Transcat, Inc. · NASDAQ:TRNS
Transcat — Investor Presentation (November 2023)
29 slides from Transcat's investor presentation, Nov 15, 2023
Slide 1: Investor Presentation November 2023
INVESTOR PRESENTATION November 2023
Slide 2: Forward-looking statements and non-GAAP disclaimer
This presentation contains forward - looking statements within the meaning of Section 21 E of the Securities Exchange Act of 1934 . All statements other than historical fact are forward - looking statements . Forward - looking statements are not statements of historical fact and thus are subject to
Slide 3: A Leader in the Calibration Service Market
3 A Leader in the Calibration Service Market, Provider of Cost, Control & Optimization Services and Value - add Distributor of Test, Measurement & Control Instrumentation Market Capitalization $783 million Recent Price $88.68 Average Daily Volume (3 mo.) 61,990 Common Shares Outstanding 8.8 million
Slide 4: Seasoned Executive Management Team
4 Seasoned Executive Management Team Michael W. West Senior Vice President of Business Operations ▪ 15+ years of experience in B2B distribution marketing and consulting ▪ Previously, VP of Distribution & Marketing at Transcat and principal owner of QuestCom Inc., a marketing and advertising firm Que
Slide 5: Company Overview
5 Company Overview Industry leading provider of mission critical, accredited calibration services and equipment FOUNDED IN 1964 OVER 59 YEARS OF INDUSTRY EXPERIENCE NASDAQ:TRNS PUBLICLY - TRADED COMMERCIAL CALIBRATION LAB 57 CONSECUTIVE QUARTERS OF YOY SERVICE REVENUE GROWTH NEXA COST, CONTROL AND O
Slide 6: History
6 History 57 Consecutive Quarters of YOY Service Revenue Growth 25,000 75,000 125,000 175,000 225,000 275,000 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Service Revenue Total Revenue Total GM Service GM GM% 35% 20% Lee Rudow Joins Transcat w/ Service Focus Heavily Regulated Industry
Slide 7: Service Segment: Consistent Performance and Growth
7 Service Segment: Consistent Performance and Growth 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Service Revenue 36.4$ 40.7$ 48.2$ 51.8$ 59.2$ 71.1$ 77.4$ 84.0$ 93.0$ 101.3$ 122.0$ 144.9$ Service GM% 23.7% 25.3% 26.6% 27.2% 26.3% 26.8% 25.7% 24.9% 25.3% 30.3% 31.9% 32.2% Service Op I
Slide 8: Complementary Business Segments
8 1. As of Q1 FY 2024 TTM Revenue Ended June 24, 2023. Complementary Business Segments x Approx. 18% service revenue growth, approx. 11% organic growth x Driven by regulation and high cost of failure, life sciences focus x Strong operating leverage x Flat revenue growth with improving gross margins
Slide 9: Competitive Landscape and Differentiators
9 Competitive Landscape and Differentiators Industry Attributes Recurring Service Revenue Streams Growing Service Market Driven by Regulation and High Cost of Failure Differentiators = Premium Priced Service Distribution and Rental a Source of Service Leads and Cash Flow NEXA Cost, Control and Optim
Slide 10: Strategic, Regulated Vertical Markets
10 Strategic, Regulated Vertical Markets • Provider of premium, mission critical services to regulated, high cost of failure industries that require long qualification cycles • High switching costs deeply entrench customers on Transcat service platform; high barrier to entry that results in recurrin
Slide 11: Double-Digit Service Growth Drivers
11 Double - Digit Service Growth Drivers Acquisitions Expand Geographic Footprint, Capabilities, Markets (Leverage NEXA) (Leverage NEXA)
Slide 12: Transcat locations map
12 © 2022 Transcat Inc. San Juan Map Legend Transcat Headquarters Transcat Calibration Labs Transcat Client - Based Lab (CBL) Montreal Bosto n Harrisburg Philadelphia Pittsburgh Rochester Toronto Ottawa Milwaukee Indianapolis Dayton Charlotte St. Louis Denver Houston Phoenix San Diego Los Angeles Po
Slide 13: Broad and Diverse Blue Chip Customer Base
13 * Company estimates based on YTD FY 2024 Broad and Diverse Blue Chip Customer Base Percentage of Service Revenue * Servicing the Fortune 500 Manufacturers: Pharmaceuticals Medical Devices: Orthopedics Endoscopy Surgical Tools Defense Systems Aerospace Uranium Processing / Storage Industrial/Mater
Slide 14: Recent Acquisition Drivers
14 Recent Acquisition Drivers Geographic Expansion Leveraged Infrastructure (Bolt - on) FY22 FY22 FY22 FY23 FY24 FY24 FY24 FY2024 FY2023 FY2022 Year Target Increased Capabilities and Expertise
Slide 15: Acquisition and Integration Differentiators
15 Acquisition and Integration Differentiators Diligence and Decision Making Acquirer of Choice Synergy Capture Track Record of Success A c q u i s i t i o n S u c c e s s Disciplined approach with high emphasis on cultural fit Strategic checklist and assessment process Expertise and experience Cons
Slide 16: Brand Extension and Expanded Addressable Markets
16 Brand Extension and Expanded Addressable Markets – Portfolio of Service Companies Strong brand recognition and strategic acquisitions have expanded capabilities and synergies Immediate cross selling potential with complete "family" of services – in both Technical Services (Transcat Traditional La
Slide 17: Life Sciences Capital Project Ecosystem
LIFE SCIENCES CAPITAL PROJECT ECOSYSTEM 17 With the NEXA NS3 (Single Source Solution) + SteriQual + Transcat Our team serves as the single point of contact completing the full scope of CapEx Project work. This will ensure the project is delivered in the Client’s best interest carried out across all
Slide 18: Axiom – Rental Business Accelerating Growth
18 Axiom – Rental Business Accelerating Growth x $38 million purchase price; $28 million in Company stock and $10 million in cash x Existing leadership and staff retained, with Josh Shilts, current Axiom President, continuing to lead the organization x Little overlap in Rental Asset pools, which we
Slide 19: Financial Overview
FINANCIAL OVERVIEW Note: Amounts shown in the graphs that follow may be rounded. Therefore, totals shown in the graphs may not be equal to the sum of the segments
Slide 20: Consolidated Historical Results
20 Consolidated Historical Results Distribution FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Revenue $173 $173 $155 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Adjusted EBITDA $14.5 $16.4 $20.6 $18.4 $17.8 $144 $161 $ 205 $26.3 63% 37% FY 2012 $ 110 33% 67% FY 2012 Service $8.
Slide 21: Service Segment Driving Strong Results
21 Service Segment Driving Strong Results $77.4 $84.0 $93.0 $101.3 $122.0 $144.9 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Service Revenue 25.7% 24.9% 25.3% 30.3% 31.9% 32.2% FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Service Gross Margin % • Capturing share in highly regulated end market
Slide 22: Distribution Supports Growth Strategy
22 Distribution Supports Growth Strategy $72.1 $83.0 $85.7 FY 2021 FY 2022 FY 2023 Distribution and Rental Sales 5.0% 6.5% 0.9% 4.4% 6.5% 3.0% 21.4% 23.5% 25.3% FY 2021 FY 2022 FY 2023 Distribution Gross Margin % • Stable performance, which is in line with our strategy to drive service segment growt
Slide 23: Fiscal 2024 Q2 Financial Details
23 Fiscal 2024 Q2 Financial Details Fiscal 2024 Q2 Gross Profit and Margin Fiscal 2024 Q2 Adjusted EBITDA • Q2 Consolidated revenue up 11% on strong Service segment performance • Service revenue growth of 17%, with double - digit organic growth of 10% • Q2 Distribution revenue grew 1% versus prior y
Slide 24: Operating free cash flow
24 ** In addition to reporting net cash provided by operations, a U.S. generally accepted accounting principle (“GAAP”) measure, we present operating free cash flow (net cash provided by operations less capital expenditures), which is a non - GAAP measure. We believe operating fr ee cash flow is an
Slide 25: Questions & Answers
CALIBRATED sy TRANSCAT Questions & Answers CALIBRATED
Slide 26: Adjusted EBITDA Reconciliation
26 ($ in thousands) Adjusted EBITDA Reconciliation In addition to reporting net income, a U.S. generally accepted accounting principle (“GAAP”) measure, we present Adjusted EBI TDA (earnings before interest, income taxes, depreciation and amortization, non - cash stock compensation expense, restruct
Slide 27: Segment Adjusted EBITDA Reconciliation
27 FY 2012 FY 2023 Service Operating Income (175)$ 11,422$ + Depreciation & Amortization 1,959$ 8,800$ + Transaction Expense 185$ + Other (Expense) / Income (37)$ (247)$ + Noncash Stock Compensation 263$ 2,463$ Service Adjusted EBITDA 2,010$ 22,623$ Distribution Operating Income $5,603 $4,826 + Depr
Slide 28: Adjusted EBITDA Reconciliation
28 Adjusted EBITDA Reconciliation In addition to reporting net income, a U.S. generally accepted accounting principle (“GAAP”) measure, we present Adjusted EBI TDA (earnings before interest, income taxes, depreciation and amortization, non - cash stock compensation expense, restructuring expense and
Slide 29: Segment Adjusted EBITDA Reconciliation
29 Segment Adjusted EBITDA Reconciliation In addition to reporting net income, a U.S. generally accepted accounting principle (“GAAP”) measure, we present Adjusted EBI TDA (earnings before interest, income taxes, depreciation and amortization, non - cash stock compensation expense, restructuring exp