Transcat Reports Second Quarter Results with Growth in Revenue and Gross Profit

About this update from Transcat, Inc.

Consolidated Revenue grew 8% compared to prior year Distribution Gross Profit grew 10% on double-digit Revenue growth Services Gross Profit grew 4% driven by 4% Organic Revenue growth ROCHESTER, N.Y. --(BUSINESS WIRE)-- Transcat, Inc. (Nasdaq: TRNS) (“Transcat” or the “Company”), a leading provider of accredited calibration services, cost control and optimization services, and distribution and rental of value-added professional grade handheld test, measurement, and control instrumentation, today reported financial results for its second quarter ended September 28, 2024 (the “second quarter”) of fiscal year 2025, which ends March 29, 2025 (“fiscal 2025”). Results include the previously reported acquisitions of TIC-MS, Inc. ("TIC-MS") effective March 27, 2023 , SteriQual, Inc. ("SteriQual"), effective July 12, 2023 , Axiom Test Equipment, Inc. (“Axiom”), effective August 8, 2023 and Becnel Rental Tools, LLC ("Becnel") effective April 15, 2024 . “Consolidated revenue was up 8%. Consistent demand in our Calibration Services business was supported by our differentiated value proposition which resonates well in the highly regulated end markets we serve, including life sciences,” commented Lee D. Rudow , President and CEO. “Service Revenue grew 6% versus prior year, the 62nd consecutive quarter of growth. Service organic revenue growth of 4% was below historical trends and was significantly impacted by a decline in our Nexa cost control and optimization services business. Excluding Nexa, we are pleased with service organic growth of 9% versus prior year.” “Though the magnitude of Nexa's slowdown was greater than what we expected, we have identified the root causes and are committed to returning the Nexa business to growth. This includes fully integrating Nexa's sales and marketing into Transcat's dynamic growth process and renaming the business Transcat Solutions, to fully leverage our industry leading brand." "Nexa has performed very well since acquisition in calendar 2021, and while collaborating on a regular basis to drive calibration sales growth, we allowed that group to operate in a more autonomous fashion and missed an opportunity to fully integrate Nexa into the proven Transcat sales and marketing processes. Integration is now well underway, and we have the power of the Transcat leadership team focused on pipeline expansion, which we believe will contribute to the return to high single digit organic Services revenue growth in the first half of fiscal 2026.” Mr. Rudow added, “Distribution Revenue grew 11% versus prior year. However, Becnel revenue was negatively impacted by two hurricanes in the Gulf of Mexico , which pressured second quarter Distribution margins. Becnel is a well-run business that has cultivated strong customer relationships with companies that highly utilize Transcat’s core instrumentation and calibration services. We fully expect Becnel to deliver sequential improvements in the third and fourth quarters and expect Distribution Gross Margins to return to levels consistent with the second half of fiscal 2024.” “Transcat has a proven history of successfully identifying, acquiring, and integrating dynamic companies that have expanded our addressable markets, widened the breadth of offerings, and allowed us to leverage existing infrastructure. In addition to strong returns, the acquisitions present compelling cross-sell synergies to drive organic revenue growth into these newly acquired customer bases. Transcat’s acquisition pipeline remains robust and is focused on all our strategic channels.” Second Quarter Fiscal 2025 Review (Results are compared with the second quarter of the fiscal year ended March 30, 2024 (“fiscal 2024”)) ($ in thousands) Change FY25 Q2 FY24 Q2 $'s % Service Revenue $ 44,083 $ 41,431 $ 2,652 6.4 % Distribution Revenue 23,743 21,373 2,370 11.1 % Revenue $ 67,826 $ 62,804 $ 5,022 8.0 % Gross Profit $ 21,206 $ 20,125 $ 1,081 5.4 % Gross Margin 31.3 % 32.0 % Operating Income $ 3,735 $ 1,643 $ 2,092 127.3 % Operating Margin 5.5 % 2.6 % Net Income $ 3,286 $ 460 $ 2,826 614.3 % Net Margin 4.8 % 0.7 % Adjusted EBITDA* $ 8,861 $ 9,330 $ (469 ) (5.0 )% Adjusted EBITDA* Margin 13.1 % 14.9 % Diluted EPS $ 0.35 $ 0.06 $ 0.29 483.3 % Adjusted Diluted EPS* $ 0.52 $ 0.60 $ (0.08 ) (13.3 )% *See Note 1 on page 5 for a description of these non-GAAP financial measures and pages 10, 11 and 12 for the reconciliation tables. Consolidated revenue was $67.8 million , an increase of $5.0 million or 8.0%. Consolidated gross profit was $21.2 million , an increase of $1.1 million , or 5.4%, while gross margin decreased 70 basis points primarily due to Nexa and Becnel Revenue softness. Operating expenses were $17.5 million , a decrease of $1.0 million , or 5.5%. The second quarter of fiscal year 2024 included a $2.8 million non-cash charge related to the Nexa earn-out agreement. Adjusted EBITDA was $8.9 million which represented a decrease of $0.5 million or 5.0%. Net income per diluted share was $0.35 compared to $0.06 last year. Adjusted diluted earnings per share was $0.52 versus $0.60 last year. Service segment second quarter results Represents the accredited calibration, repair, inspection and laboratory instrument services business (65.0% of total revenue for the second quarter of fiscal 2025). ($ in thousand) Change FY25 Q2 FY24 Q2 $'s % Service Segment Revenue $ 44,083 $ 41,431 $ 2,652 6.4 % Gross Profit $ 14,591 $ 14,084 $ 507 3.6 % Gross Margin 33.1 % 34.0 % Operating Income $ 3,704 $ 742 $ 2,962 399.2 % Operating Margin 8.4 % 1.8 % Adjusted EBITDA* $ 6,624 $ 6,798 $ (174 ) (2.6 )% Adjusted EBITDA* Margin 15.0 % 16.4 % *See Note 1 on page 5 for a description of this non-GAAP financial measure and pages 10 and 11 for the Adjusted EBITDA Reconciliation tables. Service segment revenue was $44.1 million , an increase of $2.7 million or 6.4%, and included $0.8 million of incremental revenue from acquisitions. Organic revenue growth of 4.4% driven by end-market demand and continued market share gains. The segment gross margin was 33.1%, a decrease of 90 basis points from prior year primarily due to lower revenue from Nexa. Distribution segment second quarter results Represents the sale and rental of new and used professional grade handheld test, measurement and control instrumentation (35.0% of total revenue for the second quarter of fiscal 2025). ($ in thousands) Change FY25 Q2 FY24 Q2 $'s % Distribution Segment Revenue $ 23,743 $ 21,373 $ 2,370 11.1 % Gross Profit $ 6,615 $ 6,041 $ 574 9.5 % Gross Margin 27.9 % 28.3 % Operating Income $ 31 $ 901 $ (870 ) (96.6 )% Operating Margin 0.1 % 4.2 % Adjusted EBITDA* $ 2,237 $ 2,532 $ (295 ) (11.7 )% Adjusted EBITDA* Margin 9.4 % 11.8 % *See Note 1 on page 5 for a description of this non-GAAP financial measure and pages 10 and 11 for the Adjusted EBITDA Reconciliation tables. Distribution revenue was $23.7 million , which represented an increase of $2.4 million or 11.1%, driven by growth in the Rental business including acquisitions. Distribution segment gross margin was 27.9%, a decrease of 40 basis points due to Becnel revenue impacted by the Gulf of Mexico hurricanes. Six Month Review (Results are compared with the first six months of fiscal 2024) Total revenue was $134.5 million , an increase of $11.1 million or 9.01%. Consolidated gross profit was up $5.0 million , or 12.9%, and gross margin expanded to 32.6% or 110 basis points. Consolidated operating expenses increased $2.5 million , or 7.6%, driven by incremental expenses from acquired businesses, increased intangibles amortization expense and investments in technology and our employee base to support future growth, offset by the previously mentioned amended Nexa Earn-Out agreement in the second quarter of fiscal year 2024. As a result, consolidated operating income was $8.8 million compared with $6.3 million in last fiscal year’s period. Adjusted EBITDA was $19.1 million which represented an increase of $1.3 million or 7.1%. Net income per diluted share increased to $0.83 from $0.43 and adjusted diluted earnings per share was $1.20 versus $1.12 last year. The effective tax rate was 13.9% compared to 25.3% in the prior year, due to the timing of discrete benefits related to share-based compensation items. Balance Sheet and Cash Flow Overview On September 28, 2024 , the Company had $23.8 million in cash and cash equivalents on hand and $80.0 million available for borrowing under its secured revolving credit facility. Total debt was $3.0 million versus $4.2 million on March 30, 2024 . The Company’s leverage ratio, as defined in the credit agreement, was 0.08 on September 28, 2024 , compared with 0.10 on March 30, 2024 . Outlook Mr. Rudow concluded, “We are very proud of the consistent results the Transcat team has delivered year in and year out over an extended period of time. That said, we are disappointed with the Nexa-impacted aggregated results in fiscal Q2. We experienced short term, isolated revenue challenges in the Nexa services channel in the quarter but believe the swift actions our exceptional team is already taking will rectify the situation in the near term, as we continue to execute on our highly successful core growth strategy.” “We expect FY25 organic Service revenue growth in the mid-single digits when normalized for the extra week in fiscal 2024 and gross margin expansion. We anticipate a return to high single digit organic growth by the first half of fiscal 2026.” “Automation of our calibration processes and focus on productivity remain key enablers of margin expansion. We have demonstrated the ability to leverage these tools to improve our operational efficiency, which has become visible in our financial performance over time.” “We continue to work our robust acquisition pipeline and are pleased with the current flow of strategic opportunities.” Transcat expects its income tax rate to range between 21% and 23% in fiscal 2025. This estimate includes Federal, various state, Canadian and Irish income taxes and reflects the discrete tax accounting associated with share-based payment awards. Webcast and Conference Call Transcat will host a conference call and webcast on Tuesday, October 29, 2024 at 11:00 a.m. ET . Management will review the financial and operating results for the first quarter, as well as the Company’s strategy and outlook. A question and answer session will follow the formal discussion. The review will be accompanied by a slide presentation, which will be available at www.transcat.com/investor-relations . The conference call can be accessed by calling (201) 689-8471. Alternatively, the webcast can be monitored at www.transcat.com/investor-relations . A telephonic replay will be available from 2:00 p.m. ET on the day of the call through Tuesday, November 5, 2024 . To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13747789, access the webcast replay at www.transcat.com/investor-relations , where a transcript will be posted once available. NOTE 1 – Non-GAAP Financial Measures In addition to reporting net income, a U.S. generally accepted accounting principle (“GAAP”) measure, we present Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, non-cash stock compensation expense, and acquisition related transaction expenses, which is a non-GAAP measure. The Company’s management believes Adjusted EBITDA is an important measure of operating performance because it allows management, investors and others to evaluate and compare the performance of its core operations from period to period by removing the impact of the capital structure (interest), tangible and intangible asset base (depreciation and amortization), taxes, stock-based compensation expense and other items, which is not always commensurate with the reporting period in which it is included. As such, the Company uses Adjusted EBITDA as a measure of performance when evaluating its business segments and as a basis for planning and forecasting. Adjusted EBITDA is not a measure of financial performance under GAAP and is not calculated through the application of GAAP. As such, it should not be considered as a substitute for the GAAP measure of net income and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure. Adjusted EBITDA, as presented, may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies. See pages 10 and 11 for the Adjusted EBITDA Reconciliation tables. In addition to reporting Diluted Earnings Per Share, a GAAP measure, we present Adjusted Diluted Earnings Per Share (net income plus acquisition related amortization expense, acquisition related transaction expenses, acquisition related stock-based compensation, and acquisition amortization of backlog; divided by the average diluted shares outstanding during the period), which is a non-GAAP measure. Our management believes Adjusted Diluted Earnings Per Share is an important measure of our operating performance because it provides a basis for comparison of our business operations between current, past and future periods by excluding items that we do not believe are indicative of our core operating performance. Adjusted Diluted Earnings Per Share is not a measure of financial performance under GAAP and is not calculated through the application of GAAP. As such, it should not be considered as a substitute or alternative for the GAAP measure of Diluted Earnings Per Share and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure. Adjusted Diluted Earnings Per Share, as presented, may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies. See page 12 for the Adjusted Diluted EPS Reconciliation table. ABOUT TRANSCAT Transcat, Inc. is a leading provider of accredited calibration, reliability, maintenance optimization, quality and compliance, validation, Computerized Maintenance Management System (CMMS), and pipette services. The Company is focused on providing best-in-class services and products to highly regulated industries, particularly the Life Science industry, which includes pharmaceutical, biotechnology, medical device, and other FDA-regulated businesses, as well as aerospace and defense, and energy and utilities. Transcat provides periodic on-site services, mobile calibration services, pickup and delivery, in-house services at its 29 Calibration Service Centers strategically located across the United States , Puerto Rico , Canada , and Ireland . In addition, Transcat operates calibration labs in 21 imbedded customer-site locations. The breadth and depth of measurement parameters addressed by Transcat’s ISO/IEC 17025 scopes of accreditation are believed to be the best in the industry. Transcat also operates as a leading value-added distributor that markets, sells and rents new and used national and proprietary brand instruments to customers primarily in North America . The Company believes its combined Service and Distribution segment offerings, experience, technical expertise, and integrity create a unique and compelling value proposition for its customers. Transcat’s strategy is to leverage its strong brand and unique value proposition that includes its comprehensive instrument service capabilities, enterprise asset management, and leading distribution platform to drive organic sales growth. The Company will also look to expand its addressable calibration market through acquisitions and capability investments to further realize the inherent leverage of its business model. More information about Transcat can be found at: Transcat.com . Safe Harbor Statement This news release 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 statements relate to expectations, estimates, beliefs, assumptions and predictions of future events and are identified by words such as “aim,” “anticipates,” “believes,” “can,” “could,” “designed,” “estimates,” “expects,” “focus,” “goal,” “intends,” “may,” “plan,” “outlook,” “potential,” “seek,” “strategy,” “strive,” “target,” “will,” “would,” and other similar words. All statements addressing operating performance, events or developments that Transcat expects or anticipates will occur in the future, including but not limited to statements relating to anticipated revenue, profit margins, the commercialization of software projects, sales operations, capital expenditures, cash flows, operating income, growth strategy, segment growth, potential acquisitions, integration of acquired businesses, market position, customer preferences, outlook and changes in market conditions in the industries in which Transcat operates are forward-looking statements. Forward-looking statements should be evaluated in light of important risk factors and uncertainties. These risk factors and uncertainties include those more fully described in Transcat’s Annual Report and Quarterly Reports filed with the Securities and Exchange Commission , including under the heading entitled “Risk Factors.” Should one or more of these risks or uncertainties materialize or should any of the Company’s underlying assumptions prove incorrect, actual results may vary materially from those currently anticipated. In addition, undue reliance should not be placed on the Company’s forward-looking statements, which speak only as of the date they are made. Except as required by law, the Company disclaims any obligation to update, correct or publicly announce any revisions to any of the forward-looking statements contained in this news release, whether as the result of new information, future events or otherwise. FINANCIAL TABLES FOLLOW. TRANSCAT, INC. CONSOLIDATED STATEMENTS OF INCOME (In Thousands, Except Per Share Amounts) (Unaudited) (Unaudited) Second Quarter Ended Six Months Ended September 28, September 23, September 28, September 23, 2024 2023 2024 2023 Service Revenue $ 44,083 $ 41,431 $ 87,861 $ 81,284 Distribution Revenue 23,743 21,373 46,672 42,118 Total Revenue 67,826 62,804 134,533 123,402 Cost of Service Revenue 29,492 27,347 58,387 54,229 Cost of Distribution Revenue 17,128 15,332 32,285 30,338 Total Cost of Revenue 46,620 42,679 90,672 84,567 Gross Profit 21,206 20,125 43,861 38,835 Selling, Marketing and Warehouse Expenses 8,181 6,856 15,982 13,325 General and Administrative Expenses 9,290 11,626 19,045 19,227 Total Operating Expenses 17,471 18,482 35,027 32,552 Operating Income 3,735 1,643 8,834 6,283 Interest Expense 76 890 128 1,704 Interest Income (286 ) - (598 ) - Other Expense (Income) 232 (49 ) 363 15 Total Interest and Other, net 22 841 (107 ) 1,719 Income Before Provision For Income Taxes 3,713 802 8,941 4,564 Provision for Income Taxes 427 342 1,247 1,155 Net Income $ 3,286 $ 460 $ 7,694 $ 3,409 Basic Earnings Per Share $ 0.36 $ 0.06 $ 0.84 $ 0.44 Average Shares Outstanding 9,159 7,819 9,107 7,732 Diluted Earnings Per Share $ 0.35 $ 0.06 $ 0.83 $ 0.43 Average Shares Outstanding 9,282 7,948 9,222 7,840 TRANSCAT, INC. CONSOLIDATED BALANCE SHEETS (In Thousands, Except Share and Per Share Amounts) (Unaudited) (Audited) September 28 , March 30 , 2024 2024 ASSETS Current Assets: Cash and Cash Equivalents $ 23,815 $ 19,646 Marketable Securities - $ 15,533 Accounts Receivable, less allowance for credit losses of $565 and $544 as of September 28, 2024 and March 30, 2024 , respectively 48,933 47,779 Other Receivables 628 506 Inventory, net 15,549 17,418 Prepaid Expenses and Other Current Assets 6,241 4,276 Total Current Assets 95,166 105,158 Property and Equipment, net 47,493 38,944 Goodwill 138,127 105,585 Intangible Assets, net 24,362 19,987 Right to Use Assets, net 17,309 16,823 Other Assets 1,096 1,055 Total Assets $ 323,553 $ 287,552 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts Payable $ 13,043 $ 11,495 Accrued Compensation and Other Current Liabilities 11,092 19,665 Current Portion of Long-Term Debt 2,386 2,339 Total Current Liabilities 26,521 33,499 Long-Term Debt 612 1,817 Deferred Tax Liabilities, net 9,297 9,291 Lease Liabilities 14,661 14,873 Other Liabilities 3,705 2,903 Total Liabilities 54,796 62,383 Shareholders' Equity: Common Stock, par value $0.50 per share, 30,000,000 shares authorized; 9,199,277 and 8,839,299 shares issued and outstanding as of September 28, 2024 and March 30, 2024 , respectively 4,600 4,420 Capital in Excess of Par Value 178,986 141,624 Accumulated Other Comprehensive Loss (718 ) (949 ) Retained Earnings 85,889 80,074 Total Shareholders' Equity 268,757 225,169 Total Liabilities and Shareholders' Equity $ 323,553 $ 287,552 TRANSCAT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited) Six Months Ended September 28 , September 23 , 2024 2023 Cash Flows from Operating Activities: Net Income $ 7,694 $ 3,409 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Net Loss on Disposal of Property and Equipment 43 11 Deferred Income Taxes 6 23 Depreciation and Amortization 8,513 6,078 Provision for Accounts Receivable and Inventory Reserves 108 347 Stock-Based Compensation Expense 1,623 2,171 Changes in Assets and Liabilities, net of acquisitions: Accounts Receivable and Other Receivables 1,746 2,384 Inventory 2,597 3,376 Prepaid Expenses and Other Current Assets (1,918 ) 465 Accounts Payable 1,525 (3,969 ) Accrued Compensation and Other Current Liabilities (3,248 ) 1,677 Income Taxes Payable (2,930 ) - Net Cash Provided by Operating Activities 15,759 15,972 Cash Flows from Investing Activities: Purchase of Property and Equipment (7,633 ) (5,444 ) Business Acquisitions, net of cash acquired (15,858 ) (12,882 ) Sales of Marketable Securities 15,533 - Net Cash Used in Investing Activities (7,958 ) (18,326 ) Cash Flows from Financing Activities: Repayment of Revolving Credit Facility, net - 5,288 Repayments of Term Loan (1,158 ) (1,112 ) Issuance of Common Stock, net of direct costs 838 384 Repurchase of Common Stock (3,026 ) (2,247 ) Net Cash (Used in)/Provided by Financing Activities (3,346 ) 2,313 Effect of Exchange Rate Changes on Cash and Cash Equivalents (286 ) (244 ) Net Increase/(Decrease) in Cash and Cash Equivalents 4,169 (285 ) Cash and Cash Equivalents at Beginning of Period 19,646 1,531 Cash and Cash Equivalents at End of Period $ 23,815 $ 1,246 TRANSCAT, INC. Adjusted EBITDA Reconciliation Table (In thousands) (Unaudited) Fiscal 2025 Q1 Q2 Q3 Q4 YTD Net Income $ 4,408 $ 3,286 $ 7,694 + Interest Income (260 ) (210 ) (470 ) + Other Expense 131 232 363 + Tax Provision 820 427 1,247 Operating Income $ 5,099 $ 3,735 $ 8,834 + Depreciation & Amortization 4,113 4,399 8,512 + Transaction Expenses 434 33 467 + Other Expense (131 ) (232 ) (363 ) + Non-cash Stock Compensation 697 926 1,623 Adjusted EBITDA $ 10,212 $ 8,861 $ 19,073 Segment Breakdown Service Operating Income $ 4,091 $ 3,704 $ 7,795 + Depreciation & Amortization 2,402 2,455 4,857 + Transaction Expenses 146 - 146 + Other Expense (96 ) (164 ) (260 ) + Non-cash Stock Compensation 421 629 1,050 Service Adjusted EBITDA $ 6,964 $ 6,624 $ 13,588 Distribution Operating Income $ 1,008 $ 31 $ 1,039 + Depreciation & Amortization 1,711 1,944 3,655 + Transaction Expenses 288 32 320 + Other Expense (35 ) (67 ) (102 ) + Non-cash Stock Compensation 276 297 573 Distribution Adjusted EBITDA $ 3,248 $ 2,237 $ 5,485 TRANSCAT, INC. Adjusted EBITDA Reconciliation Table (In thousands) (Unaudited) Fiscal 2024 Q1 Q2 Q3 Q4 YTD Net Income $ 2,949 $ 460 $ 3,348 $ 6,890 $ 13,647 + Interest Expense / (Income) 814 890 (266 ) (411 ) 1,027 + Other Expense / (Income) 64 (49 ) 289 11 315 + Tax Provision 813 342 923 2,714 4,792 Operating Income $ 4,640 $ 1,643 $ 4,294 $ 9,204 $ 19,781 + Depreciation & Amortization 2,790 3,269 3,783 3,635 13,477 + Transaction Expenses 185 328 78 37 628 + Acquisition Earn-Out Adjustment - 2,800 87 (2,357 ) 530 + Other (Expense) / Income (64 ) 49 (289 ) (11 ) (315 ) + Non-cash Stock Compensation 930 1,241 1,167 1,174 4,512 Adjusted EBITDA $ 8,481 $ 9,330 $ 9,120 $ 11,682 $ 38,613 Segment Breakdown Service Operating Income $ 3,192 $ 742 $ 2,966 $ 8,144 $ 15,044 + Depreciation & Amortization 2,226 2,325 2,362 2,280 9,193 + Transaction Expenses 185 76 30 (44 ) 247 + Acquisition Earn-Out Adjustment - 2,800 87 (2,357 ) 530 + Other (Expense) / Income (47 ) 29 (203 ) (18 ) (239 ) + Non-cash Stock Compensation 676 826 737 736 2,975 Service Adjusted EBITDA $ 6,232 $ 6,798 $ 5,979 $ 8,741 $ 27,750 Distribution Operating Income $ 1,448 $ 901 $ 1,328 $ 1,060 $ 4,737 + Depreciation & Amortization 564 944 1,421 1,355 4,284 + Transaction Expenses - 252 48 81 381 + Other (Expense) / Income (17 ) 20 (86 ) 7 (76 ) + Non-cash Stock Compensation 254 415 430 438 1,537 Distribution Adjusted EBITDA $ 2,249 $ 2,532 $ 3,141 $ 2,941 $ 10,863 TRANSCAT, INC. Adjusted Diluted EPS Reconciliation Table (In Thousands, Except Per Share Amounts) (Unaudited) Fiscal 2025 Q1 Q2 Q3 Q4 YTD Net Income $ 4,408 $ 3,286 $ 7,694 + Amortization of Intangible Assets 1,749 1,888 3,637 + Acquisition Amortization of Backlog 24 4 28 + Acquisition Deal Costs 434 33 467 + Acquisition Stock Expense 234 130 364 + Income Tax Effect at 25% (610 ) (514 ) (1,124 ) Adjusted Net Income $ 6,239 $ 4,827 $ - $ - $ 11,066 Average Diluted Shares Outstanding 9,196 9,282 9,222 Diluted Earnings Per Share $ 0.48 $ 0.35 $ - $ - $ 0.83 Adjusted Diluted Earnings Per Share $ 0.68 $ 0.52 $ - $ - $ 1.20 Fiscal 2024 Q1 Q2 Q3 Q4 YTD Net Income $ 2,949 $ 460 $ 3,348 $ 6,890 $ 13,647 + Amortization of Intangible Assets 1,093 1,416 1,674 1,447 5,630 + Acquisition Amortization of Backlog - 19 24 24 67 + Acquisition Deal Costs 185 328 78 81 672 + Acquisition Stock Expense 182 274 265 258 979 + Income Tax Effect at 25% (365 ) (509 ) (532 ) (431 ) (1,837 ) + Acquisition Earn-Out Adjustment - 2,800 87 (2,358 ) 529 Adjusted Net Income $ 4,044 $ 4,788 $ 4,944 $ 5,911 $ 19,687 Average Diluted Shares Outstanding 7,762 7,948 8,752 8,972 8,352 Diluted Earnings Per Share $ 0.38 $ 0.06 $ 0.38 $ 0.77 $ 1.63 Adjusted Diluted Earnings Per Share $ 0.52 $ 0.60 $ 0.56 $ 0.66 $ 2.36 TRANSCAT, INC. Additional Information - Business Segment Data (Dollars in thousands) (Unaudited) Change SERVICE FY 2025 Q2 FY 2024 Q2 $'s % Service Revenue $ 44,083 $ 41,431 $ 2,652 6.4 % Cost of Revenue 29,492 27,347 2,145 7.8 % Gross Profit $ 14,591 $ 14,084 $ 507 3.6 % Gross Margin 33.1 % 34.0 % Selling, Marketing & Warehouse Expenses $ 4,586 $ 4,143 $ 443 10.7 % General and Administrative Expenses 6,301 9,199 (2,898 ) (31.5 )% Operating Income $ 3,704 $ 742 $ 2,962 399.2 % % of Revenue 8.4 % 1.8 % Change DISTRIBUTION FY 2025 Q2 FY 2024 Q2 $'s % Distribution Revenue $ 23,743 $ 21,373 $ 2,370 11.1 % Cost of Revenue 17,128 15,332 1,796 11.7 % Gross Profit $ 6,615 $ 6,041 $ 574 9.5 % Gross Margin 27.9 % 28.3 % Selling, Marketing & Warehouse Expenses $ 3,595 $ 2,713 $ 882 32.5 % General and Administrative Expenses 2,989 2,427 562 23.2 % Operating Income $ 31 $ 901 $ (870 ) (96.6 )% % of Sales 0.1 % 4.2 % Change TOTAL FY 2025 Q2 FY 2024 Q2 $'s % Total Revenue $ 67,826 $ 62,804 $ 5,022 8.0 % Total Cost of Revenue 46,620 42,679 3,941 9.2 % Gross Profit $ 21,206 $ 20,125 $ 1,081 5.4 % Gross Margin 31.3 % 32.0 % Selling, Marketing & Warehouse Expenses $ 8,181 $ 6,856 $ 1,325 19.3 % General and Administrative Expenses 9,290 11,626 (2,336 ) (20.1 )% Operating Income $ 3,735 $ 1,643 $ 2,092 127.3 % % of Revenue 5.5 % 2.6 % TRANSCAT, INC. Additional Information - Business Segment Data (Dollars in thousands) (Unaudited) Change FY 2025 FY 2024 SERVICE YTD YTD $'s % Service Revenue $ 87,861 $ 81,284 $ 6,577 8.1 % Cost of Revenue 58,387 54,229 4,158 7.7 % Gross Profit $ 29,474 $ 27,055 $ 2,419 8.9 % Gross Margin 33.5 % 33.3 % Selling, Marketing & Warehouse Expenses $ 8,890 $ 8,250 $ 640 7.8 % General and Administrative Expenses 12,790 14,871 (2,081 ) (14.0 )% Operating Income $ 7,794 $ 3,934 $ 3,860 98.1 % % of Revenue 8.9 % 4.8 % Change FY 2025 FY 2024 DISTRIBUTION YTD YTD $'s % Distribution Revenue $ 46,672 $ 42,118 $ 4,554 10.8 % Cost of Revenue 32,285 30,338 1,947 6.4 % Gross Profit $ 14,387 $ 11,780 $ 2,607 22.1 % Gross Margin 30.8 % 28.0 % Selling, Marketing & Warehouse Expenses $ 7,093 $ 5,075 $ 2,018 39.8 % General and Administrative Expenses 6,254 4,356 1,898 43.6 % Operating Income $ 1,040 $ 2,349 $ (1,309 ) (55.7 )% % of Sales 2.2 % 5.6 % Change FY 2025 FY 2024 TOTAL YTD YTD $'s % Total Revenue $ 134,533 $ 123,402 $ 11,131 9.0 % Total Cost of Revenue 90,672 84,567 6,105 7.2 % Gross Profit $ 43,861 $ 38,835 $ 5,026 12.9 % Gross Margin 32.6 % 31.5 % Selling, Marketing & Warehouse Expenses $ 15,983 $ 13,325 $ 2,658 19.9 % General and Administrative Expenses 19,044 19,227 (183 ) (1.0 )% Operating Income $ 8,834 $ 6,283 $ 2,551 40.6 % % of Revenue 6.6 % 5.1 % View source version on businesswire.com : https://www.businesswire.com/news/home/20241028914815/en/ For more information contact: Tom Barbato Phone: (585) 505-6530 Email: [email protected] Source: Transcat, Inc.

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