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Mar 25, 2023
Transcat Q4 2023 Earnings Report
Transcat reported record revenue and gross margins, driven by strong performance in both the Service and Distribution segments. Service revenue increased, with organic growth, and the Distribution segment showed continued margin improvement due to strength in the Rentals business. The company completed three acquisitions during the fiscal year, expanding its addressable markets and service offerings.
Key Takeaways
Transcat reported record revenue and gross margins for the fourth quarter and full year 2023. Consolidated revenue increased by 11.1% to $62.1 million, with a gross profit increase of 14.9% to $19.2 million. Adjusted EBITDA increased by 17.6% to $9.0 million, and net income per diluted share rose to $0.48 from $0.40.
Consolidated revenue increased by 11.1% to $62.1 million.
Service segment revenue increased by 14.7%, with 10.0% organic growth.
Distribution sales increased by 5.1% due to improved end market demand and strength in the Rentals business.
Adjusted EBITDA increased by 17.6% to $9.0 million.
Transcat
Transcat
Transcat Revenue by Segment
Revenue by Segment
Service Revenue
CapyFin.comDistribution Revenue
CapyFin.com Forward Guidance
Transcat anticipates another year of growth and margin expansion across its Service channels in fiscal 2024, benefiting from a predominately life science-oriented market and a growing Rentals business. Organic Service revenue growth is expected in the high single-digits, with continued gross margin improvement. The company plans to invest in its NEXA business and new client-based labs to support additional organic revenue growth and margin expansion.
Positive Outlook
- Expects another year of growth and margin expansion across Service channels.
- Benefits from a predominately life science-oriented market.
- Growing Rentals business expected to perform well.
- Expects organic Service revenue growth in the high single-digits.
- Anticipates demonstrating more selling, general and administrative expense leverage in the second half of fiscal 2024.
Challenges Ahead
- Macroeconomic uncertainty looms over the business world.
- Investments in NEXA and new client-based labs will temporarily weigh on year-over-year gross margin expansion in the first quarter of FY24.
- Tax rate is expected to range between 21% and 23% in fiscal 2024.
- There will be a difference in calendarization of the tax benefit from vesting of share-based payments in fiscal 2024.
- Competition in the calibration and distribution markets.
Revenue & Expenses
Visualization of income flow from segment revenue to net income