Twenty-five years ago, the leadership of Transcat Inc., then known as Transmation Inc., made a key decision that changed its future.
This month marks the 25th anniversary of Transcat’s calibration services, a segment of the company that has grown to more than $40 million since 1988. The company’s services segment is approaching 40 percent of its total revenues of $120 million.
The company was founded in 1964. The business first focused on manufacturing test instruments such as pressure calibrators before switching to calibration services, including validation, remediation, analytical qualification and consulting. The company distributes test equipment.
Essentially, Transcat tests and calibrates equipment that will be used to test products in other industries.
The company has expanded from one lab to 18 throughout North America. It has the No. 2 market share for a third-party service provider in the calibration industry. Next year will be the 50th anniversary of the company.
Ten years ago the outlook for the company was vastly different. Under the new leadership of Carl Sassano and Charles Hadeed, the company began to lay the groundwork for Transcat’s future.
From 2003 to 2013, Sassano and Hadeed built infrastructure and focused on creating a strong foundation that would lead to gradual growth.
"I think this company had a plan and it was well-executed," said Lee Rudow, president and CEO. "Transcat is a company that, if you go back to 2003, it was really troubled; it was almost delisted, borderline insolvent, and I think that new leadership really changed this company."
Transcat has acquired seven companies in the last four to five years and will continue to seek growth organically and through acquisitions.
The company employs 400 people nationwide, 150 in Rochester. The business hopes to add 30 people to its local staff next year.
"One thing that is important in the service business is you need a critical mass. And so within the last 12 months or so, after being in the business for 25 years, we’ve developed enough critical mass that we sort of turned the corner in terms of profitability," Rudow said. "The company last year was more profitable in our services segment than at any other time."
Geographic and opportunistic expansion is a near-term focus.
"Our goal is to drive and achieve double-digit (growth) in our service segment," Rudow said. "We continue to set company records, both in profitability and in revenue so far this year."
In its fiscal first quarter, which ended July 30, the company posted net income of $721,000 compared with $361,000 a year earlier. Its stock was trading at midweek at $7.40 a share. Its 52-week range is $4.97 to $8.55.
"I love taking something from where it is and growing it-and growing it profitably," Rudow said. "It’s a series of disciplines and things you put in place. We are a $120 million company, and my job is to make us a $200 million company. That’s my goal."
Because the company’s customer base includes clients in the bioscience and medical device industries, much of the work Transcat does is regulated by the Food and Drug Administration. Even in times of economic recession, Transcat’s business is relatively stable because FDA regulations ensure a need for calibration.
"A medical device that’s going to go inside your (body)-it could be a heart valve, pacemaker, could be an artificial knee-if these things aren’t right, they can cause death, and our society regulates that," Rudow said. "The more regulation, the better from a Transcat perspective."
The business wants to continue having transactional customers, but it sees enterprise customers as one way it can broaden its customer base. An enterprise account would be a large company in one location or one company with multiple locations that all work with Transcat.
"We’ve spent the last couple of years developing large customers who have 12,000 gages, and we’ve gotten a lot better at that. So we now have a field sales force that gets more face-to-face than what we traditionally did in the past," Rudow said.
One of the challenges of the calibration service industry is to ensure uniformly that measurements are as accurate as possible. Transcat uses a system called Caltrak, an online calibration management system that monitors the accuracy and quality of each calibration.
"The question really is, how do you give the right instructions to every tech at the right time?" said Niko Smrekar, director of marketing. "What we do different than everybody else is we have a team of specialists that creates calibration procedures and then code those instructions into Caltrak, which are then visible to every tech at any time anybody picks up that instrument."
A challenge for the company is branding itself.
"We’re the second-largest third-party service provider vendor in the country," Rudow said. "And yet we think there’s a huge opportunity to get our name out there so it’s associated more with what we do and what our strengths are. Transcat has to mean something, just like Apple means something."
The company also seeks to be better known in the Rochester area.
"Our headquarters is in Rochester, (but) we’re probably better known outside of Rochester than we are inside Rochester," Rudow said.
10/11/13 (c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email [email protected].