Transcat (TRNS) Q3 2026 earnings summary

Executive summary

• Fiscal Q3 2026 revenue rose 26% year-over-year to $83.9 million, with both service and distribution segments achieving double-digit growth, driven by strong demand and acquisitions.

• Service organic revenue growth returned to 7%–7.3%, contributing to overall service segment growth of 29%.

• Gross margin expanded 60 basis points to 30.1%, and adjusted EBITDA increased 27% to $10.1 million.

• Net loss was $1.1 million, primarily due to higher amortization, interest expense, stock-based compensation, and CEO transition costs.

• CEO succession plan is nearing completion, with related one-time charges and additional search expenses expected in Q4.

Financial highlights

• Consolidated gross profit rose 28% to $25.3 million, with gross margin at 30.1%.

• Adjusted EBITDA grew 27% to $10.1 million, with margin expansion of 10 basis points.

• Adjusted diluted EPS was $0.26, normalizing for acquisition and non-recurring costs.

• Operating cash flow and free cash flow for the nine months ended December 2025 were $16.9–$17.9 million.

• Total debt rose to $99.9 million, with leverage ratio at 2.00 and $50.1 million available under the credit facility.

Outlook and guidance

• Management reaffirms high single-digit organic service revenue growth guidance for Q4 and the remainder of fiscal 2026.

• Fiscal 2026 income tax rate expected to be 30%–32%.

• Margin normalization expected as onboarding costs subside, with continued focus on organic growth and acquisitions.

• Optimism for long-term shareholder value supported by recent acquisitions and expanded geographic footprint.