8-K
TRANSCAT INC (TRNS)
UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549
FORM 8-K
CURRENT REPORTPursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| Date of Report (Date of earliest event reported) | November 2, 2021 | |
|---|---|---|
| Transcat, Inc. | ||
| --- | ||
| (Exact name of registrant as specified in its charter) | ||
| Ohio | 000-03905 | 16-0874418 |
| --- | --- | --- |
| (State or other jurisdiction | (Commission | (IRS Employer |
| of incorporation) | File Number) | Identification No.) |
| 35 Vantage Point Drive, Rochester, New York | 14624 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) | |
| Registrant's telephone number, including area code | (585) 352-7777 | |
| --- | --- | |
| (Former name or former address, if changed since last report) | ||
| --- | ||
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | ||
| --- | --- | |
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
| Securities registered pursuant to Section 12(b) of the Act: | ||
| --- | --- | --- |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock, $0.50 par value | TRNS | Nasdaq Global Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On November 2, 2021, Transcat, Inc. (the “Company”) issued a press release announcing its financial results for its fiscal year 2022 second quarter ended September 25, 2021. The press release is attached to this Form 8-K as Exhibit 99.1.
In addition, on November 3, 2021, the Company posted slides to the Investor Relations section of its website that will accompany the Company’s earnings conference call and webcast at 11:00 a.m. Eastern Time on November 3, 2021. The slides are attached to this Form 8-K as Exhibit 99.2.
The information furnished pursuant to this Item 2.02, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under such section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Transcat, Inc. Press Release dated November 2, 2021 |
| 99.2 | Slides for the November 3, 2021 Earnings Conference Call and Webcast |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| TRANSCAT, INC. | |||
|---|---|---|---|
| Dated: | November 3, 2021 | By: | /s/ James M. Jenkins |
| James M. Jenkins | |||
| General Counsel and VP of Corporate Development |
Exhibit 99.1
| NEWSRELEASE |
|---|
Transcat, Inc. 35 Vantage Point Drive • Rochester • NY • 14624 • Phone: (585) 352-7777
IMMEDIATE RELEASE
Transcat Reports Second Quarter Adjusted EBITDA Increase of 35.5% to $7.1 Million on Strong Revenue Growth and Gross Margin Expansion
| ● | Consolidated revenue of $50.4 million up 21.1% from prior year |
|---|---|
| ● | Service segment revenue grew 20.3% and gross margin expanded 70 basis points to 32.9%; organic revenue grew 14.0% |
| ● | Distribution segment revenue grew 22.2% and gross margin expanded 240 basis points to 23.5% |
| ● | Operating expenses include $0.8 million of one-time transaction costs from NEXA acquisition; adjusted EBITDA of $7.1 million, up 35.5% from prior year |
ROCHESTER, NY, November 2, 2021 – Transcat, Inc. (Nasdaq: TRNS) (“Transcat” or the “Company”), a leading provider of accredited calibration, repair, inspection and laboratory instrument services and value-added distributor of professional grade handheld test, measurement and control instrumentation, today reported financial results for its second quarter ended September 25, 2021 (the “second quarter”) of fiscal year 2022, which ends March 26, 2022 (“fiscal 2022”). Results include the previously reported acquisitions of BioTek Services, Inc. (“BioTek”) effective December 16, 2020, Upstate Metrology (“Upstate”) effective April 29, 2021 and Cal OpEx Limited (d/b/a NEXA Enterprise Asset Management), (“NEXA”) effective August 31, 2021.
“Our excellent second quarter results were driven by broad-based revenue strength and solid operational execution across both of our operating segments.” commented Lee D. Rudow, President and CEO. “Our Service segment revenue grew 20.3% and gross margin increased 70 basis points to a second quarter record of 32.9%. We reported 14.0% organic revenue growth as demand in our highly regulated end markets, including life sciences, remained strong. We are pleased with the continued expansion of our gross margin, which was largely driven by operating leverage on our fixed costs from organic growth.”
“Our Distribution segment revenue grew 22.2% on improved demand and an easier comparison against a prior-year period that was significantly impacted by the COVID-19 pandemic. Importantly, this segment has fully recovered from last year’s lows and is now exceeding pre-pandemic levels as revenue was up double-digits when compared to the second quarter of fiscal year 2020. Overall, our Service segment performance drove second quarter consolidated adjusted EBITDA of $7.1 million, an increase of $1.9 million or 35.5% from the prior year.”
Mr. Rudow added, “We are excited with the early progress made on our recent acquisition of NEXA Enterprise Asset Management. NEXA expands our reach into the attractive market for asset management services and its unique capabilities around managing cost, efficiency and the reliability components of life
Transcat Reports Second Quarter Adjusted EBITDA increase of 35.5% to $7.1 million on Strong Revenue Growth and Gross Margin Expansion November 2, 2021 Page 2 of 12
science companies’ instrumentation programs is a natural complement to our core calibration offerings. We are confident this enhances our overall value proposition to current and future customers and the NEXA and Transcat teams have already worked together to identify several synergistic growth opportunities.”
| Second Quarter Fiscal 2022 Review | (Results are compared with the second quarter of the fiscal year ended March 27, 2021 (“fiscal 2021”)) | ||||
|---|---|---|---|---|---|
| ( in thousands) | Change | ||||
| --- | --- | --- | --- | --- | --- |
| FY21 Q2 | 's | % | |||
| Service Revenue | 29,544 | $ | 24,554 | 20.3% | |
| Distribution Sales | 20,843 | 17,053 | 22.2% | ||
| Revenue | 50,387 | $ | 41,607 | 21.1% | |
| Gross Profit | 14,611 | $ | 11,494 | 27.1% | |
| Gross Margin | 29.0% | 27.6% | |||
| Operating Income | 3,578 | $ | 3,078 | 16.2% | |
| Operating Margin | 7.1% | 7.4% | |||
| Net Income | 3,015 | $ | 2,024 | 49.0% | |
| Net Margin | 6.0% | 4.9% | |||
| Adjusted EBITDA* | 7,079 | $ | 5,223 | 35.5% | |
| Adjusted EBITDA* Margin | 14.0% | 12.6% |
All values are in US Dollars.
*See Note 1 on page 4 for a description of this non-GAAP financial measure and page 10 for the Adjusted EBITDA Reconciliation table.
Consolidated revenue was $50.4 million, an increase of 21.1%. Consolidated gross profit was $14.6 million, an increase of $3.1 million, or 27.1%, and gross margin expanded 140 basis points to 29.0% due to strong operational performance in both the Service and Distribution segments. Operating expenses increased $2.6 million, or 31.1%, driven by incremental expenses from acquired businesses, investments in technology and $0.8 million in one-time transaction expenses related to the NEXA acquisition that closed within the quarter. Adjusted EBITDA was $7.1 million and increased by 35.5%. Net income per diluted share increased to $0.40 from $0.27.
Service segment delivers strong second quarter results
Represents the accredited calibration, repair, inspection and laboratory instrument services business (59% of total revenue for the second quarter of fiscal 2022).
| ( in thousands) | Change | ||||||
|---|---|---|---|---|---|---|---|
| FY21 Q2 | 's | % | |||||
| Service Segment Revenue | 29,544 | $ | 24,554 | 20.3% | |||
| Gross Profit | 9,712 | $ | 7,900 | 22.9% | |||
| Gross Margin | 32.9% | 32.2% | |||||
| Operating Income | 2,647 | $ | 2,977 | ) | (11.1% | ) | |
| Operating Margin | 9.0% | 12.1% | |||||
| Adjusted EBITDA* | 5,460 | $ | 4,475 | 22.0% | |||
| Adjusted EBITDA* Margin | 18.5% | 18.2% |
All values are in US Dollars.
* See Note 1 on page 4 for a description of this non-GAAP financial measure and page 10 for the Adjusted EBITDA Reconciliation table.
Transcat Reports Second Quarter Adjusted EBITDA increase of 35.5% to $7.1 million on Strong Revenue Growth and Gross Margin Expansion November 2, 2021 Page 3 of 12
Service segment revenue increased 20.3% to $29.5 million and included $1.6 million of incremental revenue from acquisitions. Organic revenue growth was 14.0% and was driven by improvement in end market conditions, continued market share gains and an easier comparison over the prior-year quarter, which was impacted by the COVID-19 pandemic.
The segment gross margin increased by 70 basis points due continued strong technician productivity and operating leverage on fixed costs.
Distribution segment revenue and margins showed strong increases
Represents the sale and rental of new and used professional grade handheld test, measurement and control instrumentation (41% of total revenue for the second quarter of fiscal 2022).
| ( in thousands) | Change | ||||
|---|---|---|---|---|---|
| FY21 Q2 | 's | % | |||
| Distribution Segment Sales | 20,843 | $ | 17,053 | 22.2% | |
| Gross Profit | 4,899 | $ | 3,594 | 36.3% | |
| Gross Margin | 23.5% | 21.1% | |||
| Operating Income | 931 | $ | 101 | 821.8% | |
| Operating Margin | 4.5% | 0.6% | |||
| Adjusted EBITDA* | 1,619 | $ | 748 | 116.4% | |
| Adjusted EBITDA* Margin | 7.8% | 4.4% |
All values are in US Dollars.
* See Note 1 on page 4 for a description of this non-GAAP financial measure and page 10 for the Adjusted EBITDA Reconciliation table.
Distribution sales increased 22.2% on improved market conditions and an easier comparison to the prior year period, which was impacted by the COVID-19 pandemic. Distribution segment gross margin increased 240 basis points on a favorable mix of products sold.
Six Month Review (Results are compared with the first six months of fiscal 2021)
Total revenue was $98.2 million, an increase of 21.9%. Consolidated gross profit was up $7.2 million, or 34.6%, and gross margin expanded to 28.7% or 270 basis points. Consolidated operating expenses increased $4.0 million, or 23.7%, driven by incremental expenses from acquired businesses, investments in technology and $0.8 million in one-time transaction expenses related to the NEXA acquisition that closed in the second quarter. As a result, consolidated operating income was $7.3 million compared with $4.0 million in last fiscal year’s period.
Net income was $6.7 million, or $0.88 per diluted share, compared with $2.8 million, or $0.38 per diluted share. Adjusted EBITDA was $13.2 million, an increase of 51.4%. See Note 1 on page 4 for a description of this non-GAAP financial measure and page 10 for the Adjusted EBITDA Reconciliation table.
Balance Sheet Highlights
At September 25, 2021, the Company had $46.6 million available for borrowing under its secured revolving credit facility. Total debt of $43.1 million was up $23.5 million from fiscal 2021 year-end. The Company’s leverage ratio, as defined in the credit agreement, was 1.54 at September 25, 2021, compared with 0.94 at March 27, 2021.
Transcat Reports Second Quarter Adjusted EBITDA increase of 35.5% to $7.1 million on Strong Revenue Growth and Gross Margin Expansion November 2, 2021 Page 4 of 12
Outlook
Mr. Rudow concluded, “The second quarter results were excellent and we are appreciative of the hard work and solid execution from our teams in both our Service and Distribution segments. We have a strong balance sheet, sustainable Service segment gross margins and an active M&A pipeline. We are confident that the strength of our unique and enhanced value proposition and our new customer pipeline positions us well for continued strong organic growth.
“For the third quarter of fiscal 2022, we expect Service total revenue growth to be similar to what we achieved in the second quarter, with roughly half of the growth to come organically and the other half coming from acquisition. We expect Service gross margin to expand over the prior year third quarter, similar to the level of year-over-year expansion we just achieved in the second quarter. Distribution revenue is expected to grow in the low teens in the third quarter on improved order trends and a prior-year comparison that includes lower levels of demand due to the COVID-19 pandemic.”
Transcat revised its fiscal year 2022 income tax rate to a range between 14% and 15% from the previous estimated range of 16% to 18%. This estimate includes Federal, various state, Canadian and Irish income taxes and reflects the discrete tax benefit associated with share-based payment and stock option activity.
Webcast and Conference Call
Transcat will host a conference call and webcast on Wednesday, November 3, 2021 at 11:00 a.m. ET. Management will review the financial and operating results for the second 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 Wednesday, November 10, 2021. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13724485, 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, restructuring expense, non-cash loss on sale of building 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, rather 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 the attached Adjusted EBITDA Reconciliation table below.
Transcat Reports Second Quarter Adjusted EBITDA increase of 35.5% to $7.1 million on Strong Revenue Growth and Gross Margin ExpansionNovember 2, 2021Page 5 of 12
ABOUT TRANSCAT
Transcat, Inc. is a leading provider of accredited calibration, repair, inspection and laboratory instrument 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 22 Calibration Service Centers strategically located across the United States, Puerto Rico, Canada and Ireland, and services at 20 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 the complementary nature of its two operating segments, its comprehensive service capabilities, strong brand, enhanced e-commerce capabilities 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.
Transcat Reports Second Quarter Adjusted EBITDA increase of 35.5% to $7.1 million on Strong Revenue Growth and Gross Margin ExpansionNovember 2, 2021Page 6 of 12
Safe Harbor StatementThis 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 are identified by words such as “expects,” “estimates,” “projects,” “anticipates,” “believes,” “could,” “plans,” “aims” 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 Company’s response to the coronavirus (“COVID-19”) pandemic, 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.
For more information contact:
Mark A. Doheny, Chief Financial Officer Phone: (585) 563-5766
Email: mark.doheny@transcat.com
FINANCIAL TABLES FOLLOW.
Transcat Reports Second Quarter Adjusted EBITDA increase of 35.5% to $7.1 million on Strong Revenue Growth and Gross Margin ExpansionNovember 2, 2021Page 7 of 12
TRANSCAT, INC. CONSOLIDATED STATEMENTS OF INCOME(In Thousands, Except Per Share Amounts)
| (Unaudited) | (Unaudited) | |||||||
|---|---|---|---|---|---|---|---|---|
| Second Quarter Ended | Six Months Ended | |||||||
| September 25, | September 26, | September 25, | September 26, | |||||
| 2021 | 2020 | 2021 | 2020 | |||||
| Service Revenue | $ | 29,544 | $ | 24,554 | $ | 57,101 | $ | 47,521 |
| Distribution Sales | 20,843 | 17,053 | 41,076 | 32,990 | ||||
| Total Revenue | 50,387 | 41,607 | 98,177 | 80,511 | ||||
| Cost of Service Revenue | 19,832 | 16,654 | 38,637 | 33,552 | ||||
| Cost of Distribution Sales | 15,944 | 13,459 | 31,409 | 26,056 | ||||
| Total Cost of Revenue | 35,776 | 30,113 | 70,046 | 59,608 | ||||
| Gross Profit | 14,611 | 11,494 | 28,131 | 20,903 | ||||
| Selling, Marketing and Warehouse | ||||||||
| Expenses | 4,974 | 4,291 | 9,971 | 8,365 | ||||
| General and Administrative Expenses | 6,059 | 4,125 | 10,893 | 8,496 | ||||
| Total Operating Expenses | 11,033 | 8,416 | 20,864 | 16,861 | ||||
| Operating Income | 3,578 | 3,078 | 7,267 | 4,042 | ||||
| Interest and Other Expense, net | 250 | 317 | 445 | 560 | ||||
| Income Before Income Taxes | 3,328 | 2,761 | 6,822 | 3,482 | ||||
| Provision for Income Taxes | 313 | 737 | 119 | 660 | ||||
| Net Income | $ | 3,015 | $ | 2,024 | $ | 6,703 | $ | 2,822 |
| Basic Earnings Per Share | $ | 0.40 | $ | 0.27 | $ | 0.90 | $ | 0.38 |
| Average Shares Outstanding | 7,482 | 7,417 | 7,473 | 7,405 | ||||
| Diluted Earnings Per Share | $ | 0.40 | $ | 0.27 | $ | 0.88 | $ | 0.38 |
| Average Shares Outstanding | 7,595 | 7,549 | 7,578 | 7,525 |
Transcat Reports Second Quarter Adjusted EBITDA increase of 35.5% to $7.1 million on Strong Revenue Growth and Gross Margin ExpansionNovember 2, 2021Page 8 of 12
TRANSCAT, INC. CONSOLIDATED BALANCE SHEETS(In Thousands, Except Share and Per Share Amounts)
| (Audited) | |||||
|---|---|---|---|---|---|
| March 27, | |||||
| 2021 | |||||
| ASSETS | |||||
| Current Assets: | |||||
| Cash | 2,551 | $ | 560 | ||
| Accounts Receivable, less allowance for doubtful accounts of 698 | |||||
| and 526 as of September 25, 2021 and March 27, 2021, respectively | 36,464 | 33,950 | |||
| Other Receivables | 448 | 428 | |||
| Inventory, net | 10,205 | 11,636 | |||
| Prepaid Expenses and Other Current Assets | 4,105 | 2,354 | |||
| Total Current Assets | 53,773 | 48,928 | |||
| Property and Equipment, net | 23,034 | 22,203 | |||
| Goodwill | 59,441 | 43,272 | |||
| Intangible Assets, net | 12,753 | 7,513 | |||
| Right To Use Asset, net | 8,393 | 9,392 | |||
| Other Assets | 919 | 808 | |||
| Total Assets | 158,313 | $ | 132,116 | ||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| Current Liabilities: | |||||
| Accounts Payable | 10,983 | $ | 12,276 | ||
| Accrued Compensation and Other Liabilities | 8,455 | 10,417 | |||
| Income Taxes Payable | - | 382 | |||
| Current Portion of Long-Term Debt | 2,134 | 2,067 | |||
| Total Current Liabilities | 21,572 | 25,142 | |||
| Long-Term Debt | 40,917 | 17,494 | |||
| Deferred Tax Liabilities | 4,914 | 3,201 | |||
| Lease Liabilities | 6,705 | 7,958 | |||
| Other Liabilities | 3,461 | 3,243 | |||
| Total Liabilities | 77,569 | 57,038 | |||
| Shareholders' Equity: | |||||
| Common Stock, par value 0.50 per share, 30,000,000 shares authorized; | |||||
| 7,518,159 and 7,458,251 shares issued and outstanding | |||||
| as of September 25, 2021 and March 27, 2021, respectively | 3,759 | 3,729 | |||
| Capital in Excess of Par Value | 22,713 | 19,287 | |||
| Accumulated Other Comprehensive Loss | (502 | ) | (451 | ) | |
| Retained Earnings | 54,774 | 52,513 | |||
| Total Shareholders' Equity | 80,744 | 75,078 | |||
| Total Liabilities and Shareholders' Equity | 158,313 | $ | 132,116 |
All values are in US Dollars.
Transcat Reports Second Quarter Adjusted EBITDA increase of 35.5% to $7.1 million on Strong Revenue Growth and Gross Margin ExpansionNovember 2, 2021Page 9 of 12
TRANSCAT, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(In Thousands)
| (Unaudited) | ||||||
|---|---|---|---|---|---|---|
| For the Six Months Ended | ||||||
| September 25, | September 26, | |||||
| 2021 | 2020 | |||||
| Cash Flows from Operating Activities: | ||||||
| Net Income | $ | 6,703 | $ | 2,822 | ||
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||||||
| Loss on Disposal of Property and Equipment | 84 | 68 | ||||
| Deferred Income Taxes | 7 | 47 | ||||
| Depreciation and Amortization | 4,131 | 3,736 | ||||
| Provision for Accounts Receivable and Inventory Reserves | 499 | 523 | ||||
| Stock-Based Compensation Expense | 1,057 | 678 | ||||
| Changes in Assets and Liabilities: | ||||||
| Accounts Receivable and Other Receivables | (374 | ) | 3,543 | |||
| Inventory | 1,739 | 623 | ||||
| Prepaid Expenses and Other Assets | (1,847 | ) | (625 | ) | ||
| Accounts Payable | (1,293 | ) | (892 | ) | ||
| Accrued Compensation and Other Liabilities | (2,812 | ) | 1,626 | |||
| Income Taxes Payable | (392 | ) | 327 | |||
| Net Cash Provided by Operating Activities | 7,502 | 12,476 | ||||
| Cash Flows from Investing Activities: | ||||||
| Purchase of Property and Equipment | (3,770 | ) | (3,116 | ) | ||
| Business Acquisitions, net of cash acquired | (20,910 | ) | - | |||
| Net Cash Used in Investing Activities | (24,680 | ) | (3,116 | ) | ||
| Cash Flows from Financing Activities: | ||||||
| Proceeds from (Repayment of) Revolving Credit Facility, net | 24,511 | (6,632 | ) | |||
| Repayments of Term Loan | (1,021 | ) | (979 | ) | ||
| Issuance of Common Stock | 1,238 | 474 | ||||
| Repurchase of Common Stock | (5,649 | ) | (1,287 | ) | ||
| Net Cash Provided by (Used in) Financing Activities | 19,079 | (8,424 | ) | |||
| Effect of Exchange Rate Changes on Cash | 90 | (473 | ) | |||
| Net Increase in Cash | 1,991 | 463 | ||||
| Cash at Beginning of Period | 560 | 499 | ||||
| Cash at End of Period | $ | 2,551 | $ | 962 |
Transcat Reports Second Quarter Adjusted EBITDA increase of 35.5% to $7.1 million on Strong Revenue Growth and Gross Margin ExpansionNovember 2, 2021Page 10 of 12
TRANSCAT, INC.Adjusted EBITDA Reconciliation Table(in thousands) (Unaudited)
| Fiscal 2022 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q1 | Q2 | Q3 | Q4 | YTD | |||||||||||
| Net Income | $ | 3,688 | $ | 3,015 | $ | 6,703 | |||||||||
| + Interest Expense | 189 | 169 | 358 | ||||||||||||
| + Other Expense / (Income) | 6 | 81 | 87 | ||||||||||||
| + Tax Provision | (194 | ) | 313 | 119 | |||||||||||
| Operating Income | $ | 3,689 | $ | 3,578 | $ | 7,267 | |||||||||
| + Depreciation & Amortization | 1,990 | 2,141 | 4,131 | ||||||||||||
| + Transaction Expense | - | 821 | 821 | ||||||||||||
| + Other (Expense) / Income | (6 | ) | (81 | ) | (87 | ) | |||||||||
| + Noncash Stock Compensation | 437 | 620 | 1,057 | ||||||||||||
| Adjusted EBITDA | $ | 6 110 | $ | 7,079 | $ | 13,189 | |||||||||
| Segment Breakdown | |||||||||||||||
| Service Operating Income | $ | 2,974 | $ | 2,647 | $ | 5,621 | |||||||||
| + Depreciation & Amortization | 1,488 | 1,634 | 3,122 | ||||||||||||
| + Transaction Expense | - | 821 | 821 | ||||||||||||
| + Other (Expense) / Income | (2 | ) | (56 | ) | (58 | ) | |||||||||
| + Noncash Stock Compensation | 261 | 414 | 675 | ||||||||||||
| Service Adjusted EBITDA | $ | 4,721 | $ | 5,460 | $ | 10,181 | |||||||||
| Distribution Operating Income | $ | 715 | $ | 931 | $ | 1,646 | |||||||||
| + Depreciation & Amortization | 502 | 507 | 1,009 | ||||||||||||
| + Other (Expense) / Income | (4 | ) | (25 | ) | (29 | ) | |||||||||
| + Noncash Stock Compensation | 176 | 206 | 382 | ||||||||||||
| Distribution Adjusted EBITDA | $ | 1,389 | $ | 1,619 | $ | 3,008 | |||||||||
| Fiscal 2021 | |||||||||||||||
| Q1 | Q2 | Q3 | Q4 | YTD | |||||||||||
| Net Income | $ | 798 | $ | 2,024 | $ | 1,761 | $ | 3,208 | $ | 7,791 | |||||
| + Interest Expense | 224 | 233 | 203 | 190 | 850 | ||||||||||
| + Other Expense / (Income) | 19 | 84 | 16 | 122 | 241 | ||||||||||
| + Tax Provision | (77 | ) | 737 | 539 | 992 | 2,191 | |||||||||
| Operating Income | $ | 964 | $ | 3,078 | $ | 2,519 | $ | 4,512 | $ | 11,073 | |||||
| + Depreciation & Amortization | 1,871 | 1,864 | 1,861 | 1,984 | 7,580 | ||||||||||
| + Restructuring Expense | 360 | - | - | 290 | 650 | ||||||||||
| + Other (Expense) / Income | (19 | ) | (85 | ) | (15 | ) | (122 | ) | (241 | ) | |||||
| + Noncash Stock Compensation | 312 | 366 | 197 | 638 | 1,513 | ||||||||||
| Adjusted EBITDA | $ | 3,488 | $ | 5,223 | $ | 4,562 | $ | 7,302 | $ | 20,575 | |||||
| Segment Breakdown | |||||||||||||||
| Service Operating Income | $ | 1,129 | $ | 2,977 | $ | 1,956 | $ | 4,379 | 10,441 | ||||||
| + Depreciation & Amortization | 1,394 | 1,359 | 1,372 | 1,472 | 5,597 | ||||||||||
| + Restructuring Expense | 193 | - | - | 156 | 349 | ||||||||||
| + Other (Expense) / Income | (15 | ) | (57 | ) | (8 | ) | (82 | ) | (162 | ) | |||||
| + Noncash Stock Compensation | 162 | 196 | 126 | 351 | 835 | ||||||||||
| Service Adjusted EBITDA | $ | 2,863 | $ | 4,475 | $ | 3,446 | $ | 6,276 | $ | 17,060 | |||||
| Distribution Operating Income | $ | (165 | ) | $ | 101 | $ | 563 | $ | 133 | $ | 632 | ||||
| + Depreciation & Amortization | 477 | 505 | 489 | 512 | 1,983 | ||||||||||
| + Restructuring Expense | 167 | - | - | 134 | 301 | ||||||||||
| + Other (Expense) / Income | (4 | ) | (28 | ) | (7 | ) | (40 | ) | (79 | ) | |||||
| + Noncash Stock Compensation | 150 | 170 | 71 | 287 | 678 | ||||||||||
| Distribution Adjusted EBITDA | $ | 625 | $ | 748 | $ | 1,116 | $ | 1,026 | $ | 3,515 |
Transcat Reports Second Quarter Adjusted EBITDA increase of 35.5% to $7.1 million on Strong Revenue Growth and Gross Margin ExpansionNovember 2, 2021Page 11 of 12
TRANSCAT, INC.Additional Information - Business Segment Data(Dollars in thousands) (Unaudited)
| Change | ||||||||
|---|---|---|---|---|---|---|---|---|
| SERVICE | FY 2022 Q2 | FY 2021 Q2 | 's | % | ||||
| Service Revenue | $ | 29,544 | $ | 24,554 | 20.3% | |||
| Cost of Service Revenue | 19,832 | 16,654 | 19.1% | |||||
| Gross Profit | $ | 9,712 | $ | 7,900 | 22.9% | |||
| Gross Margin | 32.9% | 32.2% | ||||||
| Selling, Marketing & Warehouse Expenses | $ | 2,835 | $ | 2,427 | 16.8% | |||
| General and Administrative Expenses | 4,230 | 2,496 | 69.5% | |||||
| Operating Income | $ | 2,647 | $ | 2,977 | ) | (11.1% | ) | |
| % of Revenue | 9.0% | 12.1% | ||||||
| Change | ||||||||
| DISTRIBUTION | FY 2022 Q2 | FY 2021 Q2 | 's | % | ||||
| Distribution Sales | $ | 20,843 | $ | 17,053 | 22.2% | |||
| Cost of Distribution Sales | 15,944 | 13,459 | 18.5% | |||||
| Gross Profit | $ | 4,899 | $ | 3,594 | 36.3% | |||
| Gross Margin | 23.5% | 21.1% | ||||||
| Selling, Marketing & Warehouse Expenses | $ | 2,139 | $ | 1,864 | 14.8% | |||
| General and Administrative Expenses | 1,829 | 1,629 | 12.3% | |||||
| Operating Income | $ | 931 | $ | 101 | 821.8% | |||
| % of Sales | 4.5% | 0.6% | ||||||
| Change | ||||||||
| TOTAL | FY 2022 Q2 | FY 2021 Q2 | 's | % | ||||
| Total Revenue | $ | 50,387 | $ | 41,607 | 21.1% | |||
| Total Cost of Revenue | 35,776 | 30,113 | 18.8% | |||||
| Gross Profit | $ | 14,611 | $ | 11,494 | 27.1% | |||
| Gross Margin | 29.0% | 27.6% | ||||||
| Selling, Marketing & Warehouse Expenses | $ | 4,974 | $ | 4,291 | 15.9% | |||
| General and Administrative Expenses | 6,059 | 4,125 | 46.9% | |||||
| Operating Income | $ | 3,578 | $ | 3,078 | 16.2% | |||
| % of Revenue | 7.1% | 7.4% |
All values are in US Dollars.
Transcat Reports Second Quarter Adjusted EBITDA increase of 35.5% to $7.1 million on Strong Revenue Growth and Gross Margin ExpansionNovember 2, 2021Page 12 of 12
TRANSCAT, INC.Additional Information - Business Segment Data(Dollars in thousands) (Unaudited)
| Change | |||||||
|---|---|---|---|---|---|---|---|
| FY 2022 | FY 2021 | ||||||
| SERVICE | YTD | YTD | 's | % | |||
| Service Revenue | $ | 57,101 | $ | 47,521 | 20.2% | ||
| Cost of Service Revenue | 38,637 | 33,552 | 15.2% | ||||
| Gross Profit | $ | 18,464 | $ | 13,969 | 32.2% | ||
| Gross Margin | 32.3% | 29.4% | |||||
| Selling, Marketing & Warehouse Expenses | $ | 5,550 | $ | 4,775 | 16.2% | ||
| General and Administrative Expenses | 7,293 | 5,088 | 43.3% | ||||
| Operating Income | $ | 5,621 | $ | 4,106 | 36.9% | ||
| % of Revenue | 9.8% | 8.6% | |||||
| Change | |||||||
| FY 2022 | FY 2021 | ||||||
| DISTRIBUTION | YTD | YTD | 's | % | |||
| Distribution Sales | $ | 41,076 | $ | 32,990 | 24.5% | ||
| Cost of Distribution Sales | 31,409 | 26,056 | 20.5% | ||||
| Gross Profit | $ | 9,667 | $ | 6,934 | 39.4% | ||
| Gross Margin | 23.5% | 21.0% | |||||
| Selling, Marketing & Warehouse Expenses | $ | 4,421 | $ | 3,590 | 23.1% | ||
| General and Administrative Expenses | 3,600 | 3,408 | 5.6% | ||||
| Operating Income | $ | 1,646 | $ | (64 | ) | 2671.9% | |
| % of Sales | 4.0% | (0.2% | ) | ||||
| Change | |||||||
| FY 2022 | FY 2021 | ||||||
| TOTAL | YTD | YTD | 's | % | |||
| Total Revenue | $ | 98,177 | $ | 80,511 | 21.9% | ||
| Total Cost of Revenue | 70,046 | 59,608 | 17.5% | ||||
| Gross Profit | $ | 28,131 | $ | 20,903 | 34.6% | ||
| Gross Margin | 28.7% | 26.0% | |||||
| Selling, Marketing & Warehouse Expenses | $ | 9,971 | $ | 8,365 | 19.2% | ||
| General and Administrative Expenses | 10,893 | 8,496 | 28.2% | ||||
| Operating Income | $ | 7,267 | $ | 4,042 | 79.8% | ||
| % of Revenue | 7.4% | 5.0% |
All values are in US Dollars.
Exhibit 99.2
