SOURCE: Transcat, Inc.

August 16, 2005 16:33 ET

Transcat Announces Results of Annual Meeting of Shareholders;

Transcat's CEO Sees Continued Growth and Profitability in Fiscal Year 2006

ROCHESTER, NY -- (MARKET WIRE) -- August 16, 2005 -- 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 the results of its Annual Meeting of Shareholders held today at the company's headquarters.

The agenda for the annual meeting included the election of four existing directors -- E. Lee Garelick, Richard J. Harrison, Dr. Harvey J. Palmer, and John T. Smith -- for three-year terms expiring in 2008 and the ratification of the appointment of BDO Seidman, LLP, an independent registered public accounting firm, as Transcat's independent auditors for the fiscal year ending March 25, 2006.

Excellent Results in Fiscal Year 2005

In his remarks at the Annual Meeting, Carl E. Sassano, Chairman of the Board, President and Chief Executive Officer, said: "At last year's annual meeting, we said we were going to continue making improvements and that we expected to deliver profitable results for our shareholders. Here's what we accomplished in fiscal year 2005:

--  Last year, we said that improvements made in fiscal year 2004 would
    position us for long-term sustainable profitability and growth and they
    did.  In fiscal year 2005, we achieved substantial overall growth in
    operating income.  We were on track with our revenue projections for
    Distribution Products and Calibration Services, while we increased our
    margins and marketing efforts.
--  Last year, we said that Distribution Products net sales, year-to-year,
    would have single digit growth and we ended with a 4.7% increase in sales.
    As anticipated, we had a stronger first half that moderated to more typical
    levels in the second half.
--  Last year, we said that we expected an increase in Calibration
    Services revenues for fiscal year 2005.  We're very pleased with the strong
    13.9% sales growth in Calibration Services revenues that we experienced in
    the fiscal year 2005 fourth quarter.  Because of the nature of the
    Calibration Services sales process, it takes time to finalize contracts and
    begin the work.
--  Last year, we said that gross profit margins should improve by 1 to 3
    points.  By the close of the fiscal year 2005 fourth quarter, our gross
    profit ratio increased by 4.1 points.  Because of our management of
    operating expenses, we tripled operating income and achieved diluted
    earnings per share of $0.04 in fiscal year 2005.

"The bottom line is that we did what we said we would: Deliver profitable results for our shareholders in fiscal year 2005. These trends are continuing into the new fiscal year.

Distribution Products

"Our strategy for our Distribution Products business is simple: Carry the products that our customers need, make certain that the products we carry are the best in the industry, have superior customer service, and keep marketing to and prospecting for new customers relentlessly. It's a proven formula that delivers results: Distribution Products sales were up 4.7% last year.

"To make certain that we offer our customers the best products from the industry's best vendors, we are always building relationships with new vendors. This year, we were pleased to announce our partnership with GE Infrastructure Sensing to offer an expanded range of products for the process, utility and pharmaceutical markets. These include General Eastern, Kaye, Panametrics and Protimeter laboratory and process instrument products, all of which are highly regarded in the industry.

"The focus for our Distribution Products business in fiscal year 2006 is on organic growth. As you evaluate our progress going forward in this fiscal year and beyond, it's important to understand that on a quarter-to-quarter basis, our growth can be influenced by promotions as well as our customers' business cycles. The way we view and evaluate our Distribution Products business is on a yearly basis, which is the most accurate gauge of the health of the business and not on a quarter-to-quarter basis. You should do the same.

Calibration Services

"Our Calibration Services business provides precise, reliable and fast calibrations to the industries that we serve. It is a strategic core competency of our company and is where we see the growth coming from in the years ahead.

"One of the emerging trends we've seen during the past fiscal year, and one that is clearly continuing into this fiscal year, is that companies are looking to outsource their calibration services needs to firms such as ours. During fiscal year 2005, we added two new Calibration Services customers: a medical device manufacturer and a nuclear power plant, which marks our first significant entry into the energy sector. We acquired these new customers as a result of our ability to offer a comprehensive program of value-added calibration services. That is the foundation on which we are building our future success.

"In our Calibration Services business, we're going to continue identifying companies that value quality and that are looking to outsource their calibration services needs. Our marketing and sales programs in this fiscal year will generally focus on gaining entry into customers in target industries and where there is a preexisting base of calibration services customers.

"The selling cycle for Calibration Services can be lengthy, sometimes 6 to 12 months. Also, we might get an order to provide a customer with outsourced calibration services that will start with their next calibration cycle, which could be next year. As with Distribution Products, you need to view and evaluate our Calibration Services business on a yearly basis, which is the most accurate gauge of the health of our business and not on a quarter-to-quarter basis. That's how we do it.

Looking Ahead

"As you know, we don't make specific projections. However, we believe that the performance in our first quarter is reflective of what we think is possible to achieve for fiscal year 2006 as a whole.

--  For Distribution Products, we expect sales growth in the mid-single
--  For Calibration Services, we expect sales growth in the mid-to-high
    single digits.
--  Overall, we anticipate continued improvements in gross margin and year-
    over-year improvements in operating earnings, with the first half stronger
    than the second half.

"Once again, we urge you to evaluate our business on a yearly basis, and not on a quarterly basis.

"We will always strive to keep our customers happy by offering them superb service with a demonstrated commitment to quality. That's what has built our business and what has helped to achieve our excellent results this past fiscal year. That's what will help us to deliver excellent results going forward."

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 eleven 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 registered with Underwriter's Laboratories, Inc. 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.

Contact Information

  • Contact:

    Charles P. Hadeed
    COO, VP Finance & CFO
    Transcat, Inc.

    Van Negris / Lexi Terrero
    Van Negris & Company, Inc.

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