Transcat, Inc. · NASDAQ:TRNS
Transcat — Investor Presentation (September 2015)
26 slides from Transcat's investor presentation, September 2015
Slide 1: Investor Presentation
Sept. 2015 Investor Presentation Lee D. Rudow President and CEO John J. Zimmer Senior VP of Finance and CFO 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 that often are identif
Slide 3: Leader in Fragmented Calibration & Compliance Service Market
Leader in Fragmented Calibration & Compliance Service Market and Distributor of Test, Measurement and Control Instrumentation Achieving critical revenue mass in the Service segment Long-term operating earnings to grow faster than revenue Strong leadership in place to drive company to next leve
Slide 4: Two Complementary Segments
Two Complementary Segments Q1 FY 2016 TTM Revenue: $124.2MM Service Distribution $53MM $71MM (43%) (57%) Double digit Service growth Service driven by regulation Unique value proposition Strong cash generation Strong operating leverage Leverage between segments © 2015 Transcat Inc. 4
Slide 5: Executing our Strategy
Executing our Strategy Growing Revenue & Operating Income ($ in millions) Consolidated Revenue Consolidated Operating Income $118.5 $123.6 $124.2 $110.0 $112.3 $6.7 $6.8 $7.0 $5.4 $5.9 FY 2012 FY 2013 FY 2014 FY 2015 Q1 FY 2016 FY 2012 FY 2013 FY 2014 FY 2015 Q1 FY 2016 TTM TTM Distribution Service
Slide 6: Service Segment Operating Leverage
Service Segment Operating Leverage ($ in millions) Service Revenue $51.8 $53.2 $48.2 43% of total revenue $36.4 $40.7 25 consecutive quarters of year-over-year growth FY 2015 Service operating FY 2012 FY 2013 FY 2014 FY 2015 Q1 FY 2016 TTM income surpassed Distribution Service Operating Income
Slide 7: Leveraging Distribution to Drive Growth
Leveraging Distribution to Drive Growth ($ in millions) Distribution Sales Maintaining market share $73.6 $71.6 $70.3 $71.8 $71.0 Soft oil and gas market impacted sales Lower vendor rebates hit gross margin (no impact expected in FY 2012 FY 2013 FY 2014 FY 2015 Q1 FY 2016 TTM FY2016) Distribut
Slide 8: Strong Cash Generation
Strong Cash Generation ($ in millions) Adjusted EBITDA* $10.7 Service: +45% CAGR $10.0 $10.3 $8.8 $8.9 Distribution segment $2.0 $3.1 $4.6 $6.1 $6.7 generates significant cash $6.8 $5.8 $5.4 $4.1 $4.0 FY 2012 FY 2013 FY 2014 FY 2015 Q1 FY 2016 TTM Distribution Services All figures are rounded to
Slide 9: Bottom-line Performance
Bottom-line Performance ($ in millions) Net Income $4.0 $4.2 $4.0 $3.7 $3.3 3.3% 3.4% 3.3% 3.4% 3.0% % of Revenue FY 2012 FY 2013 FY 2014 FY 2015 Q1 FY 2016 TTM EPS $0.43 $0.49 $0.54 $0.57 $0.59 © 2015 Transcat Inc. 9
Slide 10: Balance Sheet Supports Acquisition Strategy
Balance Sheet Supports Acquisition Strategy ($ in millions) Long Term Debt $12.2 • Revolving credit facility: $11.5 $8.0 $18.0 million available $7.6 $3.4 • FY 2016 CapEx – Increasing lab capabilities FY 2012 FY 2013 FY 2014 FY 2015 Q1 FY 2016 – Adding lab capacity – Assets for rental business Capit
Slide 11: Generating Cash to Drive Key Investments
Generating Cash to Drive Key Investments Historical Trailing 12 Month Key Investments and Current Quarter Debt Balance ($ in thousands) $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 ROIC (TTM) 10.6
Slide 12: Market Strategy and Outlook
Market Strategy and Outlook 12
Slide 13: Calibration Services Market
Calibration Services Market $1.0 Billion Addressable Market¹ #2 in Market Share by Revenue for 3rd Party Service Providers2 25% 25% 22% 40% Transcat 35% 20% 13% 10% 10% OEMs Tektronix Transcat Regionals ($8mm-$15mm) 3rd Party Service Providers Trescal Others (highly fragmented; In-house Laboratories
Slide 14: Unique Service Value Proposition
Unique Service Value Proposition Fully Accredited Calibration Provider with Highest Quality in the Industry Flexible Service Delivery Options: Permanent on-site Periodic on-site Mobile In-house Pickup & Delivery Headquarters NVLAP AccreditedFacilities Other Accredited Requirements © 2015 T
Slide 15: Broad and Diverse Blue Chip Customer Base
Broad and Diverse Blue Chip Customer Base Percentage of Service Revenue * Industrial Life Science / 29% FDA-regulated 32% Energy / Utilities 8% Other Chemical 24% 7% *Revenue and Percentages as of FY 2015 © 2015 Transcat Inc. 15
Slide 16: Service Growth Strategy
Service Growth Strategy Organic Growth Strategy Acquisition Strategy Expanding addressable market Taking market share Geographic Expansion Outsourcing of Internal Labs Increased Capabilities /Expertise Integrated Sales Model – Enterprise Sales Bolt-On - Leverage Infrastructure Levera
Slide 17: Serve an Expanded Life Science Market
Serve an Expanded Life Science Market Mission Critical Services Standard Transcat now provides the Calibration entire suite of services Analytical Services Unique among competition 2012 acquisition expanded Process offerings Pipettes Calibration Gained new customer with analytical services V
Slide 18: Full Suite of Products and Services
Full Suite of Products and Services Calibration Services New Instrument A Total Product Calibration & Solution Distribution Rental Validation & Analytical Services © 2015 Transcat Inc. 18
Slide 19: Executing Acquisition Strategy
Executing Acquisition Strategy Acquired Anmar Metrology, Inc. August 24, 2015 Specializes in providing customized calibration and repair solutions for customers in multiple industries with a significant focus on the Life Science and Defense market Building critical mass in Southern California
Slide 20: Investments Focused on Growth
Investments Focused on Growth C3 Asset Management Software Cost • Compliance • Control Customizable, web-based software Meets the critical needs of highly regulated manufacturing environments Strengthened value proposition Positive customer reaction to software capabilities © 2015 Transcat I
Slide 21: Investments Focused on Growth
Investments Focused on Growth Web 3.0 – new e-commerce and CMS platform Flexible and adaptable to changing e-commerce market Robust promotional and lead nurturing engine Strong SEO integration Increased efficiency in content management Goals: - increase relevant traffic - higher conversion rate © 20
Slide 22: FY 2016 Outlook
FY 2016 Outlook* Expect double-digit Service segment revenue growth − Acquisitions − Leverage e-commerce platform and C3 Asset Management Software − Life science market expanding − Enterprise sales strategy is working Capture Distribution market share − Expanding number of product offerings − Ad
Slide 23: Investor Presentation
Sept. 2015 Investor Presentation 23
Slide 24: Supplemental Information
Supplemental Information 24
Slide 25: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in thousands) Q1 FY 2016 FY 2012 FY 2013 FY 2014 FY 2015 TTM Service Operating Income (loss) $ (175) $ 1,311 $ 2,379 $ 3,693 $ 4,072 +Depreciation & Amortization 1,959 1,740 2,144 2,362 2,554 +Other (Expense) / Income (37) (84) (141) (138) (162) +Noncash Stock Comp
Slide 26: Seasoned Executive Team Driving Growth
Seasoned Executive Team Driving Growth ● 27 Years of Industry Experience John J. Zimmer Lee D. Rudow ● Demonstrated Growth Record Senior VP, Finance and CFO President & CEO Joined Transcat in 2006 ● Joined Transcat in 2011 Jennifer J. Nelson Vice President of Scott D. Sutter Rob A. Flack Human Resou