Business Wire | Nov 2, 2021 04:15PM EDT

Transcat Reports Second Quarter Adjusted EBITDA Increase of 35.5% to $7.1 Million on Strong Revenue Growth and Gross Margin Expansion

Nov. 02, 2021

ROCHESTER, N.Y.--(BUSINESS WIRE)--Nov. 02, 2021--Transcat, Inc. (Nasdaq: TRNS) ("Transcat" or the "Company"), a leading provider of accredited calibration, repair, inspection and laboratory instrument services and value-added distributor of professional grade handheld test, measurement and control instrumentation, today reported financial results for its second quarter ended September 25, 2021 (the "second quarter") of fiscal year 2022, which ends March 26, 2022 ("fiscal 2022"). Results include the previously reported acquisitions of BioTek Services, Inc. ("BioTek") effective December 16, 2020, Upstate Metrology ("Upstate") effective April 29, 2021 and Cal OpEx Limited (d/b/a NEXA Enterprise Asset Management), ("NEXA") effective August 31, 2021.

"Our excellent second quarter results were driven by broad-based revenue strength and solid operational execution across both of our operating segments." commented Lee D. Rudow, President and CEO. "Our Service segment revenue grew 20.3% and gross margin increased 70 basis points to a second quarter record of 32.9%. We reported 14.0% organic revenue growth as demand in our highly regulated end markets, including life sciences, remained strong. We are pleased with the continued expansion of our gross margin, which was largely driven by operating leverage on our fixed costs from organic growth."

"Our Distribution segment revenue grew 22.2% on improved demand and an easier comparison against a prior-year period that was significantly impacted by the COVID-19 pandemic. Importantly, this segment has fully recovered from last year's lows and is now exceeding pre-pandemic levels as revenue was up double-digits when compared to the second quarter of fiscal year 2020. Overall, our Service segment performance drove second quarter consolidated adjusted EBITDA of $7.1 million, an increase of $1.9 million or 35.5% from the prior year."

Mr. Rudow added, "We are excited with the early progress made on our recent acquisition of NEXA Enterprise Asset Management. NEXA expands our reach into the attractive market for asset management services and its unique capabilities around managing cost, efficiency and the reliability components of life science companies' instrumentation programs is a natural complement to our core calibration offerings. We are confident this enhances our overall value proposition to current and future customers and the NEXA and Transcat teams have already worked together to identify several synergistic growth opportunities."

Second Quarter Fiscal 2022 Review

(Results are compared with the second quarter of the fiscal year ended March27, 2021 ("fiscal 2021"))

($ in thousands) Change

FY22 Q2 FY21 Q2 $'s %

Service Revenue $ 29,544 $ 24,554 $ 4,990 20.3%

Distribution Sales 20,843 17,053 3,790 22.2%

Revenue $ 50,387 $ 41,607 $ 8,780 21.1%

Gross Profit $ 14,611 $ 11,494 $ 3,117 27.1%

Gross Margin 29.0% 27.6%



Operating Income $ 3,578 $ 3,078 $ 500 16.2%

Operating Margin 7.1% 7.4%



Net Income $ 3,015 $ 2,024 $ 991 49.0%

Net Margin 6.0% 4.9%



Adjusted EBITDA* $ 7,079 $ 5,223 $ 1,856 35.5%

Adjusted EBITDA* Margin 14.0% 12.6%

*See Note 1 on page 4 for a description of this non-GAAP financial measure and page 10 for the Adjusted EBITDA Reconciliation table.

Consolidated revenue was $50.4 million, an increase of 21.1%. Consolidated gross profit was $14.6 million, an increase of $3.1 million, or 27.1%, and gross margin expanded 140 basis points to 29.0% due to strong operational performance in both the Service and Distribution segments. Operating expenses increased $2.6 million, or 31.1%, driven by incremental expenses from acquired businesses, investments in technology and $0.8 million in one-time transaction expenses related to the NEXA acquisition that closed within the quarter. Adjusted EBITDA was $7.1 million and increased by 35.5%. Net income per diluted share increased to $0.40 from $0.27.

Service segment delivers strong second quarter results



Represents the accredited calibration, repair, inspection and laboratoryinstrument services business



(59% of total revenue for the second quarter of fiscal 2022).

($ in thousands) Change

FY22 Q2 FY21 Q2 $'s %

Service Segment Revenue $ 29,544 $ 24,554 $ 4,990 20.3%

Gross Profit $ 9,712 $ 7,900 $ 1,812 22.9%

Gross Margin 32.9% 32.2%



Operating Income $ 2,647 $ 2,977 $ (330) (11.1%)

Operating Margin 9.0% 12.1%



Adjusted EBITDA* $ 5,460 $ 4,475 $ 985 22.0%

Adjusted EBITDA* Margin 18.5% 18.2%

* See Note 1 on page 4 for a description of this non-GAAP financial measure and page 10 for the Adjusted EBITDA Reconciliation table.

Service segment revenue increased 20.3% to $29.5 million and included $1.6 million of incremental revenue from acquisitions. Organic revenue growth was 14.0% and was driven by improvement in end market conditions, continued market share gains and an easier comparison over the prior-year quarter, which was impacted by the COVID-19 pandemic.

The segment gross margin increased by 70 basis points due continued strong technician productivity and operating leverage on fixed costs.

Distribution segment revenue and margins showed strong increases

Represents the sale and rental of new and used professional grade handheldtest, measurement and control instrumentation (41% of total revenue for thesecond quarter of fiscal 2022).

($ in thousands) Change

FY22 Q2 FY21 Q2 $'s %

Distribution Segment Sales $ 20,843 $ 17,053 $ 3,790 22.2%

Gross Profit $ 4,899 $ 3,594 $ 1,305 36.3%

Gross Margin 23.5% 21.1%



Operating Income $ 931 $ 101 $ 830 821.8%

Operating Margin 4.5% 0.6%



Adjusted EBITDA* $ 1,619 $ 748 $ 871 116.4%

Adjusted EBITDA* Margin 7.8% 4.4%

* See Note 1 on page 4 for a description of this non-GAAP financial measure and page 10 for the Adjusted EBITDA Reconciliation table.

Distribution sales increased 22.2% on improved market conditions and an easier comparison to the prior year period, which was impacted by the COVID-19 pandemic. Distribution segment gross margin increased 240 basis points on a favorable mix of products sold.

Six Month Review(Results are compared with the first six months of fiscal 2021)

Total revenue was $98.2 million, an increase of 21.9%. Consolidated gross profit was up $7.2 million, or 34.6%, and gross margin expanded to 28.7% or 270 basis points. Consolidated operating expenses increased $4.0 million, or 23.7%, driven by incremental expenses from acquired businesses, investments in technology and $0.8 million in one-time transaction expenses related to the NEXA acquisition that closed in the second quarter. As a result, consolidated operating income was $7.3 million compared with $4.0 million in last fiscal year's period.

Net income was $6.7 million, or $0.88 per diluted share, compared with $2.8 million, or $0.38 per diluted share. Adjusted EBITDA was $13.2 million, an increase of 51.4%. See Note 1 on page 4 for a description of this non-GAAP financial measure and page 10 for the Adjusted EBITDA Reconciliation table.

Balance Sheet Highlights

At September 25, 2021, the Company had $46.6 million available for borrowing under its secured revolving credit facility. Total debt of $43.1 million was up $23.5 million from fiscal 2021 year-end. The Company's leverage ratio, as defined in the credit agreement, was 1.54 at September 25, 2021, compared with 0.94 at March 27, 2021.

Outlook

Mr. Rudow concluded, "The second quarter results were excellent and we are appreciative of the hard work and solid execution from our teams in both our Service and Distribution segments. We have a strong balance sheet, sustainable Service segment gross margins and an active M&A pipeline. We are confident that the strength of our unique and enhanced value proposition and our new customer pipeline positions us well for continued strong organic growth.

"For the third quarter of fiscal 2022, we expect Service total revenue growth to be similar to what we achieved in the second quarter, with roughly half of the growth to come organically and the other half coming from acquisition. We expect Service gross margin to expand over the prior year third quarter, similar to the level of year-over-year expansion we just achieved in the second quarter. Distribution revenue is expected to grow in the low teens in the third quarter on improved order trends and a prior-year comparison that includes lower levels of demand due to the COVID-19 pandemic."

Transcat revised its fiscal year 2022 income tax rate to a range between 14% and 15% from the previous estimated range of 16% to 18%. This estimate includes Federal, various state, Canadian and Irish income taxes and reflects the discrete tax benefit associated with share-based payment and stock option activity.

Webcast and Conference Call

Transcat will host a conference call and webcast on Wednesday, November 3, 2021 at 11:00 a.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 (201) 689-8471. Alternatively, the webcast can be monitored at www.transcat.com/investor-relations.

A telephonic replay will be available from 2:00 p.m. ET on the day of the call through Wednesday, November 10, 2021. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13724485, access the webcast replay at 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, a U.S. generally accepted accounting principle ("GAAP") measure, we present Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, non-cash stock compensation expense, restructuring expense, non-cash loss on sale of building and acquisition related transaction expenses), which is a non-GAAP measure. The Company's management believes Adjusted EBITDA 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 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 as a measure of performance when evaluating its business segments and as a basis for planning and forecasting. Adjusted EBITDA is not a measure of financial performance under GAAP and is not calculated through the application of GAAP. As such, it should not be considered as a substitute for the GAAP measure of net income and, therefore, should not be used in isolation of, rather in conjunction with, the GAAP measure. Adjusted EBITDA, as presented, may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies. See the attached Adjusted EBITDA Reconciliation table below.

ABOUT TRANSCAT

Transcat, Inc. is a leading provider of accredited calibration, repair, inspection and laboratory instrument 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 22 Calibration Service Centers strategically located across the United States, Puerto Rico, Canada and Ireland, and services at 20 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 the complementary nature of its two operating segments, its comprehensive service capabilities, strong brand, enhanced e-commerce capabilities 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 are identified by words such as "expects," "estimates," "projects," "anticipates," "believes," "could," "plans," "aims" 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, the Company's response to the coronavirus ("COVID-19") pandemic, the commercialization of software projects, 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 September September September 25, 26, 25, 26,

2021 2020 2021 2020

Service Revenue $ 29,544 $ 24,554 $ 57,101 $ 47,521

Distribution Sales 20,843 17,053 41,076 32,990

Total Revenue 50,387 41,607 98,177 80,511

Cost of Service Revenue 19,832 16,654 38,637 33,552

Cost of Distribution Sales 15,944 13,459 31,409 26,056

Total Cost of Revenue 35,776 30,113 70,046 59,608

Gross Profit 14,611 11,494 28,131 20,903

Selling, Marketing and 4,974 4,291 9,971 8,365Warehouse Expenses

General and Administrative 6,059 4,125 10,893 8,496Expenses

Total Operating Expenses 11,033 8,416 20,864 16,861

Operating Income 3,578 3,078 7,267 4,042

Interest and Other Expense, net 250 317 445 560

Income Before Income Taxes 3,328 2,761 6,822 3,482

Provision for Income Taxes 313 737 119 660

Net Income $ 3,015 $ 2,024 $ 6,703 $ 2,822

Basic Earnings Per Share $ 0.40 $ 0.27 $ 0.90 $ 0.38

Average Shares Outstanding 7,482 7,417 7,473 7,405

Diluted Earnings Per Share $ 0.40 $ 0.27 $ 0.88 $ 0.38

Average Shares Outstanding 7,595 7,549 7,578 7,525

TRANSCAT, INC.

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share and Per Share Amounts)

(Unaudited)

(Audited)

September 25,

March 27,

2021

2021

ASSETS

Current Assets:

Cash$

2,551

$

560

Accounts Receivable, less allowance for doubtful accounts of $698and $526 as of September 25, 2021 and March 27, 2021, respectively36,464

33,950

Other Receivables448

428

Inventory, net10,205

11,636

Prepaid Expenses and Other Current Assets4,105

2,354

Total Current Assets53,773

48,928

Property and Equipment, net

23,034

22,203

Goodwill

59,441

43,272

Intangible Assets, net

12,753

7,513

Right To Use Asset, net

8,393

9,392

Other Assets

919

808

Total Assets$

158,313

$

132,116

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

Accounts Payable$

10,983

$

12,276

Accrued Compensation and Other Liabilities8,455

10,417

Income Taxes Payable-

382

Current Portion of Long-Term Debt2,134

2,067

Total Current Liabilities21,572

25,142

Long-Term Debt

40,917

17,494

Deferred Tax Liabilities

4,914

3,201

Lease Liabilities

6,705

7,958

Other Liabilities

3,461

3,243

Total Liabilities77,569

57,038

Shareholders' Equity:

Common Stock, par value $0.50 per share, 30,000,000 shares authorized;7,518,159 and 7,458,251 shares issued and outstandingas of September 25, 2021 and March 27, 2021, respectively3,759

3,729

Capital in Excess of Par Value22,713

19,287

Accumulated Other Comprehensive Loss(502

)

(451

)

Retained Earnings54,774

52,513

Total Shareholders' Equity80,744

75,078

Total Liabilities and Shareholders' Equity$

158,313

$

132,116

TRANSCAT, INC.

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share and Per Share Amounts)

(Unaudited) (Audited)

September March 27, 25,

2021 2021

ASSETS

Current Assets:

Cash $ 2,551 $ 560

Accounts Receivable, less allowance for doubtful accounts of $698and $526 as of September 25, 2021 and March 27, 36,464 33,950 2021, respectivelyOther Receivables 448 428

Inventory, net 10,205 11,636

Prepaid Expenses and Other Current Assets 4,105 2,354

Total Current Assets 53,773 48,928

Property and Equipment, net 23,034 22,203

Goodwill 59,441 43,272

Intangible Assets, net 12,753 7,513

Right To Use Asset, net 8,393 9,392

Other Assets 919 808

Total Assets $ 158,313 $ 132,116

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

Accounts Payable $ 10,983 $ 12,276

Accrued Compensation and Other Liabilities 8,455 10,417

Income Taxes Payable - 382

Current Portion of Long-Term Debt 2,134 2,067

Total Current Liabilities 21,572 25,142

Long-Term Debt 40,917 17,494

Deferred Tax Liabilities 4,914 3,201

Lease Liabilities 6,705 7,958

Other Liabilities 3,461 3,243

Total Liabilities 77,569 57,038

Shareholders' Equity:

Common Stock, par value $0.50 per share, 30,000,000 shares authorized;7,518,159 and 7,458,251 shares issued and outstandingas of September 25, 2021 and March 27, 2021, 3,759 3,729 respectivelyCapital in Excess of Par Value 22,713 19,287

Accumulated Other Comprehensive Loss (502 ) (451 )

Retained Earnings 54,774 52,513

Total Shareholders' Equity 80,744 75,078

Total Liabilities and Shareholders' Equity $ 158,313 $ 132,116

TRANSCAT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

For the Six Months Ended

September 25,

September 26,

2021

2020

Cash Flows from Operating Activities:

Net Income$

6,703

$

2,822

Adjustments to Reconcile Net Income to Net Cash Providedby Operating Activities:Loss on Disposal of Property and Equipment84

68

Deferred Income Taxes7

47

Depreciation and Amortization4,131

3,736

Provision for Accounts Receivable and Inventory Reserves499

523

Stock-Based Compensation Expense1,057

678

Changes in Assets and Liabilities:Accounts Receivable and Other Receivables(374

)

3,543

Inventory1,739

623

Prepaid Expenses and Other Assets(1,847

)

(625

)

Accounts Payable(1,293

)

(892

)

Accrued Compensation and Other Liabilities(2,812

)

1,626

Income Taxes Payable(392

)

327

Net Cash Provided by Operating Activities7,502

12,476

Cash Flows from Investing Activities:

Purchase of Property and Equipment(3,770

)

(3,116

)

Business Acquisitions, net of cash acquired(20,910

)

-

Net Cash Used in Investing Activities(24,680

)

(3,116

)

Cash Flows from Financing Activities:

Proceeds from (Repayment of) Revolving Credit Facility, net24,511

(6,632

)

Repayments of Term Loan(1,021

)

(979

)

Issuance of Common Stock1,238

474

Repurchase of Common Stock(5,649

)

(1,287

)

Net Cash Provided by (Used in) Financing Activities19,079

(8,424

)

Effect of Exchange Rate Changes on Cash

90

(473

)

Net Increase in Cash

1,991

463

Cash at Beginning of Period

560

499

Cash at End of Period

$

2,551

$

962

TRANSCAT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

For the Six Months Ended

September September 25, 26,

2021 2020

Cash Flows from Operating Activities:

Net Income $ 6,703 $ 2,822

Adjustments to Reconcile Net Income to Net Cash Providedby Operating Activities: Loss on Disposal of Property and Equipment 84 68

Deferred Income Taxes 7 47

Depreciation and Amortization 4,131 3,736

Provision for Accounts Receivable and Inventory 499 523 ReservesStock-Based Compensation Expense 1,057 678

Changes in Assets and Liabilities: Accounts Receivable and Other Receivables (374 ) 3,543

Inventory 1,739 623

Prepaid Expenses and Other Assets (1,847 ) (625 )

Accounts Payable (1,293 ) (892 )

Accrued Compensation and Other Liabilities (2,812 ) 1,626

Income Taxes Payable (392 ) 327

Net Cash Provided by Operating Activities 7,502 12,476

Cash Flows from Investing Activities:

Purchase of Property and Equipment (3,770 ) (3,116 )

Business Acquisitions, net of cash acquired (20,910 ) -

Net Cash Used in Investing Activities (24,680 ) (3,116 )

Cash Flows from Financing Activities:

Proceeds from (Repayment of) Revolving Credit 24,511 (6,632 )Facility, netRepayments of Term Loan (1,021 ) (979 )

Issuance of Common Stock 1,238 474

Repurchase of Common Stock (5,649 ) (1,287 )

Net Cash Provided by (Used in) Financing Activities 19,079 (8,424 )

Effect of Exchange Rate Changes on Cash 90 (473 )

Net Increase in Cash 1,991 463

Cash at Beginning of Period 560 499

Cash at End of Period $ 2,551 $ 962

TRANSCAT, INC.

Adjusted EBITDA Reconciliation Table

(in thousands)

(Unaudited)

Fiscal 2022

Q1

Q2

Q3

Q4

YTD

Net Income

$

3,688

$

3,015

$

6,703

+ Interest Expense189

169

358

+ Other Expense / (Income)6

81

87

+ Tax Provision(194

)

313

119

Operating Income

$

3,689

$

3,578

$

7,267

+ Depreciation & Amortization1,990

2,141

4,131

+ Transaction Expense

-

821

821

+ Other (Expense) / Income(6

)

(81

)

(87

)

+ Noncash Stock Compensation437

620

1,057

Adjusted EBITDA

$

6 110

$

7,079

$

13,189

Segment Breakdown

Service Operating Income

$

2,974

$

2,647

$

5,621

+ Depreciation & Amortization1,488

1,634

3,122

+ Transaction Expense

-

821

821

+ Other (Expense) / Income(2

)

(56

)

(58

)

+ Noncash Stock Compensation261

414

675

Service Adjusted EBITDA

$

4,721

$

5,460

$

10,181

Distribution Operating Income

$

715

$

931

$

1,646

+ Depreciation & Amortization502

507

1,009

+ Other (Expense) / Income(4

)

(25

)

(29

)

+ Noncash Stock Compensation176

206

382

Distribution Adjusted EBITDA

$

1,389

$

1,619

$

3,008

Fiscal 2021

Q1

Q2

Q3

Q4

YTD

Net Income

$

798

$

2,024

$

1,761

$

3,208

$

7,791

+ Interest Expense224

233

203

190

850

+ Other Expense / (Income)19

84

16

122

241

+ Tax Provision(77

)

737

539

992

2,191

Operating Income

$

964

$

3,078

$

2,519

$

4,512

$

11,073

+ Depreciation & Amortization1,871

1,864

1,861

1,984

7,580

+ Restructuring Expense

360

-

-

290

650

+ Other (Expense) / Income(19

)

(85

)

(15

)

(122

)

(241

)

+ Noncash Stock Compensation312

366

197

638

1,513

Adjusted EBITDA

$

3,488

$

5,223

$

4,562

$

7,302

$

20,575

Segment Breakdown

Service Operating Income

$

1,129

$

2,977

$

1,956

$

4,379

10,441

+ Depreciation & Amortization1,394

1,359

1,372

1,472

5,597

+ Restructuring Expense

193

-

-

156

349

+ Other (Expense) / Income(15

)

(57

)

(8

)

(82

)

(162

)

+ Noncash Stock Compensation162

196

126

351

835

Service Adjusted EBITDA

$

2,863

$

4,475

$

3,446

$

6,276

$

17,060

Distribution Operating Income

$

(165

)

$

101

$

563

$

133

$

632

+ Depreciation & Amortization477

505

489

512

1,983

+ Restructuring Expense

167

-

-

134

301

+ Other (Expense) / Income(4

)

(28

)

(7

)

(40

)

(79

)

+ Noncash Stock Compensation150

170

71

287

678

Distribution Adjusted EBITDA

$

625

$

748

$

1,116

$

1,026

$

3,515

TRANSCAT, INC.

Adjusted EBITDA Reconciliation Table

(in thousands)

(Unaudited)

Fiscal 2022

Q1 Q2 Q3 Q4 YTD

Net Income $ 3,688 $ 3,015 $ 6,703

+ Interest Expense 189 169 358

+ Other Expense / 6 81 87 (Income)+ Tax Provision (194 ) 313 119

Operating Income $ 3,689 $ 3,578 $ 7,267

+ Depreciation & 1,990 2,141 4,131 Amortization+ Transaction Expense - 821 821

+ Other (Expense) / (6 ) (81 ) (87 )Income+ Noncash Stock 437 620 1,057 CompensationAdjusted EBITDA $ 6 110 $ 7,079 $ 13,189

Segment Breakdown

Service Operating Income $ 2,974 $ 2,647 $ 5,621

+ Depreciation & 1,488 1,634 3,122 Amortization+ Transaction Expense - 821 821

+ Other (Expense) / (2 ) (56 ) (58 )Income+ Noncash Stock 261 414 675 CompensationService Adjusted EBITDA $ 4,721 $ 5,460 $ 10,181

Distribution Operating $ 715 $ 931 $ 1,646 Income

+ Depreciation & 502 507 1,009 Amortization+ Other (Expense) / (4 ) (25 ) (29 )Income+ Noncash Stock 176 206 382 CompensationDistribution Adjusted $ 1,389 $ 1,619 $ 3,008 EBITDA

Fiscal 2021

Q1 Q2 Q3 Q4 YTD

Net Income $ 798 $ 2,024 $ 1,761 $ 3,208 $ 7,791

+ Interest Expense 224 233 203 190 850

+ Other Expense / 19 84 16 122 241 (Income)+ Tax Provision (77 ) 737 539 992 2,191

Operating Income $ 964 $ 3,078 $ 2,519 $ 4,512 $ 11,073

+ Depreciation & 1,871 1,864 1,861 1,984 7,580 Amortization+ Restructuring Expense 360 - - 290 650

+ Other (Expense) / (19 ) (85 ) (15 ) (122 ) (241 )Income+ Noncash Stock 312 366 197 638 1,513 CompensationAdjusted EBITDA $ 3,488 $ 5,223 $ 4,562 $ 7,302 $ 20,575

Segment Breakdown

Service Operating Income $ 1,129 $ 2,977 $ 1,956 $ 4,379 10,441

+ Depreciation & 1,394 1,359 1,372 1,472 5,597 Amortization+ Restructuring Expense 193 - - 156 349

+ Other (Expense) / (15 ) (57 ) (8 ) (82 ) (162 )Income+ Noncash Stock 162 196 126 351 835 CompensationService Adjusted EBITDA $ 2,863 $ 4,475 $ 3,446 $ 6,276 $ 17,060

Distribution Operating $ (165 ) $ 101 $ 563 $ 133 $ 632 Income

+ Depreciation & 477 505 489 512 1,983 Amortization+ Restructuring Expense 167 - - 134 301

+ Other (Expense) / (4 ) (28 ) (7 ) (40 ) (79 )Income+ Noncash Stock 150 170 71 287 678 CompensationDistribution Adjusted $ 625 $ 748 $ 1,116 $ 1,026 $ 3,515 EBITDA

TRANSCAT, INC.

Additional Information - Business Segment Data

(Dollars in thousands)

(Unaudited)

Change

SERVICE

FY 2022 Q2

FY 2021 Q2

$'s

%

Service Revenue

$

29,544

$

24,554

$

4,990

20.3

%

Cost of Service Revenue

19,832

16,654

3,178

19.1

%

Gross Profit

$

9,712

$

7,900

$

1,812

22.9

%

Gross Margin

32.9

%

32.2

%

Selling, Marketing & Warehouse Expenses

$

2,835

$

2,427

$

408

16.8

%

General and Administrative Expenses

4,230

2,496

1,734

69.5

%

Operating Income

$

2,647

$

2,977

$

(330

)

(11.1

%)

% of Revenue

9.0

%

12.1

%

Change

DISTRIBUTION

FY 2022 Q2

FY 2021 Q2

$'s

%

Distribution Sales

$

20,843

$

17,053

$

3,790

22.2

%

Cost of Distribution Sales

15,944

13,459

2,485

18.5

%

Gross Profit

$

4,899

$

3,594

$

1,305

36.3

%

Gross Margin

23.5

%

21.1

%

Selling, Marketing & Warehouse Expenses

$

2,139

$

1,864

$

275

14.8

%

General and Administrative Expenses

1,829

1,629

200

12.3

%

Operating Income

$

931

$

101

$

830

821.8

%

% of Sales

4.5

%

0.6

%

Change

TOTAL

FY 2022 Q2

FY 2021 Q2

$'s

%

Total Revenue

$

50,387

$

41,607

$

8,780

21.1

%

Total Cost of Revenue

35,776

30,113

5,663

18.8

%

Gross Profit

$

14,611

$

11,494

$

3,117

27.1

%

Gross Margin

29.0

%

27.6

%

Selling, Marketing & Warehouse Expenses

$

4,974

$

4,291

$

683

15.9

%

General and Administrative Expenses

6,059

4,125

1,934

46.9

%

Operating Income

$

3,578

$

3,078

$

500

16.2

%

% of Revenue

7.1

%

7.4

%

TRANSCAT, INC.

Additional Information - Business Segment Data

(Dollars in thousands)

(Unaudited)

Change

SERVICE FY 2022 Q2 FY 2021 Q2 $'s %



Service Revenue $ 29,544 $ 24,554 $ 4,990 20.3 %

Cost of Service Revenue 19,832 16,654 3,178 19.1 %

Gross Profit $ 9,712 $ 7,900 $ 1,812 22.9 %

Gross Margin 32.9 % 32.2 %



Selling, Marketing & Warehouse $ 2,835 $ 2,427 $ 408 16.8 %Expenses

General and Administrative 4,230 2,496 1,734 69.5 %Expenses

Operating Income $ 2,647 $ 2,977 $ (330 ) (11.1 %)

% of Revenue 9.0 % 12.1 %



Change

DISTRIBUTION FY 2022 Q2 FY 2021 Q2 $'s %



Distribution Sales $ 20,843 $ 17,053 $ 3,790 22.2 %

Cost of Distribution Sales 15,944 13,459 2,485 18.5 %

Gross Profit $ 4,899 $ 3,594 $ 1,305 36.3 %

Gross Margin 23.5 % 21.1 %



Selling, Marketing & Warehouse $ 2,139 $ 1,864 $ 275 14.8 %Expenses

General and Administrative 1,829 1,629 200 12.3 %Expenses

Operating Income $ 931 $ 101 $ 830 821.8 %

% of Sales 4.5 % 0.6 %



Change

TOTAL FY 2022 Q2 FY 2021 Q2 $'s %



Total Revenue $ 50,387 $ 41,607 $ 8,780 21.1 %

Total Cost of Revenue 35,776 30,113 5,663 18.8 %

Gross Profit $ 14,611 $ 11,494 $ 3,117 27.1 %

Gross Margin 29.0 % 27.6 %



Selling, Marketing & Warehouse $ 4,974 $ 4,291 $ 683 15.9 %Expenses

General and Administrative 6,059 4,125 1,934 46.9 %Expenses

Operating Income $ 3,578 $ 3,078 $ 500 16.2 %

% of Revenue 7.1 % 7.4 %

TRANSCAT, INC.

Additional Information - Business Segment Data

(Dollars in thousands)

(Unaudited)

Change

SERVICE

FY 2022 YTD

FY 2021 YTD

$'s

%

Service Revenue

$

57,101

$

47,521

$

9,580

20.2

%

Cost of Service Revenue

38,637

33,552

5,085

15.2

%

Gross Profit

$

18,464

$

13,969

$

4,495

32.2

%

Gross Margin

32.3

%

29.4

%

Selling, Marketing & Warehouse Expenses

$

5,550

$

4,775

$

775

16.2

%

General and Administrative Expenses

7,293

5,088

2,205

43.3

%

Operating Income

$

5,621

$

4,106

$

1,515

36.9

%

% of Revenue

9.8

%

8.6

%

Change

DISTRIBUTION

FY 2022 YTD

FY 2021 YTD

$'s

%

Distribution Sales

$

41,076

$

32,990

$

8,086

24.5

%

Cost of Distribution Sales

31,409

26,056

5,353

20.5

%

Gross Profit

$

9,667

$

6,934

$

2,733

39.4

%

Gross Margin

23.5

%

21.0

%

Selling, Marketing & Warehouse Expenses

$

4,421

$

3,590

$

831

23.1

%

General and Administrative Expenses

3,600

3,408

192

5.6

%

Operating Income

$

1,646

$

(64

)

$

1,710

2671.9

%

% of Sales

4.0

%

(0.2

%)

Change

TOTAL

FY 2022 YTD

FY 2021 YTD

$'s

%

Total Revenue

$

98,177

$

80,511

$

17,666

21.9

%

Total Cost of Revenue

70,046

59,608

10,438

17.5

%

Gross Profit

$

28,131

$

20,903

$

7,228

34.6

%

Gross Margin

28.7

%

26.0

%

Selling, Marketing & Warehouse Expenses

$

9,971

$

8,365

$

1,606

19.2

%

General and Administrative Expenses

10,893

8,496

2,397

28.2

%

Operating Income

$

7,267

$

4,042

$

3,225

79.8

%

% of Revenue

7.4

%

5.0

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20211102006305/en/

CONTACT: Mark A. Doheny, Chief Financial Officer Phone: (585) 563-5766 Email: mark.doheny@transcat.com