PART I. FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) The company reported a 14.6% revenue increase to $76.4 million for Q1 FY26, though net income declined to $3.3 million [Condensed Consolidated Statements of Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q1 FY26 revenue grew 14.6% YoY to $76.4 million, but higher expenses led to a net income decline to $3.3 million Q1 FY26 vs Q1 FY25 Income Statement Highlights (In Thousands, Except Per Share) | Metric | Q1 Ended June 28, 2025 | Q1 Ended June 29, 2024 | YoY Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | **$76,424** | **$66,707** | **+14.6%** | | Service Revenue | $49,144 | $43,778 | +12.3% | | Distribution Revenue | $27,280 | $22,929 | +19.0% | | **Gross Profit** | **$25,821** | **$22,655** | **+14.0%** | | Operating Income | $5,338 | $5,099 | +4.7% | | **Net Income** | **$3,261** | **$4,408** | **-26.0%** | | Diluted EPS | $0.35 | $0.48 | -27.1% | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to $392.5 million as of June 28, 2025, alongside increases in total liabilities and shareholders' equity Balance Sheet Summary (In Thousands) | Account | June 28, 2025 | March 29, 2025 | | :--- | :--- | :--- | | **Total Assets** | **$392,536** | **$385,242** | | Total Current Assets | $79,654 | $78,009 | | Goodwill | $177,114 | $176,928 | | **Total Liabilities** | **$100,000** | **$98,362** | | Long-Term Debt | $33,182 | $30,892 | | **Total Shareholders' Equity** | **$292,536** | **$286,880** | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations decreased significantly to $3.6 million in Q1 FY26 from $8.9 million in the prior year Cash Flow Summary (In Thousands) | Activity | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $3,623 | $8,924 | | Net Cash Used in Investing Activities | ($4,598) | ($4,094) | | Net Cash Provided by/(Used in) Financing Activities | $1,946 | ($1,935) | | **Net Increase in Cash** | **$344** | **$3,011** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, segment performance, recent acquisitions, and a new $150 million credit facility - The company's two reportable segments are **Service** (calibration, repair, etc) and **Distribution** (sales and rentals of instruments)[61](index=61&type=chunk) - The acquisition of Martin Calibration (Dec 2024) for **~$81.8 million** contributed **$7.9 million in revenue** in Q1 FY26[69](index=69&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk) - The acquisition of Becnel Rental Tools (Apr 2024) for **~$49.8 million** contributed **$3.4 million in revenue** in Q1 FY26[74](index=74&type=chunk)[77](index=77&type=chunk)[80](index=80&type=chunk) - Subsequent to the quarter end, on July 29, 2025, the company entered a new five-year **$150.0 million secured revolving credit facility**, replacing its former $80.0 million facility[85](index=85&type=chunk) - On August 5, 2025, the company acquired Essco Calibration Laboratory for approximately **$84.0 million in cash**[86](index=86&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes 14.6% revenue growth to acquisitions, while rising operating expenses compressed operating margin to 7.0% [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Q1 FY26 revenue rose 14.6% driven by acquisitions, but lower Service gross margin and higher operating expenses reduced net income Q1 FY26 Revenue Performance (in thousands) | Segment | Q1 FY26 Revenue | Q1 FY25 Revenue | YoY Change ($) | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | | Service | $49,144 | $43,778 | +$5,366 | +12.3% | | Distribution | $27,280 | $22,929 | +$4,351 | +19.0% | | **Total** | **$76,424** | **$66,707** | **+$9,717** | **+14.6%** | - Acquired revenue from businesses bought after the prior period was **$7.9 million**, while **organic revenue increased by 4.1%**[91](index=91&type=chunk) - Service revenue **organic growth was negative 1.0%** due to lower revenue from the Transcat Solutions business[96](index=96&type=chunk) - The effective tax rate increased significantly to **28.6% from 15.7%** in the prior-year quarter, mainly due to the timing of discrete tax items relative to pre-tax income[109](index=109&type=chunk) [Non-GAAP Financial Measures](index=29&type=section&id=Non-GAAP%20Financial%20Measures) Adjusted EBITDA increased 15.2% to $11.8 million, while Adjusted Diluted EPS decreased to $0.59 from $0.68 YoY Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Line Item | Q1 Ended June 28, 2025 | Q1 Ended June 29, 2024 | | :--- | :--- | :--- | | Net Income | $3,261 | $4,408 | | + Interest Expense (Income), Net | $440 | ($260) | | + Tax Provision | $1,304 | $820 | | + Depreciation & Amortization | $5,605 | $4,113 | | + Transaction Expense | $28 | $434 | | + Non-cash Stock Compensation | $1,130 | $697 | | **Adjusted EBITDA** | **$11,768** | **$10,212** | Adjusted Diluted Earnings Per Share | Metric | Q1 Ended June 28, 2025 | Q1 Ended June 29, 2024 | | :--- | :--- | :--- | | Diluted EPS – GAAP | $0.35 | $0.48 | | **Adjusted Diluted EPS** | **$0.59** | **$0.68** | [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) The company secured a new $150 million credit facility while cash from operations declined due to working capital changes - On July 29, 2025, the company established a new five-year, **$150.0 million secured revolving credit facility**, replacing the previous $80.0 million facility[120](index=120&type=chunk) - Net cash from operating activities **decreased to $3.6 million from $8.9 million YoY**, primarily due to changes in working capital[128](index=128&type=chunk) - Capital expenditures were **$4.6 million in Q1 FY26**, up from $3.7 million in Q1 FY25, used for expanding Service capabilities and the rental business[130](index=130&type=chunk) [Outlook](index=33&type=section&id=Outlook) Management anticipates a return to high single-digit Service organic growth in H2 FY26, supported by a strong acquisition pipeline - The company expects a return to **high single-digit Service organic revenue growth** in the second half of Fiscal 2026[135](index=135&type=chunk) - The acquisition of Essco Calibration is the **largest deal in the company's history** and establishes a strong presence in the New England market[134](index=134&type=chunk) - The estimated income tax rate for the full fiscal year 2026 is expected to be between **27% and 29%**[135](index=135&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risks stem from interest rate fluctuations and foreign currency exchange rates - A **1% change in interest rates** would increase or decrease annual interest expense by approximately **$0.3 million**, assuming constant borrowing levels as of June 28, 2025[137](index=137&type=chunk) - About **90% of total revenues are denominated in U.S. dollars**, with the rest in Canadian dollars and Euros; a 10% change in these foreign currencies' value would impact total revenue by about 1%[139](index=139&type=chunk) - The company utilizes **short-term foreign exchange forward contracts** to hedge against Canadian dollar currency fluctuations[140](index=140&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The CEO and CFO concluded that the company's **disclosure controls and procedures were effective** as of June 28, 2025[141](index=141&type=chunk) - **No changes occurred** during the first quarter of fiscal 2026 that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[142](index=142&type=chunk) PART II. OTHER INFORMATION [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including the Essco acquisition agreement and the new credit facility agreement - Key exhibits filed include the purchase agreement for Essco Holdings Inc and the new Credit Agreement with Manufacturers and Traders Trust Company[145](index=145&type=chunk) [Signatures](index=37&type=section&id=SIGNATURES) The report was duly signed and authorized by the CEO and CFO on August 6, 2025 - The report was signed on **August 6, 2025**, by the company's CEO and CFO[151](index=151&type=chunk)

Revenue and Growth - Total revenue for fiscal year 2025 was $278.4 million, an increase of $18.9 million or 7.3% compared to $259.5 million in fiscal year 2024[182]. - Service revenue reached $181.4 million in fiscal year 2025, up $11.9 million or 7.0%, accounting for 65.2% of total revenue[183]. - Distribution segment sales increased by 7.8% to $97.0 million in fiscal year 2025, representing 34.8% of total revenue[184]. - Service revenue increased by $11.9 million, or 7.0%, in fiscal year 2025, with $10.4 million attributed to acquisitions[209]. - Distribution sales rose by $7.0 million, or 7.8%, in fiscal year 2025, primarily due to $7.2 million from acquisitions[213]. - Service organic growth was in the high single-digit range for both the fourth quarter and full fiscal year 2025, driven by consistent demand in the Calibration business[246]. - The company expects a return to high single-digit organic Service revenue growth once the macroeconomic environment normalizes[248]. Profitability - Total gross profit was $89.5 million in fiscal year 2025, a 6.7% increase from $83.8 million in fiscal year 2024[185]. - Service gross profit was $60.7 million, reflecting a 5.9% increase from fiscal year 2024[216]. - Net income for fiscal year 2025 was $14.5 million, an increase of $0.9 million from $13.6 million in fiscal year 2024[187]. - Net income for fiscal year 2025 was 5.2% of total revenue, slightly down from 5.3% in fiscal year 2024[207]. - Adjusted EBITDA for FY 2025 was $39.7 million, a 2.9% increase from $38.6 million in FY 2024[226]. - Adjusted diluted earnings per share for FY 2025 was $2.29, down from $2.36 in FY 2024[230]. Expenses and Margins - Operating expenses were $71.6 million, or 25.7% of total revenue, compared to $64.0 million, or 24.7% of total revenue, in fiscal year 2024[186]. - Total operating expenses increased by $7.6 million, or 11.8%, to $71.6 million in FY 2025 compared to FY 2024[220]. - The Service segment gross margin decreased by 40 basis points to 33.4% in fiscal year 2025, while the Distribution segment gross margin increased by 20 basis points to 29.7%[185]. - Service gross margin for FY 2025 was 36.2% in Q4, up from 35.7% in Q4 FY 2024[217]. - Distribution gross margin for FY 2025 was 28.2% in Q4, an increase of 20 basis points compared to FY 2024[219]. Cash Flow and Financial Position - Cash provided by operating activities was $39.0 million in FY 2025, up from $32.6 million in FY 2024[238]. - Net cash provided by operating activities increased to $39.0 million in fiscal year 2025 from $32.6 million in fiscal year 2024, primarily due to increases in depreciation and amortization[240]. - Accounts receivable rose by $8.2 million in fiscal year 2025, including $7.7 million from acquisitions, compared to a $3.1 million increase in fiscal year 2024[240]. - The inventory balance decreased by $2.9 million in fiscal year 2025, following a $0.5 million increase in fiscal year 2024[240]. - The company has access to a revolving credit facility of $80.0 million through June 2026[232]. - The interest rate for the revolving credit facility ranged from 5.1% to 6.2% during fiscal year 2025, with a fixed rate of 3.90% on the 2018 Term Loan[251]. - As of March 29, 2025, the leverage ratio was 0.78, compared to 0.10 at March 30, 2024[235]. Acquisitions and Strategic Initiatives - Acquired revenue from recent acquisitions, including Martin and Becnel, contributed $10.4 million to the Service segment's growth[175]. - Business acquisitions totaled $87.4 million in fiscal year 2025, significantly higher than $12.9 million in fiscal year 2024[242]. - Management is implementing a diversification strategy in the Distribution segment to mitigate impacts from specific industries and enhance competitive differentiation[179]. Tax and Currency - The company expects an effective tax rate of 27.0% to 29.0% for FY 2026[222]. - The anticipated income tax rate for fiscal year 2026 is projected to range between 27.0% and 29.0%[249]. - Approximately 90% of total revenues for fiscal years 2025 and 2024 were denominated in U.S. dollars, with a 10% change in the value of the Canadian dollar or Euro impacting revenue by approximately 1%[253]. - A foreign exchange contract with a notional amount of $1.1 million was outstanding as of March 29, 2025, to mitigate currency risk[254]. Product Shipments and Backorders - Total pending product shipments decreased by $1.8 million, or 34.7%, at the end of fiscal year 2025 compared to fiscal year 2024[214]. - Backorders at the end of fiscal year 2025 were $2.7 million, down from $4.5 million at the end of fiscal year 2024[214].

Financial Performance Highlights - Q4 Revenue increased by 9% year-over-year to $77.1 million [8], while full-year revenue grew by 7% [8] to $278.4 million [11] - Adjusted EBITDA increased by 9% in Q4 to $12.7 million [8] - Full-year Net Income reached $14.5 million, or $1.57 per diluted share [8] - Consolidated Gross Profit for Q4 increased by 8% to $25.9 million [18], with full-year Gross Profit growing by 7% to $89.5 million [16] Segment Performance - Service Revenue increased by 11% in Q4 and 7% for the full year [8], reaching $52.0 million and $181.4 million respectively [10, 11] - Distribution Revenue grew by 4% in Q4 and 8% for the full year [8], reaching $25.1 million and $97.0 million respectively [10, 11] - Service segment adjusted EBITDA up Q4 16% [28] - Distribution adjusted EBITDA down Q4 13% [28] Cash Flow and Balance Sheet - Operating Free Cash Flow significantly improved by $6.5 million year-over-year, reaching $25.8 million [29] - The company had $49.1 million available from its credit facility at quarter-end [33]

Revenue Performance - Consolidated revenue for Q4 FY2025 was $77.1 million, an increase of 8.8% compared to Q4 FY2024[10] - Full fiscal year 2025 revenue reached $278.4 million, up 7.3% from $259.5 million in FY2024[20] - Total revenue for the fourth quarter ended March 29, 2025, was $77.134 million, a 8.4% increase from $70.913 million in the same quarter of the previous year[35] - Service revenue increased by 11.3% to $52.0 million in Q4 FY2025, driven by double-digit growth in the Calibration business[15] - Service revenue reached $52.010 million, up 11.6% from $46.732 million year-over-year, while distribution sales increased by 3.9% to $25.124 million[35] - Total revenue for Fiscal 2025 was $278,421 million, up 7.3% from $259,481 million in Fiscal 2024[49] Profitability Metrics - Adjusted EBITDA for Q4 FY2025 was $12.7 million, reflecting a 9.1% increase driven by strength in the Calibration business[12] - Gross profit for the fiscal year ended March 29, 2025, was $89.453 million, representing a 6.5% increase compared to $83.806 million in the prior year[35] - Adjusted EBITDA for the fiscal year 2025 reached $39,732,000, compared to $38,613,000 in fiscal 2024, indicating a year-over-year increase of 2.9%[41] - The service segment adjusted EBITDA for fiscal 2025 was $28,694,000, compared to $27,750,000 in fiscal 2024, representing a growth of 3.4%[41] - The distribution segment adjusted EBITDA for fiscal 2025 was $11,038,000, a decrease from $10,863,000 in fiscal 2024, indicating a decline of 1.6%[41] Net Income and Earnings Per Share - Net income for Q4 FY2025 decreased to $4.5 million, down 35.2% from $6.9 million in Q4 FY2024[9] - Net income for the fiscal year ended March 29, 2025, was $14,515,000, an increase of 6.35% from $13,647,000 in the previous year[39] - Adjusted diluted earnings per share for the fiscal year was $1.57, compared to $1.63 in the previous year, reflecting a decrease of 3.7%[35] - Fiscal 2025 net income reached $14,515 million, a significant increase from $13,647 million in Fiscal 2024, representing a year-over-year growth of 6.3%[45] - Diluted earnings per share (EPS) for Fiscal 2025 was $1.57, up from $1.63 in Fiscal 2024, while adjusted diluted EPS increased to $2.29 from $2.36[45] Expenses and Liabilities - Operating expenses increased by 27.9% to $19.0 million in Q4 FY2025, influenced by expenses from acquired businesses[11] - General and administrative expenses increased by 39.7% in Q4 of Fiscal 2025, totaling $9,733 million compared to $6,965 million in Q4 of Fiscal 2024[47] - Current liabilities slightly increased to $34.037 million from $33.499 million year-over-year, showing a stable financial position[37] Cash Flow and Investments - Net cash provided by operating activities increased to $38,985,000, up from $32,616,000, reflecting a growth of 19.5%[39] - Cash used in investing activities significantly rose to $84,000,000, compared to $41,672,000 in the prior year, marking a 101.5% increase[39] - The company reported a substantial business acquisition net cash outflow of $87,436,000 in fiscal 2025, compared to $12,859,000 in fiscal 2024[39] - Total cash and cash equivalents at the end of the period decreased to $1,517,000 from $19,646,000, reflecting a decline of 92.3%[39] Debt and Financial Position - Total debt increased to $32.7 million as of March 29, 2025, compared to $4.2 million on March 30, 2024[23] - The company reported a leverage ratio of 0.78 on March 29, 2025, indicating a strong balance sheet[24] Strategic Outlook - Management expects to return to high single-digit organic revenue growth as macro-trends normalize[7] - The company plans to expand its addressable calibration market through acquisitions and capability investments, aiming for organic sales growth[31] - Transcat's strategy includes leveraging its strong brand and unique value proposition to drive growth in highly regulated industries, particularly in Life Sciences[31]

Financial Data and Key Metrics Changes - Fiscal year 2025 consolidated revenue increased by 7% to $278.4 million, driven by consistent demand for services and products [7] - Operating cash flow reached a record $38.6 million, an 18% year-over-year increase [8] - Q4 net income decreased to $4.5 million from $6.9 million in the prior year, with diluted earnings per share dropping to $0.48 from $0.77 [16] - Full year net income increased by 6% to $14.5 million [16] - Adjusted EBITDA for Q4 was $12.7 million, up 9% from the previous year, with a consistent EBITDA margin of 16.5% [18] Business Line Data and Key Metrics Changes - Service revenue grew by 11% to $52 million in Q4, with organic growth in the high single-digit range [12] - Distribution revenue increased by 4% to $25.1 million in Q4, driven by growth in the rental channel [13] - Full year service revenue benefited by $10.4 million from acquisitions [13] - Service gross margin expanded by 50 basis points to 36.2% in Q4, while distribution gross margin decreased by 30 basis points to 28.2% [14] Market Data and Key Metrics Changes - The rental platform continues to show growth, contributing to the overall performance of the distribution segment [10] - The company noted that barriers to entry in the calibration services market have defended its unique value proposition [10] Company Strategy and Development Direction - The acquisition of Martin Calibration is seen as highly synergistic, expanding geographic reach and capabilities [8] - The company aims to leverage its strengths in leadership and culture to drive future growth [21] - Management expressed confidence in the resilience of the calibration services channel, which benefits from recurring revenue streams in regulated markets [22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged short-term volatility but remains optimistic about long-term growth potential, particularly in the calibration services segment [52] - The leadership team is focused on improving sales and operational efficiencies, with expectations for high single-digit growth as macro trends normalize [54] Other Important Information - The company plans to file its 10-K on May 27 [19] - The integration of the Martin acquisition is reportedly ahead of schedule [23] Q&A Session Summary Question: Can you discuss the cadence of business performance in Q4? - Management characterized Q4 as solid, with pent-up demand contributing to high single-digit organic growth [30] Question: Were there any significant opportunities that closed recently? - Management indicated a healthy pipeline of new opportunities, expecting momentum in the latter half of the year [33] Question: How is the distribution segment responding to tariff announcements? - Management noted that distribution has held up well, but the impact of tariffs remains uncertain [36] Question: What are the levers for expense control? - Management highlighted delayed hires and good cost management as key factors in controlling operating expenses [48] Question: How is the Solutions business progressing? - Management reported steady progress in integrating the Solutions channel into the overall service platform [61] Question: What is the current status of automation efforts? - Management indicated that automation efforts are ongoing, with significant progress made but more work to be done [67] Question: How does the rental market perform in a challenging macro environment? - Management expects rental demand to increase as customers may prefer rentals over purchases during uncertain times [78]

Financial Data and Key Metrics Changes - Fiscal year 2025 consolidated revenue increased by 7% to $278.4 million, driven by consistent demand for services and products [5][12] - Service revenue grew by 7% to $181.4 million, while distribution revenue increased by 8% to $97 million [6][12] - Operating cash flow reached a record $38.6 million, an 18% year-over-year increase [6] - Q4 net income decreased to $4.5 million from $6.9 million in the prior year, with diluted earnings per share dropping to $0.48 from $0.77 [15] - Full year net income increased by 6% to $14.5 million [15] Business Line Data and Key Metrics Changes - Calibration Services achieved double-digit revenue growth of 11% in Q4, with organic growth in the high single-digit range [7][11] - Distribution revenue in Q4 grew by 4%, driven by growth in the rental channel [8][12] - Service gross margin expanded by 50 basis points to 36.2% in Q4, while distribution gross margin decreased by 30 basis points to 28.2% [13][14] Market Data and Key Metrics Changes - The rental platform continues to show growth, contributing to the overall performance of the distribution segment [8][12] - The company noted that barriers to entry in the service market have defended its unique value proposition and strong brand [10] Company Strategy and Development Direction - The acquisition of Martin Calibration is seen as highly synergistic, expanding geographic reach and capabilities [6][7] - The company aims to leverage its strengths in leadership and culture to execute its strategy and vision for future growth [20] - Management expressed confidence in the resilience of the calibration services channel, benefiting from recurring revenue streams in regulated markets [19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged short-term volatility but expressed confidence in the company's ability to return to high single-digit growth levels as macro trends normalize [19][29] - The leadership team is focused on improving sales and operational processes, with expectations for stabilization and growth in the Solutions business [20][50] - Management remains optimistic about the future, citing a strong pipeline for strategic acquisitions and ongoing improvements in service delivery [19][43] Other Important Information - The company plans to file its 10-K on May 27 [18] - Operating free cash flow improved by 31% to $25.4 million [16] Q&A Session Summary Question: Can you discuss the cadence of business performance in Q4? - Management characterized Q4 as solid, with pent-up demand contributing to high single-digit organic growth [25][26] Question: Were there any significant opportunities in the service business? - Management confirmed a healthy pipeline of new opportunities and new wins expected to contribute to momentum in the latter half of the year [28] Question: How is the distribution segment responding to tariff announcements? - Management noted that distribution has held up well, with current orders possibly influenced by customers trying to get ahead of tariffs [30][31] Question: What are the levers for expense control? - Management highlighted delayed hires and good cost management as key factors, with expectations for some nominal increases in expenses moving forward [37][38] Question: How is the Solutions business progressing? - Management reported steady progress in integrating the Solutions channel into the overall service platform, with expectations for improved results [50] Question: What is the current status of automation efforts? - Management indicated that automation efforts are ongoing, with significant progress made, but still more work to be done [54][56] Question: How does the company view the rental market in a challenging macro environment? - Management expects rental demand to grow in line with historical trends, particularly as uncertainty persists [66][68]

Core Viewpoint - Transcat, Inc. reported a revenue increase of 8.8% year-over-year for the quarter ended March 2025, but the EPS showed a decline compared to the previous year [1] Financial Performance - Revenue for the quarter was $77.13 million, exceeding the Zacks Consensus Estimate of $76.8 million by 0.44% [1] - EPS for the quarter was $0.64, down from $0.77 in the same quarter last year, resulting in an EPS surprise of -3.03% compared to the consensus estimate of $0.66 [1] - Distribution Sales revenue was $25.12 million, which is 3.9% higher year-over-year but below the average estimate of $26.57 million [4] - Service Revenue reached $52.01 million, surpassing the average estimate of $50.24 million and reflecting an 11.3% increase year-over-year [4] - Gross Profit from Distribution was $7.09 million, lower than the average estimate of $8 million [4] - Gross Profit from Service was $18.83 million, exceeding the average estimate of $16.99 million [4] Stock Performance - Transcat's shares have returned -4% over the past month, while the Zacks S&P 500 composite increased by 13.1% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market [3]

Core Insights - Transcat, Inc. reported quarterly earnings of $0.64 per share, missing the Zacks Consensus Estimate of $0.66 per share, and down from $0.77 per share a year ago, representing an earnings surprise of -3.03% [1] - The company posted revenues of $77.13 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.44%, compared to year-ago revenues of $70.91 million [2] - Transcat shares have declined approximately 23.2% since the beginning of the year, contrasting with the S&P 500's gain of 1.3% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.64 on revenues of $73.8 million, and for the current fiscal year, it is $2.63 on revenues of $306.01 million [7] - The estimate revisions trend for Transcat is mixed, leading to a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market in the near future [6] Industry Context - The Instruments - Control industry, to which Transcat belongs, is currently in the top 39% of over 250 Zacks industries, suggesting that stocks in the top 50% outperform those in the bottom 50% by more than 2 to 1 [8] - Another company in the same industry, Thermon Group, is expected to report quarterly earnings of $0.50 per share, reflecting a year-over-year change of +47.1%, with revenues anticipated to be $133.56 million, up 4.6% from the previous year [9][10]

Core Viewpoint - Transcat, Inc. (TRNS) is expected to report a quarterly earnings per share (EPS) of $0.66, indicating a 14.3% decline year-over-year, while revenues are projected to increase by 8.3% to $76.8 million [1] Group 1: Earnings and Revenue Estimates - Analysts predict quarterly earnings of $0.66 per share for Transcat, reflecting a 14.3% decline compared to the same period last year [1] - Revenue is forecasted to be $76.8 million, representing an 8.3% year-over-year increase [1] - The consensus EPS estimate has not changed over the past 30 days, indicating stability in analysts' projections [2] Group 2: Key Metrics Forecast - Revenue from Distribution Sales is expected to reach $26.57 million, a year-over-year increase of 9.9% [5] - Service Revenue is projected to be $50.24 million, reflecting a 7.5% increase from the previous year [5] - Gross Profit from Distribution is anticipated to be $8.00 million, up from $7.33 million in the same quarter last year [5] - Gross Profit from Service is expected to reach $16.99 million, slightly above the year-ago figure of $16.70 million [6] Group 3: Market Performance - Transcat shares have shown a return of -5.6% over the past month, contrasting with the Zacks S&P 500 composite's +9.9% change [6] - The company holds a Zacks Rank 3 (Hold), suggesting it is expected to perform in line with the overall market in the near future [6]

Financial Performance - Consolidated revenue for Q3 FY 2025 was $66.8 million, an increase of $1.6 million or 2.4% compared to Q3 FY 2024, primarily driven by acquisitions[95] - Gross profit for Q3 FY 2025 was $19.7 million, a decrease of $1.3 million or 6.0% year-over-year, with a gross margin of 29.5%, down 260 basis points from the previous year[96] - Operating expenses increased to $17.6 million in Q3 FY 2025, up $0.9 million or 5.6% from the prior year, resulting in an operating income of $2.1 million, a decrease of 51.1%[97] - Net income for Q3 FY 2025 was $2.4 million, down from $3.3 million in Q3 FY 2024, primarily due to lower operating income[98] - Total revenue for the first nine months of FY 2025 was $201.287 million, an increase of $12.719 million or 6.7% compared to the same period in FY 2024[118] - Net income for the first nine months of fiscal year 2025 was $10.1 million, an increase of $3.3 million or 48.7% compared to the same period in fiscal year 2024[125] - Total Adjusted EBITDA for Q3 FY 2025 was $7.9 million, a decrease of $1.2 million or 13.2% from Q3 FY 2024, with Adjusted EBITDA margin decreasing to 11.9%[117] - Total Adjusted EBITDA for the first nine months of fiscal year 2025 was $27.0 million, a slight increase of $0.1 million or 0.2% year-over-year[126] Revenue Breakdown - Service revenue accounted for 62.3% of total revenue in Q3 FY 2025, with a slight increase of $0.1 million or 0.1% year-over-year, while organic revenue decreased by 3.9%[101] - Distribution revenue was $25.2 million in Q3 FY 2025, an increase of $1.5 million or 6.5%, attributed to incremental revenue from the acquisition of Becnel[105] - The trailing twelve-month Service revenue for Q3 FY 2025 was $176.1 million, reflecting a growth of 8.3% compared to the prior year[103] - Service revenue for the first nine months of FY 2025 was $129.418 million, a 5.4% increase from FY 2024, including $4.2 million from recent acquisitions[118] Profitability Metrics - Operating margin decreased from 6.6% in Q3 FY 2024 to 3.1% in Q3 FY 2025, indicating a significant decline in profitability[97] - Total gross profit for Q3 FY 2025 was $19.679 million, a decrease of $1.257 million or 6.0% from Q3 FY 2024, with a gross margin of 29.5%[109] - Service gross profit in Q3 FY 2025 decreased by $1.137 million or 8.4%, with a service gross margin of 29.7%, down 280 basis points from Q3 FY 2024[110] - Distribution gross margin was 29.1% in Q3 FY 2025, a decrease of 240 basis points from 31.5% in Q3 FY 2024, attributed to the mix of non-rental products sold[112] Operating Expenses - Total operating expenses in Q3 FY 2025 were $17.579 million, an increase of $937,000 or 5.6% compared to Q3 FY 2024, with selling, marketing, and warehouse expenses rising by 8.0%[113] - The company plans to subcontract approximately 13% to 15% of Service revenue to third-party vendors while evaluating outsourcing needs and making capital investments[103] Cash Flow and Investments - Cash provided by operating activities was $28.4 million in the first nine months of fiscal year 2025, compared to $26.9 million in the same period of fiscal year 2024[140] - The company invested $10.5 million in capital expenditures during the first nine months of fiscal year 2025, primarily for customer-driven expansion[142] - The company used $86.1 million for business acquisitions in the first nine months of fiscal year 2025, compared to $12.9 million in the same period of fiscal year 2024[142] Balance Sheet and Leverage - As of December 28, 2024, the company had $80.0 million available for borrowing under its revolving credit facility, with $39.5 million outstanding[138] - The company's leverage ratio was 0.97 as of December 28, 2024, compared to 0.10 at March 30, 2024, indicating strong compliance with loan covenants[137] Earnings Per Share - Diluted earnings per share for the first nine months of fiscal year 2025 was $1.09, up from $0.83 in the same period of fiscal year 2024[132] - Adjusted diluted earnings per share for the first nine months of fiscal year 2025 was $1.65, compared to $1.68 in the same period of fiscal year 2024[132] Inventory and Liabilities - Inventory balance decreased by $3.6 million during the first nine months of fiscal year 2025, compared to a decrease of $0.8 million in the same period of fiscal year 2024[30] - Accounts payable increased by $4.7 million during the first nine months of fiscal year 2025, while it decreased by $4.5 million in the first nine months of fiscal year 2024[30] - Accrued compensation and other current liabilities decreased by $6.6 million in the first nine months of fiscal year 2025, compared to an increase of $5.5 million in the same period of fiscal year 2024[30] Future Outlook - Service organic revenue growth is expected to be in the mid-to-low single digits for fiscal year 2025, with a return to historic growth levels anticipated in fiscal year 2026[147] - The company expects its income tax rate to range between 21% and 23% for the full fiscal year 2025[148] Interest Rates and Currency Impact - A 1% change in interest rates would result in a yearly interest expense change of approximately $0.5 million, assuming constant borrowing levels[150] - The interest rate for the revolving credit facility was 5.6% during the first nine months of fiscal year 2025, while the 2018 Term Loan had a fixed interest rate of 3.90%[152] - Approximately 90% of total revenues for the first nine months of fiscal year 2025 were denominated in U.S. dollars, with a 10% change in the value of the Canadian dollar or Euro impacting revenue by approximately 1%[153] - The company utilized short-term foreign exchange forward contracts, resulting in a gain of $0.2 million in both the first nine months of fiscal years 2025 and 2024[154]