Transcat Inc. on Tuesday reported record first-quarter results, beating Wall Street estimates.
For the first quarter ended June 26, the Rochester provider of accredited calibration, repair, inspection and laboratory instrument services posted revenues of $47.79 million, up nearly 23 percent from $38.9 million in the year-ago quarter. Net income for the quarter was $3.69 billion, up from $798 million in the first quarter of fiscal 2021. Diluted earnings per share increased to 49 cents from 11 cents.
Analysts had expected earnings of 25 cents on sales of $44.42 million.
“The start to our fiscal year 2022 was very strong and allowed us to achieve record first-quarter revenue, gross margin, operating income and EBITDA,” said Transcat President and CEO Lee Rudow. “Our service segment continued to perform at a high level, growing revenue 20 percent and increasing gross margin 540 basis points from the prior-year period. We reported 16.6 percent organic revenue growth as our highly-regulated end markets, including life sciences, remained strong, and we compared against a COVID-19 impacted prior-year quarter. Our gross margin improvement was driven by operating leverage on our fixed costs from the strong organic growth and to a lesser degree continued strong technician productivity.”
At the end of the first quarter, the company had $27.9 million available for borrowing under its secured revolving credit facility. Total debt of $22.2 million was up $2.6 million from fiscal 2021 year-end.
“Cash flow from operations in the first quarter was in line with our expectations and our balance sheet remains strong,” Rudow said. “We recently announced an amendment to our credit facility which favorably updates certain terms and increases our available revolving line of credit from $40 million to $80 million to support future growth investments and a robust acquisition pipeline.”
Rudow added: “For the second quarter of fiscal 2022, we expect service organic growth to be similar to what we achieved in the first quarter. We expect more modest improvement in service gross margin than we have experienced over the last several quarters, largely due to a more difficult technician productivity comparison versus the second quarter of fiscal 2021. Distribution is expected to achieve high teens growth in the second quarter on improved order trends and a prior-year comparison that includes lower levels of demand due to the COVID-19 pandemic.”
Shares of company stock (Nasdaq: TRNS) spiked early Wednesday but by mid-afternoon had settled at $60.40.
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