Transcat(TRNS) - 2025 Q2 - Quarterly Report

Financial Performance - Net income for the second quarter ended September 28, 2024, was $3,286,000, a significant increase from$460,000 in the same quarter of 2023, representing a growth of 615%[7] - For the six months ended September 28, 2024, net income reached $7,694,000, compared to$3,409,000 for the same period in 2023, marking a 126% increase[7] - The company reported comprehensive income of $3,672,000 for the second quarter of 2024, compared to$114,000 in the same quarter of 2023, showing a substantial increase[7] - The company reported a net foreign currency loss of $0.4 million for the first six months of fiscal year 2025, compared to a net gain of less than$0.1 million for the same period in fiscal year 2024[31] - Net income for the second quarter ended September 28, 2024, was $3,286,000, compared to$460,000 for the same period in 2023[7] - Comprehensive income for the six months ended September 28, 2024, was $7,925,000, up from$3,545,000 in the prior year[7] - Net income for the first six months of FY 2025 was $7.7 million, an increase of$4.3 million or 125.7% compared to $3.4 million in the same period of FY 2024[127] - Adjusted EBITDA for Q2 FY 2025 was$8.9 million, a decrease of $0.5 million or 5.0$67.826 million, a 8.08% increase from $62.804 million in the same quarter of fiscal year 2024[64] - Consolidated revenue for the second quarter of fiscal year 2025 was$67.8 million, an increase of $5.0 million or 8.0$134.5 million, an increase of $11.1 million or 9.0$123.4 million in the same period of FY 2024[119] - Service revenue accounted for 65.0% of total revenue in the second quarter of fiscal year 2025, increasing by $2.7 million or 6.4$23.7 million, an increase of $2.3 million or 11.1$6.6 million or 8.1% year-over-year[119] Assets and Equity - Total assets as of September 28, 2024, amounted to $323,553,000, up from$287,552,000 as of March 30, 2024, indicating an increase of 12.5%[10] - The total shareholders' equity rose to $268,757,000 as of September 28, 2024, compared to$225,169,000 as of March 30, 2024, representing an increase of 19.3%[10] - As of September 28, 2024, the net book value of intangible assets totaled $138.1 million, with additions of$32.5 million during the fiscal year[36] - Goodwill and intangible assets increased to a total net book value of $138.127 million as of September 28, 2024, from$105.585 million[36] Cash Flow and Investments - Cash and cash equivalents increased to $23,815,000 as of September 28, 2024, from$19,646,000 at the beginning of the period, reflecting a growth of 21.0%[14] - The company incurred a net cash used in investing activities of $7,958,000 for the six months ended September 28, 2024, compared to$18,326,000 for the same period in 2023, indicating a reduction in cash outflow[14] - Cash provided by operating activities was $15.759 million for the first six months of fiscal year 2025, slightly down from$15.972 million in the same period last year[143] - The company invested $7.6 million in capital expenditures during the first six months of fiscal year 2025, compared to$5.4 million in the same period last year, marking a 40.7% increase[149] Stock and Compensation - The average shares outstanding for basic earnings per share increased to 9,160 thousand in the second quarter of fiscal year 2025 from 7,819 thousand in the same quarter of fiscal year 2024[34] - Stock-based compensation costs recorded for the first six months of fiscal year 2025 were $1.6 million, compared to$2.2 million for the same period in fiscal year 2024[28] - Total expense related to restricted stock units was $0.9 million in the first six months of fiscal year 2025, down from$1.5 million in the same period of fiscal year 2024[53] - The total expense related to stock option awards was $0.7 million in the first six months of fiscal year 2025, up from$0.6 million in the same period of fiscal year 2024, indicating a 16.67% increase[58] Acquisitions - The company acquired Becnel Rental Tools, LLC for approximately $49.8 million, consisting of$17.5 million in cash and $32.3 million in common stock[67] - The company purchased Axiom Test Equipment, Inc. on August 8, 2023, to enhance its Distribution capabilities[71] - The total purchase price for Axiom was approximately$38.7 million, paid with $10.0 million in cash and$28.6 million in common stock[75] - The total purchase price for SteriQual was approximately $4.3 million, with a reduction to$3.8 million due to unmet revenue targets[79] - The total purchase price for TIC-MS was approximately $9.7 million, including$2.9 million in cash and $6.9 million in common stock[84] Debt and Financing - The revolving credit facility has a commitment of$80.0 million, with no amounts outstanding as of September 28, 2024[43] - The interest rate for the revolving credit facility was 7.1% for the first six months of fiscal year 2025[45] - The company's leverage ratio was 0.08 as of September 28, 2024, compared to 0.10 at March 30, 2024, indicating strong compliance with loan covenants[46] - The company can make restricted payments up to $25.0 million over the term of the credit agreement for share repurchases and dividends[43] Operational Insights - The company serves highly regulated industries, including life sciences, industrial manufacturing, and aerospace, focusing on accuracy and risk management[19] - The company plans to subcontract approximately 13% to 15% of its service revenue to third-party vendors while evaluating outsourcing needs and making capital investments[102] - The company expects to fully integrate NEXA's sales and marketing to drive anticipated revenue growth despite a decline in its cost control services[101]