Transcat Reports Strong Second Quarter Results on Double-Digit Organic Service Growth and Expanding Gross Margins

Business Wire
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In this article:

  • Second quarter consolidated revenue up 11.3% with 230 basis points gross margin expansion

  • Second quarter service revenue up 17.5%; service organic revenue growth of 10.0%

  • Second quarter service gross profit increased 22.6%; service gross margin expanded 140 basis points

  • Second quarter consolidated adjusted EBITDA grew 23.9%; adjusted EBITDA margin expanded 160 basis points

  • Second quarter adjusted diluted earnings per share of $0.60 increased $0.16 versus prior year

ROCHESTER, N.Y., October 30, 2023--(BUSINESS WIRE)--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 second quarter ended September 23, 2023 (the "second 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 strong second quarter results as Service gross margin expanded 140 basis points driven by double-digit organic Service growth of 10% and increased productivity throughout our network of labs. Service segment revenue grew 17% as demand in our highly regulated end markets, including life sciences, remained strong and our recent acquisitions continued to perform at a high level. Consolidated revenue was up 11% with gross margin expansion of 230 basis points year over year driven by our differentiated value proposition and execution of our automation and process improvement initiatives," commented Lee D. Rudow, President and CEO. "Adjusted EBITDA growth of 24% for the second quarter reflects our ability to leverage organic Service revenue growth and the successful integration of acquired companies. The Transcat Team continues to deliver strong revenue growth and sustainable gross margin expansion."

"We recently completed a public offering of our common stock, which was used to repay our credit facility, for working capital, and for other general corporate purposes. The successful offering displayed robust demand for Transcat stock among institutional investors due to our consistent long-term track record of profitable revenue growth," stated Mr. Rudow.

Mr. Rudow added, "Transcat’s differentiated and proven formula for success with acquisitions centers around our disciplined and selective approach to identify, acquire, and integrate strong companies that will be accretive over the long term, the Transcat way. We completed two acquisitions in the second quarter, including SteriQual, a provider of expert consulting services to the life sciences industry that specializes in commissioning, qualification, and validation ("CQV"), as well as Axiom Test Equipment, the largest acquisition in the history of Transcat. Axiom is a well-established, fast-growing player in the test equipment rental market that will expand our existing Rental offering. We believe Axiom will create opportunities for accelerated growth while improving the margin profile of our Distribution segment as the rental business continues to grow faster than the traditional distribution business. The two rental businesses are complementary to one another in that there is minimal overlap in the rental asset portfolios, as well as little overlap in customers. We believe this presents a compelling cross sell opportunity to quickly leverage in the rental business, but more importantly provides additional opportunity to drive organic calibration service growth into this newly acquired customer base."

Second Quarter Fiscal 2024 Review
(Results are compared with the second quarter of the fiscal year ended March 25, 2023 ("fiscal 2023"))

($ in thousands)

Change

FY24 Q2

FY23 Q2

$'s

%

Service Revenue

$

41,431

$

35,267

$

6,164

17.5

%

Distribution Sales

21,373

21,172

201

0.9

%

Revenue

$

62,804

$

56,439

$

6,365

11.3

%

Gross Profit

$

20,125

$

16,767

$

3,358

20.0

%

Gross Margin

32.0

%

29.7

%

Operating Income

$

1,643

$

3,626

$

(1,983

)

(54.7

)%

Operating Margin

2.6

%

6.4

%

Net Income

$

460

$

2,357

$

(1,897

)

(80.5

)%

Net Margin

0.7

%

4.2

%

Adjusted EBITDA*

$

9,330

$

7,531

$

1,799

23.9

%

Adjusted EBITDA* Margin

14.9

%

13.3

%

Diluted EPS

$

0.06

$

0.31

$

(0.25

)

(80.6

)%

Adjusted Diluted EPS*

$

0.60

$

0.44

$

0.16

36.4

%

*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 $62.8 million, an increase of 11.3%. Consolidated gross profit was $20.1 million, an increase of $3.4 million, or 20.0%, while gross margin expanded 230 basis points due to improvements in both operating segments. Operating expenses were $18.5 million, an increase of $5.3 million, or 40.6%, driven by incremental expenses from acquired businesses (including stock-based compensation expense), higher incentive-based employee costs due to higher sales and a non-cash charge related to the amended NEXA Earn-Out agreement. Adjusted EBITDA was $9.3 million which represented an increase of $1.8 million or 23.9%. Net income per diluted share was $0.06 compared to $0.31 last year, which includes the non-cash charge of $2.8 million for the amended NEXA Earn-Out agreement. Adjusted diluted earnings per share was $0.60 versus $0.44 last year impacted by the stock-based tax benefit move from Q1 of last year to Q2 this year and higher interest expense.

Service segment delivers strong second quarter results

Represents the accredited calibration, repair, inspection and laboratory instrument services business (66.0% of total revenue for the second quarter of fiscal 2024).

($ in thousand)

Change

FY24 Q2

FY23 Q2

$'s

%

Service Segment Revenue

$

41,431

$

35,267

$

6,164

17.5

%

Gross Profit

$

14,084

$

11,487

$

2,597

22.6

%

Gross Margin

34.0

%

32.6

%

Operating Income

$

742

$

2,507

$

(1,765

)

(70.4

)%

Operating Margin

1.8

%

7.1

%

Adjusted EBITDA*

$

6,798

$

5,549

$

1,249

22.5

%

Adjusted EBITDA* Margin

16.4

%

15.7

%

*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 $41.4 million, an increase of $6.2 million or 17.5%, and included $2.6 million of incremental revenue from acquisitions. Organic revenue growth was 10.0% and was driven by strong end-market demand and continued market share gains. The segment gross margin increased 140 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 (34.0% of total revenue for the first quarter of fiscal 2024).

($ in thousands)

Change

FY24 Q2

FY23 Q2

$'s

%

Distribution Segment Sales

$

21,373

$

21,172

$

201

0.9

%

Gross Profit

$

6,041

$

5,280

$

761

14.4

%

Gross Margin

28.3

%

24.9

%

Operating Income

$

901

$

1,119

$

(218

)

(19.5

)%

Operating Margin

4.2

%

5.3

%

Adjusted EBITDA*

$

2,532

$

1,982

$

550

27.7

%

Adjusted EBITDA* Margin

11.8

%

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 $21.4 million, relatively flat compared to the prior year. Distribution segment gross margin was 28.3%, an increase of 340 basis points due to a favorable sales mix driven by strength in the Rentals business.

Six Month Review (Results are compared with the first six months of fiscal 2023)

Total revenue was $123.4 million, an increase of $12.3 million or 11.1%. Consolidated gross profit was up $6.0 million, or 18.4%, and gross margin expanded to 31.5% or 200 basis points. Consolidated operating expenses increased $7.0 million, or 27.3%, 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 $6.3 million compared with $7.2 million in last fiscal year’s period.

Adjusted EBITDA was $17.8 million which represented an increase of $3.0 million or 20.0%. Net income per diluted share decreased to $0.43 from $0.71 and adjusted diluted earnings per share was $1.13 versus $0.98 last year. The effective tax rate was 25.3% compared to 16.9% in the prior year, due to the discrete tax treatment of the non-cash charge related to the amended NEXA Earn-Out agreement. The increase in the tax rate had an unfavorable impact of $0.01 per diluted earnings per share and adjusted diluted earnings per share when compared to the prior year.

Balance Sheet and Cash Flow Overview

On September 23, 2023, the Company had $32.0 million available for borrowing under its secured revolving credit facility. Total debt of $53.3 million was up $4.2 million from fiscal 2023 year-end due to cash used for acquisitions, partially offset by increased cash flow from operations. The Company’s leverage ratio, as defined in the credit agreement, was 1.37 on September 23, 2023, compared with 1.60 on March 25, 2023. Subsequent to the end of the quarter, the revolving credit facility was paid off using funds from the secondary offering. As previously disclosed, the NEXA Earn-Out agreement was amended to recognize the expanded scope of the NEXA portfolio, which includes the acquisition of SteriQual. The amendment required a non-cash charge of $2.8 million in the fiscal second quarter.

Outlook

Mr. Rudow added, "We have demonstrated our ability to drive growth through various economic cycles over the past decade and a half, and we are confident that will continue. We expect organic Service revenue growth in the high-single digit to low double-digit range and gross margin expansion for the fiscal 2024 year. We believe our unique value proposition drives a sustainable competitive advantage in the highly regulated markets that we serve, particularly the Life Science, Aerospace, and Defense markets. Additionally, we expect our successful and unique acquisition strategy will continue to drive synergistic growth opportunities and expand our addressable markets."

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. The tax rate is higher than in recent years and is an increase versus the estimate provided last quarter due to the amended NEXA Earn-Out agreement. The NEXA Earn-Out charge is non-deductible for tax purposes and impacts the full year rate for fiscal year 2024, however this does not impact the actual amount of taxes paid.

Webcast and Conference Call

Transcat will host a conference call and webcast on Tuesday, October 31, 2023 at 11:00 a.m. ET. Management will review the financial and operating results for the second 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 7, 2023. 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)

Second Quarter Ended

Six Months Ended

September 23,

September 24,

September 23,

September 24,

2023

2022

2023

2022

Service Revenue

$

41,431

$

35,267

$

81,284

$

69,143

Distribution Sales

21,373

21,172

42,118

41,957

Total Revenue

62,804

56,439

123,402

111,100

Cost of Service Revenue

27,347

23,780

54,229

46,821

Cost of Distribution Sales

15,332

15,892

30,338

31,474

Total Cost of Revenue

42,679

39,672

84,567

78,295

Gross Profit

20,125

16,767

38,835

32,805

Selling, Marketing and Warehouse Expenses

6,856

5,900

13,325

11,720

General and Administrative Expenses

11,626

7,241

19,227

13,855

Total Operating Expenses

18,482

13,141

32,552

25,575

Operating Income

1,643

3,626

6,283

7,230

Interest and Other Expense, net

841

537

1,719

693

Income Before Income Taxes

802

3,089

4,564

6,537

Provision for Income Taxes

342

732

1,155

1,108

...

Net Income

$

460

$

2,357

$

3,409

$

5,429

Basic Earnings Per Share

$

0.06

$

0.31

$

0.44

$

0.72

Average Shares Outstanding

7,819

7,550

7,732

7,542

Diluted Earnings Per Share

$

0.06

$

0.31

$

0.43

$

0.71

Average Shares Outstanding

7,948

7,646

7,840

7,635

TRANSCAT, INC.

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share and Per Share Amounts)

(Unaudited)

(Audited)

September 23,

March 25,

2023

2023

ASSETS

Current Assets:

Cash

$

1,246

$

1,531

Accounts Receivable, less allowance for credit losses of $614 and $457 as of September 23, 2023 and March 25, 2023, respectively

44,382

44,698

Other Receivables

335

506

Inventory, net

15,685

16,929

Prepaid Expenses and Other Current Assets

3,525

3,935

Total Current Assets

65,173

67,599

Property and Equipment, net

35,648

29,064

Goodwill

106,366

69,360

Intangible Assets, net

23,156

13,799

Right To Use Assets, net

16,784

14,876

Other Assets

1,083

1,051

Total Assets

$

248,210

$

195,749

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

Accounts Payable

$

12,523

$

15,869

Accrued Compensation and Other Current Liabilities

13,295

10,201

Current Portion of Long-Term Debt

2,293

2,248

Total Current Liabilities

28,111

28,318

Long-Term Debt

51,000

46,869

Deferred Tax Liabilities, net

10,836

6,538

Lease Liabilities

14,534

12,960

Other Liabilities

5,477

1,434

Total Liabilities

109,958

96,119

Shareholders' Equity:

Common Stock, par value $0.50 per share, 30,000,000 shares authorized; 7,978,401 and 7,562,604 shares issued and outstanding as of September 23, 2023 and March 25, 2023, respectively

3,989

3,781

Capital in Excess of Par Value

64,310

27,886

Accumulated Other Comprehensive Loss

(1,064

)

(1,200

)

Retained Earnings

71,017

69,163

Total Shareholders' Equity

138,252

99,630

Total Liabilities and Shareholders' Equity

$

248,210

$

195,749

TRANSCAT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

Six Months Ended

September 23,

September 24,

2023

2022

Cash Flows from Operating Activities:

Net Income

$

3,409

$

5,429

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

Net Loss on Disposal of Property and Equipment

11

34

Deferred Income Taxes

23

(54

)

Depreciation and Amortization

6,078

5,419

Provision for Accounts Receivable and Inventory Reserves

347

94

Stock-Based Compensation Expense

2,171

1,942

Changes in Assets and Liabilities, net of acquisitions:

Accounts Receivable and Other Receivables

2,384

(1,238

)

Inventory

3,376

(3,724

)

Prepaid Expenses and Other Current Assets

465

881

Accounts Payable

(3,969

)

(586

)

Accrued Compensation and Other Current Liabilities

1,677

(2,962

)

Net Cash Provided by Operating Activities

15,972

5,235

Cash Flows from Investing Activities:

Purchases of Property and Equipment

(5,444

)

(4,772

)

Proceeds from Sale of Property and Equipment

-

10

Business Acquisitions, net of cash acquired

(12,882

)

(4,040

)

Net Cash Used in Investing Activities

(18,326

)

(8,802

)

Cash Flows from Financing Activities:

Proceeds from Revolving Credit Facility, net

5,288

3,387

Repayments of Term Loan

(1,112

)

(1,026

)

Issuance of Common Stock

384

364

Repurchase of Common Stock

(2,247

)

(437

)

Net Cash Provided by Financing Activities

2,313

2,288

Effect of Exchange Rate Changes on Cash

(244

)

792

Net Decrease in Cash

(285

)

(487

)

Cash at Beginning of Period

1,531

1,396

Cash at End of Period

$

1,246

$

909

TRANSCAT, INC.

Adjusted EBITDA Reconciliation Table

(In thousands)

(Unaudited)

Fiscal 2024

Q1

Q2

Q3

Q4

YTD

Net Income

$

2,949

$

460

$

3,409

+ Interest Expense

814

890

1,704

+ Other Expense / (Income)

64

(49

)

15

+ Tax Provision

813

342

1,155

Operating Income

$

4,640

$

1,643

$

-

$

-

$

6,283

+ Depreciation & Amortization

2,790

3,269

6,059

+ Transaction Expense

185

328

513

+ Acquisition Earn-Out Adjustment

-

2,800

2,800

+ Other (Expense) / Income

(64

)

49

(15

)

+ Noncash Stock Compensation

930

1,241

2,171

Adjusted EBITDA

$

8,481

$

9,330

$

-

$

-

$

17,811

Segment Breakdown

Service Operating Income

$

3,192

$

742

$

3,934

+ Depreciation & Amortization

2,226

2,325

4,551

+ Transaction Expense

185

76

261

+ Acquisition Earn-Out Adjustment

-

2,800

2,800

+ Other (Expense) / Income

(47

)

29

(18

)

+ Noncash Stock Compensation

676

826

1,502

Service Adjusted EBITDA

$

6,232

$

6,798

$

-

$

-

$

13,030

Distribution Operating Income

$

1,448

$

901

$

2,349

+ Depreciation & Amortization

564

944

1,508

+ Transaction Expense

-

252

252

+ Other (Expense) / Income

(17

)

20

3

+ Noncash Stock Compensation

254

415

669

Distribution Adjusted EBITDA

$

2,249

$

2,532

$

-

$

-

$

4,781

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

$

3,409

+ Amortization of Intangible Assets

1,093

1,416

2,509

+ Acquisition Amortization of Backlog

-

19

19

+ Acquisition Deal Costs

367

602

969

+ Income Tax Effect at 25%

(365

)

(509

)

(874

)

+ Acquisition Earn-Out Adjustment

-

2,800

2,800

Adjusted Net Income

$

4,044

$

4,788

$

-

$

-

$

8,832

Average Diluted Shares Outstanding

7,762

7,948

7,840

Diluted Earnings Per Share

$

0.38

$

0.06

$

-

$

-

$

0.43

Adjusted Diluted Earnings Per Share

$

0.52

$

0.60

$

-

$

-

$

1.13

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
Q2

FY 2023
Q2

$'s

%

Service Revenue

$

41,431

$

35,267

$

6,164

17.5

%

Cost of Revenue

27,347

23,780

3,567

15.0

%

Gross Profit

$

14,084

$

11,487

$

2,597

22.6

%

Gross Margin

34.0

%

32.6

%

Selling, Marketing & Warehouse Expenses

$

4,143

$

3,791

$

352

9.3

%

General and Administrative Expenses

9,199

5,189

4,010

77.3

%

Operating Income

$

742

$

2,507

$

(1,765

)

(70.4

)%

% of Revenue

1.8

%

7.1

%

Change

DISTRIBUTION

FY 2024
Q2

FY 2023
Q2

$'s

%

Distribution Sales

$

21,373

$

21,172

$

201

0.9

%

Cost of Sales

15,332

15,892

(560

)

(3.5

)%

Gross Profit

$

6,041

$

5,280

$

761

14.4

%

Gross Margin

28.3

%

24.9

%

Selling, Marketing & Warehouse Expenses

$

2,713

$

2,109

$

604

28.6

%

General and Administrative Expenses

2,427

2,052

375

18.3

%

Operating Income

$

901

$

1,119

$

(218

)

(19.5

)%

% of Sales

4.2

%

5.3

%

Change

TOTAL

FY 2024
Q2

FY 2023
Q2

$'s

%

Total Revenue

$

62,804

$

56,439

$

6,365

11.3

%

Total Cost of Revenue

42,679

39,672

3,007

7.6

%

Gross Profit

$

20,125

$

16,767

$

3,358

20.0

%

Gross Margin

32.0

%

29.7

%

Selling, Marketing & Warehouse Expenses

$

6,856

$

5,900

$

956

16.2

%

General and Administrative Expenses

11,626

7,241

4,385

60.6

%

Operating Income

$

1,643

$

3,626

$

(1,983

)

(54.7

)%

% of Revenue

2.6

%

6.4

%

TRANSCAT, INC.

Additional Information - Business Segment Data

(Dollars in thousands)

(Unaudited)

Change

FY 2024

FY 2023

SERVICE

YTD

YTD

$'s

%

Service Revenue

$

81,284

$

69,143

$

12,141

17.6

%

Cost of Revenue

54,229

46,821

7,408

15.8

%

Gross Profit

$

27,055

$

22,322

$

4,733

21.2

%

Gross Margin

33.3

%

32.3

%

Selling, Marketing & Warehouse Expenses

$

8,250

$

7,374

$

876

11.9

%

General and Administrative Expenses

14,871

9,909

4,962

50.1

%

Operating Income

$

3,934

$

5,039

$

(1,105

)

(21.9

)%

% of Revenue

4.8

%

7.3

%

Change

FY 2024

FY 2023

DISTRIBUTION

YTD

YTD

$'s

%

Distribution Sales

$

42,118

$

41,957

$

161

0.4

%

Cost of Sales

30,338

31,474

(1,136

)

(3.6

)%

Gross Profit

$

11,780

$

10,483

$

1,297

12.4

%

Gross Margin

28.0

%

25.0

%

Selling, Marketing & Warehouse Expenses

$

5,075

$

4,346

$

729

16.8

%

General and Administrative Expenses

4,356

3,946

410

10.4

%

Operating Income

$

2,349

$

2,191

$

158

7.2

%

% of Sales

5.6

%

5.2

%

Change

FY 2024

FY 2023

TOTAL

YTD

YTD

$'s

%

Total Revenue

$

123,402

$

111,100

$

12,302

11.1

%

Total Cost of Revenue

84,567

78,295

6,272

8.0

%

Gross Profit

$

38,835

$

32,805

$

6,030

18.4

%

Gross Margin

31.5

%

29.5

%

Selling, Marketing & Warehouse Expenses

$

13,325

$

11,720

$

1,605

13.7

%

General and Administrative Expenses

19,227

13,855

5,372

38.8

%

Operating Income

$

6,283

$

7,230

$

(947

)

(13.1

)%

% of Revenue

5.1

%

6.5

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20231030956263/en/

Contacts

For more information contact:
Tom Barbato
Phone: (585) 505-6530
Email: Thomas.Barbato@transcat.com

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