On May 20, 2024, Transcat Inc (TRNS, Financial) released its 8-K filing detailing the financial results for the fourth quarter and full fiscal year 2024, which ended on March 30, 2024. Transcat Inc is a leading provider of calibration and laboratory instrument services and distributor of test, measurement, and control instrumentation. The company operates through two segments: Service and Distribution, with the majority of its revenue derived from the Service segment.
Performance Overview
Transcat Inc reported a robust performance for the fourth quarter and full fiscal year 2024, marked by double-digit organic service revenue growth and significant gross margin expansion in both segments. Consolidated revenue for Q4 was $70.9 million, a 14.3% increase from the same period last year. Gross profit rose by 25.5% to $24.0 million, with gross margin expanding by 300 basis points to 33.9%. Operating income surged by 57.2% to $9.2 million, while net income nearly doubled to $6.9 million, reflecting an 88.4% increase.
Service Segment Performance
The Service segment, which accounts for 65.9% of total revenue, delivered record results with revenue of $46.7 million, up 17.5% from the previous year. The segment's gross profit increased by 23.5% to $16.7 million, with a gross margin improvement of 170 basis points to 35.7%. Operating income for the segment soared by 79.1% to $8.1 million.
Distribution Segment Performance
The Distribution segment, representing 34.1% of total revenue, also showed strong performance with sales of $24.2 million, an 8.4% increase. The segment's gross profit rose by 30.3% to $7.3 million, driven by a favorable sales mix and strength in the Rentals business. However, operating income for the segment decreased by 19.0% to $1.1 million.
Full-Year Fiscal 2024 Review
For the full fiscal year 2024, Transcat Inc reported total revenue of $259.5 million, a 12.5% increase from the previous year. Gross profit for the year was $83.8 million, up 22.6%, with a gross margin expansion of 270 basis points to 32.3%. Operating income increased by 21.7% to $19.8 million, while net income rose by 27.7% to $13.6 million.
Balance Sheet and Cash Flow
As of March 30, 2024, Transcat Inc had $35.2 million in cash and marketable securities, with $80.0 million available for borrowing under its secured revolving credit facility. Total debt was reduced to $4.2 million, down $44.9 million from the previous year-end, primarily due to cash proceeds from a secondary stock offering. The company's leverage ratio improved significantly to 0.10 from 1.60.
Key Financial Metrics
| Metric | FY24 Q4 | FY23 Q4 | Change |
|---|---|---|---|
| Service Revenue | $46,732 | $39,763 | 17.5% |
| Distribution Sales | $24,181 | $22,304 | 8.4% |
| Total Revenue | $70,913 | $62,067 | 14.3% |
| Gross Profit | $24,035 | $19,150 | 25.5% |
| Operating Income | $9,204 | $5,855 | 57.2% |
| Net Income | $6,890 | $3,658 | 88.4% |
| Adjusted EBITDA | $11,682 | $8,998 | 29.8% |
| Diluted EPS | $0.77 | $0.48 | 60.0% |
Analysis
Transcat Inc's strong financial performance in fiscal 2024 underscores its effective growth strategy, driven by organic service revenue growth and successful integration of acquisitions. The significant gross margin expansion in both the Service and Distribution segments highlights the company's ability to optimize its operations and capitalize on market opportunities. The reduction in total debt and improved leverage ratio further strengthen the company's financial position, providing a solid foundation for future growth.
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Explore the complete 8-K earnings release (here) from Transcat Inc for further details.
