Exhibit 99.1
 |
NEWS |
Transcat, Inc. 35 Vantage Point Drive • Rochester • NY • 14624 • Phone: (585) 352-7777
IMMEDIATE RELEASE
Transcat Reports Strong Second Quarter Results on
Double-Digit Organic Service Growth and Expanding Gross Margins
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Second quarter consolidated revenue up 11.3% with 230 basis points gross margin expansion
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Second quarter service revenue up 17.5%; service organic revenue growth of 10.0% |
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Second quarter service gross profit increased 22.6%; service gross margin expanded 140 basis points | |
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Second quarter consolidated adjusted EBITDA grew 23.9%; adjusted EBITDA margin expanded 160 basis points |
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Second quarter adjusted diluted earnings per share of $0.60 increased $0.16 versus prior year |
ROCHESTER, NY, October 30, 2023 – 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.
Transcat Reports Strong Second Quarter Results on Double-Digit Organic Service Growth and Expanding Gross Margins
October 30, 2023
Page 2 of 14
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 | % | ||||||||
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*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 $0.44 last year impacted by the stock-based tax benefit move from Q1 of last year to Q2 this year and higher interest expense.
Transcat Reports Strong Second Quarter Results on Double-Digit Organic Service Growth and Expanding Gross Margins
October 30, 2023
Page 3 of 14
Service segment delivers strong second quarter results
Represents the accredited calibration, repair, inspection and laboratory instrument services business (66.0% of total revenue for the second quarter of fiscal 2024).
($ 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 | % | ||||||||||||
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*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 |
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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 | % | ||||||||||||
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*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.
Transcat Reports Strong Second Quarter Results on Double-Digit Organic Service Growth and Expanding Gross Margins
October 30, 2023
Page 4 of 14
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.
Transcat Reports Strong Second Quarter Results on Double-Digit Organic Service Growth and Expanding Gross Margins
October 30, 2023
Page 5 of 14
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.
Transcat Reports Strong Second Quarter Results on Double-Digit Organic Service Growth and Expanding Gross Margins
October 30, 2023
Page 6 of 14
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.
For more information contact:
Tom Barbato
Phone: (585) 505-6530
Email: Thomas.Barbato@transcat.com
FINANCIAL TABLES FOLLOW.
Transcat Reports Strong Second Quarter Results on Double-Digit Organic Service Growth and Expanding Gross Margins
October 30, 2023
Page 7 of 14
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 |
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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 Reports Strong Second Quarter Results on Double-Digit Organic Service Growth and Expanding Gross Margins
October 30, 2023
Page 8 of 14
TRANSCAT, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Amounts)
(Unaudited) |
(Audited) |
|||||||
September 23, |
March 25, |
|||||||
2023 |
2023 |
|||||||
ASSETS |
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Current Assets: |
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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 Reports Strong Second Quarter Results on Double-Digit Organic Service Growth and Expanding Gross Margins
October 30, 2023
Page 9 of 14
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 Reports Strong Second Quarter Results on Double-Digit Organic Service Growth and Expanding Gross Margins
October 30, 2023
Page 10 of 14
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 Reports Strong Second Quarter Results on Double-Digit Organic Service Growth and Expanding Gross Margins
October 30, 2023
Page 11 of 14
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 Reports Strong Second Quarter Results on Double-Digit Organic Service Growth and Expanding Gross Margins
October 30, 2023
Page 12 of 14
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 Reports Strong Second Quarter Results on Double-Digit Organic Service Growth and Expanding Gross Margins
October 30, 2023
Page 13 of 14
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 Reports Strong Second Quarter Results on Double-Digit Organic Service Growth and Expanding Gross Margins
October 30, 2023
Page 14 of 14
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 | % | ||||||||||||
