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Transcat Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 5, 2010 04:00PM

Transcat Inc. (TRNS) filed Quarterly Report for the period ended 2010-09-25. Transcat Inc. has a market cap of $54.4 million; its shares were traded at around $7.05 with a P/E ratio of 31.1 and P/S ratio of 0.7. Transcat Inc. had an annual average earning growth of 18.9% over the past 5 years.



Highlight of Business Operations:

Our average product sales per business day increased to $214 in the second quarter of fiscal year 2011, compared with $190 in the second quarter of fiscal year 2010. Our product sales per business day for each fiscal quarter during the fiscal years 2011 and 2010 are as follows:

In the second quarter of fiscal year 2011, sales through our direct channel increased 6.7% from the same period in the prior fiscal year. In addition to incremental revenue from United Scale of $0.4 million, direct sales to our traditional U.S., International and Canadian markets increased $1.0 million. These increases were partially offset by declining sales to wind energy industry customers of $0.7 million. Wind energy product sales, which represented 6.3% and 13.1% of our total product net sales in the second quarter of fiscal years 2011 and 2010, respectively, declined due to the timing of wind energy customer projects. Sales to our reseller channel increased 33.0% from the second quarter of fiscal year 2010 to the second quarter of fiscal year 2011, mainly attributed to the improved economic conditions during the second quarter of fiscal year 2011. The mix of reseller sales as a percent of our total product net sales increased 380 basis points from the second quarter of fiscal year 2010 to the second quarter of fiscal year 2011, partially the result of somewhat constrained sales growth in our direct sales channel due to the declining wind energy sales and a lower than normal mix of reseller sales in the prior year second quarter due to the economy. The following table presents the percent of net sales for the significant product distribution channels for each fiscal quarter during fiscal years 2011 and 2010:

Service revenue increased $0.9 million, or 14.1%, from the second quarter of fiscal year 2010 to the second quarter of fiscal year 2011. This growth can be attributed to expansion of our existing customer base and incremental revenue associated with United Scale of $0.5 million. Services provided to customers within the wind energy industry were relatively consistent quarter-over-quarter. Also, within any year, while we add new customers, we also have customers from the prior year whose calibrations may not repeat for any number of factors. Among those factors are variations in the timing of customer periodic calibrations on instruments and other services, customer capital expenditures and customer outsourcing decisions. Because the timing of calibration orders and segment expenses can vary on a quarter-to-quarter basis, we believe a trailing twelve month trend provides a better indication of the progress of this segment. Service segment revenue for the twelve months ended September 25, 2010 was $30.6 million, up 21.2% when compared with $25.2 million for the twelve months ended September 26, 2009. Our fiscal years 2011 and 2010 service revenue growth in relation to prior fiscal year quarter comparisons is as follows:

Total product gross profit in the second quarter of fiscal year 2011 was 23.8% of total product sales and improved 150 basis points when compared with 22.3% of total product sales in the second quarter of fiscal year 2010. Product gross profit improved $0.5 million in the second quarter of fiscal year 2011 compared to the second quarter of fiscal year 2010, which was the result of increased volume and $0.2 million in vendor point-of-sale rebates, partially offset by a $0.1 million decline in cooperative advertising income due the timing of direct marketing campaigns. Vendor point-of-sale rebates are based on year-over-year growth in product segment sales. We did not qualify for this type of rebate in

Read the The complete Report



Stocks Discussed: TRNS,
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