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
Sept 7 2016 Annual Meeting of Shareholders 1
Slide 2: Annual Meeting of Shareholders - Lee D. Rudow
Sept 7 2016 Annual Meeting of Shareholders Lee D. Rudow President and CEO 2
Slide 3: 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 4: Senior Management Team
Senior Management Team Lee D. Rudow President and Chief Executive Officer Michael J. Tschiderer Chief Financial Officer Robert A. Flack Vice President of Operations Jennifer J. Nelson Vice President of Human Resources Scott D. Sutter Vice President of Business Development Mike W. West Vice President
Slide 5: FY 2016 Performance
FY 2016 Performance Record Service segment revenue • Service revenue up 14% • Milestone: exceeded Distribution in revenue (53% of Q4) Distribution headwinds continued • Segment revenue down 12% • Approx. half the decline related to weakness in the oil & gas market Strong cash generation and balance
Slide 6: Outstanding Year for Acquisitions
Outstanding Year for Acquisitions Geographic Increased Leveraged Expansion Capabilities Infrastructure Excalibur Engineering Dispersion Laboratory Spectrum Technologies Anmar Metrology Calibration Technologies Spectrum & Excalibur: Largest acquisitions in recent years 6
Slide 7: Consolidated Results
Consolidated Results ($ in millions) Consolidated Revenue Consolidated Operating Income $123.6 $122.2 $125.6 $118.5 $112.3 $6.7 $6.8 $6.7 $6.3 $5.9 FY 2013 FY 2014 FY 2015 FY 2016 Q1 FY2017 FY 2013 FY 2014 FY 2015 FY 2016 Q1 FY2017 TTM TTM Distribution Service *FY 2013 – Q1 FY 2017 TTM 7
Slide 8: Record Service Segment Performance
Record Service Segment Performance ($ in millions) Service Revenue Revenue increase driven by $59.2 $62.8 organic growth and $51.8 $48.2 acquisitions $40.7 29 consecutive quarters of YOY revenue growth FY 2013 FY 2014 FY 2015 FY 2016 Q1 FY2017 TTM Strong operating leverage: Service Operating I
Slide 9: Focus: Stabilizing Distribution
Focus: Stabilizing Distribution ($ in millions) Distribution Sales Sales impacted by: $71.6 $70.3 $71.8 − Soft oil and gas market $63.0 $62.8 − More on-line distributors Opportunities – Instrument rental growth FY 2013 FY 2014 FY 2015 FY 2016 Q1 FY2017 TTM – Used equipment sales growth Distribut
Slide 10: Strong Cash Generation and Bottom-Line
Strong Cash Generation and Bottom-Line ($ in millions) Adjusted EBITDA* $10.6 $11.7 Service segment Adjusted $10.0 $10.3 $8.9 EBITDA $3.1 $4.6 $8.5 $6.1 $7.5 +71% in Q1 FY17 $5.8 $5.4 +36% CAGR $4.1 $3.1 $3.2 Distribution segment generates FY 2013 FY 2014 FY 2015 FY 2016 Q1 FY2017 Distribution S
Slide 11: Balance Sheet Supports Acquisition Strategy
Balance Sheet Supports Acquisition Strategy ($ in millions) Total Debt $27.3 Acquisitions $19.1 − FY16: $13.9M paid plus deal $12.2 holdbacks of $2.4M $8.0 $7.6 − Q1 FY17: $7.6M including deal holdback of $0.7M FY 2013 FY 2014 FY 2015 FY 2016 Q1 FY 2017 Financial flexibility Debt to Total Capita
Slide 12: Generating Cash to Drive Key Investments
Generating Cash to Drive Key Investments FY 2009 to Q1 FY 2017 ($ in millions) $90 $1.8 ($18.8) $80 $30.0 $70 ($50.5) $60 $50 $20.7 $40 $30 $25.8 $20 ($8.3) $10 $0.2 $0.8 $0 FY2009 Cash & Net D&A and Financing/Other FX Effect Capital Business Repurchase of Q1 FY2017 Investments, Income Working Capit
Slide 13: Market, Strategy and Outlook
MARKET, STRATEGY AND OUTLOOK 13
Slide 14: Taking Market Share
Taking Market Share $1.0 Billion Addressable Market¹ #2 in Market Share by Revenue for 3rd Party Service Providers2 22% 25% 40% 20% OEMs 3rd Party Service Transcat Providers 18% 19% 35% 11% In-house 10% Laboratories Tektronix Transcat Regionals ($5mm-$15mm) Trescal Others (highly fragmented; $500k-$
Slide 15: Focus on Highly Regulated Industries
Focus on Highly Regulated Industries Industrial 21% Life Science / Energy/Utilities FDA-regulated 7% 43% Chemical 6% Other 18% Aerospace & Defense 5% Percentage of Service Revenue* * Company estimates 15
Slide 16: Full Suite of Products and Services
Full Suite of Products and Services Unique Among Competition Validation Product New Distribution Calibration & Instrument and Rental Services Laboratory Calibration (New & Used Services Equipment) Superior Quality Serve an expanded Life Science market Mission critical services 16
Slide 17: Distribution Strategy Pivot
Distribution Strategy Pivot New Instrument Sales Why the pivot in strategy? Great synergies between accounts Rental of Test Leverage of current Instruments infrastructure New Instrument Higher gross margins on used and rental equipment Sales Faster ramp up in new Only Used Equipment business
Slide 18: Service Organic Growth Strategy
Service Organic Growth Strategy Taking market share from 3rd party providers and OEMs Organic Growth Capture outsourcing of internal labs Strategy Upgraded sales talent and integrated sales model Leveraging Distribution segment Expanding addressable market Acquisition Strategy through capa
Slide 19: Service Acquisition Strategy
Service Acquisition Strategy Drivers: Organic Growth − Geographic expansion Strategy − Increased capabilities /expertise − Bolt-on / leverage infrastructure Majority of opportunities: Acquisition Revenue range of $500K – $5MM Strategy Criteria: 4-6x EBITDA Minimum IRR of 15% 19
Slide 20: FY 2017 Outlook and Long-term Objectives
FY 2017 Outlook* Double-digit Service segment revenue growth − Incremental sales from recent acquisitions − Expect strong organic growth − Achieve sales and cost synergies to drive operating leverage and margin expansion Stabilization of Distribution segment − Core Distribution still faces headw
Slide 21: Annual Meeting of Shareholders
Sept 7 2016 Annual Meeting of Shareholders 21
Slide 22: Supplemental Information
SUPPLEMENTAL INFORMATION 22
Slide 23: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in thousands) Q1 FY 2017 FY 2013 FY 2014 FY 2015 FY 2016 TTM Service Operating Income (loss) $ 1,311 $ 2,379 $ 3,693 $ 4,155 $ 4,553 +Depreciation & Amortization 1,740 2,144 2,362 3,216 3,783 +Other (Expense) / Income (84) (141) (138) (64) (52) +Noncash Stock Comp 1