Transcat(TRNS) - 2022 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents Transcat, Inc.'s unaudited consolidated financial statements and management's discussion for Q2 and H1 FY22 ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS This section presents Transcat, Inc.'s unaudited consolidated financial statements and notes for Q2 and H1 FY22, detailing income, balance sheets, cash flows, equity, and accounting policies Consolidated Statements of Income This section provides a summary of Transcat's consolidated statements of income for the second quarter and six months ended September 25, 2021, and September 26, 2020 | Metric (in Thousands) | Second Quarter Ended Sep 25, 2021 | Second Quarter Ended Sep 26, 2020 | Six Months Ended Sep 25, 2021 | Six Months Ended Sep 26, 2020 | | :-------------------- | :-------------------------------- | :-------------------------------- | :---------------------------- | :---------------------------- | | Service Revenue | $29,544 | $24,554 | $57,101 | $47,521 | | Distribution Sales | $20,843 | $17,053 | $41,076 | $32,990 | | Total Revenue | $50,387 | $41,607 | $98,177 | $80,511 | | Gross Profit | $14,611 | $11,494 | $28,131 | $20,903 | | Operating Income | $3,578 | $3,078 | $7,267 | $4,042 | | Net Income | $3,015 | $2,024 | $6,703 | $2,822 | | Basic EPS | $0.40 | $0.27 | $0.90 | $0.38 | | Diluted EPS | $0.40 | $0.27 | $0.88 | $0.38 | Consolidated Statements of Comprehensive Income This section outlines Transcat's consolidated statements of comprehensive income for the second quarter and six months ended September 25, 2021, and September 26, 2020 | Metric (in Thousands) | Second Quarter Ended Sep 25, 2021 | Second Quarter Ended Sep 26, 2020 | Six Months Ended Sep 25, 2021 | Six Months Ended Sep 26, 2020 | | :-------------------- | :-------------------------------- | :-------------------------------- | :---------------------------- | :---------------------------- | | Net Income | $3,015 | $2,024 | $6,703 | $2,822 | | Currency Translation Adjustment | $(242) | $128 | $(81) | $253 | | Other Comprehensive (Loss) Income | $(233) | $165 | $(51) | $328 | | Comprehensive Income | $2,782 | $2,189 | $6,652 | $3,150 | Consolidated Balance Sheets This section presents Transcat's consolidated balance sheets as of September 25, 2021, and March 27, 2021 | Metric (in Thousands) | September 25, 2021 | March 27, 2021 | | :-------------------- | :----------------- | :------------- | | Cash | $2,551 | $560 | | Total Current Assets | $53,773 | $48,928 | | Property and Equipment, net | $23,034 | $22,203 | | Goodwill | $59,441 | $43,272 | | Intangible Assets, net | $12,753 | $7,513 | | Total Assets | $158,313 | $132,116 | | Total Current Liabilities | $21,572 | $25,142 | | Long-Term Debt | $40,917 | $17,494 | | Total Liabilities | $77,569 | $57,038 | | Total Shareholders' Equity | $80,744 | $75,078 | Consolidated Statements of Cash Flows This section details Transcat's consolidated statements of cash flows for the six months ended September 25, 2021, and September 26, 2020 | Cash Flow Activity (in Thousands) | Six Months Ended Sep 25, 2021 | Six Months Ended Sep 26, 2020 | | :-------------------------------- | :---------------------------- | :---------------------------- | | Net Cash Provided by Operating Activities | $7,502 | $12,476 | | Net Cash Used in Investing Activities | $(24,680) | $(3,116) | | Net Cash Provided by (Used in) Financing Activities | $19,079 | $(8,424) | | Net Increase in Cash | $1,991 | $463 | | Cash at End of Period | $2,551 | $962 | - Investing activities for the six months ended September 25, 2021, included $20.9 million for business acquisitions, a significant increase from the prior year[16] Consolidated Statements of Shareholders' Equity This section outlines Transcat's consolidated statements of shareholders' equity as of September 25, 2021, and March 27, 2021 - Total Shareholders' Equity increased from $75,078 thousand as of March 27, 2021, to $80,744 thousand as of September 25, 2021, driven by net income and common stock issuance, partially offset by share repurchases and other comprehensive loss[18] | Metric (in Thousands) | March 27, 2021 | September 25, 2021 | | :-------------------- | :------------- | :----------------- | | Common Stock Amount | $3,729 | $3,759 | | Capital in Excess of Par Value | $19,287 | $22,713 | | Accumulated Other Comprehensive Loss | $(451) | $(502) | | Retained Earnings | $52,513 | $54,774 | | Total Shareholders' Equity | $75,078 | $80,744 | Notes to Consolidated Financial Statements This section provides detailed notes to Transcat's consolidated financial statements, explaining accounting policies, debt, compensation, segments, and acquisitions NOTE 1 – GENERAL This note describes Transcat, Inc.'s business operations and general accounting policies - Transcat, Inc. is a leading provider of accredited calibration and laboratory instrument services and a value-added distributor of professional grade test, measurement, and control instrumentation, primarily serving highly regulated industries like life sciences[21] - The company recognized non-cash stock-based compensation expense of $1.1 million for the first six months of fiscal year 2022, up from $0.7 million in the prior year period[26] | Metric (in Thousands) | September 25, 2021 | March 27, 2021 | | :-------------------- | :----------------- | :------------- | | Goodwill | $59,441 | $43,272 | | Intangible Assets | $12,753 | $7,513 | NOTE 2 – LONG-TERM DEBT This note details Transcat's long-term debt obligations and credit facility agreements - Transcat entered into a Second Amended and Restated Credit Facility Agreement on July 7, 2021, increasing the revolving credit commitment from $40.0 million to $80.0 million and extending its term to June 2026[33][34] - The new credit agreement increased the aggregate purchase price for permitted acquisitions to $65.0 million for the current fiscal year and $50.0 million for subsequent fiscal years, with an additional $40.0 million for UK/EU businesses[34] - The company's leverage ratio was 1.54 at September 25, 2021, compared to 0.94 at March 27, 2021, and it was in compliance with all loan covenants[42] NOTE 3 – STOCK-BASED COMPENSATION This note describes Transcat's stock-based compensation plans and related expenses - The Transcat, Inc. 2021 Stock Incentive Plan was approved in September 2021, replacing the 2003 Plan, with 0.7 million shares available for future grants[45] - Total expense for restricted stock units was $0.9 million in the first six months of fiscal year 2022, up from **$