TRNS - Earnings call transcript Q1 2025

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to Transcat, Inc.

First Quarter Fiscal Year 2025 Financial Results Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Officer. Financial Chief Barbato, Tom Thank you, Mr. Barbato.

You may begin.

Thomas Barbato

CEO, operator, time and you, on Mike call President West. and Operating our With good your appreciate the and our is We everyone. today Rudow; your Officer, here and Chief morning, me Thank Lee interest Transcat. in

then questions. We the and some up open prepared with begin will the will remarks, call we call for

prepared release be wire section. release markets closed the our earnings crossed referenced the will that the in after can on in earnings found slides Our both the transcat.com be our remarks during yesterday, website, Relations Investor

If to would, #X. you please refer Slide

subject you company presentation to risks well as as other may cause and that As These we and make release formal today. These of could as factors the portion during documents are actual are the as this filed teleconference. the the future are we to the news aware, materially where Q&A in to the statements SEC. uncertainties outlined with forward-looking are factors well apply from statements differ results by which events,

precautionary find to those correct whether of information statements website well sec.gov. we SEC's review regularly Please no our on information, call, forward-looking our otherwise, the the contained or company You of can required as website about as in conjunction by law. forward-looking undertake these We as new except with at publicly result a factors. this the future on in as events or update obligation where post any statements

in measures, be will call, we today's non-GAAP evaluating believe performance. useful we during our Additionally, which certain will discuss

earnings the GAAP. GAAP substitute results isolation reconciliations non-GAAP We've consider prepared the the presentation in release. compared this of You in a with additional for in accompanying to or provided of tables accordance measures as should information not

turn I'll over call that, Lee. the to With

Lee Rudow

XX% to fiscal Consolidated ability the our portfolio us XXXX effectively our Transcat Thank the to continued first year $XX.X at straight strategy to Thank strong business drive performance for gross services call of entire to from than XXst $XX.X our points a execute as Good million. Service was XX% quarter XXX platform. and in rental high revenue continue our as was to XX% on XX you, revenue morning, Adjusted margin by everyone. our to year-over-year the across and both to joining expanded by our quarter for margin driven demonstrate recorded you and up of strong significant prior continued grew as demand as in years. we perform well performance. Consolidated Distribution growth differentiation more expansion today. basis throughout million, EBITDA Tom. driven and Service its in level quarter segments. straight delivered

X.X% In the first fiscal quarter revenue overall XXXX, grew XX% Service organically. and of

life revenue recurring around highly focus rally gross to continue of include year basis that to XX%. We and regulated streams theme get the versus grew XXX and aerospace And To first service points industries that science and better. defense. quarter point, prior the in margins bigger with we internally, get

time over drive improvement operation. ability our improvement throughout reflects continuous gross Our consistent our margin service to process

gross service productivity of increased as system and as training Specific drivers margin of and software automation improvement through technical higher levels well include enhancements.

model of the about the talked as in the the driver we inherent gain As operating revenue past, service constant in service margin leverage is grows.

The X Gross and been integration has acquired driven year now primarily rentals. prior which from Axiom the first August, margins XXX ago almost acquired at which Axiom, with expanded margin includes higher year Turning to rental Becnel we our basis in excellent. by past of distribution April the this points business, and start both quarter.

front, a progress. meaningful start, Becnel the strong off to early, on And we're making

encountered we've Becnel to point the acquisition we Becnel, opportunities of since several quarter, in already fact, that can customers. the the from synergistic first In service

While calibration to services. is a and customer well-run at users of news. that Becnel the a are very base. instrumentation some heavy loyal has point, start company this was early anticipated great is cultivated most occur strong of which

its to In very profitable that time. we addition a service rental expansion Becnel operator-based platform, margin anticipate will service growing model offers to over contribute

point our services brand Overall, strong and margin with for the testament across consolidated EBITDA. rewarded adjusted a proposition. recognized a start our we're consolidated growth fiscal XX% of across strength environments. our to in risk failure the XXX gross delivery start, of we cost growth all the of pleased mitigating in high value XX% a continues and manufacturing our business XXXX, revenue, in generated Transcat the in to our It's and the basis Transcat, uniqueness be of expansion

be retention has contributor performance been a of our line consistent hallmark continues a time. of to major over and and Transcat Customer top

balance to footprint, fiscal positioned capabilities, also the Lastly, with was to growth expertise significantly geographic initiatives, companies sheet, are revenue we our first and both of our including growth. of quarter from contributed We the current expansion which execute strong addressable the XXXX enhance ended expand benefited well the and quarter margin markets, acquisition our a that and markets.

things With the to detail Tom that, provide to first additional quarter financials. on I'll over turn

Thomas Barbato

Thanks, quarter X regarding earnings on for XXXX. on segment consolidated of by revenue Lee. first basis fiscal I'll the our posted on detail website, Slide our of which and the deck start a provides

both million $XX.X XX% prior was experienced segments consolidated versus First as year of demand. revenue consistent quarter up

growth Service acquisition. coming of the growth at Looking from and revenue it remainder X.X% the remained organically by at solid XX%, segment,

Turning continue strong XX% to business. $XX.X in rental of performance see grew million to the higher-margin distribution, as revenue we

Turning to Slide X.

was gross the expanded XX%. quarter points Our to basis of from XXX and margin million, consolidated XX% up our for profit prior year, first gross the $XX.X

driven service mentioned, our productivity. points basis expansion of levels The strong ability up margin very our by drive inherent we automation basis XXX performance. Lee points. service gross model service in and rental pleased of higher Distribution are the margin segment was of and As year-over-year increase demonstrates margin to further technician our XX.X%, with XXX gross leverage

down of year, adjusted share XX% our reduction $X.XX driven paid diluted from share secondary and our leveraging QX as income earnings We QX and year, for was per X. million share the the from from performance share earnings the acquisition-related interest of Slide debt well adjusted of year. in per the our last came report expense prior of Net Turning normalize strong per per of $X.XX up to at to up the by and $X.XX, as in diluted costs. per QX net diluted $X.X prior majority proceeds offering. earnings ongoing in QX was $X.XX, growth increased impact income share. upfront was

our per section of performance cash. this the the margin. share EBITDA adjusted found Flipping in adjusted to which supplemental We earnings it diluted we is is business performance non-GAAP of believe diluted to measure we share to reconciliation the be because A EBITDA, adjusted per best to can ability X, of generate our where our presentation. and Slide EBITDA use gauge earnings of and adjusted show operating

continue does expense income to we for As our as more metric transaction adjust onetime execute that accounting. even to our statement acquisition levels costs as this strategy, it becomes will well deal-related important highlight noncash of purchase hit from increased acquisition as

XXX compared Both to the EBITDA of same in adjusted expanded and mind, had was year. points. XX% quarter double-digit margin prior quarter million, last the EBITDA adjusted consolidated $XX.X from that basis EBITDA With segments growth up first year, in adjusted

found the operating to section presentation. this reconciliation adjusted As income in EBITDA can of net and a supplemental income of always, be

segment Moving cash Service and with QX $X.X expectations. be higher year $XX around facility. line improved million end, to assets, capabilities, and million $XX.X We centered to flow balance future a X from spend than $XXX,XXX available for year sheet. Slide quarter. our projects. total Slide expenditures X. our pool ratio technology Operating with of leverage continued last the growth were strong cash of from in had The to we capital prior At had was quarter X.Xx. credit highlights net million, rental

tools previously and after for announced, Becnel Rental million first fiscal cash. a $XX.X in million in we just company combination As million XX.X of the stock $XX year, end of paid the acquired

Lee. I'll Lastly, back our X. on we expect that, XX-Q file With it to to Form turn you, August

Lee Rudow

free low and delivered integration the our revenue confident for include organic Tom. this when the effective the expectations have solid value proposition the range very beyond, key XXXX, week portfolio and markets continue. in expect as represents a apart. of strengthened through channels. significant gross growth has extra communicated accretive industry-leading double-digit single-digit businesses time. we gross adjacent you, number addressable service successfully expanded our our in consistent We've in the high differentiator expect margin acquisitions always, business fiscal margin over XXXX, remainder year's expansion and flow. recent and are in throughout organic Transcat and Transcat also to markets. And Thank our Expectations we and we a of timely cash growth, we on long XXXX of core period Fiscal normalized expansion set service has of Throughout will set and and and

have both diverse pipeline ultimately robust increase the trajectory markets services will our that enable the a to and of opportunities expand We acquisition and and addressable core business.

to ultimate sustainable generating shareholders. for on course, the Of continue focus be our value will long-term

believe ability As headed execute we the plan. and is what about a and we look is our differentiated ahead, we strategic to defendable direction excited Transcat remain

questions. that, open for operator, can we with line And the

Operator

Palm the Capital [Operator Craig-Hallum Instructions] Group. comes from The first line with Greg of question

Greg Palm

a things the little to start I results wanted maybe segment-related dig into bit off. to

of kind to was full the growth your guide, accustomed organic we're the certainly, Services, light of year couple bit over a So on past what of years. number little

suggest a this to level can into accelerates it remainder digits, that obviously you if just the Was dig for single going bit? the high little to digits, So you're that of from year. low it double get timing? I

would a start. there to color little bit just more helpful So be

Lee Rudow

growth I'll talked demand. remains the business. wouldn't aren't We've that, Service fluctuations too going that demand expectations, term. terms our read of necessarily Sure, remains in reflective The strong. that. X.X% organic Greg. this particularly always I is This There's Lee. into deeply. of No, to long strong in fluctuations be about take

we our change the didn't to pipeline there, guidance that in and we expect for that we is demand the range still would be year. and So because the fiscal think

too we it's XX-day about no, we're look of the looked increments not So that think business at We've -- we time. not at really as much never way. something

no, And so not I'm concerned.

Greg Palm

out standpoint or maybe than a Yes. segment that a quarter? jumped positive from the for bit that little end least at expected, Any either within weaker markets

Lee Rudow

expectations. line -- the at industries We with regulated is serve. with pretty that and growth see everything pretty our much when the think the pipeline, business it's look you was that the we consistent generated, highly I in

you've a So aerospace got life with way, big defense same sciences. and in producing and

past, So with what that's think expect. consistent the we and that's I

Greg Palm

Yes.

growth and is contribution. acquisitions-related by bit certainly, a Can gears much willing how Okay. more at you in Good. us sense organic specifically, And was mix? ballpark to give that on then math, was little what's the for our in kind Are distribution? distribution. And driven I just growth overall By to you of us shifting this negative, number? happening give a point think reported rental terms of

Lee Rudow

guided have obviously, we speaking, a towards this, generally than ago. look and differently, So years we did bit at we little distribution

We've our business. acquisition. and We rental to have done the invested that strategy organically in grow through

You do on rental organic see also pretty been side, has impressive. the see you but acquired which revenue, growth,

like profits where up, are distribution are we we So in for are Margins reason. up. that

that We the distribution us, We core business going. and strategic we'll rentals. the That's change decrease is towards did over and to a for keep that going time like of mix that. may and expect increase percentage may

that and down we time We it's business channel, what about and tweak and investing that substituted higher spend used reseller to higher growth but a We we call have to rental number lot expect for something the of path. or thinking going its like business. we continue distribution in, low the it. way that in time, just margin, not margin to We're core over and down to supplemented be

Greg Palm

low-margin focused fair on that Is hey, more of walking say just it really any putting some resources maybe we're business that away business? on Or that it. it not from of is a, to you're purpose

So it may just time. longer doing the sort of

Lee Rudow

we're we not I example, business much let's business. certainly resale they And like important that not business. margin, walk pointed just lose connection. for towards latter. We incremental of from as don't high-margin going profitable. allocating away when We're the ever additional needs, our say, walk allocating to low terms from or channels customers that out, in but resources aren't a resources never have I away Yes, We're to think rental

same customers, we fact, my service the services, so always opinion, going crack in lose through in can and to In connection on that that between business, we the door we get business. that and don't rental anything, try and walk gain to

that in respect, has changed nothing Greg. -- that So

Operator

Northland with Next from of Ted question Jackson line Securities. the comes

Edward Jackson

So what's clear margins the and mean you mean, of about to proud you talked and the forward. to and and spot the in gross for terms I'm drive on bones automation the improvement. let's improvements release, be improvement after you talk something you out I using flesh lot maybe and just some in know a going programs and programs that. things put I you follow-up to of the projects jump think bright have it a driving over some productivity a with I continue should will Transcat in about that into Can meat are I services talked it's of maybe margin you are. press drive margin projects that and I that going future then of about to And regards because

Lee Rudow

because feels Tom can about sure are lot here, launched a and initiative, I want Automation We anything capture X right. years Lee. of of that and to big things and ones. is miss a is I'll to make at Yes. some important. take ago, say, X, highlight This don't in this stab try maybe play at least the there this, I'll I

inning". first say, I'd couple had second people we're "Well, in far asked how the first For you? are the along years, of inning,

in range. of now think as around We low plus I today, used in to We automation our we're XX% would the a detail percentage And in don't but lot digits. inning. terms I into of characterize get that, calibration. have that mid single it's of the fourth

once in pleased it's that is, kind what It's from you So in capitalize and that's that's right? leverage. or And arduous, place, an it. to it your but organic investment And it's growth, it automation doing. so has But that We're improve over can still steady long get lot operating we're get be want and step-function aside there's There's period over significant, difficult. margins. and And a this time, taken so And that's a it a it's programming. we're making and lot inflection always you initiative progress. of you it of of to faster runway of a dent there's the with than going point time. there done, margin. here increasing we're you as there, business, revenue a on

lot we've work. that's definitely So playing a a of And role. done

higher These things of better with because I their are also contribute, margin working times. have them the labs to their improve -- we made Officer, really efficient, really trying way and processes, onto a of in and dug and lab, all We on. build things all the the new have Operating to quicker, a organic are Chief lead some we've that gains growth we've all times. and into lead way they get our level satisfaction to turnaround you strong we're terms These customer think better bench, the make to turnaround bench, maybe... more Tom, off how products eventually through And

Thomas Barbato

add, The to want same get the people of, is done, lose benefit valuable. don't we automation benefit get, when dependency in to I the is resources talk another able right, and margins, that with we and right, to puts technicians and work we other on there's work extremely being asset are number as do it which our incremental less thing that, also the I more about would most because of productivity important additional right, see that just sight

I point well. make So as want to just that

Edward Jackson

need Like you kind you into your your terms has with think where program, wood, an with I of your for bit. it to maybe and great as Well, into you -- needs. a that labor in your means might maybe that's and would. mean have issue that why terms next to maybe go I segue of been answered good do and you so always that's But an if gotten to you labor update get points Tom, that that's in more technicians. because training get training know some in the and and my a mean to question. technicians continues big, it needs And of of programs there's ability kind labor, -- an you where Transcat, regards clearly own you develop Transcat your in it that you of you terms talent, grow own And your issue don't is that I could but choke already, see what going forward? it. through put that of your started

Lee Rudow

up always train in years. an labor we issue. University. That's be doing for Transcat that's and why been need business to Labor, issue. And when why a do, it, And our it technical have about this coming has we XX we if and it. are decided we'll be started It when been because you're where differentiator and I've have always we will Ted, an right, we own technicians. So we labor will

that's case. as Now the not easy not as I make sound. always it It's

can we're better try competition want. to than so the we we that that and -- compete jobs we and more the position win ourselves can win can we better But we

We still better So but kind no more But there question. going if can continuing. program lies always returns, that efficient, effective time. like training challenge, I and over I the see in time, you it, program to better and expect the get over a overcome relatively the I right? can also opportunity, this that of more and and get is new, you returns. So like

operator you to place as you when on of make do from it. where what kind you you that the have will those other things. mean, robots. longer And to operator. Tom to mentioned, more day, term. mean Now X see the labor resources, more kind But there's sure the you talk continuing. from need do, which there that I there be doing tech about, more takes ways, can We're are go is automation all allocate in University. too. We you you robotics, best I when Transcat we're I that's focused things of and the

Edward Jackson

that used get kind up on labs, then -- kind last is us mentioned doesn't And a on of of give over an what's just you of for that coming like, growth this just have to at question as like, I customer the kind you What revenue based on for going know, with lot, the CBLs many driver the kind But my update and topic come pipeline on terms you Okay. often. don't service looks quarters quite it's of can how a point. of a in years? it be

Lee Rudow

I would characterize steady. our client-based labs as

So and mid- to an the for the with number Different round we embedded a actually number still they sort a our labor have that have they we're shortages with customers' they and XXs of business of byproduct locations lab. in that it's upper technicians in labor ebbs as embedded need times, finding flows, usually their or it. need with of the when challenges and inability

we So transactional portfolio, look everything pipeline, you in CBL. have pipeline But medium, when got CBLs we've small, from our with of to core right across a and then core them. a number now, large, significant our strategic core

the So to not how stable tend steady service is They channels. it's accounts. on but think uptick, larger I that. But say either. describe declining would X It's the I not I that it's it's just of X be and

a state. kind it's of So in steady

Operator

& Martin of with line Co. Oppenheimer the from comes question Next Yang

Martin Yang

on numbers updated you the about as view ask for to market. U.S. wanted such updated have billion addressable $X.X calibration past, I services. you your your Lee, In

market as service an for the the Do think in Becnel's bigger have do How asset U.S.? updated services. you with as business, management decommissioning you addressable about Now us? your number rental well

Lee Rudow

markets, when core expand addressable we markets, to which to going terms pretty make addressable proximity adjacent of when is stay want business what always We in first, in general, we're calibration that close our let's our do. -- we we in Well, clear to services.

streams If there's we expand today, there's there's you sense regulation, recurring for saw Becnel. a where looking where that the demand, business with So to makes that where play, revenue we're always it Axiom. a get you with saw margin where

a of of NEXA, with around prop combination saw kind enhancers value you so calibration. And

to been around opportunities that. house I think stay next next acquisition house expand Martin, and We've there always strategy. We're addressable to the disciplined. markets door disciplined our sometimes the maybe door to going our right are to

It's board And not something and talk we from that shareholders the about. to that's It's going us to expect change. our required that.

are for because strategy, on for These markets. more acquisition are the adding to They be margin markets of we that we to that's added the look door are continue our I you. things look it. addressable that all -- them. expand to when to our attributes expertise. house So into expect tap the we certainly, expansion, we'll of And there likely approach the are part next way clarity geographic focus enhancers, hope that some some we

Martin Yang

about next margins. question is Got it. And my gross

when different convergence to So are? X at almost The about And how look of the they you you X parity think the longer margins do term. segments, between now. are segments difference at in the in medium gross margins

Lee Rudow

mid talk help margins to have me time. good towards with in in So really We being don't for quarter-to-quarter. say, upper I to it get to service the continue But guided about Tom, to improvement Tom lines, sight as range the margins pretty over right? out and would one. that now, like we've this XXs gross

there's one. have flat we a we you then, driven that. the we inherent And lot that like we margin around know over it, may and where by to go have In quarters and some course, initiatives see we distribution, of where of rentals. have basis XXXX, the points. And and XX on talk are back we that outstanding But we the that runway business. -- leverage And is about. see that we didn't left because results increase can be somewhere may this there's like time, some There you continuing

a distribution low was business. And XXs, XX%

And it certain surprises drastically a even us the changed that's degree. to for So better.

properly, really creativity, made seen have that. X business. years significant through we have leaders ago, the out of getting we've resources go not you I back If allocating that bet would would between X something parity through or margins, here, But right X being the on the

and which scalability, we connected service. to And has it like, it's

we So also higher to will over rentals, percentage I distribution, within think margin that of time which expected the as increase do. it becomes

So Tom...

Thomas Barbato

I year's acquisition, No, kind we'll agree on so go from right? lift just expect acquisition go-forward that mind of to got I with in And away. August last Axiom I kind of in similar the lap But some August, that that a will would that margins getting we we're that. would keep Axiom will basis, going in would fashion X track a forward. of the

Operator

Next question comes from the line of Ted Jackson with Northland Securities.

Edward Jackson

I last follow-up the of by revenue look question just to stronger expect questioning. trends same be this particularly as When first quarter. we historic a Do business have that the the driven the the than quarter year? the at that line sees relates you it seasonality to Transcat of services the of second and margin, typically

Lee Rudow

or? want that you Do to one take

Thomas Barbato

not significantly -- We're anything Ted, from Yes. standpoint. in expecting, our different really a seasonality

So safe assume I think it that. to would be

Operator

turn I time. are Ladies now closing this like Lee at Instructions] questions to comments. for further over floor no and gentlemen, there would the Rudow [Operator to

Lee Rudow

Okay. Transcat. Well, joining We for your appreciate your interest in all certainly thank you today. the call interest, continued us on

attending and XXth going August Oppenheimer XX. Internet Conference, Technology We be will to be it's on the Communications

to out. Otherwise, reach So to feel time. really talk check then or with in Tom to us can at me sign and any free you up

to forward results. And from you our second care. you. we talking again quarter after again thank everybody look will for participating. to We hear Take So

Operator

teleconference. today's concludes you. Thank This

lines your your for you this participation. at Thank time. disconnect may You

Transcat (TRNS) 30 Jul 242025 Q1 Earnings call transcript