Transcat(US:TRNS)2023-08-02 20:01Financial Performance - Consolidated revenue for the first quarter of fiscal year 2024 was $60.6 million, an increase of $5.9 million or 10.9% compared to the same period in fiscal year 2023[90]. - Gross profit for the first quarter of fiscal year 2024 was $18.7 million, reflecting a $2.7 million increase or 16.7% year-over-year, with a gross margin of 30.9%[91]. - Operating income increased to $4.6 million, a rise of $1.0 million or 28.7%, with an operating margin of 7.7%[92]. - Net income for the first quarter of fiscal year 2024 was $2.9 million, down from $3.1 million in the prior year, attributed to higher interest expenses and tax provisions[93]. - Adjusted EBITDA for Q1 FY 2024 was $8.481 million, a 16.1% increase from $7.307 million in Q1 FY 2023[116]. - Adjusted diluted earnings per share for Q1 FY 2024 was $0.52, compared to $0.54 in Q1 FY 2023[120]. - Net income for Q1 FY 2024 decreased to $2.949 million, down 4.0% from $3.072 million in Q1 FY 2023[113]. Revenue Breakdown - Service revenue accounted for 65.8% of total revenue, increasing by 17.6% year-over-year, including $2.2 million from acquisitions and 11.2% organic growth[96]. - Distribution sales decreased by 0.2% to $20.7 million, representing 34.2% of total revenue, primarily due to slower demand for traditional products[101]. Operating Expenses - Operating expenses rose to $14.1 million, an increase of $1.6 million or 13.2%, with operating expenses as a percentage of total revenue at 23.2%[92]. - Total operating expenses rose to $14.1 million in Q1 FY 2024, an increase of 13.2% from $12.4 million in Q1 FY 2023[110]. Margins - Service gross profit increased by $2.1 million or 19.7%, with a service gross margin of 32.5%[107]. - Service gross margin for Q1 FY 2024 was 32.5%, down from 34.0% in Q4 FY 2023[108]. - Distribution gross margin increased to 27.7% in Q1 FY 2024, a 270 basis point increase from 25.0% in Q1 FY 2023[109]. Cash Flow and Capital Structure - Cash provided by operating activities was $7.536 million in Q1 FY 2024, significantly up from $2.043 million in Q1 FY 2023[128]. - The company had $37.5 million available for borrowing under the revolving credit facility as of June 24, 2023[126]. - The leverage ratio was 1.50 at June 24, 2023, down from 1.60 at March 25, 2023[125]. - Interest rate for the revolving credit facility ranged from 6.4% to 6.9% in Q1 FY 2024, with a fixed rate of 3.90% for the 2018 Term Loan[139]. Tax and Liabilities - The effective tax rate increased to 21.6% in Q1 FY 2024 from 10.9% in Q1 FY 2023[112]. - Anticipated income tax rate for FY 2024 is between 21% and 23%, with a timing difference expected to positively impact the tax rate by approximately 13% in Q2 FY 2024[136]. - Accrued compensation and other current liabilities decreased by $0.9 million in Q1 FY 2024, compared to a decrease of $2.8 million in Q1 FY 2023[137]. Inventory and Accounts Payable - Inventory balance decreased by $1.8 million in Q1 FY 2024, compared to an increase of $2.2 million in Q1 FY 2023 due to strategic purchasing timing[25]. - Accounts payable decreased by $4.3 million in Q1 FY 2024, following a decrease of $1.2 million in Q1 FY 2023, largely due to timing of payments[25]. Capital Expenditures and Acquisitions - Capital expenditures for Q1 FY 2024 were $2.7 million, up from $2.4 million in Q1 FY 2023, primarily for customer-driven expansion[131]. - Business acquisitions cost $2.9 million in Q1 FY 2024, down from $4.0 million in Q1 FY 2023[131]. Future Projections - Expected organic Service revenue growth for FY 2024 is projected in the high-single digit to low double-digit range[135]. Currency and Foreign Exchange - Approximately 90% of total revenues for Q1 FY 2024 were denominated in U.S. dollars, with a 10% change in Canadian dollar or Euro impacting revenue by about 1%[140]. - A foreign exchange contract with a notional amount of $2.5 million was outstanding as of June 24, 2023, to mitigate currency risk[141].