Thank you, operator, and good afternoon, everyone. We appreciate your time and your interest in Transcat. With me here on the call today is our President and CEO, Lee Rudow; and our Chief Financial Officer, Tom Barbato. We will begin the call with some prepared remarks, and then we will open the call for questions. Our earnings release crossed the wire after markets closed this afternoon. Both the earnings release and the slides that we will reference during our prepared remarks can be found on our website, transcat.com, in the Investor Relations section. If you would please refer to Slide 2. As you are aware, we may make forward-looking statements during the formal presentation and Q&A portion of this teleconference. These 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 in the documents filed by the company with the SEC. 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. Additionally, 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've provided reconciliations of non-GAAP to compared GAAP measures in the tables accompanying the earnings release. With that, I'll turn the call over to Lee.

Okay. Thank you, John. Good afternoon, everyone. Thank you for joining us on the call today. Transcat delivered strong performance again in our second quarter of fiscal 2026. The key to Transcat's ongoing success is the consistent execution of our unique strategy, which includes the diversity of our product and service portfolio. As a reminder, there are four key elements to our strategy: organic service growth, inherent operating leverage in our service platform, strategic acquisitions and growth in our highly profitable rental channel. The combination of all four creates a unique and proven resiliency in our business model, which can be seen clearly in the first half of our fiscal 2026 year. And in the second quarter, despite continued economic uncertainty and volatility, consolidated revenue increased 21% to $83 million. Stable calibration revenue driven by customer retention, strong performances by our two recent acquisitions, Martin Calibration and Essco Calibration, and significant growth in our rental channel drove double-digit revenue growth in both our service and distribution segments. In addition, in the second quarter, consolidated gross profit grew 26% and gross margins expanded 120 basis points. Our differentiated strategy also enabled adjusted EBITDA growth of 37% with 160 basis points of margin expansion. Amidst macroeconomic uncertainty and continued headwinds, the team did an excellent job finding ways to win, grow, and position the company for sustainable long-term growth throughout both segments. Turning to the service results in the second quarter. Service revenue increased 20% and recorded its 66th straight quarter of year-over-year growth. Early results of our most recent acquisition, Essco Calibration, have been very strong. As expected, Essco is a perfect fit, and as we like to say, right down the fairway for Transcat. Essco, like the Martin Calibration acquisition earlier in the fiscal year, demonstrates our ability to attract and acquire highly sought-after calibration companies that expand our capabilities, geographic footprint, leadership, and most importantly, our ability to deliver long-term organic service growth. Transcat's reputation as a strategic acquirer of choice in the calibration industry continues to be an important differentiator. We firmly believe our methodology and culture around integration and synergy capture is second to none. The acquisitions of both Essco and Martin have made Transcat a very difficult company to compete with. Turning to distribution. In the second quarter, distribution revenue grew 24% from high demand, especially in our rental channel. Gross margin expanded 530 basis points versus prior year, driven primarily by an increase in the mix of higher-margin rental revenue within the Distribution segment. The strength of our balance sheet continues to support Transcat's proven growth strategy. Our new syndicated credit facility nearly doubles Transcat's resources to execute on proven acquisition and growth strategies, automation, and many new AI programs in the works. We expect AI to generate new data streams and associated insights that will benefit both sales and operations from productivity to capacity planning, from marketing to customer retention. We are engaged in a new level of data management and delivery. Overall, we're pleased with our second quarter performance, which like the first quarter, remains strong despite continued economic headwinds. With that, I'll turn things over to Tom for a more detailed look at the second quarter financial results.

Thanks, Lee. I'll start on Slide 5 of the earnings deck, which provides detail regarding our revenue on a consolidated basis and by segment for the second quarter of fiscal 2026. Second quarter consolidated revenue of $82.3 million was up 21% versus prior year as both segments grew double digits. Looking at it by segment, service revenue grew 20% despite continued economic volatility. Distribution revenue of $29.4 million grew 24%, primarily due to strong performance from the higher-margin rental business. Turning to Slide 6. Our consolidated gross profit for the second quarter of $26.8 million was up 26% from the prior year. Service gross profit increased 17% versus prior year. We continue to leverage higher levels of technician productivity and our differentiated value proposition. That said, service margins continue to be pressured by lower than historic levels of organic growth as well as lower year-over-year Transcat Solutions revenue. Distribution segment gross profit of $9.8 million was up 48% with 530 basis points of gross margin expansion, driven primarily from the performance in our rental channel. Turning to Slide 7. Q2 net income of $1.3 million decreased $2 million versus the prior year, driven by higher interest expense and increased tax rate within the quarter. Q2 net income was negatively impacted by both one-time expenses related to the company's CEO succession plan and a higher effective income tax rate. The income tax rate was impacted by higher-than-anticipated excluded compensation expenses also tied to the CEO succession plan. Diluted earnings per share came in at $0.14. We expect additional one-time CEO succession costs and a similar resulting impact on the company's effective tax rate in the second half of fiscal 2026. We report adjusted diluted earnings per share as well to normalize for the impact of upfront and ongoing acquisition-related costs. Q2 adjusted diluted earnings per share was $0.44. A reconciliation of diluted earnings per share to adjusted diluted earnings per share can be found in the supplemental schedules attached to this presentation. Flipping to Slide 8, where we show our consolidated adjusted EBITDA and adjusted EBITDA margin. We use adjusted EBITDA, which is non-GAAP, to gauge the performance of our business because we believe it is the best measure of our operating performance and ability to generate cash. As we continue to execute on our acquisition strategy, this metric becomes even more important to highlight as it does adjust for one-time deal-related transaction costs as well as increased levels of noncash expenses that will hit our income statement from acquisition purchase accounting. Second quarter consolidated adjusted EBITDA of $12.1 million increased 37% from the same quarter in the prior year with 160 basis points of margin expansion. Please note that segment non-GAAP results are now labeled adjusted operating income, but the calculation did not change. As always, a reconciliation of adjusted EBITDA to operating income and net income can be found in the supplemental section of this presentation. Moving to Slide 9. Operating cash flow was up 5% versus the prior year, and CapEx is in line with expectations and continues to be centered around service segment capabilities, rental pool assets, technology, and future growth projects. Slide 10 highlights our strong balance sheet. At quarter end, we had total debt of $111.9 million, $38.1 million available for borrowings under our secured revolving credit facility and a leverage ratio of 2.25x. We were pleased to close the Essco Calibration deal in the second quarter. Essco was a coveted calibration company that is highly synergistic and fulfills all of our strategic acquisition drivers. Our expanding adjusted EBITDA margin will drive a lower leverage ratio in subsequent quarters. Lastly, our Form 10-Q will be filed November 5, after the market closes. With that, I'll turn it back to you, Lee.

All right. Thank you, Tom. As I mentioned earlier, our diversified portfolio of products and services, along with a strong financial profile, has generated consistent results over an extended period of time and through various economic cycles. This should not be understated as our business model continues to demonstrate its resiliency. In addition, we will continue to leverage technology as a competitive advantage by investing in state-of-the-art capabilities, systems, processes, and AI, all of which drive sustainable growth and efficiencies into our business model. This is the Transcat way. As previously discussed, we expect to return to high single-digit organic service growth in the second half of fiscal 2026. In addition, we would expect margin expansion as we return to historical rates of organic growth. We have a strong acquisition pipeline to support an increase in our geographic footprint, capabilities, and overall market share. And where it makes sense, we will continue to expand our addressable markets through acquisition. Our leadership team across multiple levels of the organization continues to get stronger and is a major contributor to our ability to continue to deliver sustainable long-term value for our shareholders. And with that, operator, we can open the call up for questions.

I wanted to start by mentioning that distribution was the highlight of the quarter. So, I have two questions. First, what is driving the acceleration in rentals? How much of it is related to market conditions versus your specific company actions to boost sales? Also, can you provide the percentage of rentals in the quarter as part of the overall distribution?

Yes, Greg, it's Tom. When we discuss rentals, there are two factors contributing to the growth. One is our acquisition of Axiom Test Equipment about two years ago, which we have worked to integrate more quickly over the past year. The integrated team is performing exceptionally well, winning more opportunities and significantly contributing to our growth. Additionally, there is an impact from rent versus buy due to some macroeconomic challenges. However, the primary driver is our execution and the benefits from the integration efforts made last year. Year-over-year, the Becnel rental business is also showing strong performance, and we are experiencing consistent demand.

What kind of visibility levels do you have for the second half in that business? Because obviously, the revenue growth in the first half is pretty incredible.

Yes. I believe that in the second half of last year, we began to notice some benefits from improved performance and execution following our integration efforts. Therefore, it’s reasonable to expect continued growth rates similar to those we experienced in the first half of the year. I also anticipate reasonable margin expansion; year-to-date, we are seeing over 500 basis points of margin expansion compared to last year. Looking ahead, I expect margin expansion to be more in the range of 250 to 300 basis points. Overall, you can continue to expect strong performance.

And then on the service side, I think by my math, still kind of low single-digit organic decline. What gives you the confidence to sit here today and still say, yes, we're going to return to high single-digit organic in the back half of the year because it strikes me going from a low single-digit decline to a high single-digit, that's a pretty big move, pretty big uptick.

So, I'll take this one. Greg, this is Lee. So, if you factor out solutions, we like to look at it both ways. The growth was probably in the 1%, 2% range. And we're going to call that pretty stable given this environment. We have no real issues on the retention. The customers that we have today continue to do business with us as they have in the past. Where we've struggled a little bit in this fiscal year has been on closing new business and starting new business. I think the economy is such that the longer time to close has become more normal. The incremental cost for our customers to change vendors at this particular time with some of the uncertainty has been a challenge. But the reason why we're still quoting in the high single-digit range is because a number of accounts have been won recently and will come to fruition, and we expect revenue as we drive through the third quarter into the fourth. And so, I think there's enough there that we have a fairly good sight line into more growth than we've experienced in the first half, which, by the way, is what we've been guiding to softly for the last several quarters is what we thought would happen, and it's not too far off from original expectations.

Congratulations on the quarter. I have a question regarding Essco, reflecting on the past 90 days since you acquired them on August 5th. Have there been any aspects of the acquisition that turned out to be more positive than you initially anticipated? Conversely, have you encountered any negatives or challenges related to the Essco acquisition?

Yes. This is Lee, Max. There are very few obstacles. In addition to acquiring the company, we also gained a strong management team that understands their business, which has performed exceptionally well. Although we don't include initial growth from acquisitions in our organic growth figures, Essco has shown impressive growth, as has Martin. Both companies have achieved double-digit growth since our acquisition, and I expect that trend to continue. As for negatives, I can't really identify any. There are always challenges when getting to know people, but most planning sessions have gone smoothly. Our sales integration started almost immediately without significant issues that I am aware of. This has been one of the smoothest experiences we've had, which often happens with higher-quality companies. We've seen this with Martin and are experiencing it again with Essco. It's a common outcome; you get what you pay for, and we are very satisfied.

Yes. I want to revisit Greg's earlier question regarding the latter half of the year and the return of service to organic growth. You mentioned some economic uncertainty—could you elaborate on how that might be a barrier to your growth in the second half of the year? I'm looking to understand what factors we should consider when projecting service growth for the remainder of the year.

Well, I think what we're alluding to, Max, is maybe kind of more of what we've seen in the first half of the year. A lot of uncertainty around tariff levels and where things are going from an interest rate environment standpoint. I think it's got some of our customers reacting a little slower than what we normally see. And I think with recent news, I think we're expecting that to improve some, but it just seems like in this environment we're operating in, things are subject to change at any point in time.

I mean have you seen customer sales cycles shrink since maybe 3, 4 months ago up until now?

I don't think the sales cycle has shortened. For the past six months to a year, we've experienced consistent delays from customers who initially indicated they would proceed with Transcat and appreciated our value proposition. However, their timelines have repeatedly shifted. This situation is not unusual, and we aim to maintain a long-term perspective rather than fixate on quarter-to-quarter fluctuations. We are pleased with our current position, but economic cycles can create softer conditions than we'd prefer. Nonetheless, our revenue in relation to retention has remained strong. We've made two successful acquisitions and achieved 20% growth in services, which is encouraging given the current economic climate. This performance reflects positively on our company. We are observing signs that customers are ready to proceed with new orders, which is where our confidence in the latter half of the year stems from.

I just wanted to mention that while this isn't really a question, it does relate to the rental business, which has been performing well. You have kept it within distribution. What would it take to separate that out? The reason I ask is that it's becoming a significant part of the business and your capital expenditures. If I'm correct, you don't break out your rental capital expenditures, but it seems to be much higher than before. It's clear you're investing in your rental assets. At what point will we be able to see more information about that so we can better understand the return on that investment instead of just seeing it as a growth driver for revenue? That's my first question.

Yes, Ted, it's Tom. One of the advantages of the rental business is that we are renting equipment we would typically sell through our distribution channel. This creates a low cost of entry since we can easily transition items from distribution to rental. If a customer is willing to rent it, we can facilitate that smoothly. The flexibility and ability to grow this business from nothing into something has led to some overlap internally. Our warehouse team supports both distribution and rental operations, and we collaborate with the same vendors, making it challenging to separate the two completely. At some point, we may reach that point, but for now, we operate them as a single business from a resource perspective. Regarding our capital expenditures, about one-third of our CapEx budget is designated for rentals. It's important to consider CapEx in terms of net investment because a successful rental business requires identifying slow-moving equipment and having a strategy to sell it, generate cash, and reinvest in assets that are in demand. Overall, I would say that net-wise, rentals account for approximately one-third of our CapEx.

What is it regarding a portion of your PP&E? It wouldn't be in your inventory; it would be in your assets.

I don't have that number off the top of my head, but I could follow up with you.

I understand your point. It's becoming an important business driver, and I believe we need to establish more metrics around it. The next question concerns the solutions business. We've been facing new challenges recently, but before the election and events that followed, it had been a burden on the business for quite some time. You've indicated previously that it has stabilized. Can you provide more details? Specifically, how did the solutions business perform in the third quarter compared to the second quarter and the same period last year? Additionally, how did it align with your expectations going into the quarter?

Yes, this is Lee. I believe it's aligned with our expectations. The business has stabilized after experiencing a significant drop-off, and we're not encountering declines like we did a year ago. From Q1 to Q2, we anticipated and observed stability. Year-over-year, there are still declines, but they fall within our expected range. This business is important because it will contribute to our organic service growth over time. We expect that, once it reaches its potential, its growth rate will be similar to our typical overall growth rates for calibration services. Currently, it is in line with the expectations we set a year ago.

So, if we assume it was flat sequentially and continued to trend flat, at what point would it stop being a drag on growth metrics for the top line?

Yes. I mean if it was a flat business, then it's a business that if we're going to maintain a flat business, it's going to be for one reason only, and that is that it's a means to an end and it drives calibration business for us. And therefore, it's a channel that we see value in. We don't see it today as a flat business in the long-term. I think once we get it stabilized and get everything lined up the way we think we're capable of doing, that should be a growth business.

No, no. I preface my questions with that. I'm just kind of where I'm driving to is do the analysis at what point does it stop being a drag with regards to top line growth. That's really stabilize.

Yes, very soon. I mean as we get through this fiscal year and the back half of the year, that's exactly what we would expect. So, we shouldn't be talking about the solutions business like we've talked about it for the last year as we get through third and fourth quarter. This is the time when we saw the declines. This is when we thought we get stabilized, we're close. So, I think, yes, that conversation is going to be over the next quarter or two.

It's adjusted out for the adjusted EBITDA number and for the adjusted EPS number for the reconciliation.

I just want to confirm that the $0.44 of adjusted earnings has that removed. That's what I was asking.

That's correct.

So, I want to make sure I understand the different growth dynamics between newly acquired Essco and Martin and then your other service business. Other services overall have an organic growth rate at low single digits. But you also mentioned Essco and Martin still on double-digit growth. So, what's created such different growth profiles? Anything you can do to bridge the two?

Okay. So, I guess the question is why are those businesses doing well?

Yes, so much better than the rest of your service.

There are a few reasons for the performance we're seeing with Essco and Martin. First, Essco operates in the New England area, which plays to its strengths. Some life science customers there are thriving. We conduct extensive research and analyze a lot of data to identify which customers are growing, declining, facing challenges, or expanding their operations. During our due diligence, we found that Essco had a strong customer portfolio, and we anticipated their growth. While we share some customers with them, others differ. Essco's success is largely due to the robustness of its customer base and its growth trajectory, so this isn't surprising. The same applies to Martin, located in Minneapolis, where the life sciences and medical device companies are doing quite well. Across our 34 commercial labs, a significant portion, around 80%, is experiencing growth. However, there are regional variations that present some challenges, which is expected. We made these acquisitions with the expectation of growth despite the headwinds, and they are meeting those expectations.

Another question on the next quarter. So, part of the Martin's performance will be characterized as organic growth come next quarter, correct?

That's correct.

At the end of the quarter, yes.

Are you able to quantify how much that can contribute to your organic growth target?

I would just say, Martin, it's $25 million on a base of $225 million or $230 million of service revenue, right? So, it kind of gets diluted because it's 10% of the total. But yes. I don't know how else to characterize it.

Would you expect Martin and Essco to sustain their double-digit growth?

I think we expect them to continue to perform well. But I'm not sure how comfortable I am saying that they're continuing to perform double-digit growth, right? I mean, because every year you do that, the base gets larger and at some point, what Lee just said about their customer base, we could see some slowdowns there. But we expect them to continue to perform well. I'm just not sure we could say that they're going to continue to perform in the double-digit range.

I have a couple of follow-up questions. Regarding distribution, it seems to build up throughout the year. From a seasonal perspective, do you anticipate any changes this year? Is there any reason to expect higher-than-normal revenues in the first half? I'm curious about the timing and your current visibility on how you see distribution evolving, particularly in the second half.

You're right. I think we're going to see it continue to be strong. I mean, typically, third quarter is a strong quarter historically for distribution. But when we look at Pulse, so Pulse for us would be things like daily quotes and activity levels and so on and so forth. And the Pulse for distribution continues to be strong into the third quarter, which is what we expected. And I don't see anything right now on the radar, and I'll defer to Tom as well, that would lead me to believe there's a drop-off coming from the strong performance we've had.

Certainly not a drop-off. As I mentioned earlier, when we discuss rentals and some of the benefits from our execution and integration, we began to see meaningful growth acceleration in the latter part of last year. Looking ahead to the second half of this year, I don't expect things to reverse, but I anticipate growth will moderate somewhat. That’s why I am not expecting an expansion of over 500 basis points in margin; I believe a range of 250 to 300 basis points is more realistic with slightly lower growth.

Fair enough. And then I was wondering if you could comment at all on the competitive landscape in the service segment with a couple of things going on. I don't know how that sort of relates to your expectations of accelerated organic service growth, but just kind of curious to get your thoughts there.

When examining the competitive landscape, we have a set of traditional customers, including CIMCO, Tektronix, and Trescal, that we've always competed against. From the data we've gathered, those companies are facing some challenges due to specific headwinds. There are several reasons for this. Over the long term, Transcat has been deeply committed to the calibration market, consistently investing in our workforce, training, assets, capabilities, and acquisitions. The competitors I mentioned have not made similar investments. They haven't increased their capabilities through acquisitions or invested significantly in their businesses. Consequently, when facing headwinds, we are in a much stronger position to endure them compared to that group of competitors. I take great pride in our organization and the way we've managed to navigate these challenges. While our organic growth may be flat or in the low single digits, I believe we are better positioned and more diversified than our traditional competitors. Additionally, there is a new wave of competitors, some private equity-backed, that have consolidated smaller companies within our sector. However, without proper integration that leverages synergies, particularly for growth, I predict we will end up with similar outcomes. If we continue to invest and integrate as we have been, while acquiring strategically, I believe we will maintain a competitive edge against both old and new competitors. I feel confident about our position, even though we will encounter headwinds like everyone else. I simply believe we will perform better and be in a stronger position in the long run, as we've demonstrated over time and continue to show now.

Thank you all for joining us on the call today. We have a number of upcoming conferences in the month of November. On November 11, we will be attending the Baird 2025 Global Industrial Conference in Chicago. On November 17, we will be attending the Raymond James Sonoma Small Cap Summit in Sonoma, California. And finally, on November 19, we will be attending the Stephens Annual Investor Conference in Nashville, Tennessee. For those attending the conferences, we look forward to seeing you there. Otherwise, feel free to reach out to us at any time. Thanks again for your interest in Transcat.

Thank you. And this does conclude today's program. Thank you for your participation. You may disconnect at any time.