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Sep 24, 2022
Transcat Q2 2023 Earnings Report
Transcat reported strong second quarter results driven by 19% service revenue growth.
Key Takeaways
Transcat reported a 12% increase in consolidated revenue, driven by strong performance in both the Service and Distribution segments. Service revenue grew by 19%, while Distribution revenue increased by 1.6%. The company's EBITDA increased by 6% to $7.5 million.
Service segment revenue grew 19%, with 9% organic growth.
Distribution segment revenue increased 1.6% with gross margin expanding 140 basis points to 24.9%.
Backlog increased 18% from prior year to a record $9.1 million.
EBITDA increased 6% from prior year to $7.5 million.
Transcat
Transcat
Transcat Revenue by Segment
Revenue by Segment
Service Revenue
CapyFin.comDistribution Revenue
CapyFin.com Forward Guidance
Transcat anticipates continued organic Service revenue growth in the high-single digit range and expects gross margin improvement to continue over time. The company expects its income tax rate to range between 22% and 24% in fiscal 2023.
Positive Outlook
- Strong demand levels experienced in fiscal second quarter.
- Ability to drive growth through various economic cycles.
- Significant participation in the life-science, aerospace and defense and other highly regulated industries.
- High recurring revenue streams in regulated industries.
- Nexa Enterprise Asset Management to perform very well through various economic cycles.
Challenges Ahead
- Growing economic uncertainty.
- Start-up costs from new client-based lab implementations.
- New technicians typically take several months to achieve expected productivity levels.
- Ongoing supply chain challenges impacting the industry.
- Increase in the tax rate had an unfavorable impact of $0.06 per diluted earnings per share and adjusted diluted earnings per share when compared to the prior year.
Revenue & Expenses
Visualization of income flow from segment revenue to net income