SOURCE: Transcat Inc.

October 23, 2007 16:30 ET

Transcat Announces Fiscal Year 2008 Second Quarter and First Half Results

Net Sales Increase by 11.9% and 8.0% Respectively; Operating Income Up 14.5% and 21.8% Respectively

ROCHESTER, NY--(Marketwire - October 23, 2007) - Transcat, Inc. (NASDAQ: TRNS), a leading global distributor of professional grade test, measurement, and calibration instruments and a provider of calibration and repair services, today announced financial results for the fiscal year 2008 second quarter and first half ended September 29, 2007.

Fiscal Year 2008 Second Quarter and First Half Overview

--  Net sales increased 11.9% to $16.6 million in the fiscal year 2008
    second quarter and increased 8.0% to $32.8 million in the fiscal year 2008
    first half compared to the same periods in fiscal year 2007.
    
--  Gross profit increased 20.1% to $4.3 million in the fiscal year 2008
    second quarter and increased 14.8% to $8.5 million in the fiscal year 2008
    first half compared to the same periods in fiscal year 2007.  Gross profit
    margin percentage increased 1.7 points to 25.6% in the fiscal year 2008
    second quarter and increased 1.5 points to 25.9% in the fiscal year 2008
    first half compared to the same periods in fiscal year 2007.
    
--  Operating income increased 14.5% to $0.6 million in the fiscal year
    2008 second quarter and increased 21.8% to $1.0 million in the fiscal year
    2008 first half compared to the same periods in fiscal year 2007.
    
--  Net income was $0.2 million in the fiscal year 2008 second quarter and
    $0.4 million in the fiscal year 2008 first half. Both of these amounts were
    comparable to the same periods in fiscal year 2007.
    
--  Earnings per share for the fiscal year 2008 second quarter were $0.03
    per diluted share compared to $0.03 per diluted share for the fiscal year
    2007 second quarter. Earnings per share for the fiscal year 2008 first half
    increased to $0.06 per diluted share compared to $0.05 per diluted share
    for the fiscal year 2007 first half.
    
--  Distribution Products -- Net sales increased 13.6% to $11.2 million in
    the fiscal year 2008 second quarter from $9.9 million in the fiscal year
    2007 second quarter and gross profit increased by 27.1% to $3.1 million in
    the fiscal year 2008 second quarter from $2.5 million in the fiscal year
    2007 second quarter. Net sales increased 8.5% to $22.1 million in the
    fiscal year 2008 first half from $20.4 million in the fiscal year 2007
    first half and gross profit increased by 19.7% to $6.2 million in the
    fiscal year 2008 first half from $5.2 million in the fiscal year 2007 first
    half.
    
--  Calibration Services -- Net sales increased 8.6% to $5.4 million in
    the fiscal year 2008 second quarter from $5.0 million in the fiscal year
    2007 second quarter and gross profit increased by 4.3% to $1.13 million in
    the fiscal year 2008 second quarter from $1.08 million in the fiscal year
    2007 second quarter. Net sales increased 7.1% to $10.7 million in the
    fiscal year 2008 first half from $10.0 million in the fiscal year 2007
    first half and gross profit increased by 3.2% to $2.3 million in the fiscal
    year 2008 first half from $2.2 million in the fiscal year 2007 first half.
    

Operations Review

Charles P. Hadeed, Transcat's President, CEO and COO, stated: "We continue to grow our net sales in both our Distribution Products and Calibration Services business segments. This continued growth, combined with a 1.7 point increase in our gross profit margin percentage in the fiscal year 2008 second quarter, resulted in our improved operating earnings. Our operating cash flow remained strong and contributed to a further reduction in our debt this quarter. Overall, I am pleased with our results as we continue to build on a strong foundation.

"Net sales in our Distribution Products segment continue to be driven by exciting new products and technology from our supplier partners and our ability to assist our customers in determining their needs and subsequently providing superior customer service to meet those needs.

"The initiatives and investments that have been implemented to drive sales growth in our Calibration Services segment have taken hold and are continuing to demonstrate tangible, positive results. We are committed to our core focus, which is to provide high quality calibration and repair services to customers who value and trust the integrity of our processes."

Looking Ahead

Mr. Hadeed continued: "For the remainder of fiscal year 2008, we expect continued year-over-year sales growth in both our Distribution Products and Calibration Services business segments, a sustained increase in operating earnings (excluding the one-time deferred gain of $1.5 million which was recognized in the fiscal year 2007 third quarter) and continued strong cash flow. In our Distribution Products segment, we expect gross profit margins to be consistent with those reported for the fiscal year 2008 first half. Consistent with the historic seasonality of our Calibration Services segment, we expect the majority of our year-over-year annual sales increase to occur during the second half of fiscal year 2008, and as a result, we expect our gross profit margins to increase in this segment."

Fiscal Year 2008 Second Quarter Financial Summary

For the fiscal year 2008 second quarter, net sales were $16.6 million, an increase of $1.7 million or 11.9%, compared with net sales of $14.9 million for the fiscal year 2007 second quarter. Distribution Products net sales for the fiscal year 2008 second quarter were $11.2 million, an increase of $1.3 million or 13.6%, compared with net sales of $9.9 million for the fiscal year 2007 second quarter. Calibration Services net sales for the fiscal year 2008 second quarter were $5.4 million, an increase of $0.4 million or 8.6%, compared with net sales of $5.0 million for the fiscal year 2007 second quarter.

For the fiscal year 2008 first half, net sales were $32.8 million, an increase of $2.4 million or 8.0%, compared with net sales of $30.4 million for the fiscal year 2007 first half. Distribution Products net sales for the fiscal year 2008 first half were $22.1 million, an increase of $1.7 million or 8.5%, compared with net sales of $20.4 million for the fiscal year 2007 first half. Calibration Services net sales for the fiscal year 2008 first half were $10.7 million, an increase of $0.7 million or 7.1%, compared with net sales of $10.0 million for the fiscal year 2007 first half.

For the fiscal year 2008 second quarter, operating income was $0.6 million, an increase of $0.1 million or 14.5%, compared to operating income of $0.5 million for the fiscal year 2007 second quarter. For the fiscal year 2008 first half, operating income was $1.0 million, an increase of $0.1 million or 21.8%, compared to operating income of $0.9 million for the fiscal year 2007 first half.

Net income for the fiscal year 2008 second quarter was $0.2 million, or $0.03 per diluted share, compared to $0.2 million or $0.03 per diluted share, in the fiscal year 2007 second quarter. Net income for the fiscal year 2008 first half was $0.4 million, or $0.06 per diluted share, compared to $0.4 million, or $0.05 per diluted share for the fiscal year 2007 first half.

About Transcat, Inc.

Transcat, Inc. is a leading global distributor of professional grade test, measurement and calibration instruments and an accredited provider of calibration and repair services primarily to the process, life science and manufacturing industries.

Through the Company's Calibration Services segment, Transcat offers precise, reliable, fast calibration services through its Calibration Centers of Excellence strategically located across the United States and Canada to approximately 8,000 customers. To support the Company's customers' calibration service needs, Transcat delivers the industry's highest quality calibration services and repairs. Each of the calibration laboratories is ISO-9001: 2000 and the scope of accreditation to ISO/IEC 17025 is the widest in the industry.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements, which are subject to various risks and uncertainties. The Company's actual results could differ from those anticipated in such forward-looking statements as a result of numerous factors that may be beyond the Company's control. For a more detailed discussion of the risks and uncertainties that may affect Transcat's operating and financial results and its ability to achieve the financial objectives discussed in this press release, interested parties should review the "Risk Factors" sections in Transcat's reports filed with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the fiscal year ended March 31, 2007.

- Statistical Tables Follow -


                              TRANSCAT, INC.
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In Thousands, Except Per Share Amounts)


                                  (Unaudited)             (Unaudited)
                             Second Quarter Ended      Six Months Ended
                            ----------------------- -----------------------
                            September   September   September   September
                                29,         23,         29,         23,
                               2007        2006        2007        2006
                            ----------- ----------- ----------- -----------

Product Sales               $    11,219 $     9,880 $    22,146 $    20,417
Service Sales                     5,406       4,980      10,669       9,963
                            ----------- ----------- ----------- -----------
 Net Sales                       16,625      14,860      32,815      30,380
                            ----------- ----------- ----------- -----------

Cost of Products Sold             8,087       7,415      15,952      15,244

Cost of Services Sold             4,276       3,897       8,362       7,728
                            ----------- ----------- ----------- -----------
 Total Cost of Products and
  Services Sold                  12,363      11,312      24,314      22,972
                            ----------- ----------- ----------- -----------

Gross Profit                      4,262       3,548       8,501       7,408
                            ----------- ----------- ----------- -----------

Selling, Marketing and
 Warehouse Expenses               1,919       1,807       4,127       3,942
Administrative Expenses           1,749       1,222       3,331       2,610
                            ----------- ----------- ----------- -----------
 Total Operating Expenses         3,668       3,029       7,458       6,552
                            ----------- ----------- ----------- -----------

Operating Income                    594         519       1,043         856
                            ----------- ----------- ----------- -----------

Interest Expense                     29          90          63         184
Other Expense, net                  209          46         290         120
                            ----------- ----------- ----------- -----------
 Total Other Expense                238         136         353         304
                            ----------- ----------- ----------- -----------

Income Before Income Taxes          356         383         690         552
Provision for Income Taxes          162         137         258         189
                            ----------- ----------- ----------- -----------

Net Income                  $       194 $       246 $       432 $       363
                            =========== =========== =========== ===========


Basic Earnings Per Share    $      0.03 $      0.04 $      0.06 $      0.05
Average Shares Outstanding        7,127       6,902       7,099       6,864

Diluted Earnings Per Share  $      0.03 $      0.03 $      0.06 $      0.05
Average Shares Outstanding        7,577       7,425       7,474       7,377





                              TRANSCAT, INC.
                        CONSOLIDATED BALANCE SHEETS
            (In Thousands, Except Share and Per Share Amounts)


                                              (Unaudited)
                                             September 29,     March 31,
                                                 2007            2007
                                             -------------   -------------
ASSETS
Current Assets:
  Cash                                       $         188   $         357
  Accounts Receivable, less allowance for
   doubtful accounts of $62  and $47 as of
   September 29, 2007 and March 31, 2007,
   respectively                                      7,874           8,846
  Other Receivables                                    858             352
  Inventory, net                                     3,662           4,336
  Prepaid Expenses and Other Current Assets          1,108             762
  Deferred Tax Asset                                   955             851
                                             -------------   -------------
     Total Current Assets                           14,645          15,504
Property and Equipment, net                          3,275           2,814
Goodwill                                             2,967           2,967
Deferred Tax Asset                                     769             791
Other Assets                                           352             346
                                             -------------   -------------
  Total Assets                               $      22,008   $      22,422
                                             =============   =============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
  Accounts Payable                           $       5,411   $       5,307
  Accrued Compensation and Other Liabilities         1,931           2,578
  Income Taxes Payable                                 216              42
                                             -------------   -------------
     Total Current Liabilities                       7,558           7,927
Long-Term Debt                                       1,333           2,900
Other Liabilities                                      411             366
                                             -------------   -------------
  Total Liabilities                                  9,302          11,193
                                             -------------   -------------

Shareholders' Equity:
  Common Stock, par value $0.50 per share,
   30,000,000 shares authorized; 7,413,262
   and 7,286,119 shares issued as of
   September 29, 2007 and March 31, 2007,
   respectively; 7,137,480 and 7,010,337
   shares outstanding as of September 29,
   2007 and March 31, 2007, respectively             3,707           3,643
  Capital in Excess of Par Value                     5,792           5,268
  Warrants                                             329             329
  Accumulated Other Comprehensive Income               500              43
  Retained Earnings                                  3,366           2,934
  Less:  Treasury Stock, at cost, 275,782
   shares as of September 29, 2007 and
   March 31, 2007                                     (988)           (988)
                                             -------------   -------------
     Total Shareholders' Equity                     12,706          11,229
                                             -------------   -------------
     Total Liabilities and Shareholders'
      Equity                                 $      22,008   $      22,422
                                             =============   =============


                              TRANSCAT, INC.
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (In Thousands)

                                                        (Unaudited)
                                                     Six Months Ended
                                                 -------------------------
                                                  September     September
                                                     29,           23,
                                                     2007          2006
                                                 -----------   -----------
Cash Flows from Operating Activities:
 Net Income                                      $       432   $       363
 Adjustments to Reconcile Net Income to Net Cash
   Provided by
  Operating Activities:
   Deferred Income Taxes                                 (85)          148
   Depreciation and Amortization                         788           769
   Provision for Accounts Receivable and
    Inventory Reserves                                   (63)           43
   Stock-Based Compensation Expense                      428           328
 Changes in Assets and Liabilities:
  Accounts Receivable and Other Receivables              892           515
  Inventory                                              749           (46)
  Prepaid Expenses and Other Assets                     (602)         (280)
  Accounts Payable                                       104          (408)
  Accrued Compensation and Other Liabilities            (595)         (924)
  Income Taxes Payable                                   174           (41)
                                                 -----------   -----------
   Net Cash Provided by Operating Activities           2,222           467
                                                 -----------   -----------

Cash Flows from Investing Activities:
 Purchase of Property and Equipment                     (999)         (454)
                                                 -----------   -----------
   Net Cash Used in Investing Activities                (999)         (454)
                                                 -----------   -----------

Cash Flows from Financing Activities:
 Chase Revolving Line of Credit, net                  (1,567)            -
 GMAC Revolving Line of Credit, net                        -           223
 Payments on Other Debt Obligations                        -          (368)
 Issuance of Common Stock                                160           110
   Net Cash Used in Financing Activities              (1,407)          (35)
                                                 -----------   -----------

Effect of Exchange Rate Changes on Cash                   15             4
                                                 -----------   -----------

Net Decrease in Cash                                    (169)          (18)
Cash at Beginning of Period                              357           115
                                                 -----------   -----------
Cash at End of Period                            $       188   $        97
                                                 ===========   ===========


Supplemental Disclosures of Cash Flow Activity:
 Cash paid during the period for:
  Interest                                       $        69   $       198
  Income Taxes, net                              $       177   $        85

Supplemental Disclosure of Non-Cash Financing
 Activity:
 Treasury Stock Acquired in Cashless Exercise of
  Stock Options                                  $         -   $        50


Contact Information

  • Contact:
    Charles P. Hadeed
    President, CEO and COO
    John J. Zimmer
    Vice President of Finance and CFO
    Transcat, Inc.
    585-352-7777

    Corporate Offices
    35 Vantage Point Drive, Rochester, New York 14624
    Telephone: 585-352-7777
    Fax: 585-352-7788

    Van Negris / Lexi Terrero
    Van Negris & Company, Inc.
    212-759-0290

    Robert Cavosi
    Broadgate Consultants, LLC
    212-493-6981