Transcat begins to grow after rebounding from losses

Mary Stone//February 16, 2007//

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Transcat Inc. last year climbed to 13th from 22nd the year before on the Rochester Business Journal’s list of local public companies, ranked by net income.
Transcat had posted net income of $300,000 in 2005, following $400,000 in 2004, both sharp improvements compared with a net loss of $4.7 million in 2003 and a $6.6 million net loss in 2002.
Carl Sassano, the former second-in-command at Bausch & Lomb Inc., took the helm at then-troubled Transcat in 2002. Charles Hadeed, president and chief operating officer, also is former Bausch & Lomb executive.
Around the time Sassano joined Trans-cat, the firm undertook a series of belt-tightening measures. Transcat consolidated local operations into one headquarters on Vantage Point Drive, off Manitou Road, and consolidated a handful of the company’s calibration labs nationwide.
The year 2002 also was around the time Transcat, formerly called Transmation Inc., changed its name and shifted its focus from manufacturing.
The company sold off non-core divisions to reinforce its attention to sales and services and underscored the shift by choosing Transcat, the brand name of its test and measurement equipment catalog.
Last month, Transcat reported a surge in profit in its fiscal third-quarter results chiefly from the sale of Transmation in fiscal 2002.
Due to a binding distribution agreement, Transcat could not record the sale of its Transmation Products Group to Fluke Corp., a subsidiary of Danaher Corp., until this year.
Under the terms of the sale to Fluke, Transcat received $10.5 million in cash at closing. For accounting reasons at the time, Transcat was precluded from recognizing gains from the sale until certain conditions were met. Once they were last month Transcat recognized a gain of $1.5 million in the third quarter of fiscal 2007.
As a result, net income rose to $1.2 million in the fiscal third quarter, or 16 cents a diluted share, compared with close to $300,000, or 4 cents a share, a year ago.
Excluding the net gain, net income for the fiscal 2007 third quarter was $300,000.
Net sales for the fiscal third quarter increased 6.2 percent to $17.2 million. For the first nine months of the fiscal year, net sales increased 7.2 percent to $47.6 million. Net income was $1.6 million, up from $800,000 a year ago.
The company also strengthened its balance sheet in November with a $10 million revolving credit facility with JPMorgan Chase Bank N.A.
The new credit facility will reduce Transcat’s cost of borrowing and provide additional working capital to support continued growth, officials said.
“We have a fair amount of availability on our balance sheet. We’re in very, very solid condition, which is refreshing and obviously positive. As a result of that we’ve done two acquisitions over the past two years, one in Puerto Rico and one in Fort Wayne, Ind., both of which have added capacity to the system,” Sassano said.
The company now has 12 Calibration Centers of Excellence, which in addition to Rochester include Charlotte, Boston, Dayton, Houston, Los Angeles and Ottawa.
“Because our business is geared towards the process, petrochemical, pharmaceutical industry we do the majority of our business in the Mid-Atlantic East Coast region, quite a lot in the whole Houston ship channel, Louisiana area, and a fair amount in Southern California,” Sassano said.
In 2003, Sassano led a focus on growing the catalog business, which in 2002 grew from an annual distribution of 75,000 to 440,000 in 2005.
The catalog has helped make product sales a solid mainstay of business while Transcat continues to ramp up calibration services.
-Mary Stone