driven by 4% Organic Revenue growth

Transcat, Inc. (Nasdaq: TRNS) (“Transcat” or the “Company”), a leading provider of accredited calibration services, cost control and optimization services, and distribution and rental of value-added professional grade handheld test, measurement, and control instrumentation, today reported financial results for its second quarter ended September 28, 2024 (the “second quarter”) of fiscal year 2025, which ends March 29, 2025 (“fiscal 2025”). Results include the previously reported acquisitions of TIC-MS, Inc. ("TIC-MS") effective March 27, 2023, SteriQual, Inc. ("SteriQual"), effective July 12, 2023, Axiom Test Equipment, Inc. (“Axiom”), effective August 8, 2023 and Becnel Rental Tools, LLC ("Becnel") effective April 15, 2024.

“Consolidated revenue was up 8%. Consistent demand in our Calibration Services business was supported by our differentiated value proposition which resonates well in the highly regulated end markets we serve, including life sciences,” commented Lee D. Rudow, President and CEO. “Service Revenue grew 6% versus prior year, the 62nd consecutive quarter of growth. Service organic revenue growth of 4% was below historical trends and was significantly impacted by a decline in our Nexa cost control and optimization services business. Excluding Nexa, we are pleased with service organic growth of 9% versus prior year.”

“Though the magnitude of Nexa's slowdown was greater than what we expected, we have identified the root causes and are committed to returning the Nexa business to growth. This includes fully integrating Nexa's sales and marketing into Transcat's dynamic growth process and renaming the business Transcat Solutions, to fully leverage our industry leading brand."

"Nexa has performed very well since acquisition in calendar 2021, and while collaborating on a regular basis to drive calibration sales growth, we allowed that group to operate in a more autonomous fashion and missed an opportunity to fully integrate Nexa into the proven Transcat sales and marketing processes. Integration is now well underway, and we have the power of the Transcat leadership team focused on pipeline expansion, which we believe will contribute to the return to high single digit organic Services revenue growth in the first half of fiscal 2026.”

Mr. Rudow added, “Distribution Revenue grew 11% versus prior year. However, Becnel revenue was negatively impacted by two hurricanes in the Gulf of Mexico, which pressured second quarter Distribution margins. Becnel is a well-run business that has cultivated strong customer relationships with companies that highly utilize Transcat’s core instrumentation and calibration services. We fully expect Becnel to deliver sequential improvements in the third and fourth quarters and expect Distribution Gross Margins to return to levels consistent with the second half of fiscal 2024.”

“Transcat has a proven history of successfully identifying, acquiring, and integrating dynamic companies that have expanded our addressable markets, widened the breadth of offerings, and allowed us to leverage existing infrastructure. In addition to strong returns, the acquisitions present compelling cross-sell synergies to drive organic revenue growth into these newly acquired customer bases. Transcat’s acquisition pipeline remains robust and is focused on all our strategic channels.”

Second Quarter Fiscal 2025 Review

(Results are compared with the second quarter of the fiscal year ended March 30, 2024 (fiscal 2024))

($ in thousands)

 

 

 

 

 

 

 

 

 

Change

 

 

 

FY25 Q2

 

 

FY24 Q2

 

 

$'s

 

 

%

 

Service Revenue

 

$

44,083

 

 

$

41,431

 

 

$

2,652

 

 

 

6.4

%

Distribution Revenue

 

 

23,743

 

 

 

21,373

 

 

 

2,370

 

 

 

11.1

%

Revenue

 

$

67,826

 

 

$

62,804

 

 

$

5,022

 

 

 

8.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

$

21,206

 

 

$

20,125

 

 

$

1,081

 

 

 

5.4

%

Gross Margin

 

 

31.3

%

 

 

32.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

$

3,735

 

 

$

1,643

 

 

$

2,092

 

 

 

127.3

%

Operating Margin

 

 

5.5

%

 

 

2.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

3,286

 

 

$

460

 

 

$

2,826

 

 

 

614.3

%

Net Margin

 

 

4.8

%

 

 

0.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA*

 

$

8,861

 

 

$

9,330

 

 

$

(469

)

 

 

(5.0

)%

Adjusted EBITDA* Margin

 

 

13.1

%

 

 

14.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

 

$

0.35

 

 

$

0.06

 

 

$

0.29

 

 

 

483.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Diluted EPS*

 

$

0.52

 

 

$

0.60

 

 

$

(0.08

)

 

 

(13.3

)%

*See Note 1 on page 5 for a description of these non-GAAP financial measures and pages 10, 11 and 12 for the reconciliation tables.

Consolidated revenue was $67.8 million, an increase of $5.0 million or 8.0%. Consolidated gross profit was $21.2 million, an increase of $1.1 million, or 5.4%, while gross margin decreased 70 basis points primarily due to Nexa and Becnel Revenue softness. Operating expenses were $17.5 million, a decrease of $1.0 million, or 5.5%. The second quarter of fiscal year 2024 included a $2.8 million non-cash charge related to the Nexa earn-out agreement. Adjusted EBITDA was $8.9 million which represented a decrease of $0.5 million or 5.0%. Net income per diluted share was $0.35 compared to $0.06 last year. Adjusted diluted earnings per share was $0.52 versus $0.60 last year.

Service segment second quarter results

Represents the accredited calibration, repair, inspection and laboratory instrument services business (65.0% of total revenue for the second quarter of fiscal 2025).

($ in thousand)

 

 

 

 

 

 

 

 

 

Change

 

 

 

FY25 Q2

 

 

FY24 Q2

 

 

$'s

 

 

%

 

Service Segment Revenue

 

$

44,083

 

 

$

41,431

 

 

$

2,652

 

 

 

6.4

%

Gross Profit

 

$

14,591

 

 

$

14,084

 

 

$

507

 

 

 

3.6

%

Gross Margin

 

 

33.1

%

 

 

34.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

$

3,704

 

 

$

742

 

 

$

2,962

 

 

 

399.2

%

Operating Margin

 

 

8.4

%

 

 

1.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA*

 

$

6,624

 

 

$

6,798

 

 

$

(174

)

 

 

(2.6

)%

Adjusted EBITDA* Margin

 

 

15.0

%

 

 

16.4

%

 

 

 

 

 

 

 

 

*See Note 1 on page 5 for a description of this non-GAAP financial measure and pages 10 and 11 for the Adjusted EBITDA Reconciliation tables.

Service segment revenue was $44.1 million, an increase of $2.7 million or 6.4%, and included $0.8 million of incremental revenue from acquisitions. Organic revenue growth of 4.4% driven by end-market demand and continued market share gains. The segment gross margin was 33.1%, a decrease of 90 basis points from prior year primarily due to lower revenue from Nexa.

Distribution segment second quarter results

Represents the sale and rental of new and used professional grade handheld test, measurement and control instrumentation (35.0% of total revenue for the second quarter of fiscal 2025).

($ in thousands)

 

 

 

 

 

 

 

 

 

Change

 

 

 

FY25 Q2

 

 

FY24 Q2

 

 

$'s

 

 

%

 

Distribution Segment Revenue

 

$

23,743

 

 

$

21,373

 

 

$

2,370

 

 

 

11.1

%

Gross Profit

 

$

6,615

 

 

$

6,041

 

 

$

574

 

 

 

9.5

%

Gross Margin

 

 

27.9

%

 

 

28.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

$

31

 

 

$

901

 

 

$

(870

)

 

 

(96.6

)%

Operating Margin

 

 

0.1

%

 

 

4.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA*

 

$

2,237

 

 

$

2,532

 

 

$

(295

)

 

 

(11.7

)%

Adjusted EBITDA* Margin

 

 

9.4

%

 

 

11.8

%

 

 

 

 

 

 

 

 

*See Note 1 on page 5 for a description of this non-GAAP financial measure and pages 10 and 11 for the Adjusted EBITDA Reconciliation tables.

Distribution revenue was $23.7 million, which represented an increase of $2.4 million or 11.1%, driven by growth in the Rental business including acquisitions. Distribution segment gross margin was 27.9%, a decrease of 40 basis points due to Becnel revenue impacted by the Gulf of Mexico hurricanes.

Six Month Review (Results are compared with the first six months of fiscal 2024)

Total revenue was $134.5 million, an increase of $11.1 million or 9.01%. Consolidated gross profit was up $5.0 million, or 12.9%, and gross margin expanded to 32.6% or 110 basis points. Consolidated operating expenses increased $2.5 million, or 7.6%, driven by incremental expenses from acquired businesses, increased intangibles amortization expense and investments in technology and our employee base to support future growth, offset by the previously mentioned amended Nexa Earn-Out agreement in the second quarter of fiscal year 2024. As a result, consolidated operating income was $8.8 million compared with $6.3 million in last fiscal year’s period.

Adjusted EBITDA was $19.1 million which represented an increase of $1.3 million or 7.1%. Net income per diluted share increased to $0.83 from $0.43 and adjusted diluted earnings per share was $1.20 versus $1.12 last year. The effective tax rate was 13.9% compared to 25.3% in the prior year, due to the timing of discrete benefits related to share-based compensation items.

Balance Sheet and Cash Flow Overview

On September 28, 2024, the Company had $23.8 million in cash and cash equivalents on hand and $80.0 million available for borrowing under its secured revolving credit facility. Total debt was $3.0 million versus $4.2 million on March 30, 2024. The Company’s leverage ratio, as defined in the credit agreement, was 0.08 on September 28, 2024, compared with 0.10 on March 30, 2024.

Outlook

Mr. Rudow concluded, “We are very proud of the consistent results the Transcat team has delivered year in and year out over an extended period of time. That said, we are disappointed with the Nexa-impacted aggregated results in fiscal Q2. We experienced short term, isolated revenue challenges in the Nexa services channel in the quarter but believe the swift actions our exceptional team is already taking will rectify the situation in the near term, as we continue to execute on our highly successful core growth strategy.”

“We expect FY25 organic Service revenue growth in the mid-single digits when normalized for the extra week in fiscal 2024 and gross margin expansion. We anticipate a return to high single digit organic growth by the first half of fiscal 2026.”

“Automation of our calibration processes and focus on productivity remain key enablers of margin expansion. We have demonstrated the ability to leverage these tools to improve our operational efficiency, which has become visible in our financial performance over time.”

“We continue to work our robust acquisition pipeline and are pleased with the current flow of strategic opportunities.”

Transcat expects its income tax rate to range between 21% and 23% in fiscal 2025. This estimate includes Federal, various state, Canadian and Irish income taxes and reflects the discrete tax accounting associated with share-based payment awards.

Webcast and Conference Call

Transcat will host a conference call and webcast on Tuesday, October 29, 2024 at 11:00 a.m. ET. Management will review the financial and operating results for the first quarter, as well as the Company’s strategy and outlook. A question and answer session will follow the formal discussion. The review will be accompanied by a slide presentation, which will be available at www.transcat.com/investor-relations. The conference call can be accessed by calling (201) 689-8471. Alternatively, the webcast can be monitored at www.transcat.com/investor-relations.

A telephonic replay will be available from 2:00 p.m. ET on the day of the call through Tuesday, November 5, 2024. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13747789, access the webcast replay at www.transcat.com/investor-relations, where a transcript will be posted once available.

NOTE 1 Non-GAAP Financial Measures

In addition to reporting net income, a U.S. generally accepted accounting principle (“GAAP”) measure, we present Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, non-cash stock compensation expense, and acquisition related transaction expenses, which is a non-GAAP measure. The Company’s management believes Adjusted EBITDA is an important measure of operating performance because it allows management, investors and others to evaluate and compare the performance of its core operations from period to period by removing the impact of the capital structure (interest), tangible and intangible asset base (depreciation and amortization), taxes, stock-based compensation expense and other items, which is not always commensurate with the reporting period in which it is included. As such, the Company uses Adjusted EBITDA as a measure of performance when evaluating its business segments and as a basis for planning and forecasting. Adjusted EBITDA is not a measure of financial performance under GAAP and is not calculated through the application of GAAP. As such, it should not be considered as a substitute for the GAAP measure of net income and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure. Adjusted EBITDA, as presented, may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies. See pages 10 and 11 for the Adjusted EBITDA Reconciliation tables.

In addition to reporting Diluted Earnings Per Share, a GAAP measure, we present Adjusted Diluted Earnings Per Share (net income plus acquisition related amortization expense, acquisition related transaction expenses, acquisition related stock-based compensation, and acquisition amortization of backlog; divided by the average diluted shares outstanding during the period), which is a non-GAAP measure. Our management believes Adjusted Diluted Earnings Per Share is an important measure of our operating performance because it provides a basis for comparison of our business operations between current, past and future periods by excluding items that we do not believe are indicative of our core operating performance. Adjusted Diluted Earnings Per Share is not a measure of financial performance under GAAP and is not calculated through the application of GAAP. As such, it should not be considered as a substitute or alternative for the GAAP measure of Diluted Earnings Per Share and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure. Adjusted Diluted Earnings Per Share, as presented, may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies. See page 12 for the Adjusted Diluted EPS Reconciliation table.

ABOUT TRANSCAT

Transcat, Inc. is a leading provider of accredited calibration, reliability, maintenance optimization, quality and compliance, validation, Computerized Maintenance Management System (CMMS), and pipette services. The Company is focused on providing best-in-class services and products to highly regulated industries, particularly the Life Science industry, which includes pharmaceutical, biotechnology, medical device, and other FDA-regulated businesses, as well as aerospace and defense, and energy and utilities. Transcat provides periodic on-site services, mobile calibration services, pickup and delivery, in-house services at its 29 Calibration Service Centers strategically located across the United States, Puerto Rico, Canada, and Ireland. In addition, Transcat operates calibration labs in 21 imbedded customer-site locations. The breadth and depth of measurement parameters addressed by Transcat’s ISO/IEC 17025 scopes of accreditation are believed to be the best in the industry.

Transcat also operates as a leading value-added distributor that markets, sells and rents new and used national and proprietary brand instruments to customers primarily in North America. The Company believes its combined Service and Distribution segment offerings, experience, technical expertise, and integrity create a unique and compelling value proposition for its customers.

Transcat’s strategy is to leverage its strong brand and unique value proposition that includes its comprehensive instrument service capabilities, enterprise asset management, and leading distribution platform to drive organic sales growth. The Company will also look to expand its addressable calibration market through acquisitions and capability investments to further realize the inherent leverage of its business model. More information about Transcat can be found at: Transcat.com.

Safe Harbor Statement

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact and thus are subject to risks, uncertainties and assumptions. Forward-looking statements relate to expectations, estimates, beliefs, assumptions and predictions of future events and are identified by words such as “aim,” “anticipates,” “believes,” “can,” “could,” “designed,” “estimates,” “expects,” “focus,” “goal,” “intends,” “may,” “plan,” “outlook,” “potential,” “seek,” “strategy,” “strive,” “target,” “will,” “would,” and other similar words. All statements addressing operating performance, events or developments that Transcat expects or anticipates will occur in the future, including but not limited to statements relating to anticipated revenue, profit margins, the commercialization of software projects, sales operations, capital expenditures, cash flows, operating income, growth strategy, segment growth, potential acquisitions, integration of acquired businesses, market position, customer preferences, outlook and changes in market conditions in the industries in which Transcat operates are forward-looking statements. Forward-looking statements should be evaluated in light of important risk factors and uncertainties. These risk factors and uncertainties include those more fully described in Transcat’s Annual Report and Quarterly Reports filed with the Securities and Exchange Commission, including under the heading entitled “Risk Factors.” Should one or more of these risks or uncertainties materialize or should any of the Company’s underlying assumptions prove incorrect, actual results may vary materially from those currently anticipated. In addition, undue reliance should not be placed on the Company’s forward-looking statements, which speak only as of the date they are made. Except as required by law, the Company disclaims any obligation to update, correct or publicly announce any revisions to any of the forward-looking statements contained in this news release, whether as the result of new information, future events or otherwise.

FINANCIAL TABLES FOLLOW.

TRANSCAT, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In Thousands, Except Per Share Amounts)

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

 

Second Quarter Ended

 

 

Six Months Ended

 

 

 

September

28,

 

 

September

23,

 

 

September

28,

 

 

September

23,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service Revenue

 

$

44,083

 

 

$

41,431

 

 

$

87,861

 

 

$

81,284

 

Distribution Revenue

 

 

23,743

 

 

 

21,373

 

 

 

46,672

 

 

 

42,118

 

Total Revenue

 

 

67,826

 

 

 

62,804

 

 

 

134,533

 

 

 

123,402

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Service Revenue

 

 

29,492

 

 

 

27,347

 

 

 

58,387

 

 

 

54,229

 

Cost of Distribution Revenue

 

 

17,128

 

 

 

15,332

 

 

 

32,285

 

 

 

30,338

 

Total Cost of Revenue

 

 

46,620

 

 

 

42,679

 

 

 

90,672

 

 

 

84,567

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

21,206

 

 

 

20,125

 

 

 

43,861

 

 

 

38,835

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, Marketing and Warehouse Expenses

 

 

8,181

 

 

 

6,856

 

 

 

15,982

 

 

 

13,325

 

General and Administrative Expenses

 

 

9,290

 

 

 

11,626

 

 

 

19,045

 

 

 

19,227

 

Total Operating Expenses

 

 

17,471

 

 

 

18,482

 

 

 

35,027

 

 

 

32,552

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

3,735

 

 

 

1,643

 

 

 

8,834

 

 

 

6,283

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense

 

 

76

 

 

 

890

 

 

 

128

 

 

 

1,704

 

Interest Income

 

 

(286

)

 

 

-

 

 

 

(598

)

 

 

-

 

Other Expense (Income)

 

 

232

 

 

 

(49

)

 

 

363

 

 

 

15

 

Total Interest and Other, net

 

 

22

 

 

 

841

 

 

 

(107

)

 

 

1,719

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Before Provision For Income Taxes

 

 

3,713

 

 

 

802

 

 

 

8,941

 

 

 

4,564

 

Provision for Income Taxes

 

 

427

 

 

 

342

 

 

 

1,247

 

 

 

1,155

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

3,286

 

 

$

460

 

 

$

7,694

 

 

$

3,409

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Share

 

$

0.36

 

 

$

0.06

 

 

$

0.84

 

 

$

0.44

 

Average Shares Outstanding

 

 

9,159

 

 

 

7,819

 

 

 

9,107

 

 

��

7,732

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

$

0.35

 

 

$

0.06

 

 

$

0.83

 

 

$

0.43

 

Average Shares Outstanding

 

 

9,282

 

 

 

7,948

 

 

 

9,222

 

 

 

7,840

 

TRANSCAT, INC.

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share and Per Share Amounts)

 

 

 

(Unaudited)

 

 

(Audited)

 

 

 

September 28,

 

 

March 30,

 

 

 

2024

 

 

2024

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

23,815

 

 

$

19,646

 

Marketable Securities

 

 

-

 

 

$

15,533

 

Accounts Receivable, less allowance for credit losses of $565 and $544 as of September 28, 2024 and March 30, 2024, respectively

 

 

48,933

 

 

 

47,779

 

Other Receivables

 

 

628

 

 

 

506

 

Inventory, net

 

 

15,549

 

 

 

17,418

 

Prepaid Expenses and Other Current Assets

 

 

6,241

 

 

 

4,276

 

Total Current Assets

 

 

95,166

 

 

 

105,158

 

Property and Equipment, net

 

 

47,493

 

 

 

38,944

 

Goodwill

 

 

138,127

 

 

 

105,585

 

Intangible Assets, net

 

 

24,362

 

 

 

19,987

 

Right to Use Assets, net

 

 

17,309

 

 

 

16,823

 

Other Assets

 

 

1,096

 

 

 

1,055

 

Total Assets

 

$

323,553

 

 

$

287,552

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts Payable

 

$

13,043

 

 

$

11,495

 

Accrued Compensation and Other Current Liabilities

 

 

11,092

 

 

 

19,665

 

Current Portion of Long-Term Debt

 

 

2,386

 

 

 

2,339

 

Total Current Liabilities

 

 

26,521

 

 

 

33,499

 

Long-Term Debt

 

 

612

 

 

 

1,817

 

Deferred Tax Liabilities, net

 

 

9,297

 

 

 

9,291

 

Lease Liabilities

 

 

14,661

 

 

 

14,873

 

Other Liabilities

 

 

3,705

 

 

��

2,903

 

Total Liabilities

 

 

54,796

 

 

 

62,383

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity:

 

 

 

 

 

 

 

 

Common Stock, par value $0.50 per share, 30,000,000 shares authorized; 9,199,277 and 8,839,299 shares issued and outstanding as of September 28, 2024 and March 30, 2024, respectively

 

 

4,600

 

 

 

4,420

 

Capital in Excess of Par Value

 

 

178,986

 

 

 

141,624

 

Accumulated Other Comprehensive Loss

 

 

(718

)

 

 

(949

)

Retained Earnings

 

 

85,889

 

 

 

80,074

 

Total Shareholders' Equity

 

 

268,757

 

 

 

225,169

 

Total Liabilities and Shareholders' Equity

 

$

323,553

 

 

$

287,552

 

TRANSCAT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

 

 

 

(Unaudited)

 

 

 

Six Months Ended

 

 

 

September 28,

 

 

September 23,

 

 

 

2024

 

 

2023

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

Net Income

 

$

7,694

 

 

$

3,409

 

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:

 

 

 

 

 

 

 

 

Net Loss on Disposal of Property and Equipment

 

 

43

 

 

 

11

 

Deferred Income Taxes

 

 

6

 

 

 

23

 

Depreciation and Amortization

 

 

8,513

 

 

 

6,078

 

Provision for Accounts Receivable and Inventory Reserves

 

 

108

 

 

 

347

 

Stock-Based Compensation Expense

 

 

1,623

 

 

 

2,171

 

Changes in Assets and Liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

Accounts Receivable and Other Receivables

 

 

1,746

 

 

 

2,384

 

Inventory

 

 

2,597

 

 

 

3,376

 

Prepaid Expenses and Other Current Assets

 

 

(1,918

)

 

 

465

 

Accounts Payable

 

 

1,525

 

 

 

(3,969

)

Accrued Compensation and Other Current Liabilities

 

 

(3,248

)

 

 

1,677

 

Income Taxes Payable

 

 

(2,930

)

 

 

-

 

Net Cash Provided by Operating Activities

 

 

15,759

 

 

 

15,972

 

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

Purchase of Property and Equipment

 

 

(7,633

)

 

 

(5,444

)

Business Acquisitions, net of cash acquired

 

 

(15,858

)

 

 

(12,882

)

Sales of Marketable Securities

 

 

15,533

 

 

 

-

 

Net Cash Used in Investing Activities

 

 

(7,958

)

 

 

(18,326

)

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Repayment of Revolving Credit Facility, net

 

 

-

 

 

 

5,288

 

Repayments of Term Loan

 

 

(1,158

)

 

 

(1,112

)

Issuance of Common Stock, net of direct costs

 

 

838

 

 

 

384

 

Repurchase of Common Stock

 

 

(3,026

)

 

 

(2,247

)

Net Cash (Used in)/Provided by Financing Activities

 

 

(3,346

)

 

 

2,313

 

 

 

 

 

 

 

 

 

 

Effect of Exchange Rate Changes on Cash and Cash Equivalents

 

 

(286

)

 

 

(244

)

 

 

 

 

 

 

 

 

 

Net Increase/(Decrease) in Cash and Cash Equivalents

 

 

4,169

 

 

 

(285

)

Cash and Cash Equivalents at Beginning of Period

 

 

19,646

 

 

 

1,531

 

Cash and Cash Equivalents at End of Period

 

$

23,815

 

 

$

1,246

 

TRANSCAT, INC.

Adjusted EBITDA Reconciliation Table

(In thousands)

(Unaudited)

 

 

 

Fiscal 2025

 

 

 

Q1

 

 

Q2

 

 

Q3

 

 

Q4

 

 

YTD

 

Net Income

 

$

4,408

 

 

$

3,286

 

 

 

 

 

 

 

 

 

 

$

7,694

 

+ Interest Income

 

 

(260

)

 

 

(210

)

 

 

 

 

 

 

 

 

 

 

(470

)

+ Other Expense

 

 

131

 

 

 

232

 

 

 

 

 

 

 

 

 

 

 

363

 

+ Tax Provision

 

 

820

 

 

 

427

 

 

 

 

 

 

 

 

 

 

 

1,247

 

Operating Income

 

$

5,099

 

 

$

3,735

 

 

 

 

 

 

 

 

 

 

$

8,834

 

+ Depreciation & Amortization

 

 

4,113

 

 

 

4,399

 

 

 

 

 

 

 

 

 

 

 

8,512

 

+ Transaction Expenses

 

 

434

 

 

 

33

 

 

 

 

 

 

 

 

 

 

 

467

 

+ Other Expense

 

 

(131

)

 

 

(232

)

 

 

 

 

 

 

 

 

 

 

(363

)

+ Non-cash Stock Compensation

 

 

697

 

 

 

926

 

 

 

 

 

 

 

 

 

 

 

1,623

 

Adjusted EBITDA

 

$

10,212

 

 

$

8,861

 

 

 

 

 

 

 

 

 

 

$

19,073

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Breakdown

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service Operating Income

 

$

4,091

 

 

$

3,704

 

 

 

 

 

 

 

 

 

 

$

7,795

 

+ Depreciation & Amortization

 

 

2,402

 

 

 

2,455

 

 

 

 

 

 

 

 

 

 

 

4,857

 

+ Transaction Expenses

 

 

146

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

146

 

+ Other Expense

 

 

(96

)

 

 

(164

)

 

 

 

 

 

 

 

 

 

 

(260

)

+ Non-cash Stock Compensation

 

 

421

 

 

 

629

 

 

 

 

 

 

 

 

 

 

 

1,050

 

Service Adjusted EBITDA

 

$

6,964

 

 

$

6,624

 

 

 

 

 

 

 

 

 

 

$

13,588

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution Operating Income

 

$

1,008

 

 

$

31

 

 

 

 

 

 

 

 

 

 

$

1,039

 

+ Depreciation & Amortization

 

 

1,711

 

 

 

1,944

 

 

 

 

 

 

 

 

 

 

 

3,655

 

+ Transaction Expenses

 

 

288

 

 

 

32

 

 

 

 

 

 

 

 

 

 

 

320

 

+ Other Expense

 

 

(35

)

 

 

(67

)

 

 

 

 

 

 

 

 

 

 

(102

)

+ Non-cash Stock Compensation

 

 

276

 

 

 

297

 

 

 

 

 

 

 

 

 

 

 

573

 

Distribution Adjusted EBITDA

 

$

3,248

 

 

$

2,237

 

 

 

 

 

 

 

 

 

 

$

5,485

 

TRANSCAT, INC.

Adjusted EBITDA Reconciliation Table

(In thousands)

(Unaudited)

 

 

 

Fiscal 2024

 

 

 

Q1

 

 

Q2

 

 

Q3

 

 

Q4

 

 

YTD

 

Net Income

 

$

2,949

 

 

$

460

 

 

$

3,348

 

 

$

6,890

 

 

$

13,647

 

+ Interest Expense / (Income)

 

 

814

 

 

 

890

 

 

 

(266

)

 

 

(411

)

 

 

1,027

 

+ Other Expense / (Income)

 

 

64

 

 

 

(49

)

 

 

289

 

 

 

11

 

 

 

315

 

+ Tax Provision

 

 

813

 

 

 

342

 

 

 

923

 

 

 

2,714

 

 

 

4,792

 

Operating Income

 

$

4,640

 

 

$

1,643

 

 

$

4,294

 

 

$

9,204

 

 

$

19,781

 

+ Depreciation & Amortization

 

 

2,790

 

 

 

3,269

 

 

 

3,783

 

 

 

3,635

 

 

 

13,477

 

+ Transaction Expenses

 

 

185

 

 

 

328

 

 

 

78

 

 

 

37

 

 

 

628

 

+ Acquisition Earn-Out Adjustment

 

 

-

 

 

 

2,800

 

 

 

87

 

 

 

(2,357

)

 

 

530

 

+ Other (Expense) / Income

 

 

(64

)

 

 

49

 

 

 

(289

)

 

 

(11

)

 

 

(315

)

+ Non-cash Stock Compensation

 

 

930

 

 

 

1,241

 

 

 

1,167

 

 

 

1,174

 

 

 

4,512

 

Adjusted EBITDA

 

$

8,481

 

 

$

9,330

 

 

$

9,120

 

 

$

11,682

 

 

$

38,613

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Breakdown

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service Operating Income

 

$

3,192

 

 

$

742

 

 

$

2,966

 

 

$

8,144

 

 

$

15,044

 

+ Depreciation & Amortization

 

 

2,226

 

 

 

2,325

 

 

 

2,362

 

 

 

2,280

 

 

 

9,193

 

+ Transaction Expenses

 

 

185

 

 

 

76

 

 

 

30

 

 

 

(44

)

 

 

247

 

+ Acquisition Earn-Out Adjustment

 

 

-

 

 

 

2,800

 

 

 

87

 

 

 

(2,357

)

 

 

530

 

+ Other (Expense) / Income

 

 

(47

)

 

 

29

 

 

 

(203

)

 

 

(18

)

 

 

(239

)

+ Non-cash Stock Compensation

 

 

676

 

 

 

826

 

 

 

737

 

 

 

736

 

 

 

2,975

 

Service Adjusted EBITDA

 

$

6,232

 

 

$

6,798

 

 

$

5,979

 

 

$

8,741

 

 

$

27,750

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution Operating Income

 

$

1,448

 

 

$

901

 

 

$

1,328

 

 

$

1,060

 

 

$

4,737

 

+ Depreciation & Amortization

 

 

564

 

 

 

944

 

 

 

1,421

 

 

 

1,355

 

 

 

4,284

 

+ Transaction Expenses

 

 

-

 

 

 

252

 

 

 

48

 

 

 

81

 

 

 

381

 

+ Other (Expense) / Income

 

 

(17

)

 

 

20

 

 

 

(86

)

 

 

7

 

 

 

(76

)

+ Non-cash Stock Compensation

 

 

254

 

 

 

415

 

 

 

430

 

 

 

438

 

 

 

1,537

 

Distribution Adjusted EBITDA

 

$

2,249

 

 

$

2,532

 

 

$

3,141

 

 

$

2,941

 

 

$

10,863

 

TRANSCAT, INC.

Adjusted Diluted EPS Reconciliation Table

(In Thousands, Except Per Share Amounts)

(Unaudited)

 

 

 

Fiscal 2025

 

 

 

Q1

 

 

Q2

 

 

Q3

 

 

Q4

 

 

YTD

 

Net Income

 

$

4,408

 

 

$

3,286

 

 

 

 

 

 

 

 

 

 

$

7,694

 

+ Amortization of Intangible Assets

 

 

1,749

 

 

 

1,888

 

 

 

 

 

 

 

 

 

 

 

3,637

 

+ Acquisition Amortization of Backlog

 

 

24

 

 

 

4

 

 

 

 

 

 

 

 

 

 

 

28

 

+ Acquisition Deal Costs

 

 

434

 

 

 

33

 

 

 

 

 

 

 

 

 

 

 

467

 

+ Acquisition Stock Expense

 

 

234

 

 

 

130

 

 

 

 

 

 

 

 

 

 

 

364

 

+ Income Tax Effect at 25%

 

 

(610

)

 

 

(514

)

 

 

 

 

 

 

 

 

 

 

(1,124

)

Adjusted Net Income

 

$

6,239

 

 

$

4,827

 

 

$

-

 

 

$

-

 

 

$

11,066

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Diluted Shares Outstanding

 

 

9,196

 

 

 

9,282

 

 

 

 

 

 

 

 

 

 

 

9,222

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

$

0.48

 

 

$

0.35

 

 

$

-

 

 

$

-

 

 

$

0.83

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Diluted Earnings Per Share

 

$

0.68

 

 

$

0.52

 

 

$

-

 

 

$

-

 

 

$

1.20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal 2024

 

 

 

Q1

 

 

Q2

 

 

Q3

 

 

Q4

 

 

YTD

 

Net Income

 

$

2,949

 

 

$

460

 

 

$

3,348

 

 

$

6,890

 

 

$

13,647

 

+ Amortization of Intangible Assets

 

 

1,093

 

 

 

1,416

 

 

 

1,674

 

 

 

1,447

 

 

 

5,630

 

+ Acquisition Amortization of Backlog

 

 

-

 

 

 

19

 

 

 

24

 

 

 

24

 

 

 

67

 

+ Acquisition Deal Costs

 

 

185

 

 

 

328

 

 

 

78

 

 

 

81

 

 

 

672

 

+ Acquisition Stock Expense

 

 

182

 

 

 

274

 

 

 

265

 

 

 

258

 

 

 

979

 

+ Income Tax Effect at 25%

 

 

(365

)

 

 

(509

)

 

 

(532

)

 

 

(431

)

 

 

(1,837

)

+ Acquisition Earn-Out Adjustment

 

 

-

 

 

 

2,800

 

 

 

87

 

 

 

(2,358

)

 

 

529

 

Adjusted Net Income

 

$

4,044

 

 

$

4,788

 

 

$

4,944

 

 

$

5,911

 

 

$

19,687

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Diluted Shares Outstanding

 

 

7,762

 

 

 

7,948

 

 

 

8,752

 

 

 

8,972

 

 

 

8,352

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

$

0.38

 

 

$

0.06

 

 

$

0.38

 

 

$

0.77

 

 

$

1.63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Diluted Earnings Per Share

 

$

0.52

 

 

$

0.60

 

 

$

0.56

 

 

$

0.66

 

 

$

2.36

 

TRANSCAT, INC.

Additional Information - Business Segment Data

(Dollars in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

Change

 

SERVICE

 

FY 2025

Q2

 

 

FY 2024

Q2

 

 

$'s

 

 

 

%

Service Revenue

 

$

44,083

 

 

$

41,431

 

 

$

2,652

 

 

 

6.4

%

Cost of Revenue

 

 

29,492

 

 

 

27,347

 

 

 

2,145

 

 

 

7.8

%

Gross Profit

 

$

14,591

 

 

$

14,084

 

 

$

507

 

 

 

3.6

%

Gross Margin

 

 

33.1

%

 

 

34.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, Marketing & Warehouse Expenses

 

$

4,586

 

 

$

4,143

 

 

$

443

 

 

 

10.7

%

General and Administrative Expenses

 

 

6,301

 

 

 

9,199

 

 

 

(2,898

)

 

 

(31.5

)%

Operating Income

 

$

3,704

 

 

$

742

 

 

$

2,962

 

 

 

399.2

%

% of Revenue

 

 

8.4

%

 

 

1.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change

 

DISTRIBUTION

 

FY 2025

Q2

 

 

FY 2024

Q2

 

 

$'s

 

 

 

%

Distribution Revenue

 

$

23,743

 

 

$

21,373

 

 

$

2,370

 

 

 

11.1

%

Cost of Revenue

 

 

17,128

 

 

 

15,332

 

 

 

1,796

 

 

 

11.7

%

Gross Profit

 

$

6,615

 

 

$

6,041

 

 

$

574

 

 

 

9.5

%

Gross Margin

 

 

27.9

%

 

 

28.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, Marketing & Warehouse Expenses

 

$

3,595

 

 

$

2,713

 

 

$

882

 

 

 

32.5

%

General and Administrative Expenses

 

 

2,989

 

 

 

2,427

 

 

 

562

 

 

 

23.2

%

Operating Income

 

$

31

 

 

$

901

 

 

$

(870

)

 

 

(96.6

)%

% of Sales

 

 

0.1

%

 

 

4.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change

 

TOTAL

 

FY 2025

Q2

 

 

FY 2024

Q2

 

 

$'s

 

 

 

%

Total Revenue

 

$

67,826

 

 

$

62,804

 

 

$

5,022

 

 

 

8.0

%

Total Cost of Revenue

 

 

46,620

 

 

 

42,679

 

 

 

3,941

 

 

 

9.2

%

Gross Profit

 

$

21,206

 

 

$

20,125

 

 

$

1,081

 

 

 

5.4

%

Gross Margin

 

 

31.3

%

 

 

32.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, Marketing & Warehouse Expenses

 

$

8,181

 

 

$

6,856

 

 

$

1,325

 

 

 

19.3

%

General and Administrative Expenses

 

 

9,290

 

 

 

11,626

 

 

 

(2,336

)

 

 

(20.1

)%

Operating Income

 

$

3,735

 

 

$

1,643

 

 

$

2,092

 

 

 

127.3

%

% of Revenue

 

 

5.5

%

 

 

2.6

%

 

 

 

 

 

 

 

 

TRANSCAT, INC.

Additional Information - Business Segment Data

(Dollars in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Change

 

 

 

FY 2025

 

 

FY 2024

 

 

 

 

 

 

 

 

 

SERVICE

 

YTD

 

 

YTD

 

 

$'s

 

 

%

 

Service Revenue

 

$

87,861

 

 

$

81,284

 

 

$

6,577

 

 

 

8.1

%

Cost of Revenue

 

 

58,387

 

 

 

54,229

 

 

 

4,158

 

 

 

7.7

%

Gross Profit

 

$

29,474

 

 

$

27,055

 

 

$

2,419

 

 

 

8.9

%

Gross Margin

 

 

33.5

%

 

 

33.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, Marketing & Warehouse Expenses

 

$

8,890

 

 

$

8,250

 

 

$

640

 

 

 

7.8

%

General and Administrative Expenses

 

 

12,790

 

 

 

14,871

 

 

 

(2,081

)

 

 

(14.0

)%

Operating Income

 

$

7,794

 

 

$

3,934

 

 

$

3,860

 

 

 

98.1

%

% of Revenue

 

 

8.9

%

 

 

4.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change

 

 

 

FY 2025

 

 

FY 2024

 

 

 

 

 

 

 

 

 

DISTRIBUTION

 

YTD

 

 

YTD

 

 

$'s

 

 

 

%

Distribution Revenue

 

$

46,672

 

 

$

42,118

 

 

$

4,554

 

 

 

10.8

%

Cost of Revenue

 

 

32,285

 

 

 

30,338

 

 

 

1,947

 

 

 

6.4

%

Gross Profit

 

$

14,387

 

 

$

11,780

 

 

$

2,607

 

 

 

22.1

%

Gross Margin

 

 

30.8

%

 

 

28.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, Marketing & Warehouse Expenses

 

$

7,093

 

 

$

5,075

 

 

$

2,018

 

 

 

39.8

%

General and Administrative Expenses

 

 

6,254

 

 

 

4,356

 

 

 

1,898

 

 

 

43.6

%

Operating Income

 

$

1,040

 

 

$

2,349

 

 

$

(1,309

)

 

 

(55.7

)%

% of Sales

 

 

2.2

%

 

 

5.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change

 

 

 

FY 2025

 

 

FY 2024

 

 

 

 

 

 

 

 

 

TOTAL

 

YTD

 

 

YTD

 

 

$'s

 

 

%

 

Total Revenue

 

$

134,533

 

 

$

123,402

 

 

$

11,131

 

 

 

9.0

%

Total Cost of Revenue

 

 

90,672

 

 

 

84,567

 

 

 

6,105

 

 

 

7.2

%

Gross Profit

 

$

43,861

 

 

$

38,835

 

 

$

5,026

 

 

 

12.9

%

Gross Margin

 

 

32.6

%

 

 

31.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, Marketing & Warehouse Expenses

 

$

15,983

 

 

$

13,325

 

 

$

2,658

 

 

 

19.9

%

General and Administrative Expenses

 

 

19,044

 

 

 

19,227

 

 

 

(183

)

 

 

(1.0

)%

Operating Income

 

$

8,834

 

 

$

6,283

 

 

$

2,551

 

 

 

40.6

%

% of Revenue

 

 

6.6

%

 

 

5.1

%

 

 

 

 

 

 

 

 

 

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