Transcat Reports Third Quarter Results with Revenue Growth

ROCHESTER, N.Y.--(BUSINESS WIRE)--Transcat, Inc. (Nasdaq: TRNS) (“Transcat” or the “Company”), a leading provider of accredited calibration services, cost control and optimization services, and distribution and rental of value-added professional grade handheld test, measurement, and control instrumentation, today reported financial results for its third quarter ended December 28, 2024 (the “third quarter”) of fiscal year 2025, which ends March 29, 2025 (“fiscal 2025”). Results include the previously reported acquisitions of TIC-MS, Inc. ("TIC-MS") effective March 27, 2023, SteriQual, Inc. ("SteriQual"), effective July 12, 2023, Axiom Test Equipment, Inc. (“Axiom”), effective August 8, 2023, Becnel Rental Tools, LLC ("Becnel") effective April 15, 2024 and Martin Calibration Inc. ("Martin) effective December 10, 2024. “In the 3rd quarter, we were pleased to close the Martin Calibration deal. Martin is a coveted calibration company that is highly synergistic and fulfills all our strategic acquisition drivers by expanding our geographic reach, increasing our capabilities and leveraging our existing infrastructure" commented Lee D. Rudow, President and CEO. “Martin's size, with revenue in excess of $25 million, and reputation for quality and customer satisfaction, makes it the perfect addition to the Transcat family.” “Service organic revenue was below our historical trends and significantly impacted by the timing of this year’s Christmas holiday. Last year, the Christmas holiday fell in the first week of our fiscal fourth quarter. We typically see an acceleration of activity in the last two weeks of each quarter, but this year many of our customers closed facilities or had significantly reduced staffing levels, which limited the volume of incoming equipment throughout the month. That said, we are seeing higher activity levels in January, which we believe is in part, the receipt of units which we expected to receive in December.” "Transcat Solutions (Nexa) revenue was soft in comparison to last year and in line with our expectations for the quarter. As previously communicated, we believe the actions our team is taking will result in the Solutions channel strengthening in the back half of fiscal 2026." Mr. Rudow added, “Our organic sales pipeline is very strong and we believe it supports a return to more historic organic growth levels." Third Quarter Fiscal 2025 Review (Results are compared with the third quarter of the fiscal year ended March 30, 2024 (“fiscal 2024”)) ($ in thousands) Change FY25 Q3 FY24 Q3 $'s % Service Revenue $ 41,557 $ 41,509 $ 48 0.1 % Distribution Revenue 25,197 23,657 1,540 6.5 % Revenue $ 66,754 $ 65,166 $ 1,588 2.4 % Gross Profit $ 19,679 $ 20,936 $ (1,257 ) (6.0 )% Gross Margin 29.5 % 32.1 % Operating Income $ 2,100 $ 4,294 $ (2,194 ) (51.1 )% Operating Margin 3.1 % 6.6 % Net Income $ 2,357 $ 3,348 $ (991 ) (29.6 )% Net Margin 3.5 % 5.1 % Adjusted EBITDA* $ 7,914 $ 9,120 $ (1,206 ) (13.2 )% Adjusted EBITDA* Margin 11.9 % 14.0 % Diluted EPS $ 0.25 $ 0.38 $ (0.13 ) (34.2 )% Adjusted Diluted EPS* $ 0.45 $ 0.56 $ (0.11 ) (19.6 )% *See Note 1 on page 5 for a description of these non-GAAP financial measures and pages 10, 11 and 12 for the reconciliation tables. Consolidated revenue was $66.8 million, an increase of $1.6 million or 2.4%. Consolidated gross profit was $19.7 million, a decrease of $1.3 million, or 6.0%, while gross margin decreased 260 basis points primarily due to lower organic revenue. Operating expenses were $17.6 million, an increase of $0.9 million, or 5.6%. Adjusted EBITDA was $7.9 million which represented a decrease of $1.2 million or 13.2%. Net income per diluted share was $0.25 compared to $0.38 last year. Adjusted diluted earnings per share were $0.45 versus $0.56 last year. Service segment third quarter results Represents the accredited calibration, repair, inspection and laboratory instrument services business (63.7% of total revenue for the third quarter of fiscal 2025). ($ in thousand) Change FY25 Q3 FY24 Q3 $'s % Service Segment Revenue $ 41,557 $ 41,509 $ 48 0.1 % Gross Profit $ 12,357 $ 13,494 $ (1,137 ) (8.4 )% Gross Margin 29.7 % 32.5 % Operating Income $ 1,412 $ 2,966 $ (1,554 ) (52.4 )% Operating Margin 3.4 % 7.1 % Adjusted EBITDA* $ 4,921 $ 5,979 $ (1,058 ) (17.7 )% Adjusted EBITDA* Margin 11.8 % 14.4 % *See Note 1 on page 5 for a description of this non-GAAP financial measure and pages 10 and 11 for the Adjusted EBITDA Reconciliation tables. Service segment revenue was $41.6 million, an increase of less than $0.1 million or 0.1%, and included $2.0 million of incremental revenue from acquisitions. Organic revenue decreased by 3.8% driven by the timing of the Christmas holiday. The segment gross margin was 29.7%, a decrease of 280 basis points from the prior year primarily due to lower organic revenue. Distribution segment second quarter results Represents the sale and rental of new and used professional grade handheld test, measurement and control instrumentation (36.3% of total revenue for the second quarter of fiscal 2025). ($ in thousands) Change FY25 Q3 FY24 Q3 $'s % Distribution Segment Revenue $ 25,197 $ 23,657 $ 1,540 6.5 % Gross Profit $ 7,322 $ 7,442 $ (120 ) (1.6 )% Gross Margin 29.1 % 31.5 % Operating Income $ 688 $ 1,328 $ (640 ) (48.2 )% Operating Margin 2.7 % 5.6 % Adjusted EBITDA* $ 2,993 $ 3,141 $ (148 ) (4.7 )% Adjusted EBITDA* Margin 11.9 % 13.3 % *See Note 1 on page 5 for a description of this non-GAAP financial measure and pages 10 and 11 for the Adjusted EBITDA Reconciliation tables. Distribution revenue was $25.2 million, which represented an increase of $1.5 million or 6.5%, driven by growth in the rental business including acquisitions. Distribution segment gross margin was 29.1%, a decrease of 240 basis points due to a mix shift as product sales experienced a strong quarter but have a lower margin profile. Nine Month Review (Results are compared with the first nine months of fiscal 2024) Total revenue was $201.3 million, an increase of $12.7 million or 6.7%. Consolidated gross profit was $63.5 million, an increase of $3.8 million, or 6.3%, and gross margin decreased to 31.6% or 10 basis points. Consolidated operating expenses were $52.6 million, an increase of $3.4 million, or 6.9%, driven by incremental expenses from acquired businesses, increased intangibles amortization expense and investments in technology and our employee base to support future growth, offset by the previously mentioned amended Nexa Earn-Out agreement in the second quarter of fiscal year 2024. As a result, consolidated operating income was $10.9 million compared with $10.6 million in last fiscal year’s period. Adjusted EBITDA was $27.0 million which represented an increase of $0.1 million or 0.2%. Net income per diluted share increased to $1.09 from $0.83 and adjusted diluted earnings per share was $1.65 versus $1.69 last year. The effective tax rate was 16.7% compared to 23.5% in the prior year, due to the timing of discrete benefits related to share-based compensation items. Balance Sheet and Cash Flow Overview On December 28, 2024, the Company had $4.6 million in cash and cash equivalents on hand and $40.5 million available for borrowing under its secured revolving credit facility. Total debt was $41.9 million versus $4.2 million on March 30, 2024. The Company’s leverage ratio, as defined in the credit agreement, was 0.97 on December 28, 2024, compared with 0.10 on March 30, 2024. Outlook Mr. Rudow concluded, “The Transcat team has consistently delivered excellent results over an extended period. We are disappointed with the Service organic revenue decline in fiscal Q3 as the timing of the holiday impacted the quarter’s results. Looking ahead, our growth investments, track record of strong execution, and diversified portfolio will drive sustainable organic revenue growth.” “We expect FY25 Service organic revenue growth in the mid-to-low single digits, when normalized for the extra week in fiscal 2024. Due to the previously mentioned strong Service sales pipeline, we anticipate a return to more historic organic growth levels. We have demonstrated the ability to leverage automation of our calibration processes and focus on productivity to improve our operational efficiency. These tools remain key enablers of margin expansion.” “We are very excited about the acquisition of Martin Calibration due to Martin’s commitment to quality, extensive customer base, geographic coverage, and strong culture. We believe that Transcat, together with Martin, is a perfect match.” Transcat expects its income tax rate to range between 21% and 23% in fiscal 2025. This estimate includes Federal, various state, Canadian and Irish income taxes and reflects the discrete tax accounting associated with share-based payment awards. Webcast and Conference Call Transcat will host a conference call and webcast on Tuesday, January 28, 2025 at 11:00 a.m. ET. Management will review the financial and operating results for the first quarter, as well as the Company’s strategy and outlook. A question and answer session will follow the formal discussion. The review will be accompanied by a slide presentation, which will be available at www.transcat.com/investor-relations. The conference call can be accessed by calling (201) 689-8471. Alternatively, the webcast can be monitored at www.transcat.com/investor-relations. A telephonic replay will be available from 2:00 p.m. ET on the day of the call through Tuesday, February 4, 2025. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13747789, access the webcast replay at www.transcat.com/investor-relations, where a transcript will be posted once available. NOTE 1 – Non-GAAP Financial Measures In addition to reporting net income, a U.S. generally accepted accounting principle (“GAAP”) measure, we present Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, non-cash stock compensation expense, and acquisition related transaction expenses, which is a non-GAAP measure. The Company’s management believes Adjusted EBITDA is an important measure of operating performance because it allows management, investors and others to evaluate and compare the performance of its core operations from period to period by removing the impact of the capital structure (interest), tangible and intangible asset base (depreciation and amortization), taxes, stock-based compensation expense and other items, which is not always commensurate with the reporting period in which it is included. As such, the Company uses Adjusted EBITDA as a measure of performance when evaluating its business segments and as a basis for planning and forecasting. Adjusted EBITDA is not a measure of financial performance under GAAP and is not calculated through the application of GAAP. As such, it should not be considered as a substitute for the GAAP measure of net income and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure. Adjusted EBITDA, as presented, may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies. See pages 10 and 11 for the Adjusted EBITDA Reconciliation tables. In addition to reporting Diluted Earnings Per Share, a GAAP measure, we present Adjusted Diluted Earnings Per Share (net income plus acquisition related amortization expense, acquisition related transaction expenses, acquisition related stock-based compensation, and acquisition amortization of backlog; divided by the average diluted shares outstanding during the period), which is a non-GAAP measure. Our management believes Adjusted Diluted Earnings Per Share is an important measure of our operating performance because it provides a basis for comparison of our business operations between current, past and future periods by excluding items that we do not believe are indicative of our core operating performance. Adjusted Diluted Earnings Per Share is not a measure of financial performance under GAAP and is not calculated through the application of GAAP. As such, it should not be considered as a substitute or alternative for the GAAP measure of Diluted Earnings Per Share and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure. Adjusted Diluted Earnings Per Share, as presented, may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies. See page 12 for the Adjusted Diluted EPS Reconciliation table. ABOUT TRANSCAT Transcat, Inc. is a leading provider of accredited calibration, reliability, maintenance optimization, quality and compliance, validation, Computerized Maintenance Management System (CMMS), and pipette services. The Company is focused on providing best-in-class services and products to highly regulated industries, particularly the Life Science industry, which includes pharmaceutical, biotechnology, medical device, and other FDA-regulated businesses, as well as aerospace and defense, and energy and utilities. Transcat provides periodic on-site services, mobile calibration services, pickup and delivery, in-house services at its 33 Calibration Service Centers strategically located across the United States, Puerto Rico, Canada, and Ireland. Inclusive of customer embedded locations and other field offices, we operate out of more than 50 locations. The breadth and depth of measurement parameters addressed by Transcat’s ISO/IEC 17025 scopes of accreditation are believed to be the best in the industry. Transcat also operates as a leading value-added distributor that markets, sells and rents new and used national and proprietary brand instruments to customers primarily in North America. The Company believes its combined Service and Distribution segment offerings, experience, technical expertise, and integrity create a unique and compelling value proposition for its customers. Transcat’s strategy is to leverage its strong brand and unique value proposition that includes its comprehensive instrument service capabilities, enterprise asset management, and leading distribution platform to drive organic sales growth. The Company will also look to expand its addressable calibration market through acquisitions and capability investments to further realize the inherent leverage of its business model. More information about Transcat can be found at: Transcat.com. Safe Harbor Statement This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact and thus are subject to risks, uncertainties and assumptions. Forward-looking statements relate to expectations, estimates, beliefs, assumptions and predictions of future events and are identified by words such as “aim,” “anticipates,” “believes,” “can,” “could,” “designed,” “estimates,” “expects,” “focus,” “goal,” “intends,” “may,” “plan,” “outlook,” “potential,” “seek,” “strategy,” “strive,” “target,” “will,” “would,” and other similar words. All statements addressing operating performance, events or developments that Transcat expects or anticipates will occur in the future, including but not limited to statements relating to anticipated revenue, profit margins, the commercialization of software projects, sales operations, capital expenditures, cash flows, operating income, growth strategy, segment growth, potential acquisitions, integration of acquired businesses, market position, customer preferences, outlook and changes in market conditions in the industries in which Transcat operates are forward-looking statements. Forward-looking statements should be evaluated in light of important risk factors and uncertainties. These risk factors and uncertainties include those more fully described in Transcat’s Annual Report and Quarterly Reports filed with the Securities and Exchange Commission, including under the heading entitled “Risk Factors.” Should one or more of these risks or uncertainties materialize or should any of the Company’s underlying assumptions prove incorrect, actual results may vary materially from those currently anticipated. In addition, undue reliance should not be placed on the Company’s forward-looking statements, which speak only as of the date they are made. Except as required by law, the Company disclaims any obligation to update, correct or publicly announce any revisions to any of the forward-looking statements contained in this news release, whether as the result of new information, future events or otherwise. FINANCIAL TABLES FOLLOW. TRANSCAT, INC. CONSOLIDATED STATEMENTS OF INCOME (In Thousands, Except Per Share Amounts) (Unaudited) (Unaudited) Third Quarter Ended Nine Months Ended December 28, December 23, December 28, December 23, 2024 2023 2024 2023 Service Revenue $ 41,557 $ 41,509 $ 129,418 $ 122,793 Distribution Revenue 25,197 23,657 71,869 65,775 Total Revenue 66,754 65,166 201,287 188,568 Cost of Service Revenue 29,200 28,015 87,587 82,244 Cost of Distribution Revenue 17,875 16,215 50,160 46,553 Total Cost of Revenue 47,075 44,230 137,747 128,797 Gross Profit 19,679 20,936 63,540 59,771 Selling, Marketing and Warehouse Expenses 8,119 7,519 24,101 20,844 General and Administrative Expenses 9,460 9,123 28,505 28,350 Total Operating Expenses 17,579 16,642 52,606 49,194 Operating Income 2,100 4,294 10,934 10,577 Interest Expense 199 81 327 1,785 Interest Income (219 ) (347 ) (817 ) (347 ) Other (Income) Expense (1,009 ) 289 (646 ) 304 Total Interest and Other (Income) Expense, net (1,029 ) 23 (1,136 ) 1,742 Income Before Provision For Income Taxes 3,129 4,271 12,070 8,835 Provision for Income Taxes 772 923 2,019 2,078 Net Income $ 2,357 $ 3,348 $ 10,051 $ 6,757 Basic Earnings Per Share $ 0.26 $ 0.39 $ 1.10 $ 0.84 Average Shares Outstanding 9,230 8,615 9,147 8,060 Diluted Earnings Per Share $ 0.25 $ 0.38 $ 1.09 $ 0.83 Average Shares Outstanding 9,326 8,752 9,243 8,187 TRANSCAT, INC. CONSOLIDATED BALANCE SHEETS (In Thousands, Except Share and Per Share Amounts) (Unaudited) (Audited) December 28, March 30, 2024 2024 ASSETS Current Assets: Cash and Cash Equivalents $ 4,640 $ 19,646 Marketable Securities - 15,533 Accounts Receivable, less allowance for credit losses of $577 and $544 as of December 28, 2024 and March 30, 2024, respectively 51,621 47,779 Other Receivables 734 506 Inventory, net 13,793 17,418 Prepaid Expenses and Other Current Assets 5,771 4,276 Total Current Assets 76,559 105,158 Property and Equipment, net 50,490 38,944 Goodwill 176,617 105,585 Intangible Assets, net 57,682 19,987 Right to Use Assets, net 23,568 16,823 Other Assets 1,093 1,055 Total Assets $ 386,009 $ 287,552 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts Payable $ 16,184 $ 11,495 Accrued Compensation and Other Current Liabilities 13,085 19,665 Current Portion of Long-Term Debt 2,410 2,339 Total Current Liabilities 31,679 33,499 Long-Term Debt 39,496 1,817 Deferred Tax Liabilities, net 9,255 9,291 Lease Liabilities 20,780 14,873 Other Liabilities 3,719 2,903 Total Liabilities 104,929 62,383 Shareholders' Equity: Common Stock, par value $0.50 per share, 30,000,000 shares authorized; 9,309,257 and 8,839,299 shares issued and outstanding as of December 28, 2024 and March 30, 2024, respectively 4,655 4,420 Capital in Excess of Par Value 190,200 141,624 Accumulated Other Comprehensive Loss (1,881 ) (949 ) Retained Earnings 88,106 80,074 Total Shareholders' Equity 281,080 225,169 Total Liabilities and Shareholders' Equity $ 386,009 $ 287,552 TRANSCAT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited) Nine Months Ended December 28, December 23, 2024 2023 Cash Flows from Operating Activities: Net Income $ 10,051 $ 6,757 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Net (Gain)Loss on Disposal of Property and Equipment (64 ) 24 Deferred Income Taxes (36 ) 42 Depreciation and Amortization 12,941 9,841 Gain on Sale of Assets (855 ) - Provision for Accounts Receivable and Inventory Reserves 147 379 Stock-Based Compensation Expense 2,075 3,338 Changes in Assets and Liabilities, net of acquisitions: Accounts Receivable and Other Receivables 1,848 3,819 Inventory 4,612 3,208 Prepaid Expenses and Other Current Assets (1,419 ) 728 Accounts Payable 4,179 (5,194 ) Accrued Compensation and Other Current Liabilities (2,197 ) 3,947 Income Taxes Payable (2,925 ) - Net Cash Provided by Operating Activities 28,357 26,889 Cash Flows from Investing Activities: Purchase of Property and Equipment (10,502 ) (9,099 ) Business Acquisitions, net of cash acquired (86,095 ) (12,932 ) Proceeds from Sale of Assets 1,100 - Sales of Marketable Securities 15,533 - Net Cash Used in Investing Activities (79,964 ) (22,031 ) Cash Flows from Financing Activities: Proceeds From/(Repayment of) Revolving Credit Facility, net 39,495 (42,713 ) Repayments of Term Loan (1,745 ) (1,678 ) Issuance of Common Stock, net of direct costs 1,766 75,714 Repurchase of Common Stock (3,208 ) (2,247 ) Net Cash Provided by Financing Activities 36,308 29,076 Effect of Exchange Rate Changes on Cash and Cash Equivalents 293 (260 ) Net (Decrease)/Increase in Cash and Cash Equivalents (15,006 ) 33,674 Cash and Cash Equivalents at Beginning of Period 19,646 1,531 Cash and Cash Equivalents at End of Period $ 4,640 $ 35,205 TRANSCAT, INC. Adjusted EBITDA Reconciliation Table (In thousands) (Unaudited) Fiscal 2025 Q1 Q2 Q3 Q4 YTD Net Income $ 4,408 3,286 2,357 10,051 + Interest Income (260 ) (210 ) (20 ) (490 ) + Other Expense 131 232 (1,009 ) (646 ) + Tax Provision 820 427 772 2,019 Operating Income 5,099 3,735 2,100 10,934 + Depreciation & Amortization 4,113 4,399 4,430 12,942 + Transaction Expenses 434 33 778 1,245 + Other Expense (131 ) (232 ) 154 (209 ) + Non-cash Stock Compensation 697 926 452 2,075 Adjusted EBITDA 10,212 8,861 7,914 26,987 Segment Breakdown Service Operating Income $ 4,091 3,704 1,412 9,207 + Depreciation & Amortization 2,402 2,455 2,451 7,308 + Transaction Expenses 146 - 778 924 + Other Expense (96 ) (164 ) 94 (166 ) + Non-cash Stock Compensation 421 629 186 1,236 Service Adjusted EBITDA 6,964 6,624 4,921 18,509 Distribution Operating Income $ 1,008 31 688 1,727 + Depreciation & Amortization 1,711 1,944 1,979 5,634 + Transaction Expenses 288 32 - 320 + Other Expense (35 ) (67 ) 60 (42 ) + Non-cash Stock Compensation 276 297 266 839 Distribution Adjusted EBITDA 3,248 2,237 2,993 8,478 TRANSCAT, INC. Adjusted EBITDA Reconciliation Table (In thousands) (Unaudited) Fiscal 2024 Q1 Q2 Q3 Q4 YTD Net Income $ 2,949 460 3,348 6,890 13,647 + Interest Expense / (Income) 814 890 (266 ) (411 ) 1,027 + Other Expense / (Income) 64 (49 ) 289 11 315 + Tax Provision 813 342 923 2,714 4,792 Operating Income 4,640 1,643 4,294 9,204 19,781 + Depreciation & Amortization 2,790 3,269 3,783 3,635 13,477 + Transaction Expenses 185 328 78 37 628 + Acquisition Earn-Out Adjustment - 2,800 87 (2,357 ) 530 + Other (Expense) / Income (64 ) 49 (289 ) (11 ) (315 ) + Non-cash Stock Compensation 930 1,241 1,167 1,174 4,512 Adjusted EBITDA 8,481 9,330 9,120 11,682 38,613 Segment Breakdown Service Operating Income $ 3,192 742 2,966 8,144 15,044 + Depreciation & Amortization 2,226 2,325 2,362 2,280 9,193 + Transaction Expenses 185 76 30 (44 ) 247 + Acquisition Earn-Out Adjustment - 2,800 87 (2,357 ) 530 + Other (Expense) / Income (47 ) 29 (203 ) (18 ) (239 ) + Non-cash Stock Compensation 676 826 737 736 2,975 Service Adjusted EBITDA 6,232 6,798 5,979 8,741 27,750 Distribution Operating Income $ 1,448 901 1,328 1,060 4,737 + Depreciation & Amortization 564 944 1,421 1,355 4,284 + Transaction Expenses - 252 48 81 381 + Other (Expense) / Income (17 ) 20 (86 ) 7 (76 ) + Non-cash Stock Compensation 254 415 430 438 1,537 Distribution Adjusted EBITDA 2,249 2,532 3,141 2,941 10,863 TRANSCAT, INC. Adjusted Diluted EPS Reconciliation Table (In Thousands, Except Per Share Amounts) (Unaudited) Fiscal 2025 Q1 Q2 Q3 Q4 YTD Net Income $ 4,408 3,286 2,357 10,051 + Amortization of Intangible Assets 1,749 1,888 1,879 5,516 + Acquisition Amortization of Backlog 24 4 - 28 + Acquisition Deal Costs 434 33 778 1,245 + Acquisition Stock Expense 234 130 (261 ) 103 + Income Tax Effect at 25% (610 ) (514 ) (599 ) (1,723 ) Adjusted Net Income 6,239 4,827 4,154 - 15,220 Average Diluted Shares Outstanding 9,196 9,282 9,326 9,243 Diluted Earnings Per Share 0.48 0.35 0.25 - 1.09 Adjusted Diluted Earnings Per Share 0.68 0.52 0.45 - 1.65 Fiscal 2024 Q1 Q2 Q3 Q4 YTD Net Income $ 2,949 460 3,348 6,890 13,647 + Amortization of Intangible Assets 1,093 1,416 1,674 1,447 5,630 + Acquisition Amortization of Backlog - 19 24 24 67 + Acquisition Deal Costs 185 328 78 81 672 + Acquisition Stock Expense 182 274 265 258 979 + Income Tax Effect at 25% (365 ) (509 ) (532 ) (431 ) (1,837 ) + Acquisition Earn-Out Adjustment - 2,800 87 (2,358 ) 529 Adjusted Net Income 4,044 4,788 4,944 5,911 19,687 Average Diluted Shares Outstanding 7,762 7,948 8,752 8,972 8,352 Diluted Earnings Per Share 0.38 0.06 0.38 0.77 1.63 Adjusted Diluted Earnings Per Share 0.52 0.60 0.56 0.66 2.36 TRANSCAT, INC. Additional Information - Business Segment Data (Dollars in thousands) (Unaudited) Change SERVICE FY 2025 Q3 FY 2024 Q3 $'s % Service Revenue $ 41,557 $ 41,509 $ 48 0.1 % Cost of Revenue 29,200 28,015 1,185 4.2 % Gross Profit $ 12,357 $ 13,494 $ (1,137 ) (8.4 )% Gross Margin 29.7 % 32.5 % Selling, Marketing & Warehouse Expenses $ 4,380 $ 4,202 $ 178 4.2 % General and Administrative Expenses 6,565 6,326 239 3.8 % Operating Income $ 1,412 $ 2,966 $ (1,554 ) (52.4 )% % of Revenue 3.4 % 7.1 % Change DISTRIBUTION FY 2025 Q3 FY 2024 Q3 $'s % Distribution Revenue $ 25,197 $ 23,657 $ 1,540 6.5 % Cost of Revenue 17,875 16,215 1,660 10.2 % Gross Profit $ 7,322 $ 7,442 $ (120 ) (1.6 )% Gross Margin 29.1 % 31.5 % Selling, Marketing & Warehouse Expenses $ 3,739 $ 3,317 $ 422 12.7 % General and Administrative Expenses 2,895 2,797 98 3.5 % Operating Income $ 688 $ 1,328 $ (640 ) (48.2 )% % of Sales 2.7 % 5.6 % Change TOTAL FY 2025 Q3 FY 2024 Q3 $'s % Total Revenue $ 66,754 $ 65,166 $ 1,588 2.4 % Total Cost of Revenue 47,075 44,230 2,845 6.4 % Gross Profit $ 19,679 $ 20,936 $ (1,257 ) (6.0 )% Gross Margin 29.5 % 32.1 % Selling, Marketing & Warehouse Expenses $ 8,119 $ 7,519 $ 600 8.0 % General and Administrative Expenses 9,460 9,123 337 3.7 % Operating Income $ 2,100 $ 4,294 $ (2,194 ) (51.1 )% % of Revenue 3.1 % 6.6 % TRANSCAT, INC. Additional Information - Business Segment Data (Dollars in thousands) (Unaudited) Change FY 2025 FY 2024 SERVICE YTD YTD $'s % Service Revenue $ 129,418 $ 122,793 $ 6,625 5.4 % Cost of Revenue 87,587 82,244 5,343 6.5 % Gross Profit $ 41,831 $ 40,549 $ 1,282 3.2 % Gross Margin 32.3 % 33.0 % Selling, Marketing & Warehouse Expenses $ 13,269 $ 12,452 $ 817 6.6 % General and Administrative Expenses 19,355 21,197 (1,842 ) (8.7 )% Operating Income $ 9,207 $ 6,900 $ 2,307 33.4 % % of Revenue 7.1 % 5.6 % Change FY 2025 FY 2024 DISTRIBUTION YTD YTD $'s % Distribution Revenue $ 71,869 $ 65,775 $ 6,094 9.3 % Cost of Revenue 50,160 46,553 3,607 7.7 % Gross Profit $ 21,709 $ 19,222 $ 2,487 12.9 % Gross Margin 30.2 % 29.2 % Selling, Marketing & Warehouse Expenses $ 10,832 $ 8,392 $ 2,440 29.1 % General and Administrative Expenses 9,150 7,153 1,997 27.9 % Operating Income $ 1,727 $ 3,677 $ (1,950 ) (53.0 )% % of Sales 2.4 % 5.6 % Change FY 2025 FY 2024 TOTAL YTD YTD $'s % Total Revenue $ 201,287 $ 188,568 $ 12,719 6.7 % Total Cost of Revenue 137,747 128,797 8,950 6.9 % Gross Profit $ 63,540 $ 59,771 $ 3,769 6.3 % Gross Margin 31.6 % 31.7 % Selling, Marketing & Warehouse Expenses $ 24,101 $ 20,844 $ 3,257 15.6 % General and Administrative Expenses 28,505 28,350 155 0.5 % Operating Income $ 10,934 $ 10,577 $ 357 3.4 % % of Revenue 5.4 % 5.6 %

Transcat Reports Third Quarter Results with Revenue Growth

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