Transcat, Inc. · NASDAQ:TRNS
Transcat — Shareholder Meeting (September 2016)
23 slides from Transcat's shareholder meeting presentation, Sep 7, 2016
Slide 1: Annual Meeting of Shareholders
pean Annual Meeting of Shareholders TRANSCAT Trust in every measure
Slide 2: Welcome and overview from the CEO
Good afternoon, welcome to our annual shareholder meeting. I am Lee Rudow, President and CEO of Transcat and I will provide an overview of the current state of Transcat an our direction for FY17 and beyond. 2
Slide 3: Forward-looking statements
You should know that the presentation you are about to hear contains forward looking statements. As you will note on this slide, these statements are made based on management’s knowledge and understanding of our business and the industries we serve. However, there are risks, uncertainties and other
Slide 4: Senior leadership team acknowledgement
Before I get started I would like to take this opportunity to thank and acknowledge the members of our senior leadership team – they dedicate themselves every day to making Transcat a great company. Please stand as I call your name Mike Tschiderer – Chief Financial Officer Rob Flack – Vice President
Slide 5: Fiscal 2016 results review
Results for the past fiscal year which ended March 26th, 2016 were mixed as strong Service segment results were muted by softness in the Distribution segment. Throughout this presentation the data on our graphs will also detail the trailing twelve months which include the last 9 months from fiscal 2
Slide 6: Acquisitions and cash flow goals
While the past year was tough for our industry we believe we more than held our own. Our goal was and is to generate cash flow and accomplish this through a blend of sustainable organic growth, strong operating performance and a stable platform for acquisitions. In particular the challenging economi
Slide 7: Consolidated revenue and operating income
Consolidated revenue and operating income both saw a dip in 2016 as strong growth from the Service segment was offset from lower Distribution segment sales. We are pleased, however, that we did start fiscal 2017 with a strong first quarter as we executed our strategic plan effectively despite contin
Slide 8: Service segment results
As I mentioned, our Service segment continues to be our primary growth engine. Higher segment revenue was driven from the continued execution of our acquisition and organic growth strategy with revenue increasing more than 18% on a trailing twelve month basis. Including the most recent quarter, the
Slide 9: Distribution segment results
The profitability of our Distribution segment has declined in recent years, most notably with last year’s drop in revenue as sales were challenged by softness in the industrial and energy markets and increased competition from online competitors. Compounding the challenge was the strength of the U.S
Slide 10: Adjusted EBITDA and net income
We use Adjusted EBITDA as one of our internal measurements. Since fiscal 2013, consolidated adjusted EBITDA has grown at a 9% compound annual growth rate, while the Service segment over the same period of time has achieved a 36% compound annual growth rate. While margins from Distribution are lower
Slide 11: Balance sheet and credit facility
We continue to maintain a strong balance sheet that offers the financial flexibility to facilitate our acquisition strategy, satisfy our working capital requirements, and meet our capital expenditure needs. In fiscal 2016, we made a number of acquisitions totaling about $16.3 million and invested an
Slide 12: Cash generation and uses since fiscal 2009
This waterfall chart looks at our cash generation since fiscal 2009, around the time we started our acquisition strategy. We have consistently generated significant cash to drive key growth investments. Over the period, we generated a total of about $78 million in cash from net income and other cash
Slide 13: Market, strategy and outlook
Let me walk you through our market, strategy and outlook 13
Slide 14: North American calibration services market
The North American calibration services market is estimated at $1 billion and is comprised of the 3 main components as shown in the pie chart on the left. Transcat is part of the 3rd party service providers in red and represents 40% of the market. Our target customers reside in all three of the comp
Slide 15: Customer base and regulated industries
We sell to a broad base of customers including most Fortune 500 companies. We continue to see the greatest opportunities and have achieved the most significant growth in highly regulated industries. This is particularly true in life science which includes pharmaceutical manufacturing, biomedical ser
Slide 16: Service suite and value proposition
Transcat offer a diverse suite of services and a very unique value proposition. Historically, Transcat has offered standard calibration services and product distribution. In recent years, we have expanded our addressable service markets by offering a full suite of services that, in particular, targe
Slide 17: Service and Distribution complement each other
The Service and Distribution segments continue to complement one another, even more so with the new platforms of rental and used equipment. We expect to leverage the higher margin businesses and to capitalize on the increasing strength of our expanded Distribution offerings. Organic growth in both s
Slide 18: Service organic growth strategy
Strategically, we look to continue to drive double-digit Service segment revenue growth. As I mentioned earlier, we expect to grow organically and through acquisition. Organically, we will leverage our compelling value proposition and grow our business by taking market share from other 3rd party pro
Slide 19: Acquisition strategy
The other component to our Service growth strategy is acquisitions. There are 3 main drivers of our acquisition strategy 1. Expansion of our geographic footprint. Geographic expansion provides opportunities to expand relationships with customers who operate manufacturing facilities in multiple locat
Slide 20: Closing remarks and outlook
In closing we want you to know how optimistic we are about the future. Driven by a full year of sales from our most recent acquisitions and strong organic growth, we expect continued double digit growth for our Service segment. And, while acquisitions remain an important element of our growth strate
Slide 21: Annual Meeting of Shareholders
pean Annual Meeting of Shareholders TRANSCAT Trust in every measure 21
Slide 22: Supplemental Information
SUPPLEMENTAL INFORMATION 22
Slide 23: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (Sin thousands) Qi FY2017 FY 2013 FY 2014 FY 2015 FY 2016 7M Service Operatingincome(loss) $ 1311 $ 2,379 $ 3693 $ 4155 $ 4553 ‘+Depreciation & Amortization 1,740 2,144 2,362 3,216 3,783 +Other (Expense)/income (84) qa) (138) (64) (52) +Noncash Stock Comp 150 230 224 i