Transcat, Inc. · NASDAQ:TRNS
Transcat — Oppenheimer Virtual Conference 2021
28 slides from Transcat's conference presentation, Aug 11, 2021
Slide 1: Oppenheimer Virtual Conference
August 11, 2021 Oppenheimer Virtual Conference Lee D. Rudow President and CEO Mark A. Doheny 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 Leverage technology to increase productivity Long-term operating earnings expected to grow fas
Slide 4: Two Complementary Segments
Two Complementary Segments Service - Solid organic growth with a focus on regulated industries, including Life Science - Recurring revenue stream - Driven by regulation and the high cost of failure FY21 + - Strong operating leverage Revenue: $173.3M (Service 58%, Distribution 42%) Distribution - New
Slide 5: Strategic Plan Pillars
Strategic Plan Pillars Organic Acquired Leverage Leverage Service Growth Growth Distribution Technology Mid- to high-single To drive double-digit Lead generation Improve process and digit growth Service growth productivity to enhance margins Right strategies and leadership to succeed © 2021 Transcat
Slide 6: Flexible Service Value Proposition
Flexible Service Value Proposition 22 Locations to Serve Customers in the U.S., Canada and Puerto Rico Flexible Service Ottawa Montreal Delivery Options: Boston Client-based lab Portland Toronto Rochester Hopkinton Periodic on-site Milwaukee Pittsburgh Philadelphia Mobile Harrisburg Ft. Wayne
Slide 7: Client-Based Laboratories ("CBL")
Client-Based Laboratories (“CBL”) 20 Locations Serving Customer Tailored Needs, Full Time At Their Location Medical Device Pharma Medical Device Medical Device Rochester Medical Device Pharma Pharma / Pharma Medical Device Pharma Pharma Pharma Pharma Aerospace & Defense Pharma Aerospace & Defense Me
Slide 8: Broad and Diverse Blue Chip Customer Base
Broad and Diverse Blue Chip Customer Base Percentage of Service Revenue* 5% Chemical/Process 6% Energy/Utilities 11% Aerospace/Defense 11% Services 15% Industrial 4% Other 48% Life Science / FDA-regulated © 2021 Transcat Inc. * Company estimates 8
Slide 9: Taking Market Share
Taking Market Share $1.6 Billion Addressable Market Share by Revenue for Calibration Services Market¹ 3rd Party Service Providers2 Transcat 25% 41% 24% 17% OEMs 3rd Party (fragmented) Service 15% Providers 20% 34% (fragmented) In-house 14% Laboratories 10% Transcat Tektronix Regionals ($5M-$15M) Tre
Slide 10: Financial Results
Financial Results TRANSCAT Trust in every measure
Slide 11: Consolidated Results
Consolidated Results ($ in millions) Revenue Operating Income $182.2 $173.1 $173.3 $160.9 $13.8 $155.1 $143.9 $10.8 $11.1 $10.2 $9.0 $7.9 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Q1 FY22 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Q1 FY22 TTM TTM Distribution Service © 2021 Transcat Inc. 11
Slide 12: Service Segment Driving Strong Results
Service Segment Driving Strong Results ($ in millions) Service Revenue $101.3 $105.9 $84.0 $93.0 20% total revenue growth in Q1 FY22, $71.1 $77.4 16.6% organic growth $36.4 Inflection Capturing share in highly-regulated end Point markets, including Life Sciences FY 2012 FY 2017 FY 2018 FY 2019 FY 20
Slide 13: Distribution Supports Growth Strategy
Distribution Supports Growth Strategy ($ in millions) Distribution Sales $77.7 $76.9 $80.1 $76.4 Business recovering; 27% organic $72.8 $72.1 growth in Q1 FY22 Improving order trends and easier comparison to a COVID-19 impacted FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Q1 FY22 prior year TTM Distribut
Slide 14: Strong Cash Generation
Strong Cash Generation ($ in millions) Net Income and Diluted EPS Net income improvement driven by $10.7 improved operating performance $7.1 $8.1 $7.8 $5.9 $4.5 Tax rate expectations2 $0.64 $0.81 $0.95 $1.08 $1.03 $1.41 Fiscal 2022: 16% to 18% (includes Federal, various state, and Canadian income ta
Slide 15: Financial Flexibility Supports Growth Strategy
Financial Flexibility Supports Growth Strategy ($ in millions) Total Debt 0.96x leverage ratio at quarter-end % - Debt to Total Capitalization (Total debt to TTM Adjusted EBITDA¹ ) $30.3 $27.3 $22.9 $22.2 Amended credit facility on July 7, 2021 for $21.0 $19.6 certain terms and an increased revolvin
Slide 16: Growth Strategy
Growth Strategy 16
Slide 17: What makes Transcat Unique
What makes Transcat Unique Why We Win… Rental & Used Instruments Lead Generation For Service Segment Core Distribution 50 years – Strong Brands and Name Recognition Certifications of New Equipment Service Growth • Calibration • Validation & Analytical • Consulting © 2021 Transcat Inc. 17
Slide 18: Leverage Technology as a Competitive Advantage
Leverage 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 Better customer experience © 2021 Transcat Inc. 18
Slide 19: Our C3 Advantage
Our C3 Advantage Proprietary “C3” Portal for customer asset management © 2021 Transcat Inc. 19
Slide 20: Drive Double-Digit Service Growth
Drive Double-Digit Service Growth Our focus on Life Science sector Organic Growth Dominate our local markets Strategy Take market share from 3rd party providers and OEMs Outsourcing of in-house labs Continued expansion of pipettes, RF microwave and Geographic expansion high-end electronics Acquisiti
Slide 21: Acquisition Drivers
Acquisition Drivers Increased Geographic Capabilities and Leveraged Expansion Expertise Infrastructure Upstate Metrology BioTek Services, Inc. TTE Laboratories (pipettes.com) Infinite Integral Solutions (CalTree software) Gauge Repair Service © 2021 Transcat Inc. 21
Slide 22: Outlook
Outlook* Q2 FY 2022 Service segment: expect organic revenue growth to be similar to what we achieved in the trailing first quarter fiscal 2022; more modest improvement in gross margin compared to the last several quarters due to a more difficult technician productivity comparison in second quarter D
Slide 23: CALIBRATED
CALIBRATED ey TRANSCAT
Slide 24: Supplemental Information
Supplemental Information 24
Slide 25: Executing Acquisition Strategy
Executing Acquisition Strategy FY 2019 FY 2020 FY 2021 FY 2022 © 2021 Transcat Inc. 25
Slide 26: Seasoned Executive Team Driving Growth
Seasoned Executive Team Driving Growth Lee D. Rudow 30+ years of industry experience President and Demonstrated growth record Chief Executive Officer Joined Transcat in 2011 Mark A. Doheny 20+ years of financial management, M&A, Jennifer J. Nelson Comprehensive HR experience in different C
Slide 27: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in thousands) FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 Q1 Net Income $ 5,922 $ 7,145 $ 8,067 $ 7,791 $ 3,688 +Interest Expense 1,018 903 934 850 189 +Other (Expense) / Income 60 91 186 241 6 +Tax Provision 2,026 2,090 1,663 2,191 (194) Operating Income $ 9,026 $ 10,2
Slide 28: Segment Adjusted EBITDA Reconciliation
Segment Adjusted EBITDA Reconciliation ($ in thousands) FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 Q1 Service Operating Income $ 4,769 $ 5,158 $ 5,202 $ 5,672 $ 10,441 $ 2,974 +Depreciation & Amortization 4,660 4,397 4,754 4,929 5,597 1,488 +Restructuring Expense - - - - 349 - +Other (Expense)