Transcat, Inc. · NASDAQ:TRNS
Transcat — Singular Research Webinar 2019
29 slides from Transcat's conference presentation, Feb 27, 2019
Slide 1: Singular Research Webinar
Feb 27 2019 | Singular Research Webinar Michael J. Tschiderer Chief Financial Officer
Slide 2: Safe Harbor Statement
TRANSCAT rstn vy nssus 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
Slide 3: A Leader in the Calibration & Laboratory Instrument Service Market
Nasdaq: TRNS TRANSCAT rust in overy measure A Leader in the Calibration & Laboratory Instrument Service Market and Value-Added Distributor of Test, Measurement & Control Instrumentation v >: es Service segment is our primary growth engine Acquisitions will continue to be part of our growth strategy
Slide 4: Service and Distribution & Rental
TRANSAT stn very nas Product Distribution & Rental Our target customers usually operate in regulated Key instrument types include temperature, pressure, environments like Life Sciences and Aerospace where electrical, flow and physical/dimensional measuring the cost of failure is very high and requir
Slide 5: Two Complementary Segments
Two Complementary Segments Service - Solid organic growth - Recurring revenue stream - Strong operating leverage - Driven by regulation and the high cost of failure Distribution - New test equipment - Rentals - Strong cash generation © 2019 Transcat inc. TRANSCAT ustin evry measure Q3 FY 2019 TTM Re
Slide 6: Taking Market Share
Taking Market Share $1.4 Billion Addressable Calibration Services Market" 41% 34 Party Service Providers 34% In-house Laboratories 4 Estimated Addressable North American Calibration Market 2 Percentage of Revenue (North America), Company estimates © 2019 Transcat inc. TRANSCAT ustin evry measure Mar
Slide 7: Flexible Service Value Proposition and Locations
TRANSCAT stin evry noasure Flexible Service Value Proposition 21 Locations to Serve Customers in the U.S., Canada and Puerto Rico Flexible Service Delivery Options: v Permanent on-site Prion ¥ Periodic on-site ¥ Mobile v In-house ¥ Pickup & Delivery @ Denver tos Angeles @ son Diego @ Phoenix ‘Map Le
Slide 8: Broad and Diverse Blue Chip Customer Base
TRANSCAT ‘ror nse Broad and Diverse Blue Chip Customer Base Percentage of Service Revenue* 6% — Chemical/Process 7% Energy/Utilities 10% Aerospace/Defense 13% Services 18% Industrial 4% = Other 42% Life Science / FDA-regulated & MERCK —©KON é Tecluologies mfonenciin| © 2019 Transcat inc. * Company e
Slide 9: Services Distribution
TRANSAT stn very neasre Services Distribution © 2019 Transcat Inc.
Slide 10: Financial Results
Financial Results
Slide 11: Record Consolidated Results
TRANSCAT rstn vy nssus Record Consolidated Results (Sin millions) Consolidated Revenue Consolidated Operating Income 7% CAGR 41% CAGR 10.1 $155.1 $158.9 goo ° $143.9 $7.9 $123.6 ; $122.2 $6.8 $6.3 FY 2015 FY 2016 FY 2017 : FY 2018 Q3 FY19 FY 2015 FY 2016 FY 2017 FY 2018 Q3 FY19 TIM TM Bf Distributio
Slide 12: Service Segment Continues to Deliver
TRANSCAT ustin evry measure Service Segment Continues to Deliver (Sin millions) $36.4 Inflection Point FY 2012 $(0.2) FY 2012 © 2019 Transcat Inc. Service Revenue gma $77.4 $81.7 $51.8 $59.2 FY2015 FY2016 FY 2017 FY2018 Q3FY19 TM Service Operating Income & Margin gag $5.2 $5.2 $3.7 $4.2 71% 7.0% 67%
Slide 13: Improved Distribution Margins
TRANSCAT ‘ror nse Improved Distribution Margins (Sin millions) Distribution Sal 4 . i : aie nt Continued pivot to higher margin $71.8 $72.8 $77.7 $77.2 end-user customers and rental $63.0 business Investments in e-commerce capabilities and web-based marketing Fy 2015 FY 2016 FY 2017 FY 2018 Q3 FY19
Slide 14: Diversification Driving Distribution
TRANSCAT ustin evry measure Diversification Driving Distribution Strong Rental Revenue Growth (Sin millions) Provide higher margin profile Enhances value proposition Excalibur acquisition added incremental rental platform for higher-end electronic equipment $0.9 Used equipment business further = 4 c
Slide 15: Strong Cash Generation and Record Net Income
TRANSCAT ustin evry measure Strong Cash Generation and Record Net Income (Sin millions) Net Income and Diluted EPS $6.9 $5.9 $4.0 $4.1 1... $0.64 $0.81 $0.93 FY2015 FY2016 = FY2017-—Ss FY2018 «= Q3 FY19 TM Adjusted EBITDA’ and Margin $16.4 $17.5 $14.5 11.0% FY2015 FY2016 = FY2017-— FY2018 = Q3 FY19
Slide 16: Financial Flexibility Supports Growth Strategy
TRANSCAT ustin evry measure Financial Flexibility Supports Growth Strategy (Sin millions) Total Debt % - Debt to Total Capitalization $27.3 $22.9 $24.6 $19.1 ol 2 38.6% Iam 30.8% MN 30.3%) =z 2015 «FY 2016 FY2017 FY 2018 Q3 FY 2019 Capital Expenditures $5.3 FY2015 FY2016«—-FY2017_—«-FY2018 «= Q3 FY1
Slide 17: Growth Strategy
Growth Strategy
Slide 18: What makes Transcat Unique
TRANSCAT ustin evry measure What makes Transcat Unique Why We Win... Rental & Used Instruments Lead Generation For Service Segment Core Distribution 50 years — Strong Brand Recognition Certifications of New Equipment Service Growth * Calibration * Validation & Analytical * Consulting © 2019 Transcat
Slide 19: Leverage Technology as a Competitive Advantage
TRANSCAT ustin evry measure Leverage Technology as a Competitive Advantage Digital Transformation With industry leading web domain authority ® Proprietary “C3” asset management Trust in every measure Operational Excellence Productivity focus Lean/best practices Process automation © 2019 Transcat inc
Slide 20: Drive Double-Digit Service Growth
TRANSCAT ‘ror nse Drive Double-Digit Service Growth Dominate our local markets Take market share from Organic Growth 34 party providers and OEMs Strategy Outsourcing of internal labs Expansion of RF microwave and high-end electronics capabilities New fleet of mobile ee calibration labs Acquisition I
Slide 21: Executing Acquisition Strategy
TRANSCAT stn rg sare Executing Acquisition Strategy Spectrum craig ies, Inc. Al) Angel's A TRANSAT eens Gea bur ae ANGE! Inc. FY 2016 FY 2017 FY 2018 FY 2019 NBS Calibrations, Inc. © 2019 Transcat inc. 21
Slide 22: Acquisition Drivers
TRANSCAT stn rg sare Acquisition Drivers Increased Geographic Capabilities and Leveraged Expansion Expertise Infrastructure Angel’s Instrumentation v v NBS Calibrations v v Excalibur Engineering Y v Dispersion Laboratory v v Spectrum Technologies v v © 2019 Transcat inc. 22
Slide 23: Strategic Acquisitions to drive service growth
a Benno rvice growth Strategic Acquisitions Y To rive key double-digt service Brow" Leverage Technology, Processes i ree process & productivity ¥ Automate calibrations v Margin enhancement & People to Improve Productivity © 2019 Transcat Inc. Outlook provided as of February 4, 2019
Slide 24: Singular Research Webinar
Feb 27 2019 Singular Research Webinar
Slide 25: Supplemental Information
Supplemental Information TRANSAT is: 0
Slide 26: Adjusted EBITDA Reconciliation
TRANSCAT ‘ror nse Adjusted EBITDA Reconciliation (Sin thousands) 3QFY19 FY 2015, FY 2016 FY 2017 FY 2018, 1! Net Income $ 4026 $ 4124 $ 4522 $ 5922 $6,939 + Interest 234 247 ns 1,018 904 + Other Expense / (Income) aa 48 51 60 35 +Tax Provision 2,397 1,883 2,642 2,026 2,220 Operating income $ 6768 $
Slide 27: Segment Adjusted EBITDA Reconciliation
TRANSCAT ‘ror nse Segment Adjusted EBITDA Reconciliation ($ in thousands) 3QFY19 FY 2015 FY 2016 FY 2017 FY 2018 ™. Service Operating Income $ 3,693 $ 4,155 $ 4,769 $ 5158 § 5,191 +Depreciation & Amortization 2,362 3,216 4,660 4,397 4,607 +Other (Expense) / Income (138) (64) (55) (61) (41) +Noncash
Slide 28: Generating Cash to Drive Key Investments
TRANSCAT ustin evry measure Generating Cash to Drive Key Investments FY 2009 (start of acquisition strategy) to Q3 FY 2019 (Sin millions) $120 $2.2 ($34.3) $100 - $25.7 eo $31.4 _ ($54.3) $60 $39.9 $40 20 | gp |e a 88 FY2009 Cash & Net D&A and — Financing/Other FX Effect Capital Business Repurchase
Slide 29: Seasoned Executive Team Driving Growth
Seasoned Executive Team Driving Growth TRANSCAT ustin evry measure Lee D. Rudow = More than 32 years of industry experience President and Chief Executive Officer = Joined Transcat in 2011 Benjamin P. Hawley Robert A. Flack Jennifer J.Nelson Andrew J. Quaranto Vice President of Vice President of Vice