Transcat Inc 8-K, filed Feb 5, 2020
Transcat Inc (TRNS)
About this 8-K
Transcat Inc filed this 8-K on February 5, 2020, reporting on events of February 4, 2020.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| Date of Report (Date of earliest event reported) | February 4, 2020 |
| 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) |
| [ ] | 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)) |
| 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 February 4, 2020, Transcat, Inc. (the “Company”) issued a press release announcing its financial results for its fiscal year 2020 third quarter ended December 28, 2019. The press release is attached to this Form 8-K as Exhibit 99.1.
In addition, on February 5, 2020, 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 February 5, 2020. 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 February 4, 2020 | |||
| 99.2 | Slides for the February 5, 2020 Earnings Conference Call and Webcast |
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: February 5, 2020 | By: | /s/ Michael J. Tschiderer |
| Michael J. Tschiderer | ||
| Vice President of Finance and Chief Financial Officer | ||
Exhibit 99.1
 |
NEWS |
Transcat, Inc. 35 Vantage Point Drive • Rochester • NY • 14624 • Phone: (585) 352-7777
IMMEDIATE RELEASE
Transcat Reports Record Third Quarter Revenue in Fiscal 2020
| ● | Record third quarter consolidated revenue of $43.2 million in fiscal 2020 |
| ● | Solid Service segment organic revenue growth of 7.8% reflects continued market expansion, including within the highly regulated life sciences market |
| ● | Distribution segment revenue growth of 3.5% |
| ● | Generated $8.2 million in cash from fiscal year-to-date operations, up 13.6% |
ROCHESTER, NY, February 4, 2020 – Transcat, Inc. (Nasdaq: TRNS) (“Transcat” or the “Company”), a leading provider of accredited calibration, repair, inspection and laboratory instrument services and value-added distributor of professional grade handheld test, measurement and control instrumentation, today reported financial results for its third quarter ended December 28, 2019 (the “third quarter”) of the fiscal year ending March 28, 2020 (“fiscal 2020”). Results include the previously reported acquisition of Gauge Repair Service, effective April 1, 2019.
Lee D. Rudow, President and CEO, commented, “We had solid growth in the third quarter, despite being heavily impacted by holiday timing that caused an unusually slow December. This low volume in the last month of our third quarter weighed on margins and masked the improvements we are seeing throughout the organization. Our Service operations are more efficient and our productivity metrics have improved over the course of this fiscal year, reflecting our focused efforts to hire and train an appropriate number of technicians to support our continued growth and to ensure customer satisfaction.
“We have a strong pipeline of organic and acquisition opportunities, and our performance metrics are a solid leading indicator of customer retention, all of which support belief in our execution and long-term strategy.”
| Third Quarter Fiscal 2020 Review | [Results are compared with the third quarter of the fiscal year ended March 30, 2019 (“fiscal 2019”)] |
| ($ in thousands) | Change | |||||||||||||||
| FY20 Q3 | FY19 Q3 | $'s | % | |||||||||||||
| Service Revenue | $ | 22,087 | $ | 20,492 | $ | 1,595 | 7.8 | % | ||||||||
| Distribution Sales | 21,092 | 20,376 | 716 | 3.5 | % | |||||||||||
| Revenue | $ | 43,179 | $ | 40,868 | $ | 2,311 | 5.7 | % | ||||||||
| Gross Profit | $ | 9,928 | $ | 9,548 | $ | 380 | 4.0 | % | ||||||||
| Gross Margin | 23.0 | % | 23.4 | % | ||||||||||||
| Operating Income | $ | 2,091 | $ | 2,394 | (303 | ) | (12.7 | %) | ||||||||
| Operating Margin | 4.8 | % | 5.9 | % | ||||||||||||
| Net Income | $ | 1,477 | $ | 1,569 | (92 | ) | (5.9 | %) | ||||||||
| Net Margin | 3.4 | % | 3.8 | % | ||||||||||||
| Adjusted EBITDA* | $ | 4,066 | $ | 4,378 | $ | (312 | ) | (7.1 | %) | |||||||
| Adjusted EBITDA* Margin | 9.4 | % | 10.7 | % | ||||||||||||
*See Note 1 below for a description of this non-GAAP financial measure and the attached Adjusted EBITDA Reconciliation table.
Transcat Reports Record Third Quarter Revenue in Fiscal 2020
February 4, 2020
Page 2 of 11
The Company achieved revenue of $43.2 million, a record level for a third quarter, which was driven by growth in both segments. Gross and operating margins were largely impacted by the under absorption of fixed costs from a slow December.
The effective tax rate for the third quarter of fiscal 2020 was 22.1% compared with 25.3% in the prior fiscal year period. The tax rate continues to be aided by the discrete income tax benefits related to share-based awards due to stock option exercise activity. Third quarter net income per diluted share was $0.20 compared with $0.21 in last fiscal year’s corresponding period.
Service segment delivers 43rd consecutive quarter of year-over-year revenue growth
Represents the accredited calibration, repair, inspection and laboratory instrument services business (51% of total revenue for the third quarter of fiscal 2020).
| ($ in thousands) | Change | |||||||||||||||
| FY20 Q3 | FY19 Q3 | $'s | % | |||||||||||||
| Service Segment Revenue | $ | 22,087 | $ | 20,492 | $ | 1,595 | 7.8 | % | ||||||||
| Gross Profit | $ | 4,866 | $ | 4,488 | $ | 378 | 8.4 | % | ||||||||
| Gross Margin | 22.0 | % | 21.9 | % | ||||||||||||
| Operating Income | $ | 488 | $ | 578 | $ | (90 | ) | (15.6 | %) | |||||||
| Operating Margin | 2.2 | % | 2.8 | % | ||||||||||||
| Adjusted EBITDA* | $ | 1,866 | $ | 1,981 | $ | (115 | ) | (5.8 | %) | |||||||
| Adjusted EBITDA* Margin | 8.4 | % | 9.7 | % | ||||||||||||
*See Note 1 below for a description of this non-GAAP financial measure and the attached Adjusted EBITDA Reconciliation table.
Service segment revenue increased 7.8%, which was all organic. On a trailing twelve-month basis (“TTM”), Service segment revenue was $92.3 million, a 13.0% improvement compared with the TTM ending with the prior-fiscal year third quarter. Higher revenue was primarily the result of new business from the highly regulated life sciences market, including the ramp-up of new client-based lab contracts, and growth in U.S. and Canadian general industrial manufacturing.
Although Service gross margin increased 10 basis points, the segment gross and operating margin changes reflected the impact of a soft December.
Distribution segment sales improved, but customer mix impacted margins
Represents the distribution and rental of new and used professional grade handheld test, measurement and control instrumentation (49% of total revenue for the third quarter of fiscal 2020).
| ($ in thousands) | Change | |||||||||||||||
| FY20 Q3 | FY19 Q3 | $'s | % | |||||||||||||
| Distribution Segment Sales | $ | 21,092 | $ | 20,376 | $ | 716 | 3.5 | % | ||||||||
| Gross Profit | $ | 5,062 | $ | 5,060 | $ | 2 | 0.0 | % | ||||||||
| Gross Margin | 24.0 | % | 24.8 | % | ||||||||||||
| Operating Income | $ | 1,603 | $ | 1,816 | $ | (213 | ) | (11.7 | %) | |||||||
| Operating Margin | 7.6 | % | 8.9 | % | ||||||||||||
| Adjusted EBITDA* | $ | 2,200 | $ | 2,397 | $ | (197 | ) | (8.2 | %) | |||||||
| Adjusted EBITDA* Margin | 10.4 | % | 11.8 | % | ||||||||||||
*See Note 1 below for a description of this non-GAAP financial measure and the attached Adjusted EBITDA Reconciliation table.
The Company’s higher margin equipment rental business increased 3.4% to $1.2 million in the third quarter, a relatively low growth rate compared with the double-digit growth experienced in recent quarters.
Transcat Reports Record Third Quarter Revenue in Fiscal 2020
February 4, 2020
Page 3 of 11
As a result, segment gross margin was less favorably impacted by rentals compared with the prior fiscal year third quarter.
Nine Month Review (Results are compared with the first nine months of fiscal 2019)
Total revenue was $127.3 million, up 9.4%, or $10.9 million, inclusive of acquired revenue of $1.7 million. Consolidated gross profit was up 9.4%, or $2.6 million, with a gross margin of 23.9%. Total operating expenses increased 10 basis points to 18.3% of revenue as the Company ramped up for higher capacity. As a result, operating income increased 7.8%, to $7.1 million, though operating margin was down 10 basis points to 5.6%.
Net income was $5.6 million, or $0.75 per diluted share, compared with $4.5 million, or $0.60 per diluted share. Adjusted EBITDA was $12.8 million compared with $12.2 million. See Note 1 below for a description of this non-GAAP financial measure and the attached Adjusted EBITDA Reconciliation table.
Balance Sheet and Cash Flow Overview
Year-to-date net cash provided by operations increased $1.0 million, or 13.6%, to $8.2 million, and was used to fund organic growth opportunities, acquisition payments and debt repayments. In the third quarter of fiscal 2020, $0.4 million of cash was used to fund the release of certain purchase agreement holdbacks from the August 2018 acquisition of Angel’s Instrumentation, Inc.
Capital expenditures were $5.0 million for the first nine months of fiscal 2020, with investments focused on technology infrastructure to drive operational excellence, fund organic growth opportunities within both operating segments, and for rental pool assets.
At December 28, 2019, the Company had total debt of $19.7 million, with $23.4 million available under its credit facility. The Company’s leverage ratio, as defined in the credit agreement, was 1.07 at December 28, 2019, compared with 1.12 at fiscal 2019 year-end.
Outlook
Mr. Rudow concluded, “Our sales have bounced-back in January and early February from the slow, holiday-impacted December and we believe we remain on track to achieve record results in fiscal 2020. In addition, our acquisition pipeline is healthy and will remain a key element of our strategic growth plan.
“We are strategically positioned to capitalize on growth opportunities as we have added significant capacity to our lab network. We ended the third quarter with a net increase of 37 technicians over the prior-year period, a 12% increase in staffing. Availability of trained technical labor is now a key differentiator and competitive advantage for Transcat.
“We are also pleased with our progress in developing a culture centered on technology and increased productivity as imperatives. As we move forward, we expect to continue to improve on this important cultural advancement, and believe we are well-positioned to support double-digit Service growth with improved profitability margins going forward.”
Transcat lowered its income tax rate expectations for fiscal 2020 to range between 17% and 18%, from the previously provided range of 18% to 19%.
The Company lowered its capital expenditure expectations for fiscal 2020 to a range of $6.8 million to $7.1 million, from the previously provided range of $7.8 to $8.2 million, largely due to the timing of certain projects and less spend required on Service lab replacement assets.
Webcast and Conference Call
Transcat will host a conference call and webcast on Wednesday, February 5, 2020 at 11:00 a.m. ET. Management will review the financial and operating results for the third 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.
Transcat Reports Record Third Quarter Revenue in Fiscal 2020
February 4, 2020
Page 4 of 11
A telephonic replay will be available from 2:00 p.m. ET on the day of the call through Wednesday, February 12, 2020. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13697525, or 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-based compensation expense, and non-cash loss on sale of building), 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, and stock-based compensation expense, which is not always commensurate with the reporting period in which it is included. As such, the Company uses Adjusted EBITDA as a measure of performance when evaluating its business segments and as a basis for planning and forecasting. Adjusted EBITDA is not a measure of financial performance under GAAP and is not calculated through the application of GAAP. As such, it should not be considered as a substitute for the GAAP measure of net income and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure. Adjusted EBITDA, as presented, may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies. See the attached Adjusted EBITDA Reconciliation table below.
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, including life science, aerospace and defense, pharmaceutical, medical device manufacturing and biotechnology. Transcat provides permanent and periodic on-site services, mobile calibration services and in-house services through 21 Calibration Service Centers strategically located across the United States, Puerto Rico and Canada. 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 its inherent leverage of its business model.
More information about Transcat can be found at: Transcat.com.
Transcat Reports Record Third Quarter Revenue in Fiscal 2020
February 4, 2020
Page 5 of 11
Safe Harbor Statement
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact and thus are subject to risks, uncertainties and assumptions. Forward-looking statements are identified by words such as “expects,” “estimates,” “projects,” “anticipates,” “believes,” “could,” “plans,” and other similar words. All statements addressing operating performance, events or developments that Transcat, Inc. expects or anticipates will occur in the future, including but not limited to statements relating to anticipated revenue, profit margins, the commercialization of software products, 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 are 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:
| Michael J. Tschiderer, Chief Financial Officer Phone: (585) 563-5766 Email: mtschiderer@transcat.com |
Deborah K. Pawlowski, Investor Relations Phone: (716) 843-3908 Email: dpawlowski@keiadvisors.com |
FINANCIAL TABLES FOLLOW.
Transcat Reports Record Third Quarter Revenue in Fiscal 2020
February 4, 2020
Page 6 of 11
TRANSCAT, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)
| (Unaudited) | (Unaudited) | |||||||||||
| Third Quarter Ended | Nine Months Ended | |||||||||||
| December 28, | December 29, | December 28, | December 29, | |||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||
| Service Revenue | $ | 22,087 | $ | 20,492 | $ | 67,987 | $ | 59,719 | ||||
| Distribution Sales | 21,092 | 20,376 | 59,350 | 56,686 | ||||||||
| Total Revenue | 43,179 | 40,868 | 127,337 | 116,405 | ||||||||
| Cost of Service Revenue | 17,221 | 16,004 | 51,737 | 45,505 | ||||||||
| Cost of Distribution Sales | 16,030 | 15,316 | 45,175 | 43,100 | ||||||||
| Total Cost of Revenue | 33,251 | 31,320 | 96,912 | 88,605 | ||||||||
| Gross Profit | 9,928 | 9,548 | 30,425 | 27,800 | ||||||||
| Selling, Marketing and Warehouse | ||||||||||||
| Expenses | 4,463 | 4,215 | 13,166 | 12,267 | ||||||||
| General and Administrative Expenses | 3,374 | 2,939 | 10,151 | 8,938 | ||||||||
| Total Operating Expenses | 7,837 | 7,154 | 23,317 | 21,205 | ||||||||
| Operating Income | 2,091 | 2,394 | 7,108 | 6,595 | ||||||||
| Interest and Other Expense, net | 194 | 295 | 776 | 715 | ||||||||
| Income Before Income Taxes | 1,897 | 2,099 | 6,332 | 5,880 | ||||||||
| Provision for Income Taxes | 420 | 530 | 758 | 1,395 | ||||||||
| Net Income | $ | 1,477 | $ | 1,569 | $ | 5,574 | $ | 4,485 | ||||
| Basic Earnings Per Share | $ | 0.20 | $ | 0.22 | $ | 0.76 | $ | 0.62 | ||||
| Average Shares Outstanding | 7,367 | 7,203 | 7,316 | 7,192 | ||||||||
| Diluted Earnings Per Share | $ | 0.20 | $ | 0.21 | $ | 0.75 | $ | 0.60 | ||||
| Average Shares Outstanding | 7,557 | 7,518 | 7,470 | 7,500 | ||||||||
Transcat Reports Record Third Quarter Revenue in Fiscal 2020
February 4, 2020
Page 7 of 11
TRANSCAT, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Amounts)
| (Unaudited) | (Audited) | |||||||
| December 28, | March 30, | |||||||
| 2019 | 2019 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 204 | $ | 788 | ||||
| Accounts Receivable, less allowance for doubtful accounts of $439 and $338 as of December 28, 2019 and March 30, 2019, respectively | 26,718 | 27,469 | ||||||
| Other Receivables | 1,313 | 1,116 | ||||||
| Inventory, net | 14,452 | 14,304 | ||||||
| Prepaid Expenses and Other Current Assets | 1,920 | 1,329 | ||||||
| Total Current Assets | 44,607 | 45,006 | ||||||
| Property and Equipment, net | 20,646 | 19,653 | ||||||
| Goodwill | 34,961 | 34,545 | ||||||
| Intangible Assets, net | 3,955 | 5,233 | ||||||
| Right To Use Assets, net | 9,021 | - | ||||||
| Other Assets | 821 | 793 | ||||||
| Total Assets | $ | 114,011 | $ | 105,230 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts Payable | $ | 10,893 | $ | 14,572 | ||||
| Accrued Compensation and Other Liabilities | 6,848 | 5,450 | ||||||
| Income Taxes Payable | 40 | 228 | ||||||
| Current Portion of Long-Term Debt | 1,960 | 1,899 | ||||||
| Total Current Liabilities | 19,741 | 22,149 | ||||||
| Long-Term Debt | 17,748 | 19,103 | ||||||
| Deferred Tax Liabilities | 2,472 | 2,450 | ||||||
| Lease Liabilities | 7,333 | - | ||||||
| Other Liabilities | 1,933 | 1,898 | ||||||
| Total Liabilities | 49,227 | 45,600 | ||||||
| Shareholders' Equity: | ||||||||
| Common Stock, par value $0.50 per share, 30,000,000 shares authorized; 7,376,488 and 7,210,882 shares issued and outstanding as of December 28, 2019 and March 30, 2019, respectively | 3,688 | 3,605 | ||||||
| Capital in Excess of Par Value | 17,556 | 16,467 | ||||||
| Accumulated Other Comprehensive Loss | (444 | ) | (611 | ) | ||||
| Retained Earnings | 43,984 | 40,169 | ||||||
| Total Shareholders' Equity | 64,784 | 59,630 | ||||||
| Total Liabilities and Shareholders' Equity | $ | 114,011 | $ | 105,230 | ||||
Transcat Reports Record Third Quarter Revenue in Fiscal 2020
February 4, 2020
Page 8 of 11
TRANSCAT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
| (Unaudited) | ||||||||
| For the Nine Months Ended | ||||||||
| December 28, | December 29, | |||||||
| 2019 | 2018 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net Income | $ | 5,574 | $ | 4,485 | ||||
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||||||||
| Net Loss on Disposal of Property and Equipment | 253 | 6 | ||||||
| Deferred Income Taxes | 22 | (20 | ) | |||||
| Depreciation and Amortization | 4,951 | 4,733 | ||||||
| Provision for Accounts Receivable and Inventory Reserves | 311 | 122 | ||||||
| Stock-Based Compensation | 610 | 969 | ||||||
| Changes in Assets and Liabilities: | ||||||||
| Accounts Receivable and Other Receivables | 398 | 393 | ||||||
| Inventory | 341 | (544 | ) | |||||
| Prepaid Expenses and Other Assets | (689 | ) | (156 | ) | ||||
| Accounts Payable | (3,679 | ) | (2,169 | ) | ||||
| Accrued Compensation and Other Liabilities | 347 | (1,170 | ) | |||||
| Income Taxes Payable | (204 | ) | 597 | |||||
| Net Cash Provided by Operating Activities | 8,235 | 7,246 | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Purchase of Property and Equipment | (5,001 | ) | (5,452 | ) | ||||
| Proceeds from Sale of Property and Equipment | 184 | - | ||||||
| Business Acquisitions, net of cash acquired | (452 | ) | (3,614 | ) | ||||
| Payment of Contingent Consideration & Holdbacks Related to | ||||||||
| Business Acquisitions | (864 | ) | (108 | ) | ||||
| Net Cash Used in Investing Activities | (6,133 | ) | (9,174 | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from Revolving Credit Facility, net | 122 | 807 | ||||||
| Proceeds from Term Loan | - | 2,500 | ||||||
| Repayments of Term Loan | (1,416 | ) | (1,607 | ) | ||||
| Issuance of Common Stock | 1,625 | 193 | ||||||
| Repurchase of Common Stock | (2,822 | ) | (143 | ) | ||||
| Net Cash (Used in) Provided by Financing Activities | (2,491 | ) | 1,750 | |||||
| Effect of Exchange Rate Changes on Cash | (195 | ) | 421 | |||||
| Net (Decrease) Increase in Cash | (584 | ) | 243 | |||||
| Cash at Beginning of Period | 788 | 577 | ||||||
| Cash at End of Period | $ | 204 | $ | 820 | ||||
Transcat Reports Record Third Quarter Revenue in Fiscal 2020
February 4, 2020
Page 9 of 11
TRANSCAT, INC.
Adjusted EBITDA Reconciliation Table
(Dollars in thousands)
(Unaudited)
| Fiscal 2020 | ||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | YTD | ||||||||||||||||
| Net Income | $ | 1,718 | $ | 2,379 | $ | 1,477 | $ | 5,574 | ||||||||||||
| + Interest Expense | 244 | 243 | 216 | 703 | ||||||||||||||||
| + Other Expense / (Income) | 41 | 54 | (22 | ) | 73 | |||||||||||||||
| + Tax Provision | (45 | ) | 383 | 420 | 758 | |||||||||||||||
| Operating Income | $ | 1,958 | $ | 3,059 | $ | 2,091 | $ | 7,108 | ||||||||||||
| + Depreciation & Amortization | 1,622 | 1,681 | 1,648 | 4,951 | ||||||||||||||||
| + Other (Expense) / Income | 159 | (54 | ) | 22 | 127 | |||||||||||||||
| + Noncash Stock Compensation | 203 | 102 | 305 | 610 | ||||||||||||||||
| Adjusted EBITDA | $ | 3,942 | $ | 4,788 | $ | 4,066 | $ | 12,796 | ||||||||||||
| Segment Breakdown | ||||||||||||||||||||
| Service Operating Income | $ | 738 | $ | 1,837 | $ | 488 | $ | 3,063 | ||||||||||||
| + Depreciation & Amortization | 1,220 | 1,246 | 1,206 | 3,672 | ||||||||||||||||
| + Other (Expense) / Income | 77 | (38 | ) | 13 | 52 | |||||||||||||||
| + Noncash Stock Compensation | 112 | 56 | 159 | 327 | ||||||||||||||||
| Service Adjusted EBITDA | $ | 2,147 | $ | 3,101 | $ | 1,866 | $ | 7,114 | ||||||||||||
| Distribution Operating Income | $ | 1,220 | $ | 1,222 | $ | 1,603 | $ | 4,045 | ||||||||||||
| + Depreciation & Amortization | 401 | 436 | 442 | 1,279 | ||||||||||||||||
| + Other (Expense) / Income | 83 | (17 | ) | 9 | 75 | |||||||||||||||
| + Noncash Stock Compensation | 91 | 46 | 146 | 283 | ||||||||||||||||
| Distribution Adjusted EBITDA | $ | 1,795 | $ | 1,687 | $ | 2,200 | $ | 5,682 | ||||||||||||
| Fiscal 2019 | ||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | YTD | ||||||||||||||||
| Net Income | $ | 1,428 | $ | 1,488 | $ | 1,569 | $ | 2,660 | $ | 7,145 | ||||||||||
| + Interest Expense | 206 | 197 | 250 | 250 | 903 | |||||||||||||||
| + Other Expense / (Income) | 19 | (2 | ) | 45 | 29 | 91 | ||||||||||||||
| + Tax Provision | 372 | 493 | 530 | 695 | 2,090 | |||||||||||||||
| Operating Income | $ | 2,025 | $ | 2,176 | $ | 2,394 | $ | 3,634 | $ | 10,229 | ||||||||||
| + Depreciation & Amortization | 1,567 | 1,500 | 1,666 | 1,628 | 6,361 | |||||||||||||||
| + Other (Expense) / Income | (19 | ) | 2 | (45 | ) | (29 | ) | (91 | ) | |||||||||||
| + Noncash Stock Compensation | 269 | 337 | 363 | 358 | 1,327 | |||||||||||||||
| Adjusted EBITDA | $ | 3,842 | $ | 4,015 | $ | 4,378 | $ | 5,591 | $ | 17,826 | ||||||||||
| Segment Breakdown | ||||||||||||||||||||
| Service Operating Income | $ | 1,068 | $ | 1,125 | $ | 578 | $ | 2,431 | $ | 5,202 | ||||||||||
| + Depreciation & Amortization | 1,189 | 1,116 | 1,248 | 1,201 | 4,754 | |||||||||||||||
| + Other (Expense) / Income | (13 | ) | (1 | ) | (35 | ) | (20 | ) | (69 | ) | ||||||||||
| + Noncash Stock Compensation | 146 | 174 | 190 | 192 | 702 | |||||||||||||||
| Service Adjusted EBITDA | $ | 2,390 | $ | 2,414 | $ | 1,981 | $ | 3,804 | $ | 10,589 | ||||||||||
| Distribution Operating Income | $ | 957 | $ | 1,051 | $ | 1,816 | $ | 1,203 | $ | 5,027 | ||||||||||
| + Depreciation & Amortization | 378 | 384 | 418 | 427 | 1,607 | |||||||||||||||
| + Other (Expense) / Income | (6 | ) | 3 | (10 | ) | (9 | ) | (22 | ) | |||||||||||
| + Noncash Stock Compensation | 123 | 163 | 173 | 166 | 625 | |||||||||||||||
| Distribution Adjusted EBITDA | $ | 1,452 | $ | 1,601 | $ | 2,397 | $ | 1,787 | $ | 7,237 | ||||||||||
Transcat Reports Record Third Quarter Revenue in Fiscal 2020
February 4, 2020
Page 10 of 11
TRANSCAT, INC.
Additional Information - Business Segment Data
(Dollars in thousands)
(Unaudited)
| Change | ||||||||||||||||
| SERVICE | FY 2020 Q3 | FY 2019 Q3 | $'s | % | ||||||||||||
| Service Revenue | $ | 22,087 | $ | 20,492 | $ | 1,595 | 7.8 | % | ||||||||
| Cost of Revenue | $ | 17,221 | $ | 16,004 | $ | 1,217 | 7.6 | % | ||||||||
| Gross Profit | $ | 4,866 | $ | 4,488 | $ | 378 | 8.4 | % | ||||||||
| Gross Margin | 22.0 | % | 21.9 | % | ||||||||||||
| Selling, Marketing & Warehouse Expenses | $ | 2,331 | $ | 2,229 | $ | 102 | 4.6 | % | ||||||||
| General and Administrative Expenses | $ | 2,047 | $ | 1,681 | $ | 366 | 21.8 | % | ||||||||
| Operating Income | $ | 488 | $ | 578 | ( | $ | 90 | ) | (15.6 | %) | ||||||
| % of Revenue | 2.2 | % | 2.8 | % | ||||||||||||
| Change | ||||||||||||||||
| DISTRIBUTION | FY 2020 Q3 | FY 2019 Q3 | $'s | % | ||||||||||||
| Distribution Sales | $ | 21,092 | $ | 20,376 | $ | 716 | 3.5 | % | ||||||||
| Cost of Sales | $ | 16,030 | $ | 15,316 | $ | 714 | 4.7 | % | ||||||||
| Gross Profit | $ | 5,062 | $ | 5,060 | $ | 2 | 0.0 | % | ||||||||
| Gross Margin | 24.0 | % | 24.8 | % | ||||||||||||
| Selling, Marketing & Warehouse Expenses | $ | 2,132 | $ | 1,986 | $ | 146 | 7.4 | % | ||||||||
| General and Administrative Expenses | $ | 1,327 | $ | 1,258 | $ | 69 | 5.5 | % | ||||||||
| Operating Income | $ | 1,603 | $ | 1,816 | ( | $ | 213 | ) | (11.7 | %) | ||||||
| % of Sales | 7.6 | % | 8.9 | % | ||||||||||||
| Change | ||||||||||||||||
| TOTAL | FY 2020 Q3 | FY 2019 Q3 | $'s | % | ||||||||||||
| Total Revenue | $ | 43,179 | $ | 40,868 | $ | 2,311 | 5.7 | % | ||||||||
| Total Cost of Revenue | $ | 33,251 | $ | 31,320 | $ | 1,931 | 6.2 | % | ||||||||
| Gross Profit | $ | 9,928 | $ | 9,548 | $ | 380 | 4.0 | % | ||||||||
| Gross Margin | 23.0 | % | 23.4 | % | ||||||||||||
| Selling, Marketing & Warehouse Expenses | $ | 4,463 | $ | 4,215 | $ | 248 | 5.9 | % | ||||||||
| General and Administrative Expenses | $ | 3,374 | $ | 2,939 | $ | 435 | 14.8 | % | ||||||||
| Operating Income | $ | 2,091 | $ | 2,394 | ( | $ | 303 | ) | (12.7 | %) | ||||||
| % of Revenue | 4.8 | % | 5.9 | % | ||||||||||||
Transcat Reports Record Third Quarter Revenue in Fiscal 2020
February 4, 2020
Page 11 of 11
TRANSCAT, INC.
Additional Information - Business Segment Data
(Dollars in thousands)
(Unaudited)
| Change | ||||||||||||||
| FY 2020 | FY 2019 | |||||||||||||
| SERVICE | YTD | YTD | $'s | % | ||||||||||
| Service Revenue | $ | 67,987 | $ | 59,719 | $ | 8,268 | 13.8 | % | ||||||
| Cost of Revenue | $ | 51,737 | $ | 45,505 | $ | 6,232 | 13.7 | % | ||||||
| Gross Profit | $ | 16,250 | $ | 14,214 | $ | 2,036 | 14.3 | % | ||||||
| Gross Margin | 23.9 | % | 23.8 | % | ||||||||||
| Selling, Marketing & Warehouse Expenses | $ | 6,944 | $ | 6,360 | $ | 584 | 9.2 | % | ||||||
| General and Administrative Expenses | $ | 6,243 | $ | 5,083 | $ | 1,160 | 22.8 | % | ||||||
| Operating Income | $ | 3,063 | $ | 2,771 | $ | 292 | 10.5 | % | ||||||
| % of Revenue | 4.5 | % | 4.6 | % | ||||||||||
| Change | ||||||||||||||
| FY 2020 | FY 2019 | |||||||||||||
| DISTRIBUTION | YTD | YTD | $'s | % | ||||||||||
| Distribution Sales | $ | 59,350 | $ | 56,686 | $ | 2,664 | 4.7 | % | ||||||
| Cost of Sales | $ | 45,175 | $ | 43,100 | $ | 2,075 | 4.8 | % | ||||||
| Gross Profit | $ | 14,175 | $ | 13,586 | $ | 589 | 4.3 | % | ||||||
| Gross Margin | 23.9 | % | 24.0 | % | ||||||||||
| Selling, Marketing & Warehouse Expenses | $ | 6,222 | $ | 5,907 | $ | 315 | 5.3 | % | ||||||
| General and Administrative Expenses | $ | 3,908 | $ | 3,855 | $ | 53 | 1.4 | % | ||||||
| Operating Income | $ | 4,045 | $ | 3,824 | $ | 221 | 5.8 | % | ||||||
| % of Sales | 6.8 | % | 6.7 | % | ||||||||||
| Change | ||||||||||||||
| FY 2020 | FY 2019 | |||||||||||||
| TOTAL | YTD | YTD | $'s | % | ||||||||||
| Total Revenue | $ | 127,337 | $ | 116,405 | $ | 10,932 | 9.4 | % | ||||||
| Total Cost of Revenue | $ | 96,912 | $ | 88,605 | $ | 8,307 | 9.4 | % | ||||||
| Gross Profit | $ | 30,425 | $ | 27,800 | $ | 2,625 | 9.4 | % | ||||||
| Gross Margin | 23.9 | % | 23.9 | % | ||||||||||
| Selling, Marketing & Warehouse Expenses | $ | 13,166 | $ | 12,267 | $ | 899 | 7.3 | % | ||||||
| General and Administrative Expenses | $ | 10,151 | $ | 8,938 | $ | 1,213 | 13.6 | % | ||||||
| Operating Income | $ | 7,108 | $ | 6,595 | $ | 513 | 7.8 | % | ||||||
| % of Revenue | 5.6 | % | 5.7 | % | ||||||||||
Exhibit 99.2
