Transcat Reports Record Fiscal Q2 2026 Performance Fueled by Double-Digit Growth
Transcat delivered another strong quarter, achieving double-digit service revenue growth and continued strength in our rentals channel,” said Lee D. Rudow, President and CEO. “Distribution revenue rose 24% year over year, accompanied by a 530-basis-point gross margin expansion, reflecting our strategic focus on higher-margin rentals. Consistent execution of our strategic plan, including seamless integration of recent acquisitions, drove a 37% increase in Adjusted EBITDA*. Our solid first-half results underscore the resilience and balance of our diversified business model, which continues to perform well despite ongoing macroeconomic challenges.”
“We remain focused on strengthening our long-term competitive position and are encouraged by the early performance of Essco Calibration, our most recent acquisition. Essco is an ideal addition to our calibration services portfolio, expanding our capabilities and geographic footprint while enhancing our long-term service growth potential. Together with Martin Calibration, acquired in the third quarter of Fiscal 2025, Essco is already contributing to sales synergies and reinforcing our leadership in calibration services.”
“While the broader macroeconomic environment remains uncertain, we are optimistic about our growth trajectory, supported by improved global trade conditions and our diversified portfolio. In the second half of Fiscal 2026, we expect continued service revenue momentum, driven by expansion in the New England and Midwest regions and stronger organic service growth. We anticipate a return to high single-digit organic service revenue growth, assuming stable economic conditions. With our talented team, differentiated portfolio, and solid financial foundation, Transcat is well positioned to deliver sustainable growth and long-term shareholder value.”
Non-GAAP Financial Measures
In addition to reporting results in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company also presents several non-GAAP financial measures that it believes provide meaningful insight into its core operating performance and enhance comparability across reporting periods.
Adjusted Net Income and Adjusted Net Margin
In addition to reporting net income and net margin, which are GAAP measures, the Company presents Adjusted Net Income (defined as 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). Management believes these non-GAAP measures are useful indicators of operating performance because they exclude items not considered indicative of the Company’s core operations. Accordingly, Adjusted Net Income and Adjusted Net Margin are used by management to evaluate business performance, plan for future periods, and assess results across reporting periods.
Adjusted EBITDA and Adjusted EBITDA Margin
Alongside GAAP measures of net income and net margin, the Company also reports Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, non-cash stock-based compensation expense, and acquisition-related transaction expenses) and Adjusted EBITDA Margin (Adjusted EBITDA divided by revenue). Management believes these measures are important for evaluating the underlying performance of the Company’s core operations because they remove the effects of financing decisions, non-cash expenses, taxes, and other items that may vary from period to period and are not directly related to operational performance. Adjusted EBITDA and Adjusted EBITDA Margin are used by management, investors, and other stakeholders to assess operating efficiency and to support planning and forecasting activities.
Adjusted Operating Income
In addition to reporting operating income, a GAAP measure, the Company presents Adjusted Operating Income (defined as operating income plus depreciation and amortization, non-cash stock-based compensation expense, acquisition-related transaction expenses, and contingent consideration adjustments). Management believes this non-GAAP measure provides a clearer view of the Company’s recurring operating performance by excluding items that are not reflective of ongoing operations. Adjusted Operating Income is used internally to evaluate business segments and measure performance across periods.
Adjusted Diluted Earnings Per Share (Adjusted Diluted EPS)
In addition to reporting Diluted Earnings Per Share, a GAAP measure, the Company also presents Adjusted Diluted Earnings Per Share (defined as net income plus acquisition-related amortization expense, acquisition-related transaction expenses, acquisition-related stock-based compensation, and acquisition amortization of backlog, divided by the weighted average diluted shares outstanding during the period). Management believes Adjusted Diluted EPS provides meaningful insight into the Company’s underlying profitability by excluding items that are not indicative of its core operating performance. This measure is used to compare performance across current, prior, and future periods and to inform planning and forecasting decisions.
Together, these non-GAAP financial measures supplement, but do not replace, GAAP results and should be considered alongside GAAP metrics when evaluating the Company’s financial performance.
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.
source link: https://www.businesswire.com
