Exhibit 99.1
Transcat Announces Fiscal 2004 Results;
Reports Net Income for the Fourth Quarter and the Year in line with Strategic Plan;
Fourth Quarter Revenues Rise 10%
ROCHESTER, NY – June 21, 2004 – Transcat, Inc. (Nasdaq: TRNS), a leading global distributor of professional grade test, measurement, and calibration instruments and a provider of calibration and repair services, today announced financial results for its fiscal year and fourth quarter ended March 27, 2004.
Fiscal 2004 Highlights
• | Fiscal year 2004 fourth quarter net sales increased 10.1%, from $13.9 million to $15.3 million. | |||
• | Net income for the 2004 fiscal year was $0.05 per diluted share compared with a net loss of $0.76 per diluted share in fiscal year 2003. | |||
• | Distribution Products – Net sales increased 15.6% from $9.0 million to $10.4 million in the fiscal year 2004 fourth quarter on increased order rate; backlog increases to $1.7 million. | |||
• | Calibration Services – Gross profit increased 11.4 points from fiscal year 2003 to fiscal year 2004. | |||
• | Operating expenses remain flat as operational efficiencies improve, offset by investments made to expand our presence in additional market segments. | |||
Solid Results in Fiscal 2004
Commenting on the fiscal year 2004 fourth quarter and fiscal year results, Carl E. Sassano, Chairman of the Board, President and Chief Executive Officer, stated: “After two years of strategic investments and efforts on the part of the entire Transcat team in a challenging economic environment, I am pleased to report positive results for fiscal year 2004.
“The implementation of our strategy to create a sustainable and profitable business model has placed our company on a stronger financial and business platform to pursue growth and to create value for our shareholders in fiscal year 2005 and beyond. In particular, we are encouraged by our increase in net sales for distribution products and the increase in gross profit for calibration services for the quarter.
“We have always been focused on offering the best and most current test, calibration, and measurement equipment and application assistance to our customers. This focus, our prospecting to add new catalog customers, targeting our calibration customers, coupled with a stronger year-over-year economy, has resulted in a 15.6% increase in distribution products net sales in the fiscal year 2004 fourth quarter. We continued to experience both a stronger order rate and increased backlog during the quarter, and continued to make investments in expanding our presence in additional market segments and market share in the process calibrator market. These investments in targeting new channels of distribution and promotional activities with our existing customer base resulted in an expected decline of 3 points in our distributed products gross profit ratio for the year.
“Our calibration services results for fiscal 2004 and the fiscal 2004 fourth quarter have improved considerably over the prior year. We view calibration services as a strategic core competency of our company that will contribute significantly to shareholder value over time. To increase the core base of calibration services customers, many of whom are repeat customers, we have focused our
marketing efforts on targeting companies that value quality (e.g., ISO, 17025, others), metrology and quality calibration expertise as essential components of their core manufacturing competencies, and also our equipment customers whom we attract to our calibration services through proactive cross-selling and other marketing programs. As a result of these efforts to build a larger customer base for our calibration services, revenue remained nearly flat in fiscal year 2004, despite the loss of two large customers a year ago. Importantly, we have increased and sustained a significantly higher gross profit ratio of approximately 11 points from fiscal year 2003 to fiscal year 2004 in our calibration business, which will provide increased profit leverage on anticipated calibration revenue increases.”
Looking Ahead
Mr. Sassano continued: “We believe that the improvements that we made during fiscal year 2004 have positioned our company for long-term, sustainable profitability and growth. While we expect to continue to make improvements during fiscal year 2005, we expect to deliver profitable results for our shareholders.
“We believe our progress is on track. We have emerged from financial and organizational restructuring and established a profitable business model and process to manage it. Our strategy in fiscal year 2005 is to focus on gaining business and market share in companies who value quality systems and operate in regulated environments.
“We expect to increase revenues over last year in both the distribution products and calibration services businesses. For the year, we are expecting growth overall in the low to mid single digits and overall gross margin improvements of 1-3 points. Distribution products should have higher growth in the first half of the year due to weaker prior year comparisons. Calibration services revenue can be significantly affected by the timing of new customer business and previous year comparisons in any quarter could vary widely. Our focus in calibration will be on adding customers to increase total revenue for the year.
“Importantly, Transcat will strive to continue to improve performance, provide quality service to our customers, and increase shareholder value. We believe we are well positioned to achieve these goals in fiscal year 2005.”
Fiscal 2004 Fourth Quarter and Full Year Financial Review
For the fiscal year 2004 fourth quarter, net sales were $15.3 million, an increase of $1.4 million, or 10.1%, compared with net sales of $13.9 million during the fiscal year 2003 fourth quarter. Net income for the fiscal year 2004 fourth quarter was $0.04 million, or $0.01 per diluted share, as compared with net income of $0.06 million for the fiscal year 2003 fourth quarter, or $0.01 per diluted share.
For the fiscal year ended March 27, 2004, net sales were $53.3 million compared with net sales of $57.2 million for the fiscal year ended March 31, 2003. Net income for the fiscal year ended March 27, 2004 was $0.4 million, or $0.05 per diluted share, as compared with a net loss of $4.7 million, or $0.76 per diluted share for the fiscal year ended March 31, 2003. The $4.7 million net loss in fiscal year 2003 included a net pre-tax gain of $1.6 million resulting from the extinguishment of debt; and a non-cash charge of $6.5 million reflecting the cumulative effect of adopting Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets”.
The Company also announced that its Consolidated Balance Sheet has been restated to reflect the application of Emerging Issues Task Force Issue No. 95-22, consensus reached in 1998. This issue relates to the treatment of revolving lines of credit that incorporate certain lock-box cash sweep provisions and a subjective acceleration clause, which allows a lender to call a loan should certain adverse situations occur. As a result, the Company has reclassified its revolving line of credit from a
long term liability to a current liability. While now reported as a current liability, the Company’s operational cash flow planning views its revolving line of credit as a long term source of funds. The restated balance sheets for fiscal year 2003 and at the first three quarters of fiscal year 2004 appear in the Company’s fiscal 2003 10-K/A and 10-Q/A filings with the Securities and Exchange Commission.
About Transcat, Inc.
Transcat, Inc. is a leading global distributor of professional grade test, measurement and calibration instruments and an accredited provider of calibration and repair services primarily to the process, life science and manufacturing industries.
Through the Company’s distribution products segment, Transcat markets and distributes national and proprietary brand instruments to approximately 12,000 global customers. Transcat’s Master Catalog offers easy access to more than 25,000 instruments, such as: calibrators, deadweight testers, temperature devices, multimeters, oscilloscopes, pressure pumps, testers, recorders, and related accessories, from nearly 250 of the industry’s leading manufacturers including Fluke, Hart Scientific, Agilent, Ametek, and GE-Druck. In addition, Transcat is the exclusive worldwide distributor for Altek and Transmation products. The majority of this instrumentation requires expert calibration service to ensure that it maintains the most exacting measurements.
Through the Company’s calibration services segment, Transcat offers precise, reliable, fast calibration services through ten Calibration Centers of Excellence strategically located across the United States and Canada to approximately 9,000 customers. To support the Company’s customers’ calibration service needs, Transcat delivers the industry’s highest quality calibration services and repairs. Each of the calibration laboratories is ISO-9000: 2000 registered with Underwriter’s Laboratories, Inc. and the scope of accreditation to ISO/IEC 17025 is the widest in the industry.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:This press release contains forward-looking statements, which are subject to various risks and uncertainties. The Company’s actual results could differ from those anticipated in such forward-looking statements as a result of numerous factors that may be beyond the Company’s control.
- Statistical Tables Follow -
TRANSCAT, INC.
Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited) | ||||||||||||||||
Fourth Quarter Ended | Twelve Months Ended | |||||||||||||||
March | March | March | March | |||||||||||||
27, 2004 | 31, 2003 | 27, 2004 | 31, 2003 | |||||||||||||
Product Sales | $ | 10,448 | $ | 8,991 | $ | 35,423 | $ | 38,359 | ||||||||
Service Sales | 4,827 | 4,924 | 17,894 | 18,813 | ||||||||||||
Net Sales | 15,275 | 13,915 | 53,317 | 57,172 | ||||||||||||
Cost of Products Sold | 8,215 | 6,461 | 26,948 | 28,033 | ||||||||||||
Cost of Services Sold | 3,427 | 4,011 | 12,971 | 15,820 | ||||||||||||
Total Cost of Products and Services Sold | 11,642 | 10,472 | 39,919 | 43,853 | ||||||||||||
Gross Profit | 3,633 | 3,443 | 13,398 | 13,319 | ||||||||||||
Selling, Marketing, and Warehouse Expenses | 2,345 | 2,157 | 8,540 | 8,311 | ||||||||||||
Administrative Expenses | 1,206 | 1,176 | 4,551 | 4,539 | ||||||||||||
Total Operating Expenses | 3,551 | 3,333 | 13,091 | 12,850 | ||||||||||||
Operating Income | 82 | 110 | 307 | 469 | ||||||||||||
Interest Expense | 215 | 146 | 434 | 657 | ||||||||||||
Other (Income) Expense | (131 | ) | 63 | (288 | ) | (1,537 | ) | |||||||||
Total Other Expense (Income) | 84 | 209 | 146 | (880 | ) | |||||||||||
(Loss) Income Before Income Taxes and Cumulative Effect of a Change in Accounting Principle | (2 | ) | (99 | ) | 161 | 1,349 | ||||||||||
Benefit for Income Taxes | (45 | ) | (162 | ) | (192 | ) | (408 | ) | ||||||||
Income Before Cumulative Effect of a Change in Accounting Principle | 43 | 63 | 353 | 1,757 | ||||||||||||
Cumulative Effect of a Change in Accounting Principle | - | - | - | (6,472 | ) | |||||||||||
Net Income (Loss) | $ | 43 | $ | 63 | $ | 353 | $ | (4,715 | ) | |||||||
Basic Earnings (Loss) Per Share: | ||||||||||||||||
Before Cumulative Effect of a Change in Accounting Principle | $ | 0.01 | $ | 0.01 | $ | 0.06 | $ | 0.29 | ||||||||
From Cumulative Effect of a Change in Accounting Principle | - | - | - | (1.05 | ) | |||||||||||
Total Basic Earnings (Loss) Per Share | $ | 0.01 | $ | 0.01 | $ | 0.06 | $ | (0.76 | ) | |||||||
Average Shares Outstanding (in thousands) | 6,289 | 6,176 | 6,252 | 6,147 | ||||||||||||
Diluted Earnings (Loss) Per Share: | ||||||||||||||||
Before Cumulative Effect of a Change in Accounting Principle | $ | 0.01 | $ | 0.01 | $ | 0.05 | $ | 0.29 | ||||||||
From Cumulative Effect of a Change in Accounting Principle | - | - | - | (1.05 | ) | |||||||||||
Total Diluted Earnings (Loss) Per Share | $ | 0.01 | $ | 0.01 | $ | 0.05 | $ | (0.76 | ) | |||||||
Average Shares Outstanding (in thousands) | 6,917 | 6,423 | 6,808 | 6,147 |
Certain reclassifications of prior year and prior quarter financial information have been made to conform to current quarter and twelve month presentation.
TRANSCAT, INC.
Consolidated Balance Sheets
(In Thousands, Except Share and Per Share Amounts)
(Restated) | ||||||||
March | March | |||||||
27, 2004 | 31, 2003 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash | $ | 547 | $ | 114 | ||||
Accounts Receivable, less allowance for doubtful accounts of $51 and $114 as of March 27, 2004 and March 31, 2003, respectively | 8,044 | 6,879 | ||||||
Other Receivables | 64 | 159 | ||||||
Finished Goods Inventory, net | 3,736 | 2,842 | ||||||
Income Taxes Receivable | 144 | 799 | ||||||
Prepaid Expenses and Deferred Charges | 756 | 454 | ||||||
Total Current Assets | 13,291 | 11,247 | ||||||
Property, Plant and Equipment, net | 2,025 | 2,556 | ||||||
Capital Leases, net | 181 | - | ||||||
Goodwill | 2,524 | 2,524 | ||||||
Deferred Charges | 111 | 197 | ||||||
Other Assets | 253 | 234 | ||||||
Total Assets | $ | 18,385 | $ | 16,758 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities: | ||||||||
Accounts Payable | $ | 4,139 | $ | 3,738 | ||||
Accrued Payrolls, Commissions and Other | 1,620 | 1,862 | ||||||
Income Taxes Payable | 100 | 100 | ||||||
Deposits | 57 | 64 | ||||||
Current Portion of Term Loan | 668 | 666 | ||||||
Current Portion of Capital Lease Obligations | 49 | - | ||||||
Revolving Line of Credit (Restated) | 6,441 | 5,248 | ||||||
Total Current Liabilities | 13,074 | 11,678 | ||||||
Term Loan, less current portion | - | 668 | ||||||
Capital Lease Obligations, less current portion | 134 | - | ||||||
Deferred Compensation | 205 | 170 | ||||||
Deferred Gain on TPG Divestiture | 1,544 | 1,544 | ||||||
Total Liabilities | 14,957 | 14,060 | ||||||
Stockholders’ Equity: | ||||||||
Common Stock, par value $0.50 per share, 30,000,000 shares authorized; 6,352,968 and 6,296,000 shares issued as of March 27, 2004 and March 31, 2003, respectively; 6,233,610 and 6,176,642 shares outstanding as of March 27, 2004 and March 31, 2003, respectively | 3,176 | 3,148 | ||||||
Capital in Excess of Par Value | 3,235 | 3,031 | ||||||
Warrants | 518 | 518 | ||||||
Unearned Compensation | (23 | ) | - | |||||
Accumulated Other Comprehensive Loss | (67 | ) | (235 | ) | ||||
Retained Deficit | (2,958 | ) | (3,311 | ) | ||||
Less: Treasury Stock, at cost, 119,358 shares | (453 | ) | (453 | ) | ||||
Total Stockholders’ Equity | 3,428 | 2,698 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 18,385 | $ | 16,758 | ||||
Certain reclassifications of prior year and prior quarter financial information have been made to conform to current quarter and twelve month presentation.
TRANSCAT, INC.
Consolidated Statements of Cash Flows
(In Thousands)
Twelve Months Ended | ||||||||
March | March | |||||||
27, 2004 | 31, 2003 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net Income (Loss) | $ | 353 | $ | (4,715 | ) | |||
Cumulative Effect of a Change in Accounting Principle | - | 6,472 | ||||||
Net Income Before Cumulative Effect of a Change in Accounting Principle | 353 | 1,757 | ||||||
Adjustments to Reconcile Net Income Before Cumulative Effect of a Change in Accounting Principle to Net Cash Provided by Operating Activities: Loss on Disposal of Assets | 63 | |||||||
Gain on Extinguishment of Debt | - | (1,593 | ) | |||||
Depreciation and Amortization | 1,299 | 2,047 | ||||||
Provision for Doubtful Accounts Receivable and Returns | (143 | ) | (210 | ) | ||||
Provision for Slow Moving or Obsolete Inventory | 20 | - | ||||||
Deferred Revenue — MAC | - | (179 | ) | |||||
Common Stock Expense | 110 | 40 | ||||||
Amortization of Unearned Compensation | 99 | - | ||||||
Other | (19 | ) | (10 | ) | ||||
Changes in Assets and Liabilities: | ||||||||
Accounts Receivable and Other Receivables | (927 | ) | 1,320 | |||||
MAC Escrow and Holdback | - | 225 | ||||||
Inventories | (914 | ) | 1,027 | |||||
Income Taxes Receivable / Payable | 655 | (91 | ) | |||||
Prepaid Expenses, Deferred Charges, and Other | (512 | ) | (225 | ) | ||||
Accounts Payable | 401 | (2,602 | ) | |||||
Accrued Payrolls, Commissions, and Other | (242 | ) | (186 | ) | ||||
Deposits | (7 | ) | (384 | ) | ||||
Deferred Compensation | 35 | (62 | ) | |||||
Net Cash Provided by Operating Activities | 208 | 937 | ||||||
Cash Flows from Investing Activities: | ||||||||
Purchase of Property, Plant and Equipment | (459 | ) | (291 | ) | ||||
Net Cash Used in Investing Activities | (459 | ) | (291 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Revolving Line of Credit, net | 1,193 | 89 | ||||||
Payments on Term Loan | (666 | ) | (8,333 | ) | ||||
Proceeds from Term Loan | - | 7,113 | ||||||
Payments on Capital Lease Obligations | (11 | ) | - | |||||
Net Cash Provided by (Used in) Financing Activities | 516 | (1,131 | ) | |||||
Effect of Exchange Rate Changes on Cash | 168 | 91 | ||||||
Net Increase (Decrease) in Cash | 433 | (394 | ) | |||||
Cash at Beginning of Period | 114 | 508 | ||||||
Cash at End of Period | $ | 547 | $ | 114 | ||||
Supplemental Disclosure of Non-Cash Financing Activity | ||||||||
Issuance of Warrants for Debt Retirement | $ | - | $ | 518 | ||||
Capital Lease Obligations | $ | 194 | $ | - |
Certain reclassifications of prior year and prior quarter financial information have been made to conform to current quarter and twelve month presentation.