Transcat, Inc. · NASDAQ:TRNS
Transcat — Investor Presentation (June 2018)
28 slides from Transcat's investor presentation, June 2018
Slide 1: Investor Presentation
June 2018 Investor Presentation Lee D. Rudow President and CEO Michael J. Tschiderer Chief Financial Officer NASDAQ: TRNS 1
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact and thus are subject to risks, uncertainties and assumptions. Forward-looking state
Slide 3: A Leader in the Calibration & Laboratory Instrument Service Market
NASDAQ: TRNS A Leader in the Calibration & Laboratory Instrument Service Market and Value-Added Distributor of Test, Measurement & Control Instruments Service segment is our primary growth engine Achieving high single-digit organic revenue growth Acquisitions will continue to be part of our gr
Slide 4: Two Complementary Segments
Two Complementary Segments Service Distribution Solid organic growth New test equipment Recurring revenue stream Rentals Strong operating leverage Used equipment Driven by regulation and Strong cash generation the high cost of failure FY 2018 Revenue: $155.1M (Service 50%, Distribution 50%) Unique
Slide 5: Taking Market Share
Taking Market Share $1.3 Billion Addressable #2 in Market Share by Revenue for Calibration Services Market¹ 3rd Party Service Providers2 26% 18% 25% 40% (fragmented) OEMs 3rd Party Service Transcat Providers 16% 21% 35% (fragmented) 11% In-house 8% Laboratories Tektronix Transcat Regionals ($5M-$15M
Slide 6: Flexible Service Value Proposition
Flexible Service Value Proposition 22 Locations to Serve Customers in the U.S., Canada and Puerto Rico Flexible Service Ottawa Montreal Delivery Options: Boston Permanent on-site Portland Toronto Rochester Periodic on-site Milwaukee Pittsburgh Philadelphia Mobile Harrisburg Ft. Wayne In-hous
Slide 7: Broad and Diverse Blue Chip Customer Base
Broad and Diverse Blue Chip Customer Base Percentage of Service Revenue* 5% Aerospace & Defense 6% Chemical/Process 7% Energy/Utilities 17% Other 21% Industrial 44% Life Science / FDA-regulated © 2018 Transcat Inc. * Company estimates 7
Slide 8: Unique Value Proposition
Unique Value Proposition Full Suite of Products and Services for Life Science, Industrial Manufacturing and Alternative Energy Markets New Instrument Calibration Calibration, Validation & Laboratory Services Superior Quality Product Distribution Alternative Energy and Rental © 2018 Transcat Inc. 8
Slide 9: Technology as a Competitive Advantage
Technology as a Competitive Advantage Digital New, Seasoned Transformation Technology with Industry Leadership Leading Web Domain Authority Proprietary Operational “C3” Portal for Excellence Productivity focus Customer Asset Lean/best practices Management Process improvement © 2018 Transcat Inc. 9
Slide 10: Financial Results
Financial Results TRANSCAT Trust in every measure
Slide 11: Record Consolidated Results
Record Consolidated Results ($ in millions) Consolidated Revenue Consolidated Operating Income $9.0 $7.9 $155.1 $143.9 $6.7 $6.8 $123.6 $122.2 $6.3 $118.5 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Distribution Service © 2018 Transcat Inc. CAGR calculated FY 2014
Slide 12: Service Segment Continues to Deliver
Service Segment Continues to Deliver ($ in millions) Service Revenue Solid organic revenue growth $77.4 $59.2 $71.1 36 consecutive quarters of YOY $36.4 $48.2 $51.8 revenue growth -- 9 years Inflection Point Revenue: +9% (FY18) FY 2012 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 +13% (CAGR*) Service Ope
Slide 13: Record Distribution Sales
Record Distribution Sales ($ in millions) Distribution Sales Sales and margin drivers: $77.7 Diversification strategy and an $70.3 $71.8 $72.8 improving US industrial market $63.0 Higher demand from core customers Growing rental business FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Automated pricing init
Slide 14: Strong Cash Generation and Record Net Income
Strong Cash Generation and Record Net Income ($ in millions) Net Income Tax rate expectations2 $5.9 Fiscal 2019: 25% to 27% $4.5 $4.0 $4.0 $4.1 (includes Federal, various state, and Canadian income taxes) Diluted $0.54 $0.57 $0.58 $0.64 $0.81 EPS Adjusted EBITDA CAGR3 FY 2014 FY 2015 FY 2016 FY 2017
Slide 15: Financial Flexibility Supports Growth Strategy
Financial Flexibility Supports Growth Strategy ($ in millions) Total Debt $21.3 million available from credit facility as of % - Debt to Total Capitalization March 31, 2018 $27.3 1.4x leverage ratio at year-end $22.9 $19.1 (Total debt to TTM Adjusted EBITDA¹) $12.2 $50.0M shelf registration on Form
Slide 16: Generating Cash to Drive Key Investments
Generating Cash to Drive Key Investments FY 2009 (start of acquisition strategy) to FY 2018 ($ in millions) $100 $23.8 $1.8 ($28.9) $90 $80 $70 $28.6 ($50.6) $60 $50 $40 $35.4 $30 $20 ($9.8) $10 $0.2 $0.6 $0 FY2009 Cash & Net D&A and Financing/Other FX Effect Capital Business Repurchase of FY 2018 I
Slide 17: Growth Strategy and Outlook
Growth Strategy and Outlook 17
Slide 18: Expanded Addressable Distribution Market
Expanded Addressable Distribution Market Why the pivot in strategy? Great synergies between Distribution and Service segments Leverage of current infrastructure Higher gross margins on used and rental equipment Well indexed web domain Differentiation through “value add” Lead Generation for Service B
Slide 19: Diversification Driving Distribution
Diversification Driving Distribution Strong Rental Revenue Growth ($ in millions) $3.6 Provide higher margin profile Enhances value proposition $2.3 Excalibur acquisition added incremental rental platform for higher-end electronic equipment $0.9 Used equipment business further $0.4 complements and d
Slide 20: Drive Double-Digit Service Growth
Drive Double-Digit Service Growth Dominate our local markets with integrated sales/ operations focus Organic Growth Strategy Take market share from 3rd party providers and OEMs Capture outsourcing of internal labs Expansion of RF microwave Geographic expansion and high-end electronics Acquisition In
Slide 21: Executing Acquisition Strategy
Executing Acquisition Strategy Calibration Excalibur CMC Anacor Technologies Engineering ACA Instrument Compliance Ulrich Spectrum Westcon Tmetrix Services Services Metrology Technologies FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 United Wind Newark Cal-Matrix Apex Dispe
Slide 22: Acquisition Drivers
Acquisition Drivers Increased Geographic Capabilities and Leveraged Expansion Expertise Infrastructure Excalibur Engineering Dispersion Laboratory Spectrum Technologies Anmar Metrology Calibration Technologies © 2018 Transcat Inc. 22
Slide 23: FY 2019 Outlook -- Building for the Long Term
FY 2019 Outlook¹ -- Building for the Long Term Service segment: Value proposition continues to resonate in the market; Expect mid to high single-digit organic growth and improved productivity Distribution segment: Optimistic performance will continue Operational Excellence: Initiatives ongoing; Upgr
Slide 24: Investor Presentation
June 2018 Investor Presentation NASDAQ: TRNS 24
Slide 25: Supplemental Information
Supplemental Information 25
Slide 26: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in thousands) FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Net Income $ 3,984 $ 4,026 $ 4,124 $ 4,522 $ 5,922 + Interest 130 234 247 719 1,018 + Other Expense / (Income) 129 111 48 51 60 + Tax Provision 2,462 2,397 1,883 2,642 2,026 Operating Income $ 6,705 $ 6,768 $ 6,3
Slide 27: Segment Adjusted EBITDA Reconciliation
Segment Adjusted EBITDA Reconciliation ($ in thousands) FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Service Operating Income (loss) $ 2,379 $ 3,693 $ 4,155 $ 4,769 $ 5,158 +Depreciation & Amortization 2,144 2,362 3,216 4,660 4,397 +Other (Expense) / Income (141) (138) (64) (55) (61) +Noncash Stock Comp
Slide 28: Seasoned Executive Team Driving Growth
Seasoned Executive Team Driving Growth Lee D. Rudow More than 32 years of industry experience President and Demonstrated growth record Chief Executive Officer Joined Transcat in 2011 Benjamin P. Hawley Robert A. Flack Jennifer J. Nelson Michael W. West Michael J. Tschiderer Vice President Vice