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Business Wire
2 days ago
- Business
- Business Wire
Transcat to Participate in the Northland Growth Conference 2025
ROCHESTER, N.Y.--(BUSINESS WIRE)--Transcat, Inc. (Nasdaq: TRNS) ('Transcat' or the 'Company'), a leading provider of accredited calibration services, cost control and optimization services, and distribution and rental of value-added professional grade handheld test, measurement, and control instrumentation, will participate in the Northland Growth Conference 2025 being held virtually on Wednesday, June 25, 2025. Transcat Chief Executive Officer Lee Rudow and Chief Financial Officer Thomas Barbato will conduct one-on-one and small group meetings throughout the conference. Northland Growth Conference 2025 Location: Virtual Format: Virtual 1x1 and Small Group Investor Meetings Attendees: Lee Rudow, Chief Executive Officer, Thomas Barbato, Chief Financial Officer, and Mike West, Chief Operating Officer For more information on the conference, or to schedule a one-on-one meeting with Transcat management, please contact your Northland Capital Markets representative or you may also email your request to TRNS@ or call Chris Tyson at (949) 491-8235. About Transcat Transcat, Inc. is a leading provider of accredited calibration, reliability, maintenance optimization, quality and compliance, validation, Computerized Maintenance Management System (CMMS), and pipette services. The Company is focused on providing best-in-class services and products to highly regulated industries, particularly the Life Science industry, which includes pharmaceutical, biotechnology, medical device, and other FDA-regulated businesses, as well as aerospace and defense, and energy and utilities. Transcat provides periodic on-site services, mobile calibration services, pickup and delivery, in-house services at its 33 Calibration Service Centers strategically located across the United States, Puerto Rico, Canada, and Ireland. Inclusive of customer embedded locations and other field offices, we operate out of more than 50 locations. The breadth and depth of measurement parameters addressed by Transcat's ISO/IEC 17025 scopes of accreditation are believed to be the best in the industry. Transcat also operates as a leading value-added distributor that markets, sells, and rents new and used national and proprietary brand instruments to customers primarily in North America. The Company believes its combined Service and Distribution segment offerings, experience, technical expertise, and integrity creates a unique and compelling value proposition for its customers. Transcat's strategy is to leverage its strong brand and unique value proposition that includes its comprehensive instrument service capabilities, enterprise asset management, and leading distribution platform to drive organic sales growth. The Company will also look to expand its addressable calibration market through acquisitions and capability investments to further realize the inherent leverage of its business model. More information about Transcat can be found at:
Yahoo
2 days ago
- Business
- Yahoo
Transcat to Participate in the Northland Growth Conference 2025
ROCHESTER, N.Y., June 12, 2025--(BUSINESS WIRE)--Transcat, Inc. (Nasdaq: TRNS) ("Transcat" or the "Company"), a leading provider of accredited calibration services, cost control and optimization services, and distribution and rental of value-added professional grade handheld test, measurement, and control instrumentation, will participate in the Northland Growth Conference 2025 being held virtually on Wednesday, June 25, 2025. Transcat Chief Executive Officer Lee Rudow and Chief Financial Officer Thomas Barbato will conduct one-on-one and small group meetings throughout the conference. Northland Growth Conference 2025Date: Wednesday, June 25, 2025Location: VirtualFormat: Virtual 1x1 and Small Group Investor MeetingsAttendees: Lee Rudow, Chief Executive Officer, Thomas Barbato, Chief Financial Officer, and Mike West, Chief Operating Officer For more information on the conference, or to schedule a one-on-one meeting with Transcat management, please contact your Northland Capital Markets representative or you may also email your request to TRNS@ or call Chris Tyson at (949) 491-8235. About Transcat Transcat, Inc. is a leading provider of accredited calibration, reliability, maintenance optimization, quality and compliance, validation, Computerized Maintenance Management System (CMMS), and pipette services. The Company is focused on providing best-in-class services and products to highly regulated industries, particularly the Life Science industry, which includes pharmaceutical, biotechnology, medical device, and other FDA-regulated businesses, as well as aerospace and defense, and energy and utilities. Transcat provides periodic on-site services, mobile calibration services, pickup and delivery, in-house services at its 33 Calibration Service Centers strategically located across the United States, Puerto Rico, Canada, and Ireland. Inclusive of customer embedded locations and other field offices, we operate out of more than 50 locations. The breadth and depth of measurement parameters addressed by Transcat's ISO/IEC 17025 scopes of accreditation are believed to be the best in the industry. Transcat also operates as a leading value-added distributor that markets, sells, and rents new and used national and proprietary brand instruments to customers primarily in North America. The Company believes its combined Service and Distribution segment offerings, experience, technical expertise, and integrity creates a unique and compelling value proposition for its customers. Transcat's strategy is to leverage its strong brand and unique value proposition that includes its comprehensive instrument service capabilities, enterprise asset management, and leading distribution platform to drive organic sales growth. The Company will also look to expand its addressable calibration market through acquisitions and capability investments to further realize the inherent leverage of its business model. More information about Transcat can be found at: View source version on Contacts Investor Relations Chris TysonExecutive Vice PresidentMZ Group - MZ North America949-491-8235TRNS@ Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
21-05-2025
- Business
- Yahoo
Q4 2025 Transcat Inc Earnings Call
Thomas Barbato; Chief Financial Officer; Transcat Inc Lee Rudow; President, Chief Executive Officer; Transcat Inc Greg Palm; Analyst; Craig-Hallum Capital Group Ted Jackson; Analyst; Northland Securities Scott Buck; Analyst; H.C. Wainwright & Co., LLC Operator Greetings. Welcome to Transcat Inc fourth quarter and full year full fiscal year 2025 financial results call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tom Barbato, Chief Financial Officer. Thank you, Tom. You may begin. Thomas Barbato Thank you, Sherry, and good morning, everyone. We appreciate your time and your interest in Transcat. With me here on the call today is our President and CEO Lee Rudow and our Chief Operating Officer Mike West. We'll begin the call with some prepared remarks, and then we'll open the call for questions. Our earnings release crossed the wire after the market closed yesterday. Both the earnings release and the slides that we will reference during our prepared remarks can be found on our website in the Investor Relations section. If you would please refer to slide 2 as you are aware, we may make forward-looking statements during the formal presentation and Q&A portion of this teleconference. These statements apply to future events which are subject to risks and uncertainties, as well as other factors that could cause the actual results to differ materially from where we are today. These factors are outlined in the news release as well as the documents filed by the company with the SEC. You can find those on our website where we regularly post information about the company as well as on the SEC's website at We undertake no obligation to publicly update or correct any of the forward-looking statements contained in this call, whether as a result of new information, future events, or otherwise, except as required by law. Please review our forward-looking statements in conjunction with these precautionary factors. Additionally, during today's call, we will discuss certain non-GAAP measures which we believe will be useful in evaluating our performance. We should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We've provided reconciliations of non-GAAP to compare GAAP measures in the tables accompanying the earnings release. With that, I'll turn the call over to Lee. Lee Rudow Thank you, Tom. Good morning, everyone. Thank you for joining us on the call today. The fiscal 2025 consolidated revenue was up 7% to $278.4 million on continued consistent demand for both our services and products. Service revenue grew 7% to $181.4 million driven by strength in our core calibration business. Distribution revenue grew 8% to $97 million on continued growth in our rental platform. Operating cash flow for the full fiscal 2025 year was a record $38.6 million a year over year increase of 18%. Additionally, on December 9, we acquired the coveted Martin Calibration, the largest acquisition in Transcat's history. Martin is a very profitable, well-run company with over $25 million of mostly calibration service revenue. The Martin deal is highly synergistic and fulfills all three of our strategic acquisition drivers, including geographic expansion into the Minneapolis and Chicago regions of the Midwest, expanded capabilities and expertise, particularly on the dimensional and mechanical measuring side of the business, and finally to bolt-on opportunities where we can leverage our current infrastructure in Southern California and Phoenix, Arizona. Turning to the fourth quarter results for our service segment, Transcat's calibration services business continues to perform well and benefit from high levels of regulation and recurring revenue streams. In the fourth quarter, calibration services achieved double digit revenue growth of 11%, of which organic growth was in the high single digit range when normalized for the 53 week and excluding solutions. We reported a service gross margin of 36.2% in the fourth quarter, which expanded 50 basis points versus the prior year. Margin expansion was driven by organic revenue growth and the associated inherent leverage in our calibration lab operating model, along with increased productivity from continued automation and process improvement. Turning to the fourth quarter results for our distribution segment, distribution revenue grew 4%, driven by growth in the rental channel. It's important to note our associated e-commerce platform continues to be an important component to lead generation for the service segment. Transcat's distribution platform, including rentals, uniquely positions the company to achieve its consistent organic service growth. Barriers to entry in this respect. Have defended and we expect will continue to defend both our unique value proposition and strong brand across both operating segments. With that, I'll turn things over to Tom for more detailed look at our Q4 and full year financial performance. Thomas Barbato Thankfully, I'll start on slide 4 of the earnings stack, which provides detail regarding our revenue on a consolidated basis and by segment for the fourth quarter in full year. Fourth quarter consolidated revenue of $77.1 million was up 9% versus the prior year on service segment strength and growth in our distribution segment. Looking at it by segment, service revenue grew 11% to $52 million, which included $6.8 million from acquisitions in the quarter. As Lee mentioned, growth was driven by strong performance in our calibration business, and service organic revenue growth was in the high signal digit range we normalized for the 53 week in excluding Transcat solutions. Turning to distribution, revenue of $25.1 million was up 4% versus the prior year. We continue to see growth in the rental channel. Finally, on a full year basis, the consolidated revenue total consolidated revenue was $278.4 million and increase to 7% compared to the prior fiscal year. Our service segment saw continued demand in our calibration business, resulting in year over year growth of 7%. On a full year basis, service revenue benefited by $10.4 million, resulting from acquisition. Distribution segment revenue grew 8%, driven by rentals. Turning to slide 5, our consolidated gross profit for the fourth quarter of $25.9 million was up 8% from the prior year, and our gross margin declined 30 basis points. Service gross margin expanded 50 basis points to 36.2%. The service margin increase further demonstrated the inherent leverage in our business model, as well as our ability to leverage higher levels of automation and technician productivity. The distribution segment gross margin of 28.2% was down 210 basis points. For the full year, our consolidated gross profit increased 7% to $89.5 million, and our gross margin declined 20 basis points to 32.1%. Our service gross margins was 33.4%, which represented a decrease of 30 basis points compared to the prior year. Distribution segment gross margin of 29.7% was up 20 basis points as a segment benefited from the growth in the higher margin rental channel. Turning to slide 6, Q4 net income of $4.5 million decreased from $6.9 million in the prior year, and our diluted earnings per share decreased to $0.48 from $0.77. The prior year net income included a non-cash profit increase of $2.4 million for the amended NEXA Earn-Out agreement. We report adjusted diluted earnings per share as well to normalize for the impact of upfront and ongoing acquisition related costs. Q4 adjusted diluted earnings per share was $0.64. Lastly, full year net income increased 6% to $14.5 million. Flipping the slide 7 where we show our adjusted EBITDA and adjusted EBITDA margin. We use adjusted EBITDA, which is non-GAAP to gauge the performance of our business because we believe it is the best measure of our operating performance and ability to generate cash as we continue to execute on our acquisition strategy. This metric becomes even more important to highlight as it does it just for one-time deal related trans transaction costs, as well as the increased levels of non-cash expense that will hit our income statement from acquisition purchase accounting. With that in mind, fourth quarter consolidated adjusted EBITDA of $12.7 million was up 9% from the same quarter in the prior year, driven by growth of 16% in the service segment. Q4, even a margin of 16.5% was consistent with last year. Full year EBITDA of $39.7 million, which was up 3% compared to the prior year, driven by strength in the calibration business, is always a reconciliation of adjusted EBITDA to operating income in net income can be found in the supplemental section of this presentation. Moving the slide 8, operating free cash flow of $25.4 million, improved 31% versus the prior year. Full year capital expenditures were consistent with the prior year and continued to be centered around service segment capabilities, rental pool assets, technology, and future growth projects. The spend was in line with expectations for fiscal year 2026. We expect our net CapEx to be in the range of $14 million to $16 million. Slide 9 highlights our strong balance sheet. At year end, we had a total net debt of $31 million with a leverage ratio of 0.7 [X]. We had $49 million available from our credit facility at quarter end. Lastly, we expect to file our 10-K on May 27. With that, I'll turn it back to you, Lee. Lee Rudow Thanks, Tom. Those of you who follow Transcat know we have consistently delivered strong results through various economic cycles over the past decade and a half. We have a proven track record of delivering profitable growth and being disciplined capital allocators. Our strategy is differentiated and our leadership team is poised to execute our plan and to drive excellent performance. While the macroeconomic backdrop, including tariffs, have become more uncertain since the beginning of the year, over time, Transcat's business, particularly a calibration services channel, has been resilient as it continues to benefit from recurring revenue streams in highly regulated markets put simply, in the past, the business holds up well. Holds up well because our organic growth typically returns to growth levels more in line with the historical high single digit growth range as macro trends normalize. As we look at the landscape for strategic accretive acquisitions, we are excited by our current pipeline and our opportunity to drive both synergistic growth opportunities and strengthen our foundation for future growth. And as I mentioned, we're particularly excited with the recent Martin acquisition, which is both sizable and right down the fairway for Transcat. The early Martin integration activities are going very well and ahead of schedule. We continue to believe the service segment has a substantial runway for growth both organically and through acquisition. Our solutions business is making slow and steady progress towards the short-term goals we communicated over the last couple of quarters. We are now actively operating the proven Transcat sales playbook in the solutions channel, and as we integrate the solutions channel into our overall service platform, expectations are for improved results, stabilization, and ultimately growth, which will contribute to our overall organic service goals. I'll close by saying that our leadership team has never been stronger. Across the organization, we've invested in recruiting and developing a higher level of leadership in sales, technology, and operations, all commensurate with our ambitious long-term expectation for Transcat. It all starts with strong leadership and culture, and in our business space we believe our leadership team is second to none. We intend to leverage these strengths as we create, communicate, and execute our strategy and vision for the future, a future we feel is incredibly exciting. And with that operator, you can open the call for questions. Operator Thank you (Operator Instructions) Greg Palm Craig Hallam Capital Group. Greg Palm Yeah, good morning, thanks for taking the questions and congrats on the results. Thomas Barbato Thanks Greg. Greg Palm Can we maybe just start with, in terms of like, the cadence thinking about, thinking back to December and some of the timing issues you had and, back in late January you talked about a big bounce back in January. How did the rest of the quarter flow and then I guess more importantly, over the last, call it four, five, six weeks, any change versus what you saw, back in February and March? Lee Rudow I would characterize the fourth quarter February, March, I would just include in my characterization as good, solid, kind of what we expected, we probably saw some of the pent up demand from the December time frame that I think you're referring to make its way into the fourth quarter, and that helped contribute to the high single digit organic growth. I don't think we saw it all, and I think that will, play out over time, that's a kind of interesting thing, I mean, given the backdrop we have and some of the volatility, and this work has to be done and we're going to do it, but there is some flexibility in the short term for customers to, kind of wiggle around certain dates and extend intervals when necessary. So, I think it all plays out as we'll get to work, but from a quarter to quarter, month to month basis, it's hard to predict, particularly with the volatility. So we're pleased with the high single digit growth. We think there's, probably more over time, but it's take a couple of quarters to get past the current volatility before we probably see it all. Greg Palm Yeah, that's fair. And I remember last quarter you in the service business specifically you had talked about that there were kind of several big opportunities looming out there. Did any of those close or is that kind of what you're referring to in terms of, still opportunities and things are shifting around timing wise, etc. Lee Rudow Yeah, I mean, we have a healthy pipeline currently of new opportunities we're working on. We've had a number of new wins contributing to what we think will be momentum primarily or particularly in the back half of the year as we kind of look out at some of the potentiality of it. But yeah, I mean, I think again, I've said this for many years and, it's difficult to look at any business, it's difficult to look at our business every 90 days and get a full picture, it's a regulated market, the recurring revenue streams, if you do the work well, and your customers are satisfied, you'll get the work back most of the time. And so I think if you look beyond quarter to quarter, look at the whole year, we would expect to, hit our targets of high single digit growth, as we exit this year and go into next, and how soon we get there and the volatility in the first quarter, these are things that are very difficult to determine, given the current economic backdrop, but I'm not, we don't have any concerns when we look, beyond that. Greg Palm Fair enough. Okay, and then just on distribution, I'm just curious just given, some of the tariff announcements, from a procurement standpoint just remind us kind of where that that sits and maybe more importantly, are you seeing any kind of changes in behavior from customers a are you seeing more demand for or more interest in in rentals versus buying outright? I'm just kind of curious to see what you're seeing in that segment as well. Lee Rudow Right now, if I look at the current environment we're working in, distribution has held up really well, and what I mean by that is, we're getting a fair amount of orders and volume in, but it's hard to determine even a little bit of an uptick. So it's hard to determine whether people are getting ahead of some tariffs, so some momentum is that's the impetus for some of the momentum that, we always used to say that the distribution business was kind of a leading indicator when the business was slow, that might tell you something about the economy when you're doing well, it tells you something else. In this environment where you've got, the tariff discussion going on, I think, sort of all bets are off I think the uptick and the solid, results that we're seeing kind of currently, may be a leading indicator but may also just be a reaction to tariffs. So I think we're going to need more time. Before we determine, how that business is going to play out this year and what the current, kind of steadiness means. I don't know, but, we're not overly thinking it because it's just too much volatility, but right now we're doing okay. Greg Palm And but to be clear, when you're talking about uptick, are you talking like current quarter, like quarter to date, or you, putting currently. Lee Rudow Yes, current, the current read is distribution is holding up well. Greg Palm Yeah, okay, alright, I will, I'll leave it there thanks. Lee Rudow You got it thanks Greg. Operator Ted Jackson, Northland Securities. Ted Jackson Oh great, thanks for taking the questions. So my first question, you did a really nice job with regards to expense control on the OpEx side, and I was kind of curious, what were the levers you pulled in there and how would we think about those line items as we, put together our, estimates for '26. Thomas Barbato Yeah, I think, obviously it's something that we focus on, regularly, Ted, and always trying to make sure that our costs are aligned with, the levels of revenue we're seeing and also aligned with, some of what we're seeing from a, the economic backdrop here, right. So, some of it is, delayed hires, some of it is just good, cost management and we'll continue to do that. I mean, on the hiring front you can only do that for so long, right, because we want to make sure that, we have the right teams in place to deliver, our long term, plans. So, but we'll continue to focus on costs, we'll continue to make good decisions, and you know as we go into. This year I would expect, some, nominal increases and. There will be some items that kind of return. I'll just say to more normal levels, right. So, as an example based on our performance last year, we didn't pay incentives at the level that we normally would, but we would expect this year with, our expectations that, we would see an uptick in some of those lines, but where we can, be focused on cost savings and being very cost conscious, we absolutely will. Ted Jackson Well, it was impressive. Next question, I'm going to kind of go back to, what Greg was dancing around with, when I listened to, the prepared remarks and the commentary that's in your slide deck, the discussion with regards to expect expectation of high single digit growth or services, with the caveat, that once it's once the micro environment excuse me, I did it. The macro environment normalizes, I mean, is there, is that just, boilerplate? I'm just, we're just being conservative because, it should be or, as you're kind of been rolling through, the spring is, have you seen, some disruption maybe turmoil within the business that gives you pause, where you, you've actually seen, since we've kind of rolled into April and now or May, the last two months we've seen, things kind of just be a little more turbulent and when you're thinking about how you're going to lay out that growth that you're expecting that that things will calm down and you're going to see you maybe a stronger back part of the fiscal year than the front part of, all things. Lee Rudow Yeah, I mean, I, this is Lee, of course, and I think a lot of what you said, I would agree with and the way you said it. I think that the bigger overall, yes, there's short term volatility, short term disruption. You know there are some customers that are going to, delay some work and we will call them pushouts, into the 2nd quarter from the first or even into the third or the fourth that's going to happen. This is a pretty unusual environment. But you know what we're focused on, and we've always been focused on is our value proposition, the way we approach the market, and the quality of our services that we offer, and it's very strong. In fact, I would say that entering this year and through the year, our ability to sell calibration services to satisfy our customers, the type of data we're getting from our technology, the type of structuring we're doing on how we approach the customer, these are all getting better. I mean there's process improvement opportunities we've been talking about. We don't just say that. Because it's sort of boilerplate, we say it because we're focused on it, and I expect this company to get better and to be better and to have stronger sales in the future than even in the past. Now all bets are off for the next quarter or two and I'm not going to pretend that I know every possible outcome, but I will tell you with high level confidence that the things we're doing are the right things for the business. Our value proposition is second to none. I like what we're doing on the leadership front. I like what we're doing on the sales front. The pipelines look good. And I expect this business to perform well once we get over some of the volatility. And so yeah, nothing has changed and if anything has changed, I see a bright future that could get better. I'll just leave it at that, we, to put numbers around it. I just like the direction we're going and I like and I like who we are and what we're doing. And so I look out much further than the next quarter or two. I like what I see. Ted Jackson I'd be concerned if you didn't look longer than a quarter or two. I'm going to ask one more question. I do have more, but I'm going to let other people ask, and then if they don't get asked, I'll circle back and so the next question is just kind of on, Transcat's solutions or the next of business, it's been an area that, you've been repairing, rebuilding if you would, could you talk a little bit about where things stand with, that portion of your world and kind of how to think about it for, kind of the next you know. Lee Rudow Yeah, sure, I will. And there are two goals with Nex coming off of some of the problems, we call it solutions now, and the change from Nexus solutions is important because it's a change in how we view the business. And so there's two pieces to it. One is sales. So we have integrated, we are integrating. We put a lot of work into making sure that every salesperson in this company understands the value proposition around solutions and that every salesperson's cap is on the opportunities they encounter relative to the solutions channel, and that was not in place before. It doesn't happen overnight, but I think we get better every day. So I'm fairly pleased with the process, the progress we've made in terms of the recognition of how to sell, when to sell, and why to sell solutions. That I would not have said that a year ago. I don't think I would have said it six months ago, but I like the progress we've made. On the operations front, we see total integration where solutions is not only stands on its own two feet as a channel, a small channel, but that it's a means to an end, and it's a means to an end, and we say a lot here at Transcat internally all roads lead to calibration. When we're in front of a customer and we're trying to solve problems for them on their database on their reliability, if you will, looking at their intervals, it all leads to a calibration discussion. And so we see it as a means to an end, solutions and in and of itself, and that's an important distinction. Sales understands this, operations understands this is an important part of, making Transcat a better company. So I, I'm pleased with the progress. We'll continue to stabilize it and eventually the growth that we see in that area will contribute to our overall organic growth in service. Ted Jackson Okay, I'm going to step aside, and I might jump back in later. Thanks. Lee Rudow Thanks, Ted. Operator Scott Buck, HC Wainwright. Scott Buck Hi, good morning, guys. Thanks for taking my questions. Lee, I'm curious, you've been integrating automation now for a few quarters. How much juice is there left to squeeze out of that? Lee Rudow It's a great question. I mean, we started, probably about three or four years ago, we said we were in the first inning. I appreciate the question. I think it's an important one. We are proud. We have made so much progress. I'm really proud of the team and it's contributed to, some of the margin improvement without question, and I would characterize where we are, Scott, today is around the fourth or fifth inning. I mean, I feel like we're in the midpoint, maybe not quite, maybe just under the midpoint, so maybe fourth inning is probably better than fifth. We got a lot of work to do. It's arduous, it's slow, it's hard, but when you do it and you get it done, it's like it's coding. You've got it theoretically lasts forever, and you move on to the next one. So we've invested a lot of time and effort and money. I think it's a differentiator for us and when we talk about getting consistently into the mid high single digits and beyond that, it's a big important component, of that progress. And so, yeah, let's let's call it the fourth inning with one out. How about that? Scott Buck That's helpful and great to hear there's some more room there. Second, can you remind us in a more challenging macro environment, the mechanics of distribution? I mean, do you see customers put off sales and so the rental route instead to save some of their own CapEx or What are the mechanics on on that side of the business in a in a more challenging macro environment? Lee Rudow I think the short answer is yes, you do see that we're not seeing it right now, and I think the reason may be, and this is not a definitive answer, but our gut tells us we're not seeing it right now because we all know this is a challenging environment. So why isn't distribution, feeling more pressure, we think it might be people trying to get ahead of tarrifs, so people are ordering equipment now at price levels that they anticipate are lower than they're going to be in the near future. So even though the long or the midterm outlook on distribution may not be as favorable, just in theory we're not seeing that because I think this of the macros driven by tariffs are different than macros driven by more of a long-term recession-oriented environment. So I think that's the reason why we're not seeing it, because normally you would expect distribution sales to be at the front, the tip of the spear, and to be declining and to feel some headwinds that we're not feeling today, but that we might feel as soon as we kind of get over the tariff hump where the orders have been placed. Higher costs are hitting the market and then you will see distribution maybe later in the year, but this is speculation, this is what we're thinking. Scott Buck Great, that I mean that makes a ton of sense. And then last one, Lee, the business query looks so, fairly different than it did three or four years ago. Has the M&A criteria changed at all just given the scale and scope of the business today versus, maybe 2020 or 2021. Lee Rudow I think I think we have, we spent a lot of time on our M&A plan and there are You know there's hundreds of small companies. It's very, it's still a fragmented industry. So in general, much of the narrative is the same. There's more [P/E] involvement in our space, the, we're a public company. Transcat has had outstanding performance for a really long time, really consistent. We've got a great model and of course P/E is attracted to that. So we've seen more private equity scoop up some small companies, but in almost every case. And there's a few exceptions, but not many. It's companies that we took a pass on, for good reason, from our perspective. So, there are companies being acquired and, the field, the pond is getting a little bit smaller, but I still think there's a lot of work to be done on the more desirable regionals like Martin, for example, and there's still enough fragmentation that we have a plan and we should be able to execute it. So I think it's, yes, it's changed a little bit. Everything changes, but not to some extent where I would say our acquisition plan has changed or our outlook or expectations to get important synergistic deals done. I still see a pretty good opportunity for that. Scott Buck Great, I appreciate the added color guys and congrats on the quarter. Lee Rudow Alright Scott thank you thanks for the questions. Operator Ted Jackson, Northland Securities. Ted Jackson Great, thanks again. I got two follow-ups. The first going into, kind of the distribution and rental, and maybe you get more color of what you're seeing within the rental market. I know you don't break it out in terms of the size, but we'll kind of continue to take a bigger chunk of the line items as we go forward and then, now that it's become such a more important part of your business. How do you see rental performing in a more challenged macroeconomic environment? I would think that, it's kind of a, it could be something that could do well and you would see the equipment distribution side may be weaker but perhaps the rental market stronger that my first question. Thomas Barbato Yeah, and I think that that, it kind of gets back to Lee's comment earlier, right, is that, in this, in a time of uncertainty like this, we would have expected, kind of a pullback in core distribution, and, maybe rentals to, pick up the pace because of, restrictions on cap backs, but we haven't seen that pullback in distribution yet. I think we are seeing a little bit of an uptick in rentals. And we would expect that, the longer, things remain kind of in this uncertain environment that would be a benefit, but, we have had and we continue to have expectations for the rental business to grow, kind of in line with our historical trends on the services business, high single digits, and, we're making the investments that we need to kind of ensure that growth will continue not only in, making investments in our asset pool, but also, making investments in in people to help enable that. Ted Jackson And but in some ways, I mean, given that it's, target, generally a better margin revenue stream than actual distribution, I mean it could be a case to where, even though you might see some softness in distribution, you might pick it up, at the gross profit level is with a big shift towards rentals in a fair way to kind of think about it. Thomas Barbato For sure. And I think that, as we look forward, I mean, assuming that it plays out the way you described Ted, think we will definitely be in a position where we can, or we should be in a position, I should say, where we can consistently see distribution margins north of 30%. Ted Jackson And then my last question is actually one that's hopefully a little bit more fun, but I like the commentary with regards to, the impact of automation improving some of your margin structure and you know I know that, you made that acquisition in Ireland and you know it's, it was something that we used to talk about quite a bit a too much, so maybe a little discussion about, what are some of the things you've done on the automation front that have allowed you to drive, a better return on your business and kind of where you see that going very open ended thanks. Lee Rudow I think there's two parts to automation. One is the technical side, and that is just coding, right? Taking a known standard with electronic outputs and writing code so it can talk to the unit under test is how we would describe it internally, and that's just blocking and tackling on the coding front. I don't think there's any magic to it. It's identifying where the opportunities are. And then it's getting, how, what are the resources, how much capital are you going to allocate towards this initiative, we're a public company, so everything's balanced, right? You want to go up into the right, you can't, you just have to balance, expectations and funding for even important initiatives like automation. So we're doing that. And then the back half of it is, okay, now you've got this code written, Ted, what are you going to do with it and how are you going to execute. Part of the execution is getting the code written so you have automation. But probably equal to or more important is getting it into your 33 operations throughout primarily North America, of course we have an opportunity, a lab in Ireland as well, but getting that code disseminated and every technician in every place to be using it because once they recognize the value of this, right, in theory you could be doing two calibrations at once and you get some multiplier. So I think you write the code, you determine where that opportunity exists, and then you've got to get that code disseminated and into your operation on a consistent basis. The incentives have to be in place to do that. The leadership has to be in place to do that. The day to day management has to be in place, and when you do it, and to the degree that you do it well, you will see margin gain. And so, it's kind of about two different stories going on at the same time. Ted Jackson Okay, thanks very much, guys. Lee Rudow Thanks, I appreciate the question. Operator There are no further questions at this time. I would like to turn the call back over to Lee to leave for closing comments. Lee Rudow Okay, well, thank you all for joining us on the call today. We appreciate it. We will be attending the upcoming 22nd annual Craig Hallam Institutional Investor Conference, which is in Minneapolis on the 28, so we hope to see you there. We appreciate everyone's continued interest in Transcat and feel free to check in with us really any time. We look forward to talking to you guys again after the first quarter. So, thanks again for participating. Operator Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation. Sign in to access your portfolio
Associated Press
29-01-2025
- Business
- Associated Press
Quadrant Performance Materials Expands Customer Facing Team
McKinney, TX January 29, 2025 --( Quadrant Performance Materials (QPM), the manufacturer of the EnviroSeal Insulation System for the residential and commercial building envelope, is pleased to announce the addition of 19 new team members: 16 salespeople, 2 field technicians, and a builder development manager. With this expansion, Quadrant continues to build what they proudly call the 'best team in foam #BTIF,' as these experienced professionals will support the company's initiatives of exceptional service, technical expertise, and innovative solutions to the industry. Notably, Quadrant has partnered with Seacoast Building Solutions, Compton Sales, and Creative West as manufactures reps. These partnerships underscore Quadrant's commitment to cultivating strong relationships and leveraging localized market insights to better serve its customers. Builder Development Manager: - Scott Leiti Technical Services Representatives: - Thomas Barbato & Steven Herzog Sales Team: Western States - Todd Schroeder & Patrick Bullion Creative West: Nevada, Utah, Idaho - Jake Riddle & Paul Riddle Seacoast Building Solutions: Northeastern States - Paul Sullivan, Jay Cahalane, Jay Strother, & Craig Nichols Compton Sales: Southeastern States and Northern Florida - Phil Brown, Wendell Moore, Chris Morris, Keith Compton, Gary Hardin, Gene Young, Ray Breedlove, & Daniel Compton For more information on Quadrant Performance Materials and the EnviroSeal® spray foam insulation product line, please visit or call 972-542-0072. About Quadrant Performance Materials QPM manufactures the EnviroSeal Insulation System for use in residential and commercial construction. EnviroSeal's mission is to accelerate the market-place adoption of SPF insulation, to help our customers grow profitably, and to provide a home that is energy-efficient and more comfortable for consumers. EnviroSeal® is a registered trademark of Quadrant Performance Materials. Quadrant Performance Materials Jessica Grayek 972-542-0072
Yahoo
29-01-2025
- Business
- Yahoo
Q3 2025 Transcat Inc Earnings Call
Thomas Barbato; Chief Financial Officer, Treasurer; Transcat Inc Lee Rudow; President, Chief Executive Officer, Director; Transcat Inc Greg Palm; Analyst; Craig-Hallum Capital Group Ted Jackson; Analyst; Northland Securities Martin Yang; Analyst; Oppenheimer & Co. Inc. Operator Greetings and welcome to Transcat Incorporated third quarter fiscal year 2025 financial results. (Operator Instructions). As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Tom Barbato. Thank you. You may begin. Thomas Barbato Thank you, operator and good morning, everyone. We appreciate your time and your interest in Transcat. With me here on the call today is our President and CEO, Lee Rudow and our Chief Operating Officer, Mike West. We'll begin the call with some prepared remarks and then we'll open it up the call for questions. Our earnings release crossed the wire after markets closed yesterday. Both the earnings release and the slides that we'll reference during our prepared remarks can be found on our website in the investor relations section. If you would please refer to slide 2, as you are aware, we may make forward-looking statements during the formal presentation and Q&A portion of this teleconference. These statements apply to our future events which are subject to risks and uncertainties as well as other factors that could cause the actual results to differ materially from where we are today. These factors are outlined in the news release as well as in the documents filed by the company with the SEC. You can find those on our website where we regularly post information about the company as well as on the SEC's website at We undertake no obligation to publicly update or correct any of the forward-looking statements contained in this call, whether as a result of new information, future events or otherwise, except as required by law. Please review our forward-looking statements in conjunction with these precautionary factors. Additionally, during today's call, we will discuss certain non-GAAP measures which we believe will be useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We've provided reconciliations of non-GAAP to compare GAAP measures in the tables accompanying the earnings release with that. I'll turn the call over to Lee. Lee Rudow Thank you, Tom. Good morning, everyone. Thank you for joining us. Fiscal 2025 third quarter consolidated revenue was up 2% to $66.8 million. However, organic service revenue declined 4% from prior year third quarter. Last quarter, we talked about the Nexa Solutions channel and that our expectations were that softness in that channel would continue through the current fiscal year. This continues to be our view, and the team is focused on pipeline development and getting new solution deals across the finish line. What we did not anticipate in the third quarter with the December decline in core calibration service demand following in October and November, which was largely in line with expectations. We discovered that the midweek Christmas holiday drove extended manufacturing closures in the back half of the month. Essentially, this affected the incoming calibration service work in two ways. In the front end of December, many of our customers ramped up manufacturing to meet demand up to and through the holiday shutdowns, the intensified production makes it difficult to send in equipment for calibration. The back end of December extended holiday facility closures and reduced staff, reduced staffing levels contributed to a reduced volume of incoming equipment through the end of the calendar year. So timing contributed to the December service shortfall and as one would expect service revenue picked up significantly in January as a result of pent up demand from December . Stepping away for a moment from the quarterly performance on 10 December, we acquired Martin Calibration. We're very excited to get this deal done as Martin satisfies all of our strategic acquisition requirements. With annual revenues of more than $25 million, Martin gives Transcat a strong presence in the midwest including Minneapolis, Chicago and Milwaukee, as well as Tempe, Arizona and Los Angeles, California. Martin's flagship lab is in Minneapolis, an area rich in medical device and life science. This is a region that relies heavily on quality calibrations and related services and solutions. From a bolt on perspective, we anticipate the ability to leverage our current operational infrastructure by combining our Arizona and LA labs with the Martin facilities that are in very close proximity. From a capabilities perspective, the two companies are very complementary. Martin brings a higher level of expertise on the mechanical and dimensional side and represents an ideal match with Transcat's advanced capabilities on the temperature, pressure and electrical side of the business. So in addition to the cost synergies you would expect over time with bolt on acquisitions, we expect to drive service growth by leveraging the expanded combined capabilities of both Martin and Transcat. The integration process is off to a great start and we work to maximize the early returns on this exciting coveted opportunity. Turning to distribution revenue grew 7% in the quarter in the third quarter. In December, however, due to the extended closure of many of our customers, our rental channel experienced a similar decline in demand as our core calibration services channel. The rental revenue decline in December resulted in a distribution segment mix change that negatively impacted distribution service margins. And before I turn things over to Tom, I want to point out that the Transcat team has consistently delivered excellent results over an extended period. We have a demonstrated track record of driving growth and productivity. Our team is working to overcome the near term challenges we've encountered in the last couple of quarters. And this primarily pertains to the year over year softness of the solutions channel. From a traditional calibration services channel perspective, we currently have a very strong pipeline of new high probability opportunities. As we close out fiscal 2025, we are prepared for a strong fiscal 2026. So with that, I'll turn things over to Tom for a more detailed look at the third quarter financial results. Thomas Barbato Thanks, Lee. I'll start on slide 4 of the earnings deck posted on our website which provides detail regarding our revenue on a consolidated basis and by segment for the third quarter of fiscal 2025. Third quarter consolidated revenue of $66.8 million was up 2% versus prior year driven by growth and distribution. Looking at it by segment service revenue grew slightly, 3.8% organic decline was offset by growth from acquisitions. As Lee mentioned, service revenue was negatively impacted by the unexpected extended December holiday closures at our customer sites as well as the anticipated year over year decline in the Transcat-Nexa Solutions channel. Turning to distribution, revenue of $25.2 million or 7% driven by strong product sales and rental growth. Turning to slide 5, our consolidated gross profit for the second quarter of $19.7 million was down 6% from prior year. Service gross profit declined 8% versus prior year. Continued leverage from higher levels of technician productivity could not offset the headwinds caused by lower organic revenue levels. Distribution segment, gross profit of $7.3 million was down 2% as margins were pressured in the third quarter due to mix. Turning to slide 6, Q3 net income of $2.4 million was down a $1 million versus prior year. Diluted earnings per share came in at $0.25, down $0.13. We report adjusted diluted earnings per share as well to normalize for the impacts of upfront and ongoing acquisition related costs. Q3 adjusted diluted earnings per share was $0.45. Flipping the slide 7 where we show our adjusted EBITDA and adjusted EBITDA margin. We use adjusted EBITDA which is non-GAAP to gauge the performance of our business because we believe the best measures our operating performance and ability to generate cash. As we continue to execute on our acquisition strategy, this metric becomes even more important to highlight as it does adjust for one time deal related transaction costs as well as the increased level of non-cash expenses that will hit our income statement from acquisition purchase accounting. The third quarter consolidated adjusted EBITDA of $7.9 million was down 13% from the same quarter in the prior year. As extended December holiday closures and the expected solutions revenue softness negatively impacted third quarter as well. As always, a reconciliation of adjusted EBITDA to operating income and net income can be found in the supplemental section of this presentation. Moving to slide 8, operating cash flow and operating free cash flow were both higher year over year. Q3 capital expenditures were $1.4 million higher than prior year and continue to center around service segment capabilities, rental pool assets, technology and future growth projects. The spend was in line with expectations. Slide 9 highlights our strong balance sheet. At quarter end, we had total net debt of $40.8 million with a leverage ratio of 0.97x. We had $39.5 million available from our credit facility and as previously announced, we acquired Martin Calibration for $79 million in fiscal Q3 paid in combination of $69 million in cash and $10 million in company stock. Lastly, we expect to file our form 10-Q on 05 February. With that, I'll turn it back to you, Lee. Lee Rudow Okay. Thanks Tom. As we wind down the fourth quarter, we expect fiscal 2025 organic service revenue to be in the low to mid single digits once adjusted for the 53rd week in fiscal 2024. Of course, that is below our expectations and as I mentioned earlier, it's driven by the softness, primarily driven by the softness in our solutions channel that negatively impacted our organic growth rates in fiscal 2025. We're certainly looking forward to improve solutions performance in the year ahead. Relative to our core calibration business, we have a strong pipeline and momentum. But both are building as we get ready to embark on fiscal 2026. We believe organic service growth in fiscal 2026 will be more in line with our historical performance. We will continue to focus on the full integration of Martin Calibration working together. We expect to capitalize on the numerous opportunities we have for both service growth and productivity gains. Shared my vision for the company over the years which includes strong organic service growth and industry leading value proposition, inherent service operating leverage, lower cost of goods sold and SG&A over time driven by process improvement, automation and other productivity improving initiatives. Strong operating cash flow and sensible expansion of addressable markets. We still believe in our vision, our goals and our ability to achieve them. We're excited for the fiscal year ahead. And with that, Rob, you can open the line for questions. Operator (Operator Instructions) Greg Palm, Craig Hallam. Greg Palm Yeah, good morning. Thanks for taking the questions here. I wanted to start, I guess with the near-term outlook. So, understand the some of the timing around the holidays. It sounds like things picked up in January, but you still took down the full year guide. So I'm just curious if it was timing, just things slipping from December to January, you wouldn't expect that that guy to come down. But, but it did. So is there sort of more of a deferral or what? I guess what, what's kind of the incremental weakness here relative to what we were talking about three months ago. Lee Rudow So this is Lee. I'll start and maybe Tom can add some color as well. Yeah, so we had the slowness in December. We spoke to many of our customers during and after the slowdown. So we kind of confirmed that that that was taking, that took place and impacted the numbers. The business is generally gotten very busy in January. So we made some of that back. You know, just looking at the full year, looking at the solutions impact, continued impact. We're confident that we'll be in the mid single digit range for organic growth generally speaking. There has been some relative delays in some orders and things with high probability that we expected to close in Q3. Some will close at the back end of Q4, maybe early into the into fiscal year in April. But we just being conservative in the guidance. Greg Palm Yeah. Okay. And can you maybe just give us a little bit more color on the visibility in the pipeline and really tie this back into kind of expectations for next year last quarter? I think you were kind of confidently talking about returning to high single digit organic growth. I think the commentary is a little bit more vague understandably so, but just any comments on visibility pipeline, timing around some of the closures that'd be pretty helpful. Lee Rudow Yeah. Right. Right now, our core calibration pipeline is very strong, so it's about as strong as I probably have ever seen it, which is good. There's a couple of big opportunities, for example, where we've gotten verbal confirmation, yes, we're going to go with Transcat. We're going to proceed according to these terms and this timing and some of those have been delayed, which has affected some of our softer guidance trying to get our arms around exactly when some of these jobs are going to start. And there's a variety of reasons why you have delays like this. We can get into some of them if you like. But generally speaking, the pipeline is very strong. I think that's the most important point. And for us, it's a matter -- they have to come to fruition, of course, that doesn't always happen. But we feel pretty good about where we stand going into the year, into the timing. And I think when we talk about, we're a little vague for Q4. But when we talk about next year, particularly in the back half, Greg as some of these things come to fruition. We're feeling pretty good about, the level of activity that we're seeing. So not a lot has changed. And I think when we look at the solutions business improving, throughout next year, and we combine that with the pipeline activities, the macros appear to be pretty strong and there's no reason to believe that we shouldn't get back to more historic, levels in terms of sales. Greg Palm Got it, okay. And, and that was going to be kind of my next question or sort of final on this level of thinking just making sure that nothing structural has changed whether it's law large numbers or something else. But, historically, you've demonstrated and you've talked about this high single digit, low double digit organic growth profile for the service business and I understand a couple of hiccups recently, but anything as you look ahead over the next handful of years, there's nothing that gives you hesitancy and your ability to sort of match those targets. Lee Rudow Absolutely not. I mean, we have to keep things in perspective. You know, we've had a lot of growth over a very, very long time, quarter after quarter, after quarter. Nothing has changed. Still, we have recurring revenue streams. Still, the business is driven by regulation. There hasn't been any competition that we've noticed that's been able to, that is taking market share or doing anything differently. We're still in a really good position. And when you just take a little bit of a broader perspective on the sales engine, which from our perspective continues to get better. There's always tweaks that you can make, there's always technology that you can implement to make the sales process and other processes better. We're working on all those things and to have a couple of quarters that you're in the mid single digit growth as opposed to high or even low, double digits. That's to be expected, you can't win every game the same way. But we have a really good team, a really good plan. The fundamentals are the same and we expect that over the long term and even the midterm, we expect strong performance from this company. I can't point to anything today that would stop me from believing that. So we expect a good year and the pipeline going into the year supports it. So you know, we'll see you never know for 100% but, but I like the fundamentals, nothing's changed and we just got to get over a couple quarters of softness and we -- and for the most part that we have identified, the areas that need to be addressed. So we feel pretty good about the upcoming year. Yes. Greg Palm Alright. Thanks, Lee. Thomas Barbato No problem, Greg. Lee Rudow Thanks. Thanks, Greg. Operator Ted Jackson, Northland Securities. Ted Jackson Thanks very much. Good morning. I got a list of questions. Let's start with kind of the Nexa-Transcat services and maybe get an update with regards to kind of the actions that you've taken so far and kind of the actions that are left to kind of put that business back where you want it to be. Lee Rudow Yes. So from a solutions perspective, it's something, we're talking a lot about. There's two ways to look at the solutions business. You know, one is as a stand alone business that offers, five or six service tracks in the ecosystem for calibration. And that business has to be profitable and that business has to grow that those are our expectations. There's also, Ted, the benefit that you get from the solutions business in terms of organic growth for our calibration services business. Because they also sit at the table with us literally and figuratively, when we're trying to win new business. They're a differentiator. Their suite of services make our calibration business in some cases more affordable and helps our customers accomplish and complete their goals. So we like the business. We just needed to have better pipeline development and needed a different way to sell. It needed our marketing team involved. We're doing all these things. Unfortunately, the nature of that business is you're just not going to turn it around in a quarter or two, it takes a few quarters. So we think we're doing all the right things. The pipeline is better today. That's the fact that it was when we kind of discovered that we needed to work on it. And I think we'll get it to be an improved business stable and growth in time. I'm not overly concerned with it. It's still a relatively small business, but we expect that it will be, I'm going to say back on track next fiscal year and earlier the better. Ted Jackson Okay, thanks. And then just kind of shifting over to more to some mild questions. Like service gross margins, the lowest it was since, like third quarter of '23. And I know volume was a big impact there. But, we're expecting to see a rebound in the fourth quarter and carry forward into '26. Can you give us some kind of view on what you would expect your service margins to be next quarter and how we would think about that for next fiscal year. Thomas Barbato Yeah, I think, Ted, as we've talked and kind of gone through models, I would expect Q4 to be kind of more in line to be, kind of flat year over year and then continue to grow as we look into fiscal '26 and beyond. Ted Jackson And then shifting over to distribution. And you did see, I mean, I know you said it was a lot, but it was a little bit of a recovery from last quarter. How do we think about that '25 and of course '24, '25, '26. And then can you provide some kind of, I mean, like, did we get the recovery out of bet now that we expected with regards to some of the rental stuff, maybe an update on that front. Thomas Barbato Yeah. So let me take that in pieces. Right. So, from a margin standpoint, certainly, we've talked in the past about being consistently above 30% on the distribution side and growing from there as the mix towards rentals continues, right. I think if we certainly would have been there if we didn't see the slow down. And in rentals that Lee referenced in the back half of December, and then, as we look ahead, that certainly, that 30% threshold is one that we feel that we should be able to achieve. And then, as I said, as we see a bigger mix towards rentals, we should see some growth from there. But now was certainly better sequentially in Q3 versus Q2 and we expect it to be better in Q4 sequentially is than Q3. Ted Jackson Okay. And then, I lost my train of thought. I wanted to hit something else on when your earlier answer on the margin. I'll come back and maybe it'll come into my head. How about just on pro forma earnings? How should we think about, you've just done a pretty large size acquisition. How should we think about the amortization of intangible assets within your pro forma earnings and also acquisition deal costs for fourth quarter in FY26. Thomas Barbato Is it -- why don't I follow up with you on that? And that had, I don't have the numbers in front of me right now. But I know when we talked about the model after the acquisition, I think we had done that update, but I could follow up via the email. Ted Jackson Yeah, I'm just double checking. Then shifting over to working capital. You know, your receivables are up, inventories are down payables are up, the turns all followed, all that kind of stuff. You know, can you give us kind of what's going on with some of those working capital levers and how you see them playing out for the next few quarters. Thomas Barbato Well, I think, I think we should see a move kind of consistent with the growth and revenue. You know, we've been focused on inventory levels all year and I think you've seen the improvements we've made since the beginning of the year from an inventory standpoint. The accounts receivable part of the growth is just bringing on a business, and as we bring on these bigger businesses, right. We're bringing on the accounts receivable that goes along with that. So you saw that addition coming from the Martin acquisition in December. But, I think over time, we've seen those working capital numbers, kind of flex accordingly, based on the inorganic and organic growth that we've experienced. Ted Jackson Okay, that's it for me. Thank you very much. Lee Rudow Thanks, Ted. Operator Martin Yang, Oppenheimer. Martin Yang Hi. Thank you for taking my question. First question, distribution. Would you attribute the witnessing distribution this quarter to the same reason you described for services and how uniform are those two segments performing based on those seasonal patterns. Lee Rudow What we referred to, Martin, in the earnings call script was the rental business as part of the rental channel as part of the distribution that was impacted the same way that the calibration services. So that is to say that and we saw a decrease in demand throughout the month, particularly in the back half. That's what we're referring to. And of course, as you have that as rentals becomes -- as rentals was lowered in the quarter, that changes the mix, the overall mix to heavier, -- it's weight heavier towards core distribution, which has lower margin. So it has both an impact on margin which is significant but also in volume. So that's the effect that you saw in distribution. And yes, so it was similar to service in the month of December, rentals that is. Martin Yang Got it. And then when we look at the overall distribution a year over year basis, can you tell us about the respective growth rate for rental versus nonrental? Thomas Barbato I think Martin, what we've kind of said historically and it's still kind of plays out here is that, we expect our core distribution to decline slowly over time. And then, we expect the rental business to grow at a similar rate to service, right? And what we've seen historically with service, like high single digits, that's the goal and that's what we -- the directory we've been on over the past couple of years. Martin Yang Got it. My next question regarding your comment on what happened in December. Is there any other seasonal patterns every quarter or other certain time of the year that could give you surprises like the past December. Lee Rudow Not really. You know, there are certain patterns in the business. You know, typically volume for services is higher in our fourth quarter, which is January through March. And typically distribution, core distribution, not rentals, is a little bit stronger in our third quarter. I mean, there are some patterns that seem to repeat, Martin year over year, I think what happened this year. Again, when you have a holiday on a Wednesday and you never know exactly how people react. It's just for whatever reason, which I don't think we saw as much in the past. So maybe it's an anomaly, maybe it's a pattern, don't know yet. But, but being, having a holiday land on a Wednesday, people shut down that week and the things extend to 10 days and so on and so forth. So I don't know of -- we've been doing this a long time and, and typically there aren't patterns like that. I'm not sure this is a pattern or a one off. But either way caught us a little bit off guard in terms of modeling and forecasting. So I guess that's the best way to answer. Thomas Barbato Got it. Thank you, Lee. That's it for me. Lee Rudow Okay. Thanks Martin. Operator We have reached the end of the question and answer session. I'd now like to turn the call back over to management for closing comments. Lee Rudow Okay. This is Lee and thank you all for joining us on the call today. We appreciate your continued interest in Transcat. We will be attending the Oppenheimer 10th Annual Emerging Growth Conference, which is 26 February. So for those of you who are attending a conference, feel free to call on us, check in on us and maybe sign up for a meeting time. Otherwise, you're free to contact us anytime after that conference and we'll be speaking to everybody again after our Q4 results. So thank you. Thanks again for joining us. Take care. Operator This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation. Sign in to access your portfolio
