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Dec 25, 2021
Transcat Q3 2022 Earnings Report
Transcat reported record third quarter EBITDA driven by a 22% service revenue growth and strong gross margin expansion.
Key Takeaways
Transcat reported strong third-quarter results, driven by the Service business, which saw a 22% revenue increase. The Distribution segment also experienced growth, and the company's adjusted EBITDA increased by 20% compared to the previous year.
Service revenue grew by 22%, including 10.2% organic growth and 12% from acquisitions.
Gross margin expanded 180 basis points to a record 29.7% due to operating leverage and accretive margins from acquisitions.
Distribution segment revenue increased by 7.2% with a record $9 million backlog.
Consolidated adjusted EBITDA increased by 20% to $5.5 million.
Transcat
Transcat
Transcat Revenue by Segment
Revenue by Segment
Service Revenue
CapyFin.comDistribution Revenue
CapyFin.com Forward Guidance
For the fourth quarter of fiscal 2022, Transcat expects Service revenue growth to be in the high-teens and Service gross margin to be in the range of 35%. Distribution revenue is expected to grow high single-digits. Total operating expenses are expected to increase approximately $0.5 million sequentially from the third quarter.
Positive Outlook
- Service revenue growth expected to be in the high-teens.
- Service gross margin expected to be in the range of 35%.
- Distribution revenue is expected to grow high single-digits.
- Strong balance sheet
- Sustainable Service segment gross margins
Challenges Ahead
- Total operating expenses are expected to increase approximately $0.5 million sequentially from the third quarter.
- Vendor lead times extended further toward the end of the calendar year.
- Impact of COVID-19 pandemic.
- Increases in employee and stock compensation costs
- Investments in technology
Revenue & Expenses
Visualization of income flow from segment revenue to net income