Transcat Reports 2.4% Revenue Growth to $66.8 Million in Q3 2024

Transcat, Inc. reported its financial results for the third quarter and nine months ended December 28, 2024, revealing a total revenue of $66.8 million, a 2.4% increase from $65.2 million in the same period last year. The growth was primarily driven by acquisitions, which contributed $3.7 million to revenue. However, organic revenue saw a decline of 3.9%, attributed to fewer business days during the holiday season and reduced revenue from its NEXA cost control services. For the nine-month period, total revenue reached $201.3 million, up 6.7% from $188.6 million, with service revenue increasing by 5.4% and distribution revenue rising by 9.3%.

The company's net income for the third quarter was $2.4 million, down 29.6% from $3.3 million in the prior year, largely due to a significant drop in operating income, which fell by 51.1% to $2.1 million. The decrease in operating income was influenced by higher operating expenses, which rose to $17.6 million, reflecting costs associated with recent acquisitions and increased employee compensation. The gross profit margin also declined to 29.5%, down from 32.1% in the previous year, primarily due to lower margins in the service segment.

Transcat has made strategic moves to enhance its service capabilities through acquisitions, including the recent purchase of Martin Calibration, Inc. for approximately $80.4 million, which is expected to expand the company's service offerings. The company also acquired Becnel Rental Tools, Axiom Test Equipment, and SteriQual, contributing to a significant increase in goodwill and intangible assets on its balance sheet. As of December 28, 2024, total assets stood at $386.0 million, up from $287.6 million at the end of the previous fiscal year, reflecting the impact of these acquisitions.

Operationally, Transcat's customer base and engagement metrics have shown positive trends, with service revenue accounting for 62.3% of total revenue in the third quarter. The company reported an increase in average shares outstanding, which rose to 9.3 million, reflecting its equity financing activities. The company’s leverage ratio was reported at 0.97, indicating a strong financial position relative to its debt obligations.

Looking ahead, Transcat anticipates mid-to-low single-digit organic revenue growth for fiscal year 2025, with expectations for gross margin expansion as it integrates its acquisitions and leverages automation in its calibration processes. The company remains optimistic about returning to historic growth levels in fiscal year 2026, supported by a strong sales pipeline and ongoing investments in technology and operational efficiency.