Transcat Q3 2025 Earnings Report
Key Takeaways
Transcat's consolidated revenue increased by 2.4% to $66.8 million, driven by a 6.5% increase in Distribution revenue, while Service revenue remained relatively flat. However, the company's gross profit decreased by 6.0% to $19.7 million, and net income per diluted share decreased to $0.25 compared to $0.38 last year.
Consolidated revenue increased by 2.4% to $66.8 million.
Distribution revenue grew by 6.5%, driven by growth in the rental business including acquisitions.
Service revenue increased slightly by 0.1%, including $2.0 million of incremental revenue from acquisitions, with organic revenue decreasing by 3.8% due to the timing of the Christmas holiday.
Net income per diluted share was $0.25, compared to $0.38 last year.
Transcat
Transcat
Transcat Revenue by Segment
Forward Guidance
Transcat expects FY25 Service organic revenue growth in the mid-to-low single digits, when normalized for the extra week in fiscal 2024. The company anticipates a return to more historic organic growth levels due to a strong Service sales pipeline. Transcat expects its income tax rate to range between 21% and 23% in fiscal 2025.
Positive Outlook
- Strong organic sales pipeline supports a return to more historic organic growth levels.
- Acquisition of Martin Calibration is expected to be a strong addition due to its commitment to quality, extensive customer base, geographic coverage, and strong culture.
- Automation of calibration processes and focus on productivity are expected to improve operational efficiency.
- Diversified portfolio will drive sustainable organic revenue growth.
- Track record of strong execution.
Challenges Ahead
- Service organic revenue declined in fiscal Q3 due to the timing of the holiday.
- Timing of the Christmas holiday impacted the quarter’s results.
- Transcat Solutions (Nexa) revenue was soft in comparison to last year.
- Gross margin decreased 260 basis points primarily due to lower organic revenue.
- Adjusted EBITDA decreased by $1.2 million or 13.2%.
Revenue & Expenses
Visualization of income flow from segment revenue to net income