Financial Data and Key Metrics Changes - Consolidated revenue increased by 21% to $83 million in Q2 FY2026, driven by strong performance across segments [5][9] - Consolidated gross profit grew by 26%, with gross margins expanding by 120 basis points [6][10] - Adjusted EBITDA increased by 37%, with a margin expansion of 160 basis points [6][12] - Net income for Q2 was $1.3 million, a decrease of $2 million year-over-year, impacted by higher interest expenses and a higher effective tax rate [10][11] - Adjusted diluted earnings per share was reported at 44 cents [11][56] Business Line Data and Key Metrics Changes - Service revenue grew by 20%, marking the 66th consecutive quarter of year-over-year growth [6][9] - Distribution revenue increased by 24%, primarily due to high demand in the rental channel [7][9] - Gross margin in the distribution segment expanded by 530 basis points, driven by a higher mix of rental revenue [8][10] Market Data and Key Metrics Changes - The rental business showed significant growth, attributed to the integration of Axiom Test Equipment and strong demand [18][19] - The company expects to return to high single-digit organic service growth in the second half of FY2026 [15][25] Company Strategy and Development Direction - The company focuses on organic service growth, strategic acquisitions, and growth in the rental channel as key elements of its strategy [5][6] - The leadership team is strengthening, contributing to sustainable long-term value for shareholders [15][16] - The company plans to leverage technology and AI to enhance operational efficiencies and drive growth [8][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing economic uncertainty but expressed confidence in the company's ability to navigate challenges [6][15] - The company anticipates continued strong performance in the second half of FY2026, with expectations for margin expansion [15][25] - Management highlighted the importance of customer retention and the successful integration of recent acquisitions [7][30] Other Important Information - The company closed the Esko Calibration acquisition in Q2, which is expected to contribute positively to growth [12][13] - The company has a strong balance sheet with total debt of $111.9 million and a leverage ratio of 2.25x [12][13] Q&A Session Summary Question: What is driving the rentals acceleration? - Management indicated that the growth is primarily due to successful integration of Axiom Test Equipment and market conditions favoring rentals over purchases [18][19] Question: What visibility levels exist for the second half of the rental business? - Management expects continued strong performance but does not anticipate maintaining the same growth rates as the first half [20][21] Question: What gives confidence in returning to high single-digit organic growth? - Management noted recent account wins and stable customer retention as key factors for optimism [22][25] Question: How has the Esko acquisition performed since acquisition? - Management reported strong performance from Esko, with no significant obstacles encountered during integration [29][30] Question: What defines the economic uncertainty impacting growth? - Management cited delays in customer decision-making due to macroeconomic factors as a challenge [32][34] Question: What is the outlook for the solutions business? - Management indicated that the solutions business is stabilizing and should no longer be a drag on growth [48][49] Question: Will the rental business metrics be broken out in the future? - Management acknowledged the importance of the rental business but noted current operational overlaps make it challenging to separate metrics [41][43] Question: How does the competitive landscape look in the service segment? - Management expressed confidence in the company's position relative to competitors, citing ongoing investments and strategic acquisitions as advantages [76][80]

Financial Data and Key Metrics Changes - The company reported a 9.2% increase in consolidated sales year-over-year, with acquisitions contributing 6.3 percentage points to growth, while organic sales growth was 3% [17] - EBITDA increased by 13.4% year-over-year, with EBITDA margins expanding to 12.2%, up 46 basis points from the previous year [21] - Earnings per share (EPS) rose 11.4% to $2.63, benefiting from a reduced share count due to buyback activity [21] Business Line Data and Key Metrics Changes - The service center segment saw organic sales growth of 4.4%, driven by internal initiatives and firming technical MRO demand [22] - The engineered solutions segment experienced a 19.4% increase in sales, primarily due to acquisitions, but organic sales decreased by 0.4% year-over-year [23] - Hydradyne's EBITDA contribution improved by over 20% sequentially, indicating strong progress in integration and synergy initiatives [14] Market Data and Key Metrics Changes - Year-over-year organic sales growth was reported at 3%, the strongest in two years, with 16 out of the top 30 markets showing positive sales growth [6] - Strongest growth was observed in machinery, food and beverage, refining, pulp and paper, metals, oil and gas, and aggregates, while declines were noted in lumber and wood, transportation, chemicals, mining, and utilities [6][7] - The company noted a stable to slightly positive underlying demand backdrop, with positive order momentum across various segments [10][30] Company Strategy and Development Direction - The company aims to leverage ongoing operational initiatives and structural mix tailwinds to achieve mid to high teen incremental annual margin targets [13] - M&A remains a top capital allocation priority, with an active pipeline of mid-sized targets across both segments [15] - The company is focused on enhancing its technical differentiation and value-added service capabilities through strategic acquisitions [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the first quarter performance, highlighting stronger top-line trends and sustained positive order momentum [30] - The company anticipates that industrial activity will remain mixed in the near term, with expectations for order conversion to be more weighted toward the second half of fiscal 2026 [27][28] - Management noted that customer sentiment is gradually improving, with favorable demand signals across traditional and emerging markets [31] Other Important Information - The company ended the quarter with approximately $419 million in cash and a net leverage ratio of 0.3 times EBITDA, indicating a solid balance sheet position [25] - Free cash flow totaled $112 million, representing a conversion rate of 111% relative to net income [25] Q&A Session Summary Question: Insights on holiday shutdowns from customers - Management indicated it is still early to assess customer plans for holiday shutdowns, but some customers are expected to remain active [36] Question: Supplier pricing behavior - Management noted no significant changes in supplier behavior, with price increases being orderly and manageable [39][40] Question: Engineered solutions performance expectations - Management expects engineered solutions to potentially outperform service centers in the second half of fiscal 2026 due to order backlog conversions [44] Question: Order growth dynamics - Management explained that order growth is encouraging, but project conversion times vary based on complexity and scheduling [52] Question: Pricing expectations for the year - Management maintained a cautious outlook on pricing, indicating it may not ramp beyond the current 200 basis points without clearer market activity [55] Question: Capital allocation priorities - Management confirmed that organic growth opportunities and M&A remain top priorities, with a disciplined approach to acquisitions [63]

Core Insights - Shenzhen Tian Su Measurement and Testing Co., Ltd. is preparing for an IPO on the ChiNext board, highlighting its growth and competitive advantages in the measurement and testing industry [1] Company Overview - Established in 2009, the company is a national third-party measurement and testing institution with a strong focus on technological research and standard formulation [1] - As of August 31, 2025, the company holds 133 patents, including 43 invention patents and 97 software copyrights, along with twelve core technologies [1] - The company has led or participated in the formulation of 78 standards and 9 technical specifications, with over 100 million yuan invested in R&D from 2022 to the first half of 2025 [1] Service Network and Growth Strategy - By June 30, 2025, the company has established 27 key laboratories across various provinces, creating a "grid" service network [1] - The fundraising plan aims to enhance regional laboratory service capabilities and improve national layout, thereby building service response advantages [1] - The dual-driven model of "measurement + testing" is expected to drive business growth [1] Market Position and Performance - The company offers 1,417 calibration service capabilities across ten major fields, with a rapid growth rate of 46.75% in the new energy battery testing business [1] - Four new energy testing bases have been established, serving over 2,000 enterprises while collaborating with traditional measurement services [1] - The company's brand credibility and quality customer base lay a solid foundation in the market, with 72.4% of revenue from strategic emerging industry clients in the first half of 2025 [1] Regulatory and Industry Context - The company's growth model has attracted regulatory attention, showcasing the development path of third-party measurement institutions [1]

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]