Net Sales Increase by 9.9% and 17.4% Respectively; Operating Income
Increases Significantly
ROCHESTER, N.Y., May 21 /PRNewswire-FirstCall/ -- 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 fiscal year 2007 and
the fourth quarter ended March 31, 2007.
Fiscal Year 2007 and Fourth Quarter Overview
-- Net sales increased 9.9% to $66.5 million in fiscal year 2007 and 17.4%
to $18.9 million in the fiscal year 2007 fourth quarter, both of which
were bolstered by having 14 weeks in the fiscal year 2007 fourth
quarter compared to 13 weeks in the fiscal year 2006 fourth quarter.
-- Operating income for fiscal year 2007 and the fiscal year 2007 fourth
quarter was $3.9 million and $0.7 million, respectively. Adjusted
operating income* for fiscal year 2007 increased by $0.8 million or
54.7% compared to fiscal year 2006. Operating income for the fiscal
year 2007 fourth quarter increased by $0.5 million or 190.2% compared
to the fiscal year 2006 fourth quarter.
-- Net income of $2.1 million for fiscal year 2007 decreased by $1.5
million from fiscal year 2006 net income of $3.6 million. Net income
for the fiscal year 2007 fourth quarter was $0.5 million compared to
net income of $2.8 million for the fiscal year 2006 fourth quarter.
-- Earnings per share for fiscal year 2007 were $0.28 per diluted share
compared to $0.50 per diluted share for fiscal year 2006. Earnings per
share for the fiscal year 2007 fourth quarter were $0.07 per diluted
share compared to $0.38 per diluted share for the fiscal year 2006
fourth quarter.
-- Distribution Products - Net sales increased 11.3% to $45.4 million in
fiscal year 2007 from $40.8 million in fiscal year 2006. Distribution
Products gross profit ratio for fiscal year 2007 increased 2.4 points
to 26.4% from fiscal year 2006. Purchase rebates earned in fiscal year
2007 in excess of those earned in fiscal year 2006 accounted for 1.8
points of the increase. Net sales increased 20.7% to $12.7 million for
the fiscal year 2007 fourth quarter from $10.5 million in the fiscal
year 2006 fourth quarter. For the fiscal year 2007 fourth quarter, the
gross profit ratio increased 4.1 points to 27.2% from the fiscal year
2006 fourth quarter. Purchase rebates earned in the fiscal year 2007
fourth quarter in excess of those earned in the fiscal year 2006 fourth
quarter accounted for 2.7 points of the increase.
-- Calibration Services - Net sales increased 7.1% to $21.1 million in
fiscal year 2007 from $19.7 million in fiscal year 2006. Calibration
Services gross profit ratio for the fiscal year 2007 decreased 4.6
points to 22.3% from fiscal year 2006. For the fiscal year 2007 fourth
quarter, Calibration Services net sales increased 11.2% to $6.2 million
from $5.6 million in the fiscal year 2006 fourth quarter. For the
fiscal year 2007 fourth quarter, Calibration Services gross profit
margin decreased by 4.3 points to 24.6% from 28.9% in the fiscal year
2006 fourth quarter. The decreases in gross profit ratio for both the
fiscal year 2007 and the fiscal year 2007 fourth quarter were due to
the rate of investment in lab operating expenses exceeding the rate of
growth in sales.
*Adjusted operating income represents generally accepted accounting
principles ("GAAP") operating income excluding the previously deferred gain
from the sale of Transmation Products Group ("TPG") of $1.5 million.
Adjusted operating income is not a measurement of financial performance
under accounting principles generally accepted in the United States. For a
quantitative reconciliation of the differences between adjusted operating
income to operating income as calculated in accordance with GAAP, see the
accompanying table entitled "Unaudited Reconciliation of Non-GAAP Financial
Measures to GAAP".
Operations Review
Charles P. Hadeed, Transcat's President, CEO and COO, stated: "I am
pleased with our results for fiscal year 2007 which were in line with our
expectations. We have had eight consecutive quarters of year over year
revenue growth in both our Distribution Products and Calibration Services
segments and anticipate that trend continuing into fiscal year 2008. Our
strong growth in operating earnings, excluding the TPG gain, during fiscal
year 2007 resulted primarily from revenue growth and significant
productivity improvements in our operations.
"Our Distribution Products sales for fiscal year 2007 are up 11.3% over
the prior year which factors in the extra week in the fiscal year 2007
fourth quarter. Our gross profit ratio also improved as a result of
realizing a higher margin on products sold to our direct customers.
"Our Calibration Services sales for fiscal year 2007 are up 7.1% over
the prior year. In the fiscal year 2007 fourth quarter, we began to see
positive results from the operational changes we made earlier in the year
in our sales processes and organization."
Looking Ahead
Mr. Hadeed continued: "We are focused on growth in our Calibration
Services business in fiscal year 2008 to leverage the investments we have
made and improve our gross margin and operating cash flow.
"Our strategy of bundling the sales of the best test and measurement
equipment available with the trusted integrity of our calibration services
is sound. Our unique position in the marketplace provides us a competitive
advantage and is a significant value for our customers.
"As we enter fiscal year 2008, we are well positioned to continue our
growth in both the Distribution Products and Calibration Services segments
through focused efforts that leverage our investments and the
identification of opportunities consistent with our existing product and
service segments."
Fiscal Year 2007 Fourth Quarter Financial Summary
For fiscal year 2007, net sales were $66.5 million, an increase of $6.0
million or 9.9%, compared with net sales of $60.5 million for fiscal year
2006. Distribution Products net sales for fiscal year 2007 were $45.4
million, an increase of $4.6 million or 11.3%, compared with net sales of
$40.8 million for fiscal year 2006. Calibration Services net sales for
fiscal year 2007 were $21.1 million, an increase of $1.4 million or 7.1%,
compared with net sales of $19.7 million for fiscal year 2006.
For the fiscal year 2007 fourth quarter, net sales were $18.9 million,
an increase of $2.8 million or 17.4%, compared with net sales of $16.1
million for the fiscal year 2006 fourth quarter. Distribution Products net
sales for the fiscal year 2007 fourth quarter were $12.7 million, an
increase of $2.2 million or 20.7%, compared with net sales of $10.5 million
for the fiscal year 2006 fourth quarter. Calibration Services net sales for
the fiscal year 2007 fourth quarter were $6.2 million, an increase of $0.6
million or 11.2%, compared with net sales of $5.6 million for the fiscal
year 2006 fourth quarter.
Net income for fiscal year 2007 decreased by $1.5 million to $2.1
million, or $0.28 per diluted share, compared to $3.6 million, or $0.50 per
diluted share, in fiscal year 2006. Net income for the fiscal year 2007
fourth quarter was $0.5 million, or $0.07 per diluted share, compared to
$2.8 million, or $0.38 per diluted share for the fiscal year 2006 fourth
quarter.
In evaluating the Company's results for fiscal year 2007 and the fiscal
year 2007 fourth quarter, the following factors should be taken into
account:
-- Fiscal year 2007 and the fiscal year 2007 fourth quarter operating
results include 53 weeks and 14 weeks, respectively, compared to 52
weeks and 13 weeks for the corresponding periods in fiscal year 2006.
-- The fiscal year 2007 operating results include the recognition of a
previously deferred pre-tax gain of $1.5 million from the sale of TPG
to Fluke Electronics Corporation, which occurred in fiscal year 2002.
Although the sale of TPG occurred in fiscal year 2002, Transcat had
entered into a distribution agreement in connection with the
transaction and was precluded from recognizing the gain at that time
because the distribution agreement required Transcat to purchase a pre-
determined amount of inventory during each calendar year from 2002 to
2006. In December 2006, Transcat's purchases exceeded the required
amount for calendar year 2006, as they had in each of the prior four
years, which fulfilled the obligation and triggered the recognition of
the gain in the fiscal year 2007 third quarter.
-- The Company adopted Statement of Financial Accounting Standards No.
123(R), "Share-Based Payment", which requires the expensing of stock
options, at the beginning of fiscal year 2007. Approximately $0.3
million of stock option expense was recorded in fiscal year 2007.
There was no stock option expense recorded in fiscal year 2006.
-- Net income for fiscal year 2007 and the fiscal year 2007 fourth quarter
includes income tax provisions of $1.2 million and $0.2 million,
respectively. Approximately $0.6 million of the full year amount
relates to the gain on the sale of TPG. The results for fiscal year
2006 and the fiscal year 2006 fourth quarter include a benefit from
income taxes of $2.6 million that resulted from the reversal of a large
portion of the Company's deferred tax asset valuation allowance.
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 and repair services through eleven
Calibration Centers of Excellence strategically located across the United
States, Canada and Puerto Rico to approximately 8,000 customers. To support
the Company's customers' requirements, 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.
Non-GAAP Financial Measures: This release contains a non-GAAP financial
measure within the meaning of Regulation G promulgated by the Securities
and Exchange Commission. The accompanying schedule "Unaudited
Reconciliation of Non-GAAP Financial Measures to GAAP" is a reconciliation
of the difference between this non-GAAP financial measure and the most
directly comparable financial measure calculated in accordance with GAAP.
"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 25, 2006.
TRANSCAT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)
Fourth Quarter Ended Twelve Months Ended
March 31, March 25, March 31, March 25,
2007 2006 2007 2006
Product Sales $12,698 $10,517 $45,411 $40,814
Service Sales 6,155 5,537 21,062 19,657
Net Sales 18,853 16,054 66,473 60,471
Cost of Products Sold 9,241 8,085 33,411 31,002
Cost of Services Sold 4,641 3,939 16,372 14,370
Total Cost of Products
and Services Sold 13,882 12,024 49,783 45,372
Gross Profit 4,971 4,030 16,690 15,099
Selling, Marketing,
and Warehouse Expenses 2,372 2,354 8,469 8,553
Administrative Expenses 1,859 1,421 5,872 5,028
Total Operating Expenses 4,231 3,775 14,341 13,581
Gain on TPG Divestiture - - 1,544 -
Operating Income 740 255 3,893 1,518
Interest Expense 66 106 334 427
Other Expense 18 32 283 162
Total Other Expense 84 138 617 589
Income Before Income Taxes 656 117 3,276 929
Provision for (Benefit from)
Income Taxes 167 (2,648) 1,217 (2,648)
Net Income $489 $2,765 $2,059 $3,577
Basic Earnings Per Share $0.07 $0.41 $0.30 $0.54
Average Shares Outstanding 6,990 6,754 6,914 6,647
Diluted Earnings Per Share $0.07 $0.38 $0.28 $0.50
Average Shares Outstanding 7,407 7,336 7,335 7,176
TRANSCAT, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Amounts)
March 31, March 25,
2007 2006
ASSETS
Current Assets:
Cash $357 $115
Accounts Receivable, less allowance
for doubtful accounts of $47
and $63 as of March 31, 2007 and
March 25, 2006, respectively 8,846 7,989
Other Receivables 352 -
Inventory, net 4,336 3,952
Prepaid Expenses and Other Current Assets 762 732
Deferred Tax Asset 851 1,038
Total Current Assets 15,504 13,826
Property and Equipment, net 2,814 2,637
Goodwill 2,967 2,967
Deferred Tax Asset 791 1,624
Other Assets 346 434
Total Assets $22,422 $21,488
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $5,307 $4,219
Accrued Compensation and Other Liabilities 2,578 2,530
Income Taxes Payable 42 102
Short Term Borrowings and Current
Portion of Long-Term Debt - 3,975
Total Current Liabilities 7,927 10,826
Long-Term Debt, less current portion 2,900 353
Deferred Gain on TPG Divestiture - 1,544
Other Liabilities 366 118
Total Liabilities 11,193 12,841
Shareholders' Equity:
Common Stock, par value $0.50 per
share, 30,000,000 shares authorized;
7,286,119 and 7,048,028 shares
issued as of March 31, 2007 and
March 25, 2006, respectively;
7,010,337 and 6,791,240 shares
outstanding as of March 31, 2007
and March 25, 2006, respectively 3,643 3,524
Capital in Excess of Par Value 5,268 4,641
Warrants 329 329
Unearned Compensation - (15)
Accumulated Other Comprehensive Gain 43 181
Retained Earnings 2,934 875
Less: Treasury Stock, at cost,
275,782 and 256,788 shares as of
March 31, 2007 and March 25, 2006,
respectively (988) (888)
Total Shareholders' Equity 11,229 8,647
Total Liabilities and
Shareholders' Equity $22,422 $21,488
TRANSCAT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
For the Years Ended
March 31, March 25,
2007 2006
Cash Flows from Operating Activities:
Net Income $2,059 $3,577
Adjustments to Reconcile Net Income
to Net Cash Provided by (Used in)
Operating Activities:
Deferred Income Taxes 1,118 (2,662)
Depreciation and Amortization 2,109 1,401
Provision for Accounts Receivable
and Inventory Reserves 120 45
Common Stock Expense 382 78
Amortization of Restricted Stock 52 46
Gain on TPG Divestiture (1,544) -
Changes in Assets and Liabilities:
Accounts Receivable and Other Receivables (1,270) 499
Inventory (421) 1,994
Prepaid Expenses and Other Assets (1,034) (592)
Accounts Payable 1,088 (325)
Accrued Compensation and Other Liabilities 46 372
Income Taxes Payable (60) 2
Net Cash Provided by Operating Activities 2,645 4,435
Cash Flows from Investing Activities:
Purchase of Property and Equipment (1,194) (914)
Purchase of N.W. Calibration Inspection, Inc. - (863)
Net Cash Used in Investing Activities (1,194) (1,777)
Cash Flows from Financing Activities:
Revolving Line of Credit, net (352) (2,246)
Payments on Other Debt Obligations (1,076) (824)
Issuance of Common Stock 218 416
Net Cash Used in Financing Activities (1,210) (2,654)
Effect of Exchange Rate Changes on Cash 1 5
Net Increase in Cash 242 9
Cash at Beginning of Period 115 106
Cash at End of Period $357 $115
Supplemental Disclosures of Cash Flow Activity:
Cash paid during the period for:
Interest $347 $372
Income Taxes, net $158 $21
Supplemental Disclosure of Non-Cash
Financing Activity:
Treasury Stock Acquired in Cashless
Exercise of Stock Options $100 $50
Expiration of Warrants from Debt Retirement $- $101
Stock Issued in Connection with
Business Acquisition $- $100
TRANSCAT, INC.
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP
(In Thousands)
To supplement Transcat's financial results presented in accordance with
GAAP, Transcat provided non-GAAP adjusted operating income for fiscal year
2007. The presentation of this non-GAAP financial measure should be
considered in addition to the GAAP results and should not be considered in
isolation or as a substitute for the financial information prepared and
presented in accordance with GAAP. Transcat's management uses adjusted
operating income to assess Transcat's historical and prospective operating
performance. Management uses adjusted operating income to enhance its
understanding of Transcat's core operating performance, excluding items
unrelated to current operations.
Transcat believes that management and investors benefit from this
non-GAAP financial measure to facilitate comparisons to historical
financial performance allowing for greater transparency with respect to
supplemental information used by management in its decision making.
Fourth Quarter Ended Twelve Months Ended
March 31, March 25, March 31, March 25,
2007 2006 2007 2006
Reconciliation of GAAP
operating income to
adjusted operating income:
Operating Income $740 $255 $3,893 $1,518
Gain on TPG Divestiture - - (1,544) -
Adjusted operating income $740 $255 $2,349 $1,518
SOURCE Transcat, Inc.
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CONTACT:
Charles P. Hadeed, President, CEO and COO, or
John J. Zimmer, Vice President of Finance and CFO, both of
Transcat, Inc., +1-585-352-7777; or Van Negris or Lexi Terrero,
both Van Negris & Company, Inc., +1-212-759-0290; or Robert
Cavosi of Broadgate Consultants, LLC, +1-212-493-6981
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