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Sep 28, 2024
Transcat Q2 2025 Earnings Report
Reported revenue and gross profit growth in the second quarter.
Key Takeaways
Transcat reported an 8% increase in consolidated revenue, driven by growth in both service and distribution segments. Service revenue grew by 6%, and distribution revenue grew by 11%. Consolidated gross profit increased by 5.4%, but gross margin decreased due to softness in Nexa and Becnel revenues. Net income per diluted share was $0.35, compared to $0.06 in the previous year.
Consolidated revenue increased by 8% driven by service and distribution growth.
Service revenue grew by 6%, marking the 62nd consecutive quarter of growth.
Distribution revenue increased by 11%, but was negatively impacted by hurricanes.
The company expects a return to high single digit organic growth by the first half of fiscal 2026.
Revenue by Segment
Forward Guidance
Transcat expects mid-single-digit organic service revenue growth for fiscal year 2025, normalized for the extra week in fiscal 2024, along with gross margin expansion. The company anticipates a return to high single-digit organic growth by the first half of fiscal year 2026. They also expect their income tax rate to range between 21% and 23% in fiscal 2025.
Positive Outlook
- Expects FY25 organic Service revenue growth in the mid-single digits when normalized for the extra week in fiscal 2024 and gross margin expansion.
- Anticipates a return to high single digit organic growth by the first half of fiscal 2026.
- Automation of calibration processes and focus on productivity remain key enablers of margin expansion.
- Demonstrated the ability to leverage these tools to improve operational efficiency.
- Continue to work robust acquisition pipeline and are pleased with the current flow of strategic opportunities.
Challenges Ahead
- Disappointed with the Nexa-impacted aggregated results in fiscal Q2.
- Experienced short term, isolated revenue challenges in the Nexa services channel in the quarter
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
Analyze how earnings announcements historically affect stock price performance
Avg. Return Before/After Earnings
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