Greetings and welcome to the Transcat Fourth Quarter Fiscal Year 2020 Financial Results Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note, this conference is being recorded. I will now turn the conference over to our host Craig Mychajluk, Investor Relations for Transcat. Thank you. You may begin.

Thank you and good morning, everyone. We certainly appreciate your time today and your interest in Transcat. With me on the call today, we have our President and Chief Executive Officer, Lee Rudow; and our Chief Financial Officer, Mike Tschiderer. After formal remarks, we will open the call for questions. If you do not have our news release that crossed the wire after markets closed yesterday, it can be found on our website, at transcat.com. The slides that accompany today's discussion are also on our website. If you would, please refer to slide two. As you are aware, we may make forward-looking statements during the formal presentation and Q&A portion of this teleconference. Those statements apply to future events, which are subject to risks and uncertainties, as well as other factors that could cause the actual results to differ materially from where we are today. These factors are outlined in the news release, as well as with documents filed by the company with the Securities and Exchange Commission. You can find those on our website where we regularly post information about the company, as well as on the SEC's website at sec.gov. We undertake no obligation to publicly update or correct any of the forward-looking statements contained in this call, whether as a result of new information, future events, or otherwise, except as required by law. Please review our forward-looking statements in conjunction with these precautionary factors. I would like to point out as well that during today's call we will discuss certain non-GAAP measures, which we believe will be useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We have provided reconciliations of non-GAAP to comparable GAAP measures in the tables accompanying the earnings release. So with that, let me turn the call over to Lee to begin the discussion.

Okay, thank you, Craig. Good morning, everyone. Thank you for joining us on the call today. I hope you and your families are in good health. I'll start the call today with an overview of the fourth quarter results and how we ended fiscal 2020. I'll provide a quick look into the TTE Laboratories acquisition, which closed on February 21, about a month before the end of our fiscal year. Then I'll turn things over to Mike to provide a closer look at the fourth quarter and the full-year financials before I return to speak to our outlook for fiscal 2021 and beyond. Before I get started, I want to take a moment to tell you how proud I am of the Transcat organization for both the agile response and the measured actions taken to ensure the health and safety of our employees and our customers as we work through the challenges of the COVID-19 pandemic. At the same time, we believe we’re operating in a fashion that enables the business to prosper over the long term by securing our differentiation and critical resources. I'll talk to both of those opportunities in a few minutes. Early in the fourth fiscal quarter, we formed a 10-member cross-functional response team that met on a daily basis to establish safety protocols throughout our 42 locations, as well as procedures to safely service our customers at their facilities. We followed CDC and WHO guidelines to mitigate risk, and while so doing we delivered continuous essential services to our customers across a broad range of critical industries, including manufacturers of ventilators and test kits, as well as pharmaceutical companies conducting research and development on the COVID-19 vaccine. Within a matter of days we split shifts in our labs, restricted travel, and leveraged our recent technology enhancements so that all those who needed to work from home, particularly at our headquarters in Rochester, were able to do so. The net result was that Transcat remained operational across the organization, and we are fully operational today. Like I said, I'm very proud and thankful for the dedicated service of all of our employees during these challenging times. Yesterday, we reported our financial results for the fourth quarter and full-year fiscal 2020. The results reflected strong performance in a challenging environment that not surprisingly got more difficult as we moved through February and March. Despite the unexpected headwinds that impacted our top-line performance, we still produced record revenue for the quarter and for the year. The Service segment achieved its 44th consecutive quarter of year-over-year growth, that's 11 straight years, and perhaps more importantly, even with the muted revenue in the back half of the fourth quarter, we delivered both gross margin and operating margin expansion as Service gross margins increased 120 basis points, and Service operating margin increased 40 basis points, and we continue to prioritize the leveraging of technology throughout the organization, particularly to drive service margin expansion. Throughout fiscal 2020, we demonstrated both the effectiveness of our strategy and our ability to execute it. We generated solid cash from operations, which funded the advancement of our technology infrastructure, organic growth opportunities, acquisitions, and debt repayments. Turning to the acquisition of TTE Laboratories, the timing could not have been better for Transcat. The business is complementary and geared almost entirely to life sciences. TTE specializes in the sales and service of pipettes and operates primarily in the New England region, which is the United States' number one life science cluster. Pipettes are laboratory tools commonly used in chemistry, biology, and medicine to transport a measured volume of liquid, often as a media dispenser. We look forward to executing the sales synergies that exist between Transcat's core life science customer base and TTE's specialized capabilities, and of course, the other way around as well, selling Transcat's broad suite of life science services to TTE's current pipette customers. We believe the deal is a big win for both companies. Moving on to Distribution, our diversified channels continue to foster solid performance in the fourth quarter. The rental market achieved double-digit growth in the quarter and for the full 2020 year, and while distribution revenue increased in the fourth quarter, an unfavorable mix drove a 70-point decline in gross margin percentage. Still, the segment grew 4% for the year, and most importantly, our Distribution segment continues to be a differentiator for Transcat, producing sales leads that ultimately fostered 8.4% organic service growth, and 11% total service growth for the full fiscal 2020 year. With that, I'll turn things over to Mike.

Thanks, Lee, and good morning everyone. Today, I'll be starting on slide six, which provides detail for our revenue on a consolidated basis and by segment. As a reminder, we have two reportable business segments, Service and Distribution, and our results include the five weeks TTE, which was acquired in late February 2020. As Lee mentioned, our fourth quarter performance was solid considering the impact of the COVID-19 pandemic in the latter half of the quarter, especially in March, which historically is the strongest month of our fiscal year. Consolidated revenue for the quarter was up nearly 3%, to $45.8 million, which represents a record level. The increase in Service revenue to $25 million reflects 1.1% organic growth, largely from new business within the life science market, and a quarter-over-quarter increase was 2.9% including the incremental revenue from TTE. Distribution sales were up 2.9% in the fourth quarter versus the prior year fourth quarter with higher rental revenue as we mentioned. Full-year consolidated top line results were solid, reaching a record level of $173 million. Highlights include 10.7% Service revenue growth with 8.4% on an organic revenue basis, and Distribution growing 4.2% including higher rental revenue, 19% year-over-year for the full-year. Our consolidated gross margin performance in the quarter was also a bright spot and further demonstrated the strength and overall importance the service business has on our margin profile. Quarterly Service segment gross margin improved 120 basis points from our various and ongoing productivity initiatives in spite of the COVID-19 impact on March revenues as described. While distribution gross margin was positively impacted by the higher margin profile of rentals, we did have an unfavorable mix in the quarter which resulted in the 70-point decline. However, as we mentioned, distribution is doing what we want, providing leads every day to service while generating cash. We are very pleased with the 40 basis point improvement in full fiscal year service gross margin, in spite of a tough finish to the fiscal year in March. For the full fiscal year, Distribution gross margin declined 20 basis points. Slide seven shows our operating performance. We got flow through from our service margin performance although that leverage was somewhat muted at the operating income line as we continued to invest in our technology capabilities to support current and planned growth and to advance our operational excellence initiatives. Also, one-time SG&A cost of approximately $150,000 of legal and other TTE transaction closing costs were incurred in the quarter. On slide eight, we show our net income results, which reached a full fiscal year record of $8.1 million, up nearly 13%. Net income for the quarter was down slightly due to the higher quarterly tax rate which reflected the timing of discrete income tax benefits related to certain share-based awards. We expect our income tax rate to range between 24% and 25% in fiscal 2021, including federal, state, and Canadian taxes. On slide nine, we show adjusted EBITDA and adjusted EBITDA margin. Among other measures, we use adjusted EBITDA, which is a non-GAAP measure to gauge the performance of our segments because we believe it is a good measure of operating performance. It is used by investors and others to evaluate and compare performance of core operations from period to period. I encourage you to look at the provided reconciliation of adjusted EBITDA to the closest GAAP measures which for us are operating income and net income. Slide 10 provides some detail regarding our balance sheet and cash flow. In fiscal 2020, net cash provided by operations was solid at $11.6 million and was used to fund capital expenditures of $6.6 million, make acquisition payments, and pay down debt. At fiscal year end, we had total debt of $30.3 million with $12.3 million available under our revolving credit facility. We had used $12.2 million during the fourth quarter to acquire the assets of TTE, and during the full fiscal year, we spent a total of $13.8 million for acquisitions including releasing certain final hold backs from other previous deals. Our leverage ratio at the end of the fiscal year was 1.53:1 and is calculated as total debt on our balance sheet at a period end divided by trailing 12 months adjusted EBITDA including giving credit for any acquired EBITDA. Other companies may calculate such a metric differently. As we noted in the press release and on the slides, we have pulled some prudent levers on the cost side. The management team and board have taken temporary reductions in salary and fees. We're aligning variable costs with demand and tightly controlling discretionary spending. We'll continue to closely monitor our cost structure and liquidity. For areas outside of technology, we've also put a temporary freeze on hiring and wage increases. We don't qualify for the Paycheck Protection program, but we are monitoring various Cares Act programs and leveraging various federal and state government payroll cost-sharing and tax deferral opportunities. On Monday, we executed an amendment to our credit facility, which among other things gives us an additional $10 million in borrowing capacity and financial covenant modifications going forward. The amendment now extends the credit facility to October of 2022. This amendment gives us more dry powder for investment opportunities, such as acquisitions, while providing further liquidity capacity even though it is not expected to be needed under any current operating scenario. Given the actions we have taken to further strengthen our balance sheet and liquidity, we believe we are in a good position to weather this current challenging economic environment while still making investments that will benefit the company and its shareholders in the longer term. As noted on slide 11, we are forecasting our capital expenditures for fiscal 2021 to be in a range of $5 million to $5.5 million. The focus is expected to center around further investments in technology to fund growth-oriented opportunities within both segments and the purchase of rental pool assets. This amount includes maintenance CapEx, which is expected to be consistent with fiscal 2020 at approximately $1 million to $1.5 million for the year, and lastly, we expect to timely file our Form 10-K on approximately June 8. With that, I'll turn it back to you, Lee.

Okay. Thank you, Mike. No doubt, we're all concerned about the high level of uncertainty that exists both in our personal lives, as well as from a business perspective. At Transcat, we're looking forward, and there are a few points I want to make and make sure I communicate well. Back in 2013, Transcat made a strategic decision to focus our time and our resources towards the expansion and development of the life science sector of our calibration services business. We knew the market was essential, the demographics are attractive, and the revenue stream recurring and driven by regulation. We also understood that the cost of failure within the life science sector is high, and calibration plays an important role in the mitigation of risk. Life science is a difficult market to get into and perform well in, but we are committed to developing the market, and like calibration services in general, it represents our primary growth engine. Today, more than ever, I'm glad we did. It's in difficult times like these that we believe our life science orientation provides both stability and opportunity, and we believe it adds a significant degree of resilience to our operation. We also believe our service segment as a whole by its nature tends to be quite resilient, but even more so in life sciences. While we expect our Distribution business to feel more downward pressure from an extended economic slowdown, our Service business is expected to continue to be steady and strong and better position us over the longer term because we believe we're in a good position in our markets and with our customers. We have the opportunity to focus on a couple of important things. First and foremost is taking care of our most critical resource, our people. While we are proactively managing our costs in the COVID-19 environment, we have made a strategic decision to fully retain all of our technical talent, even if that means having some excess capacity for a short period of time. In time COVID-19 will pass, and when it does, by maintaining our technical workforce, we will be ready to support expected strong organic growth levels. We also believe there will be a higher level of acquisition opportunities coming out of the current economic slowdown. It is our goal to be ready, both organically and through acquisition, to capitalize on growth opportunities as we encounter them. In addition to our people, our underlying strength will be our technology. In fiscal 2020, I worked on the technology front, the other productivity gains, margin expansion, process improvement, and improved data analytics. We expect continued improvement in all these areas on a go-forward basis. In fact, several of our key technology initiatives are being accelerated in fiscal 2021 to be ready to support growth and productivity. Outside of technology and our technical workforce, we have taken prudent cost actions in anticipation of headwinds throughout the first quarter of fiscal 2021. In the first quarter of fiscal 2021, we believe we'll be in the range of breaking even on a consolidated operating income level, and we expect positive adjusted EBITDA and the generation of sufficient cash from our operations. Over the mid to long term, we expect our scale, our unique value proposition, and our strategy to play in our favor. With that, Operator, please open the line for questions.

Thank you. At this time, we will conduct our question-and-answer session. Our first question comes from Gerry Sweeney with ROTH Capital. Please state your question.

Good morning, Mike and Lee, and thanks for taking my call.

Good morning, Gerry.

Hey, Gerry.

Could you provide more details about your expectations for fiscal 1Q? With April being slower, did Service experience any delays, and has that resulted in a backlog of various services? Have you had discussions with your customers about their needs and how they are adjusting post-COVID with social distancing? Are they changing how they allocate work to you? It would be helpful to have more insights into how things are evolving in this new COVID environment.

Yes, fair enough, Gerry. This is Lee. So, at a relatively high level, we have been pretty pleased with the Service pipeline and the level of service activity we've seen throughout the organization. Our Client-Based Labs are very steady, just inherently. The amount of workload in the beginning of the quarter tended to be off by a few percentage points, but picked up throughout the quarter and even most recently. We like the pulse, the level of work that we're being asked to perform in the first quarter, and I'll even make a comment that generally speaking I think we're pleasantly surprised. It's held up really well. In addition to that, the pipeline on a go-forward basis, as I mentioned in the earnings release, is really quite strong, and so, some of it's a matter of timing, right, companies wanting to make the change and then switch to using Transcat Services. So, I like the pipeline, I like the work levels, and most of the anticipated declines are on the distribution business, which is absolutely no surprise, and that will work itself in and out as the economy goes, but yes, Service is doing what we wanted Service to do, and that's why in the script I talked a little bit about 2013, making that pivot, and I think it's worked in our favor.

Got it, and does this environment maybe change how some of your customers look at using Transcat? I mean could there be a shift more to Client-Based Labs over different opportunities, any talk on that, or is it still too early? In other words, is the situation changing a little bit?

Right, not yet, and not really. I have not gotten any feedback relative to that. I get the nature of the question. Right now, our Client-Based Labs, everything is pretty steady stage for us. We haven't seen a lot of conversions. We have converted many of our on-sites to depot, and that makes a whole lot of sense, right, but that may or may not continue. I'd love it for it to continue, but that may not continue over time, but no fundamental shift based upon COVID that I can pick up yet. So we'll keep you in the loop if we detect something.

Yes, Gerry, I just want to add one thing on to that, and I think it's kind of an advantage: Lee just mentioned at the end, on-sites and having to work done in depots. We proactively reached out to customers, because we were worried about their visitor protocols. One of the advantages that Transcat has is having 21 calibration facilities around the country. We were able to do that, and we have been lucky that they are all operational, and there has been a number of customers that have wanted to move their site into the facilities instead of having us go out there, but it's one of those where I think being decentralized does give us some cover. If there was going to be some issue at a particular lab, we have a lot of other levers to move the work into whether it's on-sites to a lab, or from one lab to another lab.

Got it. Switching topics, you mentioned the operating line and the acceleration of some investments. Could you elaborate on what you're doing in that area, what the potential outcomes are, and what the expected results might be? I assume margins are a key focus, so please discuss that in a bit more detail, including how much you are increasing the pace of these investments.

Yes, I’ll be happy to. So, we have in the past couple of years invested in cybersecurity and our infrastructure. We are building integration tools. Some of them are done. Some of them are really close to completion. We have invested in automation. As you know, our C3 software, which is the portal for our customers to sort of act in a self-serviced fashion, and we are really committed to this journey a couple of years ago, and we are just starting now, and you can see in our margins we are just starting now to see some of the fruits of our labor, and it’s exciting, and so, as we pick up momentum, you kind of get awfully excited by it, and so we want to see it continue. In this environment, rather than make a choice to cut back on expenses relative to technology, we want to keep going forward. In fact, we are actually in a hiring mode both programmers and some project managers because we feel like the opportunity is real, it’s current, and if we capitalize on it, these things will make a lot of sense to accelerate versus doing the opposite, and that's what I meant to say, and we are going to stick to that plan because we will come out stronger because of it.

Got it, perfect, really helpful. I will jump back in line. Thank you very much.

Okay.

Our next question comes from Dick Ryan with Dougherty & Company. Please state your question.

Thank you. Lee, in your stress test of the business model for Q1, can you give us a sense of what revenue levels you might be looking at for an operational breakeven scenario, or maybe to look at it more specifically, can you give us little more feel of what your thinking kind of the declines could either be in the Service and Distribution side?

Sure. If you look back at the first quarter of last year, Dick, you will notice that we had $1.2 million of operating income in Distribution and about $700,000 in the first quarter for Service. So, we would expect the Service to hold up quite well relative to last year, and wouldn't even be surprised if we outperformed. But where you are going to see the decline is going to be in Distribution. So, instead of $1.2 million, that's more what we are looking at in terms of breaking even. There may yet be rebates involved as well for volume, and some of those go away in a short term, and so, we would like to see it getting close to breakeven on the Distribution year over year, and then, we expect Service to hold up pretty strong. Now, it's possible we could outperform in our estimates, that wouldn’t surprise me, but we wanted to take a conservative approach and say, 'Hey, if we hit breakeven plus or minus $100,000, that's about where we think we are going to be,' there is some upside I think to that, but I want to be a little conservative.

Sure, appreciate it. The kind of offensive stance you are taking on keeping your techs employed, kind of given the speed bump, I think is commendable. What do you see on the M&A side? I mean, do you think coming out of this the opportunities are going to be there, and what could they do to multiples that you were maybe looking at pre COVID-19?

Right, so having been through some economic slowdowns in the past, each and every time we saw an increased level of opportunities around acquisition. So, there's no reason to believe that that wouldn't be the case this time as well. Now, exactly the size and the pace at which that's likely to occur, I'm not sure what the multiples will be at this point. We tend to be fairly disciplined between four and six times EBITDA, but for TTE, we extended ourselves a little bit, because the fit was so good. I'm going to reserve answering that question at this point, because I'm just not sure what's going to happen; it’s too early to tell on multiples, but history would tell you that there should be an increased level, and that's why we talk to that possibility, and as time goes by, when we report on first quarter, we'll give an update on those expectations.

Sure. Just to refresh me, you've got 20 Client-Based Labs, what did you have? I mean what did that grow in fiscal '20, and what kind of trajectory could we see from Client-Based Labs over the next two, three, four years?

Right, well, to refresh your memory, if you go back beyond last year, we typically would win one of these opportunities once or twice a year for several years; that was pretty average. And I think at one time, we had about five or seven of them. If you go back the last 12 to 24 months, therein lies the difference, and there's the 10 or 12 opportunities. So, we saw a pick-up from one or two a year to five or six the year over the last couple of years. To the second half of your question, do we see that continuing? I don't see why not. I mean, if you COVID aside, the speed bump aside, we had a nice pipeline. We were marketing well and selling well and performing well in that particular space, and I don't know; I can't really speak to a reason why that wouldn't continue. There's no guarantee. Some of our pipelines have been delayed a little bit at people trying to make sense out of whether they want to change now versus next quarter or next month or a couple months from now, but the general feeling from our sales folks are that the value proposition is strong around Client-Based Labs, and we would expect that to continue. At the same level as last year’s, perhaps, maybe a little lighter, maybe heavier. We don't know at this point. I would expect about the same if I had to guess.

Okay, great. Thank you and congratulations on the strong execution.

Thanks, Dave.

Thanks, Dave.

Our next question comes from Mitra Ramgopal with Sidoti. Please state your question.

Yes, hi, good morning. Thanks for taking the questions. First, I just have a question on the Service segment that Lee I believe you mentioned some customers are delaying their project decisions, and I was just curious, I’m assuming it’s in non-life sciences areas, maybe aerospace, defense, et cetera, just wondering if you could maybe give us a little more color on that?

It's actually a mix of both, and so, we had some nice opportunities. We've been sort of given a thumbs up of verbal, 'Hey, you guys, we're going to go with you,' but we just we're not going to make a change in the first quarter. You're right, a couple of those tend to be in aerospace and defense as opposed to life sciences, but there's some in life sciences as well. So, I don't see it as a major setback. I see it as maybe a quarter, or quarter-and-a-half. I mean, if things do pick up as we expect, and the first quarter is sort of the bottom period for us, I would expect that sentiment to change at a fairly rapid pace, but right now, that's just I'm giving you feedback on what we've heard and again, it hasn't stopped us from growing to this point. I think it's just muting what we could be doing. I expect it to reverse itself at some point.

Okay, that's great. And then, related to the organic growth, you're obviously very good about long-term prospects, and I know you just added some technicians over the last year, and obviously you've held the line in terms of many potential reduction of headcount. I am just curious on the flipside, given the weaker labor market, if that's providing you maybe with some opportunities to continue to maybe add some technicians that might not have been available a few months ago?

Right. So it’s actually an interesting point. I mean we're not really focused on adding technicians at this point, because we think we're more overcapacity than undercapacity for the short term. That doesn't mean if a sensational opportunity presented itself with someone with a specialized needed skill set that we wouldn't jump on that; of course we would, but our general playbook says, 'Let's stick with the technicians we have.' We're less concerned with the profitability over the next 30 to 90 days based upon having an overcapacity of technicians, and more excited about having the opportunity to grow our business at some later point in the year. So, we're going to stick to that game plan and be open-minded to talent if it's out there, and it makes us better. I wouldn't probably hesitate, but the plan is not to go looking proactively for more technical resources when we think we already have more than enough in the first quarter.

Yes, and I think that that makes sense, Lee, and certainly I think a higher unemployment rate, just to converse, when low unemployment rate where it hurts a little bit, technical labor, you would think that in theory there would be more resources available when the time is right, and we'll always look for the best athlete available. I think we'd be in a position to take advantage of that when things settle down a little bit, Mitra.

Okay, noted, that's fair. And on the acquisition front, obviously TTE still early days yet, and with the environment really difficult maybe to assess how prominent in normal conditions, but I was just curious if you had any additional color as it relates to the integration and what you've been able to see so far from that acquisition if it's sort of meeting or even exceeding your expectations?

Yes, so from a personal perspective, I love TTE. It's probably of the 11 or so acquisitions, it's probably my favorite. I like the way it fits from a strategic perspective. I like the way it's run, and I like the upside to market their services throughout all of our labs and vice versa. So I'm pretty bullish on where I think that can go, and there are no signs to point to anything different than that. In this environment, that particular space and that particular suite of services that they offer should do well, and I like their management team, which is one of the reasons why we acquired them. So I'm going to stick to my bullish outlook on them, and like I said, I do it again; quietly coming again, in a second, I think it's going to be really good for us.

And Mitra, I think with the technology that we've deployed, not being able to kind of have as much face-to-face as we normally would, hasn't really slowed down any integration efforts. We're kind of used to doing that anyway. So I think we're not going to use that as a reason to slow down any of the integration or get the cost or the sales synergies out of it.

Okay, that's great. Thanks again for taking the questions.

Thanks, Mitra.

Thank you.

Our next question comes from Chris Sakai with Singular Research. Please state your question.

Hi, good morning. I had a question on the distribution sales mix. Wanted to get to see, what you guys are looking forward to, I guess in the current quarter, we've seen the improvements there?

Well, this distribution, Chris, will typically follow the general economy and GDP and so on. So if the economy backslides in Q1 as I think we all recognize that potential to occur, then you would expect distribution at the front of the line for us to feel that. So, yes, the reason why we're projecting out for the first 90 days of our fiscal quarter, a breakeven sort of operating environment is almost exclusively related to some of that, you know, that the impacts that we think we're going to see on distribution. That could change. We could have a strong June, we could have a strong May still, and so, we can't predict the future fully, but we do expect distribution to feel the impact of a slow economy, and we'll see how it plays out over the 90 days of our first quarter.

Okay, great. And then one other thing, looks like the operating income for the Service segment was down year-over-year. Can you help me understand a little more about why?

Yes, Chris, this is Mike. As we tried to kind of describe kind of a couple different things, one, there's a lot of investment that's happening in technology that goes into those SG&A, the operating expense lines and service, there's a lot of that because it's related to that segment, and then the TTE costs, kind of the one-timers, excuse me, the legal and the transaction costs muted operating income on a segment level and on a consolidated level. I would like to add that March is an exceptional month for us from a service standpoint; it's consistently our busiest month each year. In the last week or two of March, we typically experience a significant concentration of our service business. In this specific March, and even in February, we saw muted revenue. Due to the nature of our business, which has a fixed cost structure, if we missed $1 million in billing during the last few weeks—something that we usually achieve yearly—the impact is significant. Looking back at our previous fourth quarters, you can see that missing that $1 million in a COVID environment greatly affects our bottom line. Roughly half to three-quarters of a million dollars would typically drop to operating income, and you would have observed a different performance in that area. While I don't want to use COVID as an excuse, it clearly affected our ability to finish strong during a key time for us.

Okay, that helps, but will that be pushed into the first quarter when you're saying that?

Yes, right. Well, that's a good question. So, will it be pushed into the year, where the first quarter, hard to tell; it's hard to tell what's going to be pushed into the first quarter. We will have to wait and see. At some point, our calibrations on the service side need to be performed, and for that reason you'd believe there'd be pent-up demand and it we'd see that. If a location shuts down or company goes out of business, which can happen, then no, that's not going to come back, but if a business starts to run as normal as usual at some point during the year, you would believe there'd be pent-up demand, and we would expect, and that's why we haven't laid off technicians, that's why we're staying steady state, so that we're ready to capitalize on that, because we think that's going to occur to some degree. The exact amount, the exact impact, I'm not a hundred percent sure, but we see something coming back.

Okay, great. Thanks.

Thanks, Chris. Ladies and gentlemen, there appears to be no additional requests for questions. I'll turn it back to management for closing remarks. Thank you. Well, thank you all for joining us on the call today. We appreciate your continued interest in Transcat. Feel free to check in with us at any time. Otherwise, we'll talk to everybody at the end of our first quarter 2021. Again, we appreciate everybody participating in the call. Take care.

This concludes today's conference. All participants disconnect. Have a good day.