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Transcat Reports Record Revenue and Gross Margins for Fourth Quarter and Full Year 2023

  • Fourth Quarter Service revenue up 14.7%, Service organic revenue growth of 10.0% 



  • Fourth Quarter Service gross profit increased 17.9%, Service gross margin expanded 90 basis points



  •  Fourth Quarter consolidated adjusted EBITDA grew 17.6% with margins expanding 80 basis points

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 fourth quarter and fiscal year ended March 25, 2023 (“fiscal 2023”). Results include the previously reported acquisitions of Upstate Metrology, Inc. ("Upstate Metrology") effective April 29, 2021, Cal OpEx Limited (d/b/a NEXA Enterprise Asset Management) (“NEXA”) effective August 31, 2021, Tangent Labs, LLC (“Tangent”) effective December 31, 2021, Charlton Jeffmont Inc., Raitz Inc. and Toolroom Calibration Inc. (d/b/a Alliance Calibration) (“Alliance”) effective May 31, 2022, e2b Calibration ("e2b"), effective September 27, 2022, and Galium Limited (d/b/a Complete Calibrations) ("Complete Calibrations"), effective September 28, 2022.

“Despite macroeconomic headwinds and uncertainty, Transcat delivered strong performance across our entire business portfolio again in Fiscal 2023. The year was highlighted by record revenue and gross margins in the Service segment as well as on a consolidated basis. We are especially pleased with our Service revenue growth of 19%, which included 10% organic Service growth” commented Lee D. Rudow, President and CEO. “Service margins benefited from our differentiated value proposition, which continued to resonate throughout our expanded addressable markets. The expansion of NEXA's suite of professional services has been well received throughout the U.S. and Ireland and for the first time, we opportunistically performed work in various parts of Europe including the Netherlands, Switzerland, and Germany. Adjusted EBITDA growth of 16% for the fiscal year is a testament to the successful execution of our automation and process improvement productivity initiatives.”

Mr. Rudow added, “In the fiscal year we completed three acquisitions, Alliance Calibration in Cincinnati, e2B Calibration in Cleveland, and Complete Calibration in Ireland that have expanded our addressable markets, widened the breadth of our service offerings, and allowed us to leverage our existing infrastructure. Our acquisition strategy continues to be a differentiator as a result of the effectiveness of our integration processes, which has resulted in all of these recent long-term strategic investments meeting or exceeding our expectations to date.”

“On a final note, our rental business once again delivered strong performance versus prior year. Since being launched seven years ago, the high margin Rental business has experienced tremendous growth that we expect to continue.”

Fourth Quarter Fiscal 2023 Review

(Results are compared with the fourth quarter of the fiscal year ended March 26, 2022 ("fiscal 2022"))

($ in thousands)

 

 

 

 

 

 

 

 

 

Change

 

 

 

FY23 Q4

 

 

FY22 Q4

 

 

$'s

 

 

%

 

Service Revenue

 

$

39,763

 

 

$

34,667

 

 

$

5,096

 

 

 

14.7

%

Distribution Sales

 

 

22,304

 

 

 

21,213

 

 

 

1,091

 

 

 

5.1

%

Revenue

 

$

62,067

 

 

$

55,880

 

 

$

6,187

 

 

 

11.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

$

19,150

 

 

$

16,672

 

 

$

2,478

 

 

 

14.9

%

Gross Margin

 

 

30.9

%

 

 

29.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

$

5,855

 

 

$

4,515

 

 

$

1,340

 

 

 

29.7

%

Operating Margin

 

 

9.4

%

 

 

8.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

3,658

 

 

$

3,048

 

 

$

610

 

 

 

20.0

%

Net Margin

 

 

5.9

%

 

 

5.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA*

 

$

8,998

 

 

$

7,652

 

 

$

1,346

 

 

 

17.6

%

Adjusted EBITDA* Margin

 

 

14.5

%

 

 

13.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

 

$

0.48

 

 

$

0.40

 

 

$

0.08

 

 

 

20.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Diluted EPS*

 

$

0.60

 

 

$

0.54

 

 

$

0.06

 

 

 

11.1

%

*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 $62.1 million, an increase of 11.1%. Consolidated gross profit was $19.2 million, an increase of $2.5 million, or 14.9%, while gross margin expanded 110 basis points due to margin improvements in both operating segments. Operating expenses were $13.3 million, an increase of $1.1 million, or 9.4%, driven by incremental expenses from acquired businesses (including stock-based compensation expense), increased intangibles amortization expense, and higher incentive-based employee costs due to higher sales. Adjusted EBITDA was $9.0 million which represented an increase of $1.3 million or 17.6%. Net income per diluted share of $0.48 was up from $0.40 and adjusted diluted earnings per share increased to $0.60 versus $0.54 last year.

Service segment delivers record fourth quarter results

Represents the accredited calibration, repair, inspection and laboratory instrument services business (64.1% of total revenue for the fourth quarter of fiscal 2023).

($ in thousand)

 

 

 

 

 

 

 

 

 

Change

 

 

 

FY23 Q4

 

 

FY22 Q4

 

 

$'s

 

 

%

 

Service Segment Revenue

 

$

39,763

 

 

$

34,667

 

 

$

5,096

 

 

 

14.7

%

Gross Profit

 

$

13,523

 

 

$

11,474

 

 

$

2,049

 

 

 

17.9

%

Gross Margin

 

 

34.0

%

 

 

33.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

$

4,547

 

 

$

3,532

 

 

$

1,015

 

 

 

28.7

%

Operating Margin

 

 

11.4

%

 

 

10.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA*

 

$

7,039

 

 

$

6,028

 

 

$

1,011

 

 

 

16.8

%

Adjusted EBITDA* Margin

 

 

17.7

%

 

 

17.4

%

 

 

 

 

 

 

 

 

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

Service segment revenue was $39.8 million, an increase of $5.1 million or 14.7% and included $1.6 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 90 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 (35.9% of total revenue for the fourth quarter of fiscal 2023).

($ in thousands)

 

 

 

 

 

 

 

 

 

Change

 

 

 

FY23 Q4

 

 

FY22 Q4

 

 

$'s

 

 

%

 

Distribution Segment Sales

 

$

22,304

 

 

$

21,213

 

 

$

1,091

 

 

 

5.1

%

Gross Profit

 

$

5,627

 

 

$

5,198

 

 

$

429

 

 

 

8.3

%

Gross Margin

 

 

25.2

%

 

 

24.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

$

1,308

 

 

$

983

 

 

$

325

 

 

 

33.1

%

Operating Margin

 

 

5.9

%

 

 

4.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA*

 

$

1,959

 

 

$

1,624

 

 

$

335

 

 

 

20.6

%

Adjusted EBITDA* Margin

 

 

8.8

%

 

 

7.7

%

 

 

 

 

 

 

 

 

*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.

Distribution sales were $22.3 million, an increase of 5.1% on improved end market demand and strength in our Rentals business. Distribution segment gross margin was 25.2%, an increase of 70 basis points due to a favorable sales mix driven by strength in the Rentals business.

Full-Year Fiscal 2023 Review

(Results are compared with full-year fiscal 2022)

($ in thousands)

 

 

 

 

 

 

 

 

 

Change

 

 

 

FY 2023

 

 

FY 2022

 

 

$'s

 

 

%

 

Service Revenue

 

$

144,883

 

 

$

122,005

 

 

$

22,878

 

 

 

18.8

%

Distribution Sales

 

 

85,686

 

 

 

82,954

 

 

 

2,732

 

 

 

3.3

%

Revenue

 

$

230,569

 

 

$

204,959

 

 

$

25,610

 

 

 

12.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

$

68,355

 

 

$

58,439

 

 

$

9,916

 

 

 

17.0

%

Gross Margin

 

 

29.6

%

 

 

28.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

$

16,248

 

 

$

14,143

 

 

$

2,105

 

 

 

14.9

%

Operating Margin

 

 

7.0

%

 

 

6.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

10,688

 

 

$

11,380

 

 

$

(692

)

 

 

(6.1

)%

Net Margin

 

 

4.6

%

 

 

5.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA*

 

$

30,421

 

 

$

26,307

 

 

$

4,114

 

 

 

15.6

%

Adjusted EBITDA* Margin

 

 

13.2

%

 

 

12.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

 

$

1.40

 

 

$

1.50

 

 

$

(0.10

)

 

 

(6.7

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Diluted EPS*

 

$

1.93

 

 

$

2.03

 

 

$

(0.10

)

 

 

(4.9

)%

*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.

Total revenue was $230.6 million, an increase of $25.6 million or 12.5%. Consolidated gross profit was $68.4 million, up $9.9 million, or 17.0%, and gross margin expanded to 29.6% or 110 basis points. Consolidated operating expenses were $52.1 million, an increase of $7.8 million, or 17.6%, driven by incremental expenses from acquired businesses (including stock-based compensation expense), increased intangibles amortization expense, and investments in technology and our employee base to support future growth. As a result, consolidated operating income was $16.2 million compared with $14.1 million in last fiscal year’s period, an increase of 14.9%.

Adjusted EBITDA was $30.4 million which represented an increase of $4.1 million or 15.6%. Net income per diluted share decreased to $1.40 from $1.50 and adjusted diluted earnings per share was $1.93 versus $2.03 last year. The effective tax rate was 20.8% compared to 13.7% in the prior year, which benefited significantly from share-based payments and stock option activity. The increase in the tax rate had an unfavorable impact of $0.12 per diluted earnings per share and adjusted diluted earnings per share when compared to the prior year.

Balance Sheet and Cash Flow Overview

At March 25, 2023, the Company had $37.3 million available for borrowing under its secured revolving credit facility. Total debt of $49.1 million was up $0.7 million from fiscal 2022 year-end due to the acquisitions of Alliance, Complete Calibrations, e2b and Elite during the current fiscal year. The Company’s leverage ratio, as defined in the credit agreement, was 1.60 at March 25, 2023, compared with 1.74 at March 26, 2022.

Outlook

Mr. Rudow 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 10 plus years of profitable growth. As we think ahead into fiscal 2024, despite macroeconomic uncertainty that looms over the business world, we expect another year of growth and margin expansion across our Service channels. Our business continues to benefit from a predominately life science-oriented market, driven by high levels of regulation and recurring revenue streams, along with a growing Rentals business that tends to perform well throughout various economic cycles including more challenged economic environments. In the year ahead, we expect organic Service revenue growth in the high single-digits and gross margin improvement to continue. We are investing in our high-growth NEXA business as well as new client-based labs, which will support additional organic revenue growth and margin expansion in the second half of the year but will temporarily weigh on year-over-year gross margin expansion in the first quarter of FY24.

Accretive acquisitions that strengthen our fundamental value proposition will be a key component of our go-forward strategy. Our robust and diverse acquisition pipeline enables opportunities for Transcat to expand addressable markets and increase our capabilities like we did with NEXA and the pipettes business.

Transcat has generated consistent margin improvement over the past several years and we believe the improvement will continue. Automation of our calibration processes and overall process improvement will be key enablers to future margin expansion. We anticipate demonstrating more selling, general and administrative expense leverage in the second half of fiscal 2024. We believe the Service segment has substantial runway ahead for growth, both organically and through acquisition. 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 21% and 23% 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. Although the tax rate is consistent with recent years, there will be a difference in calendarization of the tax benefit from vesting of share-based payments in fiscal 2024. These benefits are normally realized in the fiscal first quarter, but in fiscal 2024, we will see the benefit in quarter two, due to a timing difference of when the awards were made. In the first quarter of fiscal 2023, this benefit positively impacted the tax rate by approximately 13% and we would expect a similar impact in second quarter of fiscal 2024.

Webcast and Conference Call

Transcat will host a conference call and webcast on Tuesday, May 23, 2023 at 11:00 a.m. ET. Management will review the financial and operating results for the fourth quarter and full fiscal year, 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, May 30, 2023. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13738813, 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)

 

 

 

Fourth Quarter Ended

 

 

Fiscal Year Ended

 

 

 

March 25,

 

 

March 26,

 

 

March 25,

 

 

March 26,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service Revenue

 

$

39,763

 

 

$

34,667

 

 

$

144,883

 

 

$

122,005

 

Distribution Sales

 

 

22,304

 

 

 

21,213

 

 

 

85,686

 

 

 

82,954

 

Total Revenue

 

 

62,067

 

 

 

55,880

 

 

 

230,569

 

 

 

204,959

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Service Revenue

 

 

26,240

 

 

 

23,193

 

 

 

98,245

 

 

 

83,084

 

Cost of Distribution Sales

 

 

16,677

 

 

 

16,015

 

 

 

63,969

 

 

 

63,436

 

Total Cost of Revenue

 

 

42,917

 

 

 

39,208

 

 

 

162,214

 

 

 

146,520

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

19,150

 

 

 

16,672

 

 

 

68,355

 

 

 

58,439

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, Marketing and Warehouse Expenses

 

 

6,446

 

 

 

5,627

 

 

 

24,761

 

 

 

20,649

 

General and Administrative Expenses

 

 

6,849

 

 

 

6,530

 

 

 

27,346

 

 

 

23,647

 

Total Operating Expenses

 

 

13,295

 

 

 

12,157

 

 

 

52,107

 

 

 

44,296

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

5,855

 

 

 

4,515

 

 

 

16,248

 

 

 

14,143

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and Other Expense, net

 

 

1,029

 

 

 

372

 

 

 

2,761

 

 

 

953

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Before Income Taxes

 

 

4,826

 

 

 

4,143

 

 

 

13,487

 

 

 

13,190

 

Provision for Income Taxes

 

 

1,168

 

 

 

1,095

 

 

 

2,799

 

 

 

1,810

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

3,658

 

 

$

3,048

 

 

$

10,688

 

 

$

11,380

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Share

 

$

0.48

 

 

$

0.41

 

 

$

1.42

 

 

$

1.52

 

Average Shares Outstanding

 

 

7,562

 

 

 

7,523

 

 

 

7,551

 

 

 

7,496

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

$

0.48

 

 

$

0.40

 

 

$

1.40

 

 

$

1.50

 

Average Shares Outstanding

 

 

7,688

 

 

 

7,636

 

 

 

7,645

 

 

 

7,589

 

 

TRANSCAT, INC.

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share and Per Share Amounts)

 

 

 

(Unaudited)

 

 

(Audited)

 

 

 

March 25,

 

 

March 26,

 

 

 

2023

 

 

2022

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash

 

$

1,531

 

 

$

1,396

 

Accounts Receivable, less allowance for doubtful accounts of $457 and $460 as of March 25, 2023 and March 26, 2022, respectively

 

 

44,698

 

 

 

39,737

 

Other Receivables

 

 

506

 

 

 

558

 

Inventory, net

 

 

16,929

 

 

 

12,712

 

Prepaid Expenses and Other Current Assets

 

 

3,935

 

 

 

5,301

 

Total Current Assets

 

 

67,599

 

 

 

59,704

 

Property and Equipment, net

 

 

29,064

 

 

 

26,439

 

Goodwill

 

 

69,360

 

 

 

65,074

 

Intangible Assets, net

 

 

13,799

 

 

 

14,692

 

Right To Use Assets, net

 

 

14,876

 

 

 

11,026

 

Other Assets

 

 

1,051

 

 

 

827

 

Total Assets

 

$

195,749

 

 

$

177,762

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts Payable

 

$

15,869

 

 

$

14,171

 

Accrued Compensation and Other Current Liabilities

 

 

10,201

 

 

 

11,378

 

Current Portion of Long-Term Debt

 

 

2,248

 

 

 

2,161

 

Total Current Liabilities

 

 

28,318

 

 

 

27,710

 

Long-Term Debt

 

 

46,869

 

 

 

46,291

 

Deferred Tax Liabilities, net

 

 

6,538

 

 

 

6,724

 

Lease Liabilities

 

 

12,960

 

 

 

9,194

 

Other Liabilities

 

 

1,434

 

 

 

1,667

 

Total Liabilities

 

 

96,119

 

 

 

91,586

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity:

 

 

 

 

 

 

 

 

Common Stock, par value $0.50 per share, 30,000,000 shares authorized; 7,562,604 and 7,529,078 shares issued and outstanding as of March 25, 2023 and March 26, 2022, respectively

 

 

3,781

 

 

 

3,765

 

Capital in Excess of Par Value

 

 

27,886

 

 

 

23,900

 

Accumulated Other Comprehensive Loss

 

 

(1,200

)

 

 

(233

)

Retained Earnings

 

 

69,163

 

 

 

58,744

 

Total Shareholders' Equity

 

 

99,630

 

 

 

86,176

 

Total Liabilities and Shareholders' Equity

 

$

195,749

 

 

$

177,762

 

 

TRANSCAT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

 

 

 

(Unaudited)

 

 

 

Fiscal Year Ended

 

 

 

March 25,

 

 

March 26,

 

 

 

2023

 

 

2022

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

Net Income

 

$

10,688

 

 

$

11,380

 

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

 

 

 

 

 

 

 

 

Net Loss on Disposal of Property and Equipment

 

 

88

 

 

 

88

 

Deferred Income Taxes

 

 

(186

)

 

 

559

 

Depreciation and Amortization

 

 

10,955

 

 

 

9,567

 

Provision for Accounts Receivable and Inventory Reserves

 

 

74

 

 

 

34

 

Stock-Based Compensation Expense

 

 

3,377

 

 

 

2,329

 

Changes in Assets and Liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

Accounts Receivable and Other Receivables

 

 

(5,226

)

 

 

(3,392

)

Inventory

 

 

(3,377

)

 

 

(122

)

Prepaid Expenses and Other Current Assets

 

 

1,119

 

 

 

(2,960

)

Accounts Payable

 

 

1,600

 

 

 

1,901

 

Accrued Compensation and Other Current Liabilities

 

 

(2,161

)

 

 

(1,113

)

Income Taxes Payable

 

 

-

 

 

 

(653

)

Net Cash Provided by Operating Activities

 

 

16,951

 

 

 

17,618

 

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

Purchases of Property and Equipment

 

 

(9,414

)

 

 

(10,152

)

Proceeds from Sale of Property and Equipment

 

 

10

 

 

 

109

 

Business Acquisitions, net of cash acquired

 

 

(9,109

)

 

 

(29,808

)

Net Cash Used in Investing Activities

 

 

(18,513

)

 

 

(39,851

)

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from Revolving Credit Facility, net

 

 

2,786

 

 

 

31,005

 

Repayments of Term Loan

 

 

(2,121

)

 

 

(2,114

)

Issuance of Common Stock

 

 

658

 

 

 

1,486

 

Repurchase of Common Stock

 

 

(447

)

 

 

(6,683

)

Net Cash Provided by Financing Activities

 

 

876

 

 

 

23,694

 

 

 

 

 

 

 

 

 

 

Effect of Exchange Rate Changes on Cash

 

 

821

 

 

 

(625

)

 

 

 

 

 

 

 

 

 

Net Increase in Cash

 

 

135

 

 

 

836

 

Cash at Beginning of Period

 

 

1,396

 

 

 

560

 

Cash at End of Period

 

$

1,531

 

 

$

1,396

 

 

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 EBITDA Reconciliation Table

(In thousands)

(Unaudited)

 

 

 

Fiscal 2022

 

 

 

Q1

 

 

Q2

 

 

Q3

 

 

Q4

 

 

YTD

 

Net Income

 

$

3,688

 

 

$

3,015

 

 

$

1,629

 

 

$

3,048

 

 

$

11,380

 

+ Interest Expense

 

 

189

 

 

 

169

 

 

 

194

 

 

 

258

 

 

 

810

 

+ Other Expense / (Income)

 

 

6

 

 

 

81

 

 

 

(58

)

 

 

114

 

 

 

143

 

+ Tax Provision

 

 

(194

)

 

 

313

 

 

 

596

 

 

 

1,095

 

 

 

1,810

 

Operating Income

 

$

3,689

 

 

$

3,578

 

 

$

2,361

 

 

$

4,515

 

 

$

14,143

 

+ Depreciation & Amortization

 

 

1,990

 

 

 

2,141

 

 

 

2,368

 

 

 

2,578

 

 

 

9,077

 

+ Transaction Expense

 

 

-

 

 

 

821

 

 

 

55

 

 

 

26

 

 

 

902

 

+ Other (Expense) / Income

 

 

(6

)

 

 

(81

)

 

 

58

 

 

 

(114

)

 

 

(143

)

+ Noncash Stock Compensation

 

 

437

 

 

 

620

 

 

 

624

 

 

 

647

 

 

 

2,328

 

Adjusted EBITDA

 

$

6,110

 

 

$

7,079

 

 

$

5,466

 

 

$

7,652

 

 

$

26,307

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Breakdown

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service Operating Income

 

$

2,974

 

 

$

2,647

 

 

$

1,661

 

 

$

3,532

 

 

$

10,814

 

+ Depreciation & Amortization

 

 

1,488

 

 

 

1,634

 

 

 

1,861

 

 

 

2,070

 

 

 

7,053

 

+ Transaction Expense

 

 

-

 

 

 

821

 

 

 

55

 

 

 

26

 

 

 

902

 

+ Other (Expense) / Income

 

 

(2

)

 

 

(56

)

 

 

36

 

 

 

(82

)

 

 

(104

)

+ Noncash Stock Compensation

 

 

261

 

 

 

414

 

 

 

475

 

 

 

482

 

 

 

1,632

 

Service Adjusted EBITDA

 

$

4,721

 

 

$

5,460

 

 

$

4,088

 

 

$

6,028

 

 

$

20,297

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution Operating Income

 

$

715

 

 

$

931

 

 

$

700

 

 

$

983

 

 

$

3,329

 

+ Depreciation & Amortization

 

 

502

 

 

 

507

 

 

 

507

 

 

 

508

 

 

 

2,024

 

+ Other (Expense) / Income

 

 

(4

)

 

 

(25

)

 

 

22

 

 

 

(32

)

 

 

(39

)

+ Noncash Stock Compensation

 

 

176

 

 

 

206

 

 

 

149

 

 

 

165

 

 

 

696

 

Distribution Adjusted EBITDA

 

$

1,389

 

 

$

1,619

 

 

$

1,378

 

 

$

1,624

 

 

$

6,010

 

 

TRANSCAT, INC.

Adjusted Diluted EPS Reconciliation Table

(In Thousands, Except Per Share Amounts)

(Unaudited)

 

 

 

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 Amortization of Backlog

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

+ 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal 2022

 

 

 

Q1

 

 

Q2

 

 

Q3

 

 

Q4

 

 

YTD

 

Net Income

 

$

3,688

 

 

$

3,015

 

 

$

1,629

 

 

$

3,048

 

 

$

11,380

 

+ Amortization of Intangible Assets

 

 

620

 

 

 

729

 

 

 

947

 

 

 

1,098

 

 

 

3,394

 

+ Acquisition Amortization of Backlog

 

 

-

 

 

 

100

 

 

 

300

 

 

 

90

 

 

 

490

 

+ Acquisition Deal Costs

 

 

-

 

 

 

900

 

 

 

293

 

 

 

265

 

 

 

1,458

 

+ Income Tax Effect at 25%

 

 

(155

)

 

 

(432

)

 

 

(385

)

 

 

(363

)

 

 

(1,335

)

Adjusted Net Income

 

$

4,153

 

 

$

4,312

 

 

$

2,784

 

 

$

4,138

 

 

$

15,387

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Diluted Shares Outstanding

 

 

7,593

 

 

 

7,595

 

 

 

7,653

 

 

 

7,636

 

 

 

7,589

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

$

0.49

 

 

$

0.40

 

 

$

0.21

 

 

$

0.40

 

 

$

1.50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Diluted Earnings Per Share

 

$

0.55

 

 

$

0.57

 

 

$

0.36

 

 

$

0.54

 

 

$

2.03

 

 

TRANSCAT, INC.

Additional Information - Business Segment Data

(Dollars in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Change

 

SERVICE

 

FY 2023 Q4

 

 

FY 2022 Q4

 

 

$'s

 

 

%

 

Service Revenue

 

$

39,763

 

 

$

34,667

 

 

$

5,096

 

 

 

14.7

%

Cost of Revenue

 

 

26,240

 

 

 

23,193

 

 

 

3,047

 

 

 

13.1

%

Gross Profit

 

$

13,523

 

 

$

11,474

 

 

$

2,049

 

 

 

17.9

%

Gross Margin

 

 

34.0

%

 

 

33.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, Marketing & Warehouse Expenses

 

$

4,121

 

 

$

3,490

 

 

$

631

 

 

 

18.1

%

General and Administrative Expenses

 

 

4,855

 

 

 

4,452

 

 

 

403

 

 

 

9.1

%

Operating Income

 

$

4,547

 

 

$

3,532

 

 

$

1,015

 

 

 

28.7

%

% of Revenue

 

 

11.4

%

 

 

10.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change

 

DISTRIBUTION

 

FY 2023 Q4

 

 

FY 2022 Q4

 

 

$'s

 

 

%

 

Distribution Sales

 

$

22,304

 

 

$

21,213

 

 

$

1,091

 

 

 

5.1

%

Cost of Sales

 

 

16,677

 

 

 

16,015

 

 

 

662

 

 

 

4.1

%

Gross Profit

 

$

5,627

 

 

$

5,198

 

 

$

429

 

 

 

8.3

%

Gross Margin

 

 

25.2

%

 

 

24.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, Marketing & Warehouse Expenses

 

$

2,325

 

 

$

2,137

 

 

$

188

 

 

 

8.8

%

General and Administrative Expenses

 

 

1,994

 

 

 

2,078

 

 

 

(84

)

 

 

(4.0

)%

Operating Income

 

$

1,308

 

 

$

983

 

 

$

325

 

 

 

33.1

%

% of Sales

 

 

5.9

%

 

 

4.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change

 

TOTAL

 

FY 2023 Q4

 

 

FY 2022 Q4

 

 

$'s

 

 

%

 

Total Revenue

 

$

62,067

 

 

$

55,880

 

 

$

6,187

 

 

 

11.1

%

Total Cost of Revenue

 

 

42,917

 

 

 

39,208

 

 

 

3,709

 

 

 

9.5

%

Gross Profit

 

$

19,150

 

 

$

16,672

 

 

$

2,478

 

 

 

14.9

%

Gross Margin

 

 

30.9

%

 

 

29.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, Marketing & Warehouse Expenses

 

$

6,446

 

 

$

5,627

 

 

$

819

 

 

 

14.6

%

General and Administrative Expenses

 

 

6,849

 

 

 

6,530

 

 

 

319

 

 

 

4.9

%

Operating Income

 

$

5,855

 

 

$

4,515

 

 

$

1,340

 

 

 

29.7

%

% of Revenue

 

 

9.4

%

 

 

8.1

%

 

 

 

 

 

 

 

 

 

TRANSCAT, INC.

Additional Information - Business Segment Data

(Dollars in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Change

 

 

 

FY 2023

 

 

FY 2022

 

 

 

 

 

 

 

 

 

SERVICE

 

YTD

 

 

YTD

 

 

$'s

 

 

%

 

Service Revenue

 

$

144,883

 

 

$

122,005

 

 

$

22,878

 

 

 

18.8

%

Cost of Revenue

 

 

98,245

 

 

 

83,084

 

 

 

15,161

 

 

 

18.2

%

Gross Profit

 

$

46,638

 

 

$

38,921

 

 

$

7,717

 

 

 

19.8

%

Gross Margin

 

 

32.2

%

 

 

31.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, Marketing & Warehouse Expenses

 

$

15,725

 

 

$

12,047

 

 

$

3,678

 

 

 

30.5

%

General and Administrative Expenses

 

 

19,491

 

 

 

16,060

 

 

 

3,431

 

 

 

21.4

%

Operating Income

 

$

11,422

 

 

$

10,814

 

 

$

608

 

 

 

5.6

%

% of Revenue

 

 

7.9

%

 

 

8.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change

 

 

 

FY 2023

 

 

FY 2022

 

 

 

 

 

 

 

 

 

DISTRIBUTION

 

YTD

 

 

YTD

 

 

$'s

 

 

%

 

Distribution Sales

 

$

85,686

 

 

$

82,954

 

 

$

2,732

 

 

 

3.3

%

Cost of Sales

 

 

63,969

 

 

 

63,436

 

 

 

533

 

 

 

0.8

%

Gross Profit

 

$

21,717

 

 

$

19,518

 

 

$

2,199

 

 

 

11.3

%

Gross Margin

 

 

25.3

%

 

 

23.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, Marketing & Warehouse Expenses

 

$

9,036

 

 

$

8,602

 

 

$

434

 

 

 

5.0

%

General and Administrative Expenses

 

 

7,855

 

 

 

7,587

 

 

 

268

 

 

 

3.5

%

Operating Income

 

$

4,826

 

 

$

3,329

 

 

$

1,497

 

 

 

45.0

%

% of Sales

 

 

5.6

%

 

 

4.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change

 

 

 

FY 2023

 

 

FY 2022

 

 

 

 

 

 

 

 

 

TOTAL

 

YTD

 

 

YTD

 

 

$'s

 

 

%

 

Total Revenue

 

$

230,569

 

 

$

204,959

 

 

$

25,610

 

 

 

12.5

%

Total Cost of Revenue

 

 

162,214

 

 

 

146,520

 

 

 

15,694

 

 

 

10.7

%

Gross Profit

 

$

68,355

 

 

$

58,439

 

 

$

9,916

 

 

 

17.0

%

Gross Margin

 

 

29.6

%

 

 

28.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, Marketing & Warehouse Expenses

 

$

24,761

 

 

$

20,649

 

 

$

4,112

 

 

 

19.9

%

General and Administrative Expenses

 

 

27,346

 

 

 

23,647

 

 

 

3,699

 

 

 

15.6

%

Operating Income

 

$

16,248

 

 

$

14,143

 

 

$

2,105

 

 

 

14.9

%

% of Revenue

 

 

7.0

%

 

 

6.9

%

 

 

 

 

 

 

 

 

 

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