Press release
Transcat accelerates the growth of its high margin rental business with the acquisition of Axiom Test Equipment, Inc.
ROCHESTER, N.Y.--(BUSINESS WIRE)-- Transcat, Inc. (Nasdaq: TRNS) (“Transcat” or the “Company”), a leading provider of accredited calibration services,
About this update from Transcat, Inc.
[{"type":"text","content":" ROCHESTER, N.Y.--(BUSINESS WIRE)--\nTranscat, Inc. (Nasdaq: TRNS) (“Transcat” or the “Company”), a leading provider of accredited calibration services, enterprise asset management services, and value-added distributor of professional grade handheld test, measurement and control instrumentation, announced that it has acquired all of the capital stock of privately-held Axiom Test Equipment, Inc. (“Axiom”), effective August 8, 2023. The $38 million purchase price was paid in combination of $28 million in Company stock and $10 million in cash and is subject to certain customary holdback provisions.\n\n\nFounded in 2005, Axiom is an established rental provider of Electronic Test Equipment to customers across the United States. The company has 26 employees and is headquartered just outside of San Diego, California. Axiom has an in-house ISO 17025 lab, which is primarily utilized for internal calibrations and equipment repair services. The existing staff and leadership team, led by current Axiom President Josh Shilts, will remain in place, and will continue to service customer needs.\n\n\n“Axiom is a well-established, fast-growing player in the Test Equipment rental market. They have demonstrated the ability to grow consistently, while expanding profitability, both attributes that align closely to Transcat’s historic performance. Our combined Rental business is expected be approximately $24 million in revenue, with expected Gross Margins above 55%,” according to Lee Rudow, President and Chief Executive Officer. “Axiom is a profitable business that will expand our existing Rental offering, which we believe will create opportunities for accelerated growth, while also bringing skilled staff with extensive industry knowledge and expertise.”\n\n\nMr, Rudow added, “Once Axiom is integrated into our existing Distribution business, we expect the near-term combined gross margins to be in the 28% to 30% range and would expect the margins to improve over time from there as the rental business continues to grow faster than the traditional distribution business.”\n\n\n“Importantly, the two rental businesses are complementary to one another in that there is little overlap in the rental asset portfolios, as well as little overlap in customers. We believe that this presents a compelling cross sell opportunity that we will be able to quickly leverage....