Transcat, Inc. · NASDAQ:TRNS
Transcat — Intellisight 2018 Investor Conference
29 slides from Transcat's conference presentation, Aug 15, 2018
Slide 1: Intellisight 2018 Investor Conference
Aug 15 2018 Intellisight 2018 Investor Conference 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 Instrumentation Service segment is our primary growth engine Acquisitions will continue to be part of our growth strategy Long-term operating earnings to g
Slide 4: What we do
What we do Calibration, Validation & Product Laboratory Services Distribution & Rental The Calibration process is critical to ensure We sell and rent Test, Measurement customers’ test equipment is operating and Control Instruments that are used according to specifications. in manufacturing processes
Slide 5: Two Complementary Segments
Two Complementary Segments Service - Solid organic growth - Recurring revenue stream - Strong operating leverage - Driven by regulation and the high Q1 FY 2019 TTM cost of failure Revenue: $155.1M + (Service 50% Distribution 50%) Distribution - New test equipment Unique - Rentals value - Strong ca
Slide 6: 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-$15M
Slide 7: Flexible Service Value Proposition
Flexible Service Value Proposition 20 Locations to Serve Customers in the U.S., Canada and Puerto Rico Flexible Service Ottawa Montreal Delivery Options: Boston Permanent on-site Portland Toronto Rochester Periodic on-site Milwaukee Pittsburgh Philadelphia Mobile Harrisburg Ft. Wayne In-hous
Slide 8: Broad and Diverse Blue Chip Customer Base
Broad and Diverse Blue Chip Customer Base Percentage of Service Revenue* 5% Aerospace & Defense 6% Chemical/Process 7% Energy/Utilities 17% Other 21% Industrial 44% Life Science / FDA-regulated © 2018 Transcat Inc. * Company estimates 8
Slide 9: What Makes Transcat Different
What Makes Transcat Different Unique Value Proposition…Centered on Life Science, Aerospace and Industrial Manufacturing Services Distribution CALIBRATION SERVICES NEW TEST & MEASUREMENT INSTRUMENTS VALIDATION SERVICES CONSULTING & REMEDIATION RENTAL TEST INSTRUMENTS ANALYTICAL LABORATORY SERVICES MO
Slide 10: Technology as a Competitive Advantage
Technology as a Competitive Advantage Digital Transformation With industry leading web domain authority Proprietary “C3” Portal for customer asset management Operational Excellence Productivity focus Lean/best practices Process automation © 2018 Transcat Inc. 10
Slide 11: Financial Results
Financial Results TRANSCAT Trust in every measure
Slide 12: Record Consolidated Results
Record Consolidated Results ($ in millions) Consolidated Revenue Consolidated Operating Income $9.6 $155.1 $155.5 $9.0 $143.9 $7.9 $123.6 $122.2 $6.8 $6.3 FY 2015 FY 2016 FY 2017 FY 2018 Q1 FY19 FY 2015 FY 2016 FY 2017 FY 2018 Q1 FY19 TTM TTM Distribution Service © 2018 Transcat Inc. CAGR calculated
Slide 13: Service Segment Continues to Deliver
Service Segment Continues to Deliver ($ in millions) Service Revenue Taking market share $71.1 $77.4 $78.3 37 consecutive quarters of $51.8 $59.2 $36.4 YOY revenue growth: 9+ years Inflection Point Revenue: +8% (YOY Q1 FY19 TTM) FY 2012 FY 2015 FY 2016 FY 2017 FY 2018 Q1 FY19 +14% (CAGR*) TTM Servic
Slide 14: Improved Distribution Margins
Improved Distribution Margins ($ in millions) Distribution Sales Sales drivers: Diversification $77.7 $77.2 strategy and an improving $71.8 $72.8 U.S. industrial market $63.0 Higher demand from core customers Growing rental business FY 2015 FY 2016 FY 2017 FY 2018 Q1 FY19 TTM Investments in e-commer
Slide 15: Strong Cash Generation and Record Net Income
Strong Cash Generation and Record Net Income ($ in millions) Net Income Tax rate expectations2 $6.5 Fiscal 2019: 25% to 27% $5.9 $4.1 $4.5 (includes Federal, various state, and Canadian income taxes) $4.0 Diluted $0.57 $0.58 $0.64 $0.81 $0.88 EPS Adjusted EBITDA CAGR3 FY 2015 FY 2016 FY 2017 FY 2018
Slide 16: Financial Flexibility Supports Growth Strategy
Financial Flexibility Supports Growth Strategy ($ in millions) Total Debt $22.0 million available from credit facility % - Debt to Total Capitalization as of June 30, 2018 $27.3 1.28x leverage ratio at Q1 FY 2019 $22.9 $21.5 $19.1 (Total debt to TTM Adjusted EBITDA¹) $12.2 $50.0M shelf registration
Slide 17: Generating Cash to Drive Key Investments
Generating Cash to Drive Key Investments FY 2009 (start of acquisition strategy) to Q1 FY 2019 ($ in millions) $100 $22.6 $1.9 ($30.8) $90 $80 $70 $30.2 ($50.6) $60 $50 $40 $36.8 $30 $20 ($9.9) $10 $0.2 $0.5 $0 FY2009 Cash & Net D&A and Financing/Other FX Effect Capital Business Repurchase of Q1 FY1
Slide 18: Growth Strategy and Outlook
Growth Strategy and Outlook 18
Slide 19: Expanded Addressable Distribution Market
Expanded Addressable Distribution Market Why the pivot in strategy? Great synergies between Distribution and Service segments Leverage of current infrastructure Higher gross margins on used and rental equipment Well indexed web domain Differentiation through “value add” Lead Generation for Service B
Slide 20: Diversification Driving Distribution
Diversification Driving Distribution Strong Rental Revenue Growth ($ in millions) $3.8 $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 $0.4 complements
Slide 21: Drive Double-Digit Service Growth
Drive Double-Digit Service Growth Dominate our local markets with integrated sales/ operations focus Organic Growth Strategy Take market share from 3rd party providers and OEMs Capture outsourcing of internal labs Expansion of RF microwave Geographic expansion and high-end electronics Acquisition In
Slide 22: Executing Acquisition Strategy
Executing Acquisition Strategy Excalibur Anacor Engineering Compliance Calibration CMC Services Technologies ACA Instrument Ulrich Spectrum Westcon Tmetrix Services Metrology Technologies FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 United Wind Cal-Matrix A
Slide 23: Acquisition Drivers
Acquisition Drivers Increased Geographic Capabilities and Leveraged Expansion Expertise Infrastructure NBS Calibrations Excalibur Engineering Dispersion Laboratory Spectrum Technologies Anmar Metrology © 2018 Transcat Inc. 23
Slide 24: FY19 Outlook -- Building for the Long Term
FY19 Outlook¹ -- Building for the Long Term SERVICE SEGMENT: expect mid to high single-digit organic revenue growth ACQUISITIONS: expected to drive Service segment to double-digit revenue growth; active pipeline and we believe ample dry powder to execute DISTRIBUTION SEGMENT: expect low to mid singl
Slide 25: Intellisight 2018 Investor Conference
Aug 15 2018 Intellisight 2018 Investor Conference Nasdaq: TRNS 25
Slide 26: Supplemental Information
Supplemental Information 26
Slide 27: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in thousands) 1QFY19 FY 2015 FY 2016 FY 2017 FY 2018 TTM Net Income $ 4,026 $ 4,124 $ 4,522 $ 5,922 $6,494 + Interest 234 247 719 1,018 988 + Other Expense / (Income) 111 48 51 60 44 + Tax Provision 2,397 1,883 2,642 2,026 2,115 Operating Income $ 6,768 $ 6,302 $ 7,
Slide 28: Segment Adjusted EBITDA Reconciliation
Segment Adjusted EBITDA Reconciliation ($ in thousands) 1QFY19 FY 2015 FY 2016 FY 2017 FY 2018 TTM Service Operating Income $ 3,693 $ 4,155 $ 4,769 $ 5,158 $ 5,342 +Depreciation & Amortization 2,362 3,216 4,660 4,397 4,477 +Other (Expense) / Income (138) (64) (55) (61) (47) +Noncash Stock Compensati
Slide 29: 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