Transcat (TRNS) investor relations material

Executive summary

• Q1 FY26 revenue rose 15% year-over-year to $76.4M, with double-digit growth in both service and distribution segments, driven by robust demand and recent acquisitions including Essco and Martin Calibration.

• Adjusted EBITDA increased 15% to $11.8M, while net income declined 26% to $3.3M due to higher interest expense and taxes.

• Completed the $84M acquisition of Essco Calibration Laboratory, the largest in company history, expanding presence in New England and adding $22M in annual revenue.

• Integration of Martin Calibration is ahead of schedule, contributing to Midwest growth and sales synergies.

• Closed a new 5-year $150M syndicated secured credit facility, nearly doubling available capital and supporting future acquisitions.

Financial highlights

• Consolidated revenue reached $76.4M, up 15% year-over-year, with service revenue up 12% to $49.1M and distribution revenue up 19% to $27.3M.

• Gross profit increased 14% to $25.8M; distribution gross margin hit a record 35.2%, up 130 bps, while service gross margin declined 100 bps to 33.0%.

• Adjusted EBITDA was $11.8M, with a margin of 15.4%; operating income grew 4.7% to $5.3M, but operating margin declined to 7.0%.

• Net income for the quarter was $3.3M, down from $4.4M, with diluted EPS at $0.35 and adjusted EPS at $0.59.

• Operating cash flow was lower year-over-year due to working capital timing; operating free cash flow was negative $1.0M.

Outlook and guidance

• Management expects progressively stronger performance through FY26, with high single-digit organic service revenue growth in the second half, barring further economic deterioration.

• Distribution margins are anticipated to benefit from continued rental growth.

• Fiscal 2026 income tax rate projected between 27% and 29%.

• Focus remains on automation, productivity, and leveraging the operating model for margin expansion.

• Acquisition pipeline remains strong, with continued focus on integration and market expansion.