Transcat, Inc. has a market cap of $48.5 million; its shares were traded at around $6.46 with a P/E ratio of 14.9 and P/S ratio of 0.4. Transcat, Inc. had an annual average earning growth of 11.8% over the past 10 years.
Highlight of Business Operations:Service revenue increased $0.3 million, or 3.7%, from the first quarter of fiscal year 2012 to the first quarter of fiscal year 2013. The growth can be attributed to incremental revenue associated with recent business acquisitions, partially offset by the loss of $0.3 million in low margin revenue from services we were outsourcing for a customer. The remainder of our organic Service segment revenue and volume were essentially flat when compared with the first quarter of fiscal 2012. 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 reasons. Among those reasons 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 June 30, 2012 were $36.7 million, up 14.4% when compared with $32.1 million for the twelve months ended June 25, 2011. Our fiscal years 2013 and 2012 service revenue growth in relation to prior fiscal year quarter comparisons is as follows:
Product segment gross profit declined 1.4% to $4.2 million in the first quarter of fiscal year 2013 compared to the first quarter of fiscal year 2012. As a percent of net sales, gross profit improved to 25.7% in the first quarter of fiscal year 2013 compared with 24.8% in the first quarter of fiscal year 2012. The gross margin expansion was the result of increased cooperative advertising income. The following table reflects the quarterly historical trend of our product gross margin as a percent of total product sales:
Service segment gross profit was $2.0 million in the first quarter of fiscal years 2013 and 2012. Service segment gross margin decreased 120 basis points over the same time period in the prior fiscal year to 22.9% as a result of revenue growth from acquisitions rather than organic sales efforts. The incremental gross margin on acquired business revenue is generally lower than the incremental gross margin on our organically-generated revenue primarily due to the lower per unit pricing historically charged by smaller acquired companies. Because of the impact of acquisitions and calibration orders with existing customers, 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 gross profit for the twelve months ended June 30, 2012 was $8.6 million, up 5.9% when compared with $8.1 million for the twelve months ended June 25, 2011. The following table reflects the quarterly historical trend of our calibration services gross margin as a percent of net revenues:
Operating expenses decreased $0.1 million, or 2.0%, from the first quarter of fiscal year 2012 to the first quarter of fiscal year 2013. The decrease reflected lower stock-based compensation expense which was partially offset by a one-time Service segment sales organization restructuring charge. As a percentage of total net revenue, operating expenses were 22.3% and 22.4% in the first quarter of fiscal years 2013 and 2012, respectively.
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