Transcat Reports Strong Fiscal Second Quarter 2026 Financial Results with Double-Digit Revenue & Gross Profit Growth

Q2’26 Adjusted EBITDA* Increased 37% to $12.1 Million Driven by 21% Revenue Growth Q2’26 Service Revenue Increased 20% to $52.8 Million Q2’26 Distribution Revenue Grew 24% to $29.4 Million on Increased Demand for Rentals Q2’26 Distribution Gross Margin Expanded 530 Basis Points to 33.2% Management to Host Conference Call Today at 4:30 p.m. Eastern Time ROCHESTER, N.Y.--(BUSINESS WIRE)--Transcat, Inc. (Nasdaq: TRNS) (“Transcat” or the “Company”), a leader in test measurement, control and calibration, has reported its financial and operational results for its fiscal second quarter ended September 27, 2025 (the “second quarter”) of fiscal year 2026. Management Commentary "Transcat had another strong quarter of revenue and Adjusted EBITDA* performance driven by double-digit service revenue growth and continued high demand in our rentals channel,” commented Lee D. Rudow, President and CEO. “Distribution revenue grew 24% in the quarter with gross margin expansion of 530bps versus the prior year driven by the strategic mix increase of higher-margin rentals. Focused execution of our strategic plan, including effective acquisition integration, enabled 37% growth of Adjusted EBITDA*. Healthy first quarter, and now, second quarter results demonstrate the strength of our diversified portfolio to deliver strong financial performance despite economic headwinds." "We continue to strengthen the company for the future and improve our long-term competitive position. We are extremely pleased with the initial results of our most recent acquisition, Essco Calibration. We believe Essco is a perfect fit for the calibration service portfolio and demonstrates our ability to attract and acquire highly sought-after calibration companies that expand our capabilities, geographic reach, and contribute to long-term Service organic growth. We expect continued strong results from Essco, along with Martin Calibration (acquired Q3 Fiscal 2025), leveraging sales synergies with Transcat." "Looking forward, uncertainty in the macro environment remains a challenge, but we are optimistic given the recent positive developments with the U.S. and trading partners around the globe. Our diversified portfolio of products and services combined with the ability to execute against strategic priorities will differentiate Transcat in fiscal 2026 and beyond. We expect continued service revenue growth, benefiting from a larger presence in the New England and Midwest markets, and improving service organic revenue. We expect a return to high single-digit service organic revenue growth in the second half of Fiscal 2026, barring any increased economic uncertainty. We believe the combination of our talented team, portfolio differentiation, and strong financial profile positions us well to drive sustainable, long-term shareholder value." * See Note 1 on page 5 for a description of the non-GAAP financial measure and page 10 for the reconciliation table. Second Quarter Fiscal 2026 Review (Results are compared with the second quarter of the fiscal year ended March 29, 2025 ( “ fiscal 2025 ” )) ($ in thousands) Change FY26 Q2 FY25 Q2 $ % Service Revenue $ 52,836 $ 44,083 $ 8,753 19.9 % Distribution Revenue 29,436 23,743 5,693 24.0 % Revenue $ 82,272 $ 67,826 $ 14,446 21.3 % Gross Profit $ 26,762 $ 21,206 $ 5,556 26.2 % Gross Margin 32.5 % 31.3 % Operating Income $ 3,505 $ 3,735 $ (230 ) (6.2 )% Operating Margin 4.3 % 5.5 % Net Income $ 1,269 $ 3,286 $ (2,017 ) (61.4 )% Net Margin 1.5 % 4.8 % Adjusted Net Income* $ 4,155 $ 4,827 $ (672 ) (13.9 )% Adjusted Net Margin* 5.1 % 7.1 % Adjusted EBITDA* $ 12,115 $ 8,861 $ 3,254 36.7 % Adjusted EBITDA* Margin 14.7 % 13.1 % Diluted EPS $ 0.14 $ 0.35 $ (0.21 ) (60.0 )% Adjusted Diluted EPS* $ 0.44 $ 0.52 $ (0.08 ) (15.4 )% Consolidated revenue was $82.3 million, an increase of $14.4 million or 21.3%, driven by growth in both service and distribution segments. Consolidated gross profit was $26.8 million, an increase of $5.6 million, or 26.2%, while gross margin increased 120bps when compared to the prior year period. Operating expenses were $23.3 million, an increase of $5.8 million, or 33.1%, driven by incremental expenses from acquired businesses, increased stock-based compensation expense, increased intangibles' amortization expense, and higher sales-based incentives. Net Income was $1.3 million, and Adjusted EBITDA* was $12.1 million, which represented an increase of $3.3 million or 36.7%, driven by strong revenue growth. Earnings per diluted share were $0.14 compared to $0.35 last year. Adjusted Diluted Earnings Per Share* were $0.44 versus $0.52 last year. *See Note 1 on page 5 for a description of these non-GAAP financial measures and pages 10, 11 and 12 for the reconciliation tables. Service segment second quarter results R epresents the accredited calibration, repair, inspection and laboratory instrument services business (64.2% of total revenue for the second quarter of fiscal 2026). ($ in thousand) Change FY26 Q2 FY25 Q2 $ % Service Segment Revenue $ 52,836 $ 44,083 $ 8,753 19.9 % Gross Profit $ 16,993 $ 14,591 $ 2,402 16.5 % Gross Margin 32.2 % 33.1 % Operating Income $ 920 $ 3,704 $ (2,784 ) (75.2 )% Operating Margin 1.7 % 8.4 % Adjusted Operating Income* $ 7,124 $ 6,624 $ 500 7.5 % Adjusted Operating Margin* 13.5 % 15.0 % *See Note 1 on page 5 for a description of this non-GAAP financial measure and pages 10 and 11 for the Adjusted Operating Income Reconciliation tables. To distinguish between the two non-GAAP measures, the segment non-GAAP results are labeled "Adjusted Operating Income". The calculation did not change. Service segment revenue was $52.8 million, an increase of $8.8 million or 19.9%, and included $9.8 million of incremental revenue from acquisitions. The segment gross margin was 32.2%, a decrease of 90bps from the prior year. Distribution segment second quarter results Represents the sale and rental of new and used professional grade handheld test, measurement and control instrumentation (35.7% of total revenue for the second quarter of fiscal 2026). ($ in thousands) Change FY26 Q2 FY25 Q2 $ % Distribution Segment Revenue $ 29,436 $ 23,743 $ 5,693 24.0 % Gross Profit $ 9,769 $ 6,615 $ 3,154 47.7 % Gross Margin 33.2 % 27.9 % Operating Income $ 2,585 $ 31 $ 2,554 N/M Operating Margin 8.8 % 0.1 % Adjusted Operating Income* $ 4,990 $ 2,237 $ 2,753 123.1 % Adjusted Operating Margin* 17.0 % 9.4 % *See Note 1 on page 5 for a description of this non-GAAP financial measure and pages 10 and 11 for the Adjusted Operating Income Reconciliation tables. To distinguish between the two non-GAAP measures, the segment non-GAAP results are labeled "Adjusted Operating Income". The calculation did not change. Distribution segment revenue was $29.4 million, which represented an increase of $5.7 million or 24.0%, driven by growth in rentals and products. Distribution segment gross margin was 33.2%, an increase of 530 bps due to robust performance in higher-margin rentals. Balance Sheet and Cash Flow Overview On September 27, 2025, the Company had $5.1 million in cash and cash equivalents on hand and $38.1 million available for borrowing, subject to covenant restrictions, under its secured revolving credit facility. Total debt increased during the quarter, resulting primarily from the Essco acquisition, and was $111.9 million as of September 27, 2025, versus $32.7 million on March 29, 2025. On July 29, 2025, Transcat announced a new 5-Year $150 million syndicated secured credit facility with M&T Bank and included additional lenders, Wells Fargo Bank, N.A. and Bank of America, replacing its existing $80 million credit facility with M&T and payoff of the term debt. The Company’s leverage ratio, as defined in the credit agreement, was 2.26 on September 27, 2025, compared with 0.78 on March 29, 2025. Tom Barbato, Transcat’s Chief Financial Officer, added, “We were pleased to close the Essco Calibration deal in the second quarter. Essco was a coveted calibration company that is highly synergistic and fulfills all our strategic acquisition drivers by expanding geographic reach, increasing capabilities, and leveraging existing infrastructure. Second quarter Adjusted EBITDA* grew 37% with 160bps margin expansion as both segments experienced double-digit revenue growth. The expanding Adjusted EBITDA* margin will drive a lower leverage ratio in subsequent quarters.” * See Note 1 on page 5 for a description of the non-GAAP financial measure and page 10 for the reconciliation table. Fiscal Second Quarter 2026 Results Webcast and Conference Call Transcat will host a conference call and webcast on Monday, November 3, 2025, at 4:30 p.m. ET. Management will review the financial and operating results for the second 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 (203) 518-9708. Alternatively, the webcast can be monitored at www.transcat.com/investor-relations . Monday, November 3, 2025 4:30 p.m. Eastern Time Dial-in – Toll-Free US / Canada: (800) 225-9448 Dial-in – Toll / International: (203) 518-9708 Conference ID: TRANSCAT (THIS CONFERENCE ID WILL BE REQUIRED FOR ENTRY) Webcast and accompanying slide presentation: https://viavid.webcasts.com/starthere.jsp?ei=1738343&tp_key=f23bde3eca A telephonic replay will be available from 8:30 p.m. ET on the day of the conference call through Monday, November 10, 2025. To listen to the archived call, dial (844) 512-2921 from the US or Canada, or (412) 317-6671 from international locations, and enter conference ID number 11160191 or access the webcast replay at https://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 and net margin, U.S. generally accepted accounting principle (“GAAP”) measures, we present Adjusted Net Income (net income plus acquisition related amortization expense, acquisition related transaction expenses, acquisition related stock-based compensation, and acquisition amortization of backlog) and Adjusted net margin (Adjusted Net Income divided by revenue), which are non-GAAP measures. The Company’s management believes Adjusted net income and Adjusted net margin are important measures of operating performance because the measures provide 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. As such, the Company uses Adjusted Net Income and Adjusted net margin as measures of performance when evaluating its business segments and as a basis for planning and forecasting. In addition to reporting net income and net margin, GAAP measures, we present Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, non-cash stock compensation expense, and acquisition related transaction expenses) and Adjusted EBITDA margin (Adjusted EBITDA divided by revenue), which are non-GAAP measures. The Company’s management believes Adjusted EBITDA and Adjusted EBITDA margin are important measures of operating performance because the measures allow 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 and Adjusted EBITDA margin as measures of performance and as a basis for planning and forecasting. In addition to reporting operating income, a GAAP measure, we present Adjusted Operating Income (operating income plus depreciation and amortization, non-cash stock compensation expense, acquisition related transaction expenses and contingent consideration adjustments), which is a non-GAAP measure. The Company’s management believes Adjusted Operating Income 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 excluding items that we do not believe are indicative of our core operating performance. As such, the Company uses Adjusted Operating Income as a measure of performance when evaluating its business segments. 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 Net Income, Adjusted Net Income margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Operating Income, and Adjusted Diluted Earnings Per Share are not measures of financial performance under GAAP and are not calculated through the application of GAAP. As such, the measures should not be considered as a substitute or alternative for the GAAP measures of Net Income, Operating Income and Diluted Earnings Per Share and, therefore, should not be used in isolation of, but in conjunction with, the related GAAP measures. Adjusted Net Income, Adjusted Net Income margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Operating Income, and Adjusted Diluted Earnings Per Share, as presented, may produce results that vary from the related GAAP measure and may not be comparable to similarly defined non-GAAP measures used by other companies. See pages 10-12 for the reconciliation tables. 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 Calibration Service Centers strategically located across the United States, Puerto Rico, Canada, and Ireland. In addition, Transcat operates calibration labs in imbedded customer-site 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, Cost, Control and Optimizations services, 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 “anticipates,” “believes,” “estimates,” “expects,” “focus,” "look forward," “may,” “plan,” “outlook,” “potential,” “strategy,” “will,” 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, 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) Second Quarter Ended Six Months Ended September 27, September 28, September 27, September 28, 2025 2024 2025 2024 Service Revenue $ 52,836 $ 44,083 $ 101,980 $ 87,861 Distribution Revenue 29,436 23,743 56,716 46,672 Total Revenue 82,272 67,826 158,696 134,533 Cost of Service Revenue 35,843 29,492 68,778 58,387 Cost of Distribution Revenue 19,667 17,128 37,335 32,285 Total Cost of Revenue 55,510 46,620 106,113 90,672 Gross Profit 26,762 21,206 52,583 43,861 Selling, Marketing and Warehouse Expenses 10,627 8,181 20,142 15,982 General and Administrative Expenses 12,630 9,290 23,598 19,045 Total Operating Expenses 23,257 17,471 43,740 35,027 Operating Income 3,505 3,735 8,843 8,834 Interest Expense 1,269 76 1,720 128 Interest Income (5 ) (286 ) (16 ) (598 ) Other Expense 212 232 545 363 Total Interest and Other Expense/(Income), net 1,476 22 2,249 (107 ) Income Before Provision For Income Taxes 2,029 3,713 6,594 8,941 Provision for Income Taxes 760 427 2,064 1,247 Net Income $ 1,269 $ 3,286 $ 4,530 $ 7,694 Basic Earnings Per Share $ 0.14 $ 0.36 $ 0.49 $ 0.84 Basic Average Shares Outstanding 9,321 9,160 9,319 9,107 Diluted Earnings Per Share $ 0.14 $ 0.36 $ 0.48 $ 0.84 Diluted Average Shares Outstanding 9,399 9,282 9,392 9,222 TRANSCAT, INC. CONSOLIDATED BALANCE SHEETS (In Thousands, Except Share and Per Share Amounts) (Unaudited) (Audited) September 27, March 29, 2025 2025 ASSETS Current Assets: Cash and Cash Equivalents $ 5,082 $ 1,517 Accounts Receivable, less allowance for credit losses of $789 and $659 as of September 27, 2025 and March 29, 2025, respectively 62,573 55,941 Other Receivables 638 373 Inventory 13,065 14,483 Prepaid Expenses and Other Current Assets 4,387 5,695 Total Current Assets 85,745 78,009 Property and Equipment, net 58,127 50,024 Goodwill 218,362 176,928 Intangible Assets, net 85,172 54,777 Right to Use Assets 35,495 24,345 Other Assets 1,986 1,159 Total Assets $ 484,887 $ 385,242 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts Payable $ 15,374 16,755 Accrued Compensation and Other Current Liabilities 19,931 15,466 Current Portion of Long-Term Debt - 1,816 Total Current Liabilities 35,305 34,037 Long-Term Debt 111,885 30,892 Deferred Tax Liabilities, net 9,297 9,286 Lease Liabilities 31,898 21,395 Other Liabilities 1,085 2,752 Total Liabilities 189,470 98,362 Shareholders' Equity: Common Stock, par value $0.50 per share, 30,000,000 shares authorized; 9,327,667 and 9,315,840 shares issued and outstanding as of September 27, 2025 and March 29, 2025, respectively 4,664 4,658 Capital in Excess of Par Value 194,534 191,167 Accumulated Other Comprehensive Loss (747 ) (1,469 ) Retained Earnings 96,966 92,524 Total Shareholders' Equity 295,417 286,880 Total Liabilities and Shareholders' Equity $ 484,887 $ 385,242 TRANSCAT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited) Six Months Ended September 27, September 28, 2025 2024 Cash Flows from Operating Activities: Net Income $ 4,530 $ 7,694 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Net Loss on Disposal of Property and Equipment 77 43 Noncash Lease Expense 2,034 1,373 Deferred Income Taxes 11 6 Depreciation and Amortization 12,092 8,513 Amortization of Deferred Financing Costs 26 - Provision for Accounts Receivable and Inventory Reserves 258 108 Stock-Based Compensation Expense 2,970 1,623 Changes in Assets and Liabilities, net of acquisitions: Accounts Receivable and Other Receivables (3,550 ) 1,746 Inventory 1,798 2,597 Prepaid Expenses and Other Current Assets 1,039 (1,918 ) Accounts Payable (1,573 ) 1,525 Accrued Compensation and Other Current Liabilities (3,757 ) (4,621 ) Income Taxes Payable 549 (2,930 ) Net Cash Provided by Operating Activities 16,504 15,759 Cash Flows from Investing Activities: Purchase of Property and Equipment (9,030 ) (7,633 ) Business Acquisitions, net of cash acquired (82,526 ) (15,858 ) Sales of Marketable Securities - 15,533 Net Cash Used in Investing Activities (91,556 ) (7,958 ) Cash Flows from Financing Activities: Proceeds From Revolving Credit Facility 181,078 - Repayment of Revolving Credit Facility (100,084 ) - Repayments of Term Loan (1,816 ) (1,158 ) Payments of Deferred Financing Costs (366 ) - Issuance of Common Stock, net of direct costs 491 838 Repurchase of Common Stock (110 ) (3,026 ) Net Cash Provided by/(Used in) Financing Activities 79,194 (3,346 ) Effect of Exchange Rate Changes on Cash and Cash Equivalents (576 ) (286 ) Net Increase in Cash and Cash Equivalents 3,565 4,169 Cash and Cash Equivalents at Beginning of Period 1,517 19,646 Cash and Cash Equivalents at End of Period $ 5,082 $ 23,815 Contacts Investor Relations Chris Tyson Executive Vice President MZ Group - MZ North America Phone: (949) 491-8235 TRNS@mzgroup.us www.mzgroup.us Read full story here