Financial Data and Key Metrics Changes - Consolidated revenue increased by 15% to $76.4 million, driven by strong demand for calibration and rental services [7][15] - Adjusted EBITDA grew by 15% to $11.8 million, with a margin expansion of 10 basis points [17][18] - Net income decreased by $1.1 million to $3.3 million, primarily due to higher interest expenses and taxes [16] Business Line Data and Key Metrics Changes - Service revenue grew by 12%, marking the 65th consecutive quarter of year-over-year growth [8][15] - Distribution revenue increased by 19% to $27.3 million, with gross profits rising by 24% and gross margins expanding to 35.2% [13][15] - Total organic service growth, excluding Transcat Solutions, was 2% [9] Market Data and Key Metrics Changes - The acquisition of ESCO Calibration is expected to enhance Transcat's capabilities in specialized high-end electronic calibrations, particularly in regulated markets [10][11] - The company anticipates a return to high single-digit organic service revenue growth as the fiscal year progresses [21] Company Strategy and Development Direction - The company aims to leverage acquisitions to fortify its core calibration business and expand addressable markets [21] - Continuous process improvement and automation are identified as key drivers for future service margin expansion [21] - The focus remains on generating sustainable long-term value for shareholders [21] Management's Comments on Operating Environment and Future Outlook - The macro environment presents challenges, but the diversified portfolio and strategic acquisitions position the company well for future growth [21] - Management expects to progressively improve organic revenue growth during the fiscal year, barring further economic deterioration [21][58] Other Important Information - The company closed a new five-year credit facility that nearly doubles its capital resources, providing significant financial flexibility [19] - The integration of ESCO is expected to be swift, with anticipated sales and cost synergies [11][12] Q&A Session Summary Question: What drove the strong distribution results? - Management indicated consistent demand across both core distribution and rentals, suggesting that the growth is indicative of more than just pull-in revenue due to tariffs [26][27] Question: How does ESCO compare to Martin in terms of growth potential? - Management believes ESCO can be a similarly successful acquisition as Martin, with both companies having strong regional dominance but differing specialties [31][32] Question: What is the expected growth rate for ESCO? - Management characterized ESCO's growth rate as similar to Transcat's, indicating a high-quality company with consistent growth [38] Question: How will Transcat Solutions impact overall growth? - Management expects stabilization in the solutions business, contributing to high single-digit growth in the back half of the year [41][42] Question: Is there a potential for pricing power in the current market? - Management noted that there are opportunities for growth, particularly in outsourcing calibration services to in-house labs, which could enhance pricing power [85][88] Question: How does onshoring manufacturing in the U.S. affect Transcat? - Management confirmed that any onshoring of manufacturing is beneficial for Transcat, with ongoing discussions indicating potential future growth opportunities [72][76]

Financial Performance - Consolidated revenue increased by 15% year-over-year to $76.4 million[9, 12] - Service segment revenue grew by 12% to $49.1 million[9, 12] - Distribution segment revenue increased by 19% to $27.3 million[9, 12] - Consolidated gross profit increased by 14% to $25.8 million[15, 16] - Adjusted EBITDA increased by 15% to $11.8 million[9, 21, 23] - Net income decreased by 26% to $3.3 million[9, 19] Segment Performance - Service segment gross profit increased by 9% to $16.2 million[9, 15, 16] - Distribution segment gross profit increased by 24% to $9.6 million, with gross margin expansion of 130bps to 35.2%[9, 15, 16] - Distribution adjusted EBITDA increased by 49% to $4.8 million[21, 23] Strategic Initiatives - Transcat acquired Essco Calibration Laboratory for $84 million in cash[10] - A new 5-year $150 million syndicated secured credit facility was established[9, 10, 28]

Financial Data and Key Metrics Changes - Consolidated revenue increased by 2% to $6,680,000, driven by growth in distribution [6][14] - Organic service revenue declined by 4% year-over-year, primarily due to softness in the Nexa solutions channel [6][14] - Consolidated gross profit decreased by 6% to $1,970,000, with service gross profit down 8% [15] - Net income for Q3 was $240,000, down $1,000,000 compared to the prior year, with diluted earnings per share at $0.25, down $0.13 [16] - Adjusted EBITDA was $790,000, down 13% from the same quarter in the prior year [17] Business Line Data and Key Metrics Changes - Service revenue saw a slight growth, but organic decline was offset by acquisitions [14] - Distribution revenue grew by 7% to $2,520,000, driven by strong product sales and rental growth [11][15] - Rental revenue experienced a decline in December due to extended customer closures, negatively impacting distribution service margins [11][12] Market Data and Key Metrics Changes - The core calibration service demand saw a decline in December, attributed to holiday-related manufacturing closures [7][9] - The rental channel faced similar demand declines, affecting overall distribution performance [11][54] Company Strategy and Development Direction - The company is focused on integrating Martin Calibration, which is expected to enhance service growth and productivity [10][22] - Management aims for strong organic service growth and improved operational efficiencies through process improvements and automation [22] - The company maintains a strong pipeline of new opportunities in calibration services, anticipating a return to historical growth rates [21][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of holiday timing on service demand and expressed confidence in a recovery in January [26][27] - The outlook for organic service revenue is expected to be in the low to mid-single digits, below previous expectations [21] - Management remains optimistic about the fundamentals of the business and the potential for strong performance in the upcoming fiscal year [35][36] Other Important Information - The company acquired Martin Calibration for $79,000,000, enhancing its presence in key markets [19] - The company reported total net debt of $4,080,000, with a leverage ratio of 0.97x [19] Q&A Session Summary Question: Near term outlook and guidance reduction - Management confirmed that December's slowdown impacted guidance, but January showed recovery, leading to conservative full-year guidance [26][27] Question: Visibility in the pipeline and expectations for next year - Management reported a strong core calibration pipeline, with some delays affecting guidance but remains optimistic for the upcoming year [30][31] Question: Service gross margins and future expectations - Management expects service margins to stabilize and grow in the upcoming quarters, aiming for consistent performance [46] Question: Distribution performance and rental recovery - Management indicated that the rental business was impacted similarly to calibration services, but expects recovery as demand increases [54] Question: Working capital and inventory management - Management noted improvements in inventory levels and accounts receivable due to the acquisition, aligning with revenue growth [50][51]