Press release

Transcat Reports Strong Third Quarter Results on Service Gross Margin Expansion and Adjusted EBITDA Growth

0
Sponsored by Businesswire

Transcat, Inc. (Nasdaq: TRNS) (“Transcat” or the “Company”), a leading provider of accredited calibration, repair, inspection and laboratory instrument services and value-added distributor of professional grade handheld test, measurement, and control instrumentation, today reported financial results for its third quarter ended December 23, 2023 (the “third quarter”) of fiscal year 2024, which ends March 30, 2024 (“fiscal 2024”). Results include the previously reported acquisitions of TIC-MS, Inc. (“TIC-MS”) effective March 27, 2023, SteriQual, Inc. (“SteriQual”), effective July 12, 2023 and Axiom Test Equipment, Inc. (“Axiom”), effective August 8, 2023.

“We are extremely pleased with our third quarter results as Service gross margin expanded 250 basis points versus prior year driven by strong organic Service revenue growth and increased productivity throughout our network of labs. Adjusted EBITDA growth of 39% for the third quarter reflects our ability to leverage organic Service revenue growth and the successful integration of acquired companies. Consolidated revenue was up 14% with gross margin expansion of 350 basis points year over year driven by our differentiated value proposition, excellent performance in the high-margin rental business, and execution of our automation and process improvement initiatives. Service segment revenue grew 15% as demand in our highly regulated end markets, including life sciences, remained strong and our recent acquisitions continued to perform at a high level” commented Lee D. Rudow, President and CEO. “The Transcat Team continues to deliver strong revenue growth and sustainable gross margin expansion.”

Mr. Rudow added, “The outstanding performance of recent acquisitions demonstrates we are excellent stewards of capital and can successfully identify, acquire, and integrate dynamic companies. The key differentiator of the Transcat acquisition strategy is the effectiveness of our integration processes that enables new acquisitions, such as the recent deal with Axiom, to very quickly be accretive to the overall company. In addition to strong returns, the acquisitions present compelling cross-sell synergies to drive organic calibration service growth and rental sales into these newly acquired customer bases. Acquisitions allow us to leverage our existing infrastructure, expand addressable markets, and widen the breadth of our service offerings.”

Third Quarter Fiscal 2024 Review

(Results are compared with the third quarter of the fiscal year ended March 25, 2023 (fiscal 2023))

 

($ in thousands)

 

 

 

 

 

 

 

 

 

Change

 

 

FY24 Q3

 

 

FY23 Q3

 

 

$’s

 

 

%

Service Revenue

 

$

41,509

 

 

$

35,977

 

 

$

5,532

 

 

 

15.4

%

Distribution Sales

 

 

23,657

 

 

 

21,425

 

 

 

2,232

 

 

 

10.4

%

Revenue

 

$

65,166

 

 

$

57,402

 

 

$

7,764

 

 

 

13.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

$

20,936

 

 

$

16,400

 

 

$

4,536

 

 

 

27.7

%

Gross Margin

 

 

32.1

%

 

 

28.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

$

4,294

 

 

$

3,163

 

 

$

1,131

 

 

 

35.8

%

Operating Margin

 

 

6.6

%

 

 

5.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

3,348

 

 

$

1,601

 

 

$

1,747

 

 

 

109.1

%

Net Margin

 

 

5.1

%

 

 

2.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA*

 

$

9,120

 

 

$

6,585

 

 

$

2,535

 

 

 

38.5

%

Adjusted EBITDA* Margin

 

 

14.0

%

 

 

11.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

 

$

0.38

 

 

$

0.21

 

 

$

0.17

 

 

 

81.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Diluted EPS*

 

$

0.56

 

 

$

0.35

 

 

$

0.21

 

 

 

60.0

%

*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 $65.2 million, an increase of $7.8 million or 13.5%. Consolidated gross profit was $20.9 million, an increase of $4.5 million, or 27.7%, while gross margin expanded 350 basis points due to improvements in both operating segments. Operating expenses were $16.6 million, an increase of $3.4 million, or 25.7%, driven by incremental expenses from acquired businesses (including stock-based compensation expense) and higher incentive-based employee costs due to higher sales. Adjusted EBITDA was $9.1 million which represented an increase of $2.5 million or 38.5%. Net income per diluted share was $0.38 compared to $0.21 last year. Adjusted diluted earnings per share was $0.56 versus $0.35 last year.

Service segment delivers strong third quarter results

Represents the accredited calibration, repair, inspection and laboratory instrument services business (63.7% of total revenue for the third quarter of fiscal 2024).

($ in thousand)

 

 

 

 

 

 

 

 

 

Change

 

 

FY24 Q3

 

 

FY23 Q3

 

 

$’s

 

 

%

Service Segment Revenue

 

$

41,509

 

 

$

35,977

 

 

$

5,532

 

 

 

15.4

%

Gross Profit

 

$

13,494

 

 

$

10,793

 

 

$

2,701

 

 

 

25.0

%

Gross Margin

 

 

32.5

%

 

 

30.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

$

2,966

 

 

$

1,836

 

 

$

1,130

 

 

 

61.5

%

Operating Margin

 

 

7.1

%

 

 

5.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA*

 

$

5,979

 

 

$

4,562

 

 

$

1,417

 

 

 

31.1

%

Adjusted EBITDA* Margin

 

 

14.4

%

 

 

12.7

%

 

 

 

 

 

 

 

 

*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 $41.5 million, an increase of $5.5 million or 15.4%, and included $2.2 million of incremental revenue from acquisitions. Organic revenue growth was 9.1% and was driven by strong end-market demand and continued market share gains. The segment gross margin increased 250 basis points from prior year primarily due to continued productivity improvements offset by increased start-up costs from new client-based lab implementations.

Distribution segment shows continued margin improvement

Represents the sale and rental of new and used professional grade handheld test, measurement and control instrumentation (36.3% of total revenue for the third quarter of fiscal 2024).

($ in thousands)

 

 

 

 

 

 

 

 

 

Change

 

 

FY24 Q3

 

 

FY23 Q3

 

 

$’s

 

 

%

Distribution Segment Sales

 

$

23,657

 

 

$

21,425

 

 

$

2,232

 

 

 

10.4

%

Gross Profit

 

$

7,442

 

 

$

5,607

 

 

$

1,835

 

 

 

32.7

%

Gross Margin

 

 

31.5

%

 

 

26.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

$

1,328

 

 

$

1,327

 

 

$

1

 

 

 

0.1

%

Operating Margin

 

 

5.6

%

 

 

6.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA*

 

$

3,141

 

 

$

2,023

 

 

$

1,118

 

 

 

55.3

%

Adjusted EBITDA* Margin

 

 

13.3

%

 

 

9.4

%

 

 

 

 

 

 

 

 

*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.

Distribution sales were $23.7 million, which represented an increase of $2.2 million or 10.4%. These sales included $2.9 million from an acquisition offset by decreases in other channels. Distribution segment gross margin was 31.5%, an increase of 530 basis points due to a favorable sales mix driven by strength in the Rentals business.

Nine Month Review (Results are compared with the first nine months of fiscal 2023)

Total revenue was $188.6 million, an increase of $20.1 million or 11.9%. Consolidated gross profit was up $10.6 million, or 21.5%, and gross margin expanded to 31.7% or 250 basis points. Consolidated operating expenses increased $10.4 million, or 26.7%, driven by incremental expenses from acquired businesses, (including stock-based compensation expense), increased intangibles amortization expense, investments in technology and our employee base to support future growth, and a non-cash charge related to the amended NEXA Earn-Out agreement. As a result, consolidated operating income was $10.6 million compared with $10.4 million in last fiscal year’s period.

Adjusted EBITDA was $26.9 million which represented an increase of $5.5 million or 25.7%. Net income per diluted share decreased to $0.83 from $0.92 and adjusted diluted earnings per share was $1.68 versus $1.33 last year. The effective tax rate was 23.5% compared to 18.8% in the prior year, due to the discrete tax treatment of the non-cash charge related to the amended NEXA Earn-Out agreement.

Balance Sheet and Cash Flow Overview

On December 23, 2023, the Company had $80.0 million available for borrowing under its secured revolving credit facility. Total debt of $4.7 million was down $44.4 million from fiscal 2023 year-end due to cash proceeds from our secondary stock offering. The Company’s leverage ratio, as defined in the credit agreement, was 0.12 on December 23, 2023, compared with 1.60 on March 25, 2023.

Outlook

Mr. Rudow added concluded, “We are proud of our dedicated team, which has consistently delivered exceptional results through various economic cycles as can be seen over the past decade and a half of profitable growth. For the fiscal year, we expect organic Service revenue growth in the high-single digit to low double-digit range and gross margin expansion. Automation of our calibration processes and overall process improvement will be key enablers to future margin expansion. We believe the Service segment has substantial runway ahead for growth, both organically and through acquisition. Our robust and diverse acquisition pipeline enables strategic, accretive acquisitions that drive synergistic growth opportunities and will be a key component of our go-forward strategy. We believe our unique value proposition fostered by Nexa’s Cost, Control and Optimization Services drives a sustainable competitive advantage in the highly regulated markets that we serve, particularly the Life Science, Aerospace, and Defense markets, along with a growing Rentals business. We have a long history of generating sustainable value for our shareholders and providing a dynamic, rewarding workplace for our team.”

Transcat expects its income tax rate to range between 24% and 26% in fiscal 2024. 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, January 30, 2024 at 11:00 a.m. ET. Management will review the financial and operating results for the third 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, February 6, 2024. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13742041, 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, acquisition related transaction expenses, non-cash loss on sale of building and restructuring expense), 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, acquisition amortization of backlog and restructuring expense), 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 27 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 are identified by words such as “expects,” “estimates,” “projects,” “anticipates,” “believes,” “could,” “plans,” “aims” 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)

 

 

 

Third Quarter Ended

 

 

Nine Months Ended

 

 

 

December 23,

 

 

December 24,

 

 

December 23,

 

 

December 24,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service Revenue

 

$

41,509

 

 

$

35,977

 

 

$

122,793

 

 

$

105,120

 

Distribution Sales

 

 

23,657

 

 

 

21,425

 

 

 

65,775

 

 

 

63,382

 

Total Revenue

 

 

65,166

 

 

 

57,402

 

 

 

188,568

 

 

 

168,502

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Service Revenue

 

 

28,015

 

 

 

25,184

 

 

 

82,244

 

 

 

72,005

 

Cost of Distribution Sales

 

 

16,215

 

 

 

15,818

 

 

 

46,553

 

 

 

47,292

 

Total Cost of Revenue

 

 

44,230

 

 

 

41,002

 

 

 

128,797

 

 

 

119,297

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

20,936

 

 

 

16,400

 

 

 

59,771

 

 

 

49,205

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, Marketing and Warehouse Expenses

 

 

7,519

 

 

 

6,595

 

 

 

20,844

 

 

 

18,315

 

General and Administrative Expenses

 

 

9,123

 

 

 

6,642

 

 

 

28,350

 

 

 

20,497

 

Total Operating Expenses

 

 

16,642

 

 

 

13,237

 

 

 

49,194

 

 

 

38,812

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

4,294

 

 

 

3,163

 

 

 

10,577

 

 

 

10,393

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense

 

 

81

 

 

 

731

 

 

 

1,785

 

 

 

1,651

 

Interest Income

 

 

(347

)

 

 

(5

)

 

 

(347

)

 

 

(15

)

Other Income/Expense

 

 

289

 

 

 

313

 

 

 

304

 

 

 

96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Before Income Taxes

 

 

4,271

 

 

 

2,124

 

 

 

8,835

 

 

 

8,661

 

Provision for Income Taxes

 

 

923

 

 

 

523

 

 

 

2,078

 

 

 

1,631

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

3,348

 

 

$

1,601

 

 

$

6,757

 

 

$

7,030

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Share

 

$

0.39

 

 

$

0.21

 

 

$

0.84

 

 

$

0.93

 

Average Shares Outstanding

 

 

8,615

 

 

 

7,559

 

 

 

8,060

 

 

 

7,547

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

$

0.38

 

 

$

0.21

 

 

$

0.83

 

 

$

0.92

 

Average Shares Outstanding

 

 

8,752

 

 

 

7,666

 

 

 

8,187

 

 

 

7,644

 

TRANSCAT, INC.

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share and Per Share Amounts)

 

 

 

(Unaudited)

 

 

(Audited)

 

 

 

December 23,

 

 

March 25,

 

 

 

2023

 

 

2023

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

35,205

 

 

$

1,531

 

Accounts Receivable, less allowance for credit losses of $579 and $457 as of December 23, 2023 and March 25, 2023, respectively

 

 

43,307

 

 

 

44,698

 

Other Receivables

 

 

819

 

 

 

506

 

Inventory, net

 

 

16,178

 

 

 

16,929

 

Prepaid Expenses and Other Current Assets

 

 

3,295

 

 

 

3,935

 

Total Current Assets

 

 

98,804

 

 

 

67,599

 

Property and Equipment, net

 

 

37,222

 

 

 

29,064

 

Goodwill

 

 

105,700

 

 

 

69,360

 

Intangible Assets, net

 

 

21,459

 

 

 

13,799

 

Right To Use Assets, net

 

 

16,834

 

 

 

14,876

 

Other Assets

 

 

1,055

 

 

 

1,051

 

Total Assets

 

$

281,074

 

 

$

195,749

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts Payable

 

$

11,355

 

 

$

15,869

 

Accrued Compensation and Other Current Liabilities

 

 

15,683

 

 

 

10,201

 

Current Portion of Long-Term Debt

 

 

2,316

 

 

 

2,248

 

Total Current Liabilities

 

 

29,354

 

 

 

28,318

 

Long-Term Debt

 

 

2,411

 

 

 

46,869

 

Deferred Tax Liabilities, net

 

 

10,855

 

 

 

6,538

 

Lease Liabilities

 

 

14,457

 

 

 

12,960

 

Other Liabilities

 

 

5,527

 

 

 

1,434

 

Total Liabilities

 

 

62,604

 

 

 

96,119

 

 

 

 

 

 

 

 

 

 

Shareholders’ Equity:

 

 

 

 

 

 

 

 

Common Stock, par value $0.50 per share, 30,000,000 shares authorized; 8,828,515 and 7,562,604 shares issued and outstanding as of December 23, 2023 and March 25, 2023, respectively

 

 

4,414

 

 

 

3,781

 

Capital in Excess of Par Value

 

 

140,382

 

 

 

27,886

 

Accumulated Other Comprehensive Loss

 

 

(691

)

 

 

(1,200

)

Retained Earnings

 

 

74,365

 

 

 

69,163

 

Total Shareholders’ Equity

 

 

218,470

 

 

 

99,630

 

Total Liabilities and Shareholders’ Equity

 

$

281,074

 

 

$

195,749

 

TRANSCAT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

 

 

 

(Unaudited)

 

 

Nine Months Ended

 

 

December 23,

 

 

December 24,

 

 

2023

 

 

2022

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

Net Income

 

$

6,757

 

 

$

7,030

 

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

 

 

 

 

 

 

 

 

Net Loss on Disposal of Property and Equipment

 

 

24

 

 

 

62

 

Deferred Income Taxes

 

 

42

 

 

 

(52

)

Depreciation and Amortization

 

 

9,841

 

 

 

8,243

 

Provision for Accounts Receivable and Inventory Reserves

 

 

379

 

 

 

174

 

Stock-Based Compensation Expense

 

 

3,338

 

 

 

2,757

 

Changes in Assets and Liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

Accounts Receivable and Other Receivables

 

 

3,819

 

 

 

1,850

 

Inventory

 

 

3,208

 

 

 

(3,589

)

Prepaid Expenses and Other Current Assets

 

 

728

 

 

 

1,074

 

Accounts Payable

 

 

(5,194

)

 

 

(424

)

Accrued Compensation and Other Current Liabilities

 

 

3,947

 

 

 

(3,150

)

Net Cash Provided by Operating Activities

 

 

26,889

 

 

 

13,975

 

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

Purchases of Property and Equipment

 

 

(9,099

)

 

 

(7,149

)

Proceeds from Sale of Property and Equipment

 

 

 

 

 

10

 

Business Acquisitions, net of cash acquired

 

 

(12,932

)

 

 

(8,306

)

Net Cash Used in Investing Activities

 

 

(22,031

)

 

 

(15,445

)

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

(Repayment of) Proceeds from Revolving Credit Facility, net

 

 

(42,713

)

 

 

2,286

 

Repayments of Term Loan

 

 

(1,678

)

 

 

(1,570

)

Issuance of Common Stock, net of direct costs

 

 

75,714

 

 

 

503

 

Repurchase of Common Stock

 

 

(2,247

)

 

 

(437

)

Net Cash Provided by Financing Activities

 

 

29,076

 

 

 

782

 

 

 

 

 

 

 

 

 

 

Effect of Exchange Rate Changes on Cash and cash equivalents

 

 

(260

)

 

 

885

 

 

 

 

 

 

 

 

 

 

Net Increase in Cash and cash equivalents

 

 

33,674

 

 

 

197

 

Cash and cash equivalents at Beginning of Period

 

 

1,531

 

 

 

1,396

 

Cash and cash equivalents at End of Period

 

$

35,205

 

 

$

1,593

 

TRANSCAT, INC.

Adjusted EBITDA Reconciliation Table

(In thousands)

(Unaudited)

 

 

 

Fiscal 2024

 

 

 

Q1

 

 

 

Q2

 

 

Q3

 

 

 

Q4

 

 

YTD

 

Net Income

 

$

2,949

 

 

 

$

460

 

 

$

3,348

 

 

 

 

 

 

 

$

6,757

 

+ Interest Expense

 

 

814

 

 

 

 

890

 

 

 

(266

)

 

 

 

 

 

 

 

1,438

 

+ Other Expense / (Income)

 

 

64

 

 

 

 

(49

)

 

 

289

 

 

 

 

 

 

 

 

304

 

+ Tax Provision

 

 

813

 

 

 

 

342

 

 

 

923

 

 

 

 

 

 

 

 

2,078

 

Operating Income

 

$

4,640

 

 

 

$

1,643

 

 

$

4,294

 

 

 

$

 

 

$

10,577

 

+ Depreciation & Amortization

 

 

2,790

 

 

 

 

3,269

 

 

 

3,783

 

 

 

 

 

 

 

 

9,842

 

+ Transaction Expense

 

 

185

 

 

 

 

328

 

 

 

78

 

 

 

 

 

 

 

 

591

 

+ Acquisition Earn-Out Adjustment

 

 

 

 

 

 

2,800

 

 

 

87

 

 

 

 

 

 

 

 

2,887

 

+ Other (Expense) / Income

 

 

(64

)

 

 

 

49

 

 

 

(289

)

 

 

 

 

 

 

 

(304

)

+ Noncash Stock Compensation

 

 

930

 

 

 

 

1,241

 

 

 

1,167

 

 

 

 

 

 

 

 

3,338

 

Adjusted EBITDA

 

$

8,481

 

 

 

$

9,330

 

 

$

9,120

 

 

 

$

 

 

$

26,931

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Breakdown

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service Operating Income

 

$

3,192

 

 

 

$

742

 

 

$

2,966

 

 

 

 

 

 

 

$

6,900

 

+ Depreciation & Amortization

 

 

2,226

 

 

 

 

2,325

 

 

 

2,362

 

 

 

 

 

 

 

 

6,913

 

+ Transaction Expense

 

 

185

 

 

 

 

76

 

 

 

30

 

 

 

 

 

 

 

 

291

 

+ Acquisition Earn-Out Adjustment

 

 

 

 

 

 

2,800

 

 

 

87

 

 

 

 

 

 

 

 

2,887

 

+ Other (Expense) / Income

 

 

(47

)

 

 

 

29

 

 

 

(203

)

 

 

 

 

 

 

 

(221

)

+ Noncash Stock Compensation

 

 

676

 

 

 

 

826

 

 

 

737

 

 

 

 

 

 

 

 

2,239

 

Service Adjusted EBITDA

 

$

6,232

 

 

 

$

6,798

 

 

$

5,979

 

 

 

$

 

 

$

19,009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution Operating Income

 

$

1,448

 

 

 

$

901

 

 

$

1,328

 

 

 

 

 

 

 

$

3,677

 

+ Depreciation & Amortization

 

 

564

 

 

 

 

944

 

 

 

1,421

 

 

 

 

 

 

 

 

2,929

 

+ Transaction Expense

 

 

 

 

 

 

252

 

 

 

48

 

 

 

 

 

 

 

 

300

 

+ Other (Expense) / Income

 

 

(17

)

 

 

 

20

 

 

 

(86

)

 

 

 

 

 

 

 

(83

)

+ Noncash Stock Compensation

 

 

254

 

 

 

 

415

 

 

 

430

 

 

 

 

 

 

 

 

1,099

 

Distribution Adjusted EBITDA

 

$

2,249

 

 

 

$

2,532

 

 

$

3,141

 

 

 

$

 

 

$

7,922

 

TRANSCAT, INC.

Adjusted EBITDA Reconciliation Table

(In thousands)

(Unaudited)

 

 

 

Fiscal 2023

 

 

 

Q1

 

 

Q2

 

 

Q3

 

 

Q4

 

 

YTD

 

Net Income

 

$

3,072

 

 

$

2,357

 

 

$

1,601

 

 

$

3,658

 

 

$

10,688

 

+ Interest Expense

 

 

360

 

 

 

550

 

 

 

726

 

 

 

781

 

 

 

2,417

 

+ Other Expense / (Income)

 

 

(204

)

 

 

(13

)

 

 

313

 

 

 

248

 

 

 

344

 

+ Tax Provision

 

 

376

 

 

 

732

 

 

 

523

 

 

 

1,168

 

 

 

2,799

 

Operating Income

 

$

3,604

 

 

$

3,626

 

 

$

3,163

 

 

$

5,855

 

 

$

16,248

 

+ Depreciation & Amortization

 

 

2,641

 

 

 

2,778

 

 

 

2,824

 

 

 

2,712

 

 

 

10,955

 

+ Transaction Expense

 

 

30

 

 

 

 

 

 

96

 

 

 

59

 

 

 

185

 

+ Other (Expense) / Income

 

 

204

 

 

 

13

 

 

 

(313

)

 

 

(248

)

 

 

(344

)

+ Noncash Stock Compensation

 

 

828

 

 

 

1,114

 

 

 

815

 

 

 

620

 

 

 

3,377

 

Adjusted EBITDA

 

$

7,307

 

 

$

7,531

 

 

$

6,585

 

 

$

8,998

 

 

$

30,421

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Breakdown

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service Operating Income

 

$

2,532

 

 

$

2,507

 

 

$

1,836

 

 

$

4,547

 

 

$

11,422

 

+ Depreciation & Amortization

 

 

2,139

 

 

 

2,246

 

 

 

2,268

 

 

 

2,147

 

 

 

8,800

 

+ Transaction Expense

 

 

30

 

 

 

 

 

 

96

 

 

 

59

 

 

 

185

 

+ Other (Expense) / Income

 

 

134

 

 

 

3

 

 

 

(214

)

 

 

(170

)

 

 

(247

)

+ Noncash Stock Compensation

 

 

638

 

 

 

793

 

 

 

576

 

 

 

456

 

 

 

2,463

 

Service Adjusted EBITDA

 

$

5,473

 

 

$

5,549

 

 

$

4,562

 

 

$

7,039

 

 

$

22,623

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution Operating Income

 

$

1,072

 

 

$

1,119

 

 

$

1,327

 

 

$

1,308

 

 

$

4,826

 

+ Depreciation & Amortization

 

 

502

 

 

 

532

 

 

 

556

 

 

 

565

 

 

 

2,155

 

+ Other (Expense) / Income

 

 

70

 

 

 

10

 

 

 

(99

)

 

 

(78

)

 

 

(97

)

+ Noncash Stock Compensation

 

 

190

 

 

 

321

 

 

 

239

 

 

 

164

 

 

 

914

 

Distribution Adjusted EBITDA

 

$

1,834

 

 

$

1,982

 

 

$

2,023

 

 

$

1,959

 

 

$

7,798

 

TRANSCAT, INC.

Adjusted Diluted EPS Reconciliation Table

(In Thousands, Except Per Share Amounts)

(Unaudited)

 

 

 

Fiscal 2024

 

 

 

Q1

 

 

Q2

 

 

Q3

 

 

Q4

 

 

YTD

 

Net Income

 

$

2,949

 

 

$

460

 

 

$

3,348

 

 

 

 

 

 

$

6,757

 

+ Amortization of Intangible Assets

 

 

1,093

 

 

 

1,416

 

 

 

1,674

 

 

 

 

 

 

 

4,183

 

+ Acquisition Amortization of Backlog

 

 

 

 

 

19

 

 

 

24

 

 

 

 

 

 

 

43

 

+ Acquisition Deal Costs

 

 

367

 

 

 

602

 

 

 

430

 

 

 

 

 

 

 

1,399

 

+ Income Tax Effect at 25%

 

 

(365

)

 

 

(509

)

 

 

(532

)

 

 

 

 

 

 

(1,406

)

+ Acquisition Earn-Out Adjustment

 

 

 

 

 

2,800

 

 

 

 

 

 

 

 

 

 

2,800

 

Adjusted Net Income

 

$

4,044

 

 

$

4,788

 

 

$

4,944

 

 

$

 

 

$

13,776

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Diluted Shares Outstanding

 

 

7,762

 

 

 

7,948

 

 

 

8,752

 

 

 

 

 

 

 

8,187

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

$

0.38

 

 

$

0.06

 

 

$

0.38

 

 

$

 

 

$

0.83

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Diluted Earnings Per Share

 

$

0.52

 

 

$

0.60

 

 

$

0.56

 

 

$

 

 

$

1.68

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal 2023

 

 

 

Q1

 

 

Q2

 

 

Q3

 

 

Q4

 

 

YTD

 

Net Income

 

$

3,072

 

 

$

2,357

 

 

$

1,601

 

 

$

3,658

 

 

$

10,688

 

+ Amortization of Intangible Assets

 

 

1,084

 

 

 

1,147

 

 

 

1,180

 

 

 

1,043

 

 

 

4,454

 

+ Acquisition Deal Costs

 

 

299

 

 

 

239

 

 

 

254

 

 

 

226

 

 

 

1,018

 

+ Income Tax Effect at 25%

 

 

(346

)

 

 

(346

)

 

 

(359

)

 

 

(317

)

 

 

(1,368

)

Adjusted Net Income

 

$

4,109

 

 

$

3,397

 

 

$

2,676

 

 

$

4,610

 

 

$

14,792

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Diluted Shares Outstanding

 

 

7,629

 

 

 

7,646

 

 

 

7,666

 

 

 

7,688

 

 

 

7,645

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

$

0.40

 

 

$

0.31

 

 

$

0.21

 

 

$

0.48

 

 

$

1.40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Diluted Earnings Per Share

 

$

0.54

 

 

$

0.44

 

 

$

0.35

 

 

$

0.60

 

 

$

1.93

 

TRANSCAT, INC.

Additional Information – Business Segment Data

(Dollars in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Change

 

SERVICE

 

FY 2024 Q3

 

 

FY 2023 Q3

 

 

$’s

 

 

%

 

Service Revenue

 

$

41,509

 

 

$

35,977

 

 

$

5,532

 

 

 

15.4

%

Cost of Revenue

 

 

28,015

 

 

 

25,184

 

 

 

2,831

 

 

 

11.2

%

Gross Profit

 

$

13,494

 

 

$

10,793

 

 

$

2,701

 

 

 

25.0

%

Gross Margin

 

 

32.5

%

 

 

30.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, Marketing & Warehouse Expenses

 

$

4,202

 

 

$

4,230

 

 

$

(28

)

 

 

(0.7

)%

General and Administrative Expenses

 

 

6,326

 

 

 

4,727

 

 

 

1,599

 

 

 

33.8

%

Operating Income

 

$

2,966

 

 

$

1,836

 

 

$

1,130

 

 

 

61.5

%

% of Revenue

 

 

7.1

%

 

 

5.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change

 

DISTRIBUTION

 

FY 2024 Q3

 

 

FY 2023 Q3

 

 

$’s

 

 

%

 

Distribution Sales

 

$

23,657

 

 

$

21,425

 

 

$

2,232

 

 

 

10.4

%

Cost of Sales

 

 

16,215

 

 

 

15,818

 

 

 

397

 

 

 

2.5

%

Gross Profit

 

$

7,442

 

 

$

5,607

 

 

$

1,835

 

 

 

32.7

%

Gross Margin

 

 

31.5

%

 

 

26.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, Marketing & Warehouse Expenses

 

$

3,317

 

 

$

2,365

 

 

$

952

 

 

 

40.3

%

General and Administrative Expenses

 

 

2,797

 

 

 

1,915

 

 

 

882

 

 

 

46.1

%

Operating Income

 

$

1,328

 

 

$

1,327

 

 

$

1

 

 

 

0.1

%

% of Sales

 

 

5.6

%

 

 

6.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change

 

TOTAL

 

FY 2024 Q3

 

 

FY 2023 Q3

 

 

$’s

 

 

%

 

Total Revenue

 

$

65,166

 

 

$

57,402

 

 

$

7,764

 

 

 

13.5

%

Total Cost of Revenue

 

 

44,230

 

 

 

41,002

 

 

 

3,228

 

 

 

7.9

%

Gross Profit

 

$

20,936

 

 

$

16,400

 

 

$

4,536

 

 

 

27.7

%

Gross Margin

 

 

32.1

%

 

 

28.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, Marketing & Warehouse Expenses

 

$

7,519

 

 

$

6,595

 

 

$

924

 

 

 

14.0

%

General and Administrative Expenses

 

 

9,123

 

 

 

6,642

 

 

 

2,481

 

 

 

37.4

%

Operating Income

 

$

4,294

 

 

$

3,163

 

 

$

1,131

 

 

 

35.8

%

% of Revenue

 

 

6.6

%

 

 

5.5

%

 

 

 

 

 

 

 

 

TRANSCAT, INC.

Additional Information – Business Segment Data

(Dollars in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Change

 

 

 

FY 2024

 

 

FY 2023

 

 

 

 

 

 

 

 

 

SERVICE

 

YTD

 

 

YTD

 

 

$’s

 

 

%

Service Revenue

 

$

122,793

 

 

$

105,120

 

 

$

17,673

 

 

 

16.8

%

Cost of Revenue

 

 

82,244

 

 

 

72,005

 

 

 

10,239

 

 

 

14.2

%

Gross Profit

 

$

40,549

 

 

$

33,115

 

 

$

7,434

 

 

 

22.4

%

Gross Margin

 

 

33.0

%

 

 

31.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, Marketing & Warehouse Expenses

 

$

12,452

 

 

$

11,604

 

 

$

848

 

 

 

7.3

%

General and Administrative Expenses

 

 

21,197

 

 

 

14,636

 

 

 

6,561

 

 

 

44.8

%

Operating Income

 

$

6,900

 

 

$

6,875

 

 

$

25

 

 

 

0.4

%

% of Revenue

 

 

5.6

%

 

 

6.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change

 

 

 

FY 2024

 

 

FY 2023

 

 

 

 

 

 

 

 

 

DISTRIBUTION

 

YTD

 

 

YTD

 

 

$’s

 

 

%

Distribution Sales

 

$

65,775

 

 

$

63,382

 

 

$

2,393

 

 

 

3.8

%

Cost of Sales

 

 

46,553

 

 

 

47,292

 

 

 

(739

)

 

 

(1.6

)%

Gross Profit

 

$

19,222

 

 

$

16,090

 

 

$

3,132

 

 

 

19.5

%

Gross Margin

 

 

29.2

%

 

 

25.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, Marketing & Warehouse Expenses

 

$

8,392

 

 

$

6,711

 

 

$

1,681

 

 

 

25.0

%

General and Administrative Expenses

 

 

7,153

 

 

 

5,861

 

 

 

1,292

 

 

 

22.0

%

Operating Income

 

$

3,677

 

 

$

3,518

 

 

$

159

 

 

 

4.5

%

% of Sales

 

 

5.6

%

 

 

5.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change

 

 

 

FY 2024

 

 

FY 2023

 

 

 

 

 

 

 

 

 

TOTAL

 

YTD

 

 

YTD

 

 

$’s

 

 

%

Total Revenue

 

$

188,568

 

 

$

168,502

 

 

$

20,066

 

 

 

11.9

%

Total Cost of Revenue

 

 

128,797

 

 

 

119,297

 

 

 

9,500

 

 

 

8.0

%

Gross Profit

 

$

59,771

 

 

$

49,205

 

 

$

10,566

 

 

 

21.5

%

Gross Margin

 

 

31.7

%

 

 

29.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, Marketing & Warehouse Expenses

 

$

20,844

 

 

$

18,315

 

 

$

2,529

 

 

 

13.8

%

General and Administrative Expenses

 

 

28,350

 

 

 

20,497

 

 

 

7,853

 

 

 

38.3

%

Operating Income

 

$

10,577

 

 

$

10,393

 

 

$

184

 

 

 

1.8

%

% of Revenue

 

 

5.6

%

 

 

6.2

%