Market Overview

Transcat Reports Operating Income Up 14% on Record Revenue for Fiscal 2018

  • Record fourth quarter and full fiscal year revenue of $42.5 million
    and $155.1 million, respectively
  • Consolidated operating margin expanded 160 basis points to 8.3% in
    the fourth quarter and 30 basis points to 5.8% for the full fiscal year
  • Achieved record net income of $5.9 million or $0.81 per diluted
    share in fiscal 2018
  • Reduced debt $4.5 million to $22.9 million at year-end as a result
    of strong operations and cash flows

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 fourth quarter and fiscal year ended March 31,
2018 ("fiscal 2018"). Transcat operates on a 52/53 week fiscal year,
ending the last Saturday in March. In a 52-week fiscal year, each of the
four quarters is a 13-week period. In a 53-week fiscal year (which
occurs once every five or six years), the last quarter is a 14-week
period. Fiscal 2018 consisted of 53 weeks while the fiscal year ended
March 25, 2017 ("fiscal 2017") consisted of 52 weeks.

"Our fiscal 2018 results demonstrated solid performance in both of our
segments as we achieved new records with more than $155 million in
revenue and $5.9 million in net income. We are particularly pleased that
we now have had 36 straight quarters, or nine years, of
quarter-over-quarter growth in our Service segment revenue," commented
Lee D. Rudow, President and CEO. "We saw healthy demand in both
segments. Strong execution in our Service segment helped us continue to
take market share, especially in the targeted life science space, while
our Distribution segment had growth across all channels."

"While we didn't see the desired improvement in reported Service gross
margin, key Service performance indicators continued to move in the
right direction. On a consolidated basis, we generated higher operating
income, operating margin and strong cash flow, reduced debt and funded
longer-term productivity enhancement investments."

Fourth Quarter Fiscal 2018 Review (Results compared with the
fourth quarter of fiscal 2017)

($ in thousands)                 Change
FY18 Q4 FY17 Q4 $'s       %
Service Revenue $ 21,955 $ 19,526 $ 2,429 12.4%
Distribution Sales   20,497   18,927   1,570 8.3%
Revenue $ 42,452 $ 38,453 $ 3,999 10.4%
Gross Profit $ 10,895 $ 9,782 $ 1,113 11.4%
Gross Margin 25.7% 25.4%
Operating Income $ 3,503 $ 2,565 $ 938 36.6%
Operating Margin 8.3% 6.7%
Net Income $ 2,454 $ 1,429 $ 1,025 71.7%
Net Margin 5.8% 3.7%
Adjusted EBITDA* $ 5,310 $ 4,214 $ 1,096 26.0%
Adjusted EBITDA* Margin 12.5% 11.0%

*See Note 1 on page 5 for a description of this non-GAAP financial
measure and page 10 for the Adjusted EBITDA Reconciliation table.

Transcat achieved record quarterly revenue of $42.5 million, which
includes the 53rd week in fiscal 2018. Consolidated gross
profit improved $1.1 million and gross margin increased 30 basis points.
Total operating expenses were up only $0.2 million, or 2.4%. As a
result, operating income increased nearly 37%, and operating margin
expanded 160 basis points to 8.3%.

On December 22, 2017, the Tax Cuts and Jobs Act

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