This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Transcat Reports 3.0% Increase In Revenue For Fiscal 2013 Third Quarter

Stocks in this article: TRNS

Service Segment Expansion Muted by Product Segment Declines

Operating income for the third quarter of fiscal 2013 was $1.2 million, a $0.4 million decrease from the prior fiscal year period. Operating margin declined 160 basis points to 4.2% in the third quarter of fiscal 2013 compared with 5.8% for the prior-year period. Total operating expenses in the third quarter of fiscal 2013 increased $0.3 million, or 5.3%, including upfront costs related to the Company’s deployment of Salesforce.com, a customer relationship management (“CRM”) software program which is expected to increase the efficiency of our sales teams.

During the third quarter of fiscal 2013, Transcat generated $1.9 million of EBITDA (earnings before interest, taxes, depreciation and amortization), a decrease of $0.5 million when compared with the same quarter of the prior fiscal year. Service segment EBITDA increased 15.5%, to $0.4 million, which was more than offset by a decrease in EBITDA attributable to the Product segment. See Note 1 on page 4 for a description of this non-GAAP financial measure and page 9 for the EBITDA Reconciliation table.

Service Segment Strengthened by Acquisition

S ervice Segment: Represents the Company’s accredited calibration, repair, inspection and other compliance services business (34% of total revenue for the third quarter of fiscal 2013)

“The third quarter Service segment revenue growth can largely be attributed to furthering our reach into the targeted life sciences industry with our recent acquisition of Anacor,” stated Lee D. Rudow, President and COO of Transcat. “While we have made strides growing with acquisitions, we intend to further increase our focus on organic growth as well, which we expect will lead to enhanced operating leverage and stronger cash flow generation.”

  • Service segment revenue increased 8.9%, or $0.8 million, to $9.9 million in the third quarter of fiscal 2013 compared with the third quarter of the prior fiscal year.
  • Third quarter fiscal 2013 Service segment gross profit improved $0.3 million, or 16.5%, to $2.1 million compared with the prior fiscal year period, while gross margin expanded 140 basis points over the same comparable period to 21.5%.
  • Service segment contribution margin increased $0.3 million, or 65.4%, to $0.8 million compared with the third quarter of fiscal 2012. See Note 1 on page 4 for a description of this non-GAAP financial measure and page 10 for the Contribution Margin Reconciliation in the Business Segment Data.
  • Operating expenses associated with the Service segment increased 5.9% to $2.1 million in the third quarter of fiscal 2013 compared with the third quarter of the prior fiscal year.
  • Service segment operating income was basically break-even for the third quarter of fiscal 2013, an improvement from an operating loss of $0.2 million in the third quarter of fiscal 2012. Operating margin over the same comparable period improved 200 basis points.
  • Service segment EBITDA increased 15.5% to $0.4 million in the fiscal 2013 third quarter compared with the third quarter of fiscal 2012. As a percentage of Service segment revenue, EBITDA for the Service segment was 4.1% and 3.8% in the third quarters of fiscal 2013 and 2012, respectively. See Note 1 on page 4 for a description of this non-GAAP financial measure and page 9 for the EBITDA Reconciliation table.

Product Segment Revenue Steady in a Challenging Market

Product Segment: Represents the Company’s distribution of professional grade handheld test and measurement instruments business (66% of total revenue for the third quarter of fiscal 2013)

  • Product segment sales were $19.4 million in the third quarter of fiscal 2013, consistent with the prior-year period despite two fewer business days. Average Product segment sales per day increased 3.6% to $319 thousand in the third quarter of fiscal 2013, compared with $308 thousand in the same period of fiscal 2012.
  • Online product sales increased 24.5% to $2.3 million in the third quarter of fiscal 2013 from $1.8 million in the prior-year period. Online sales accounted for 11.7% and 9.4% of Product segment sales in the third quarters of 2013 and 2012, respectively.
  • Third quarter Product segment gross profit decreased $0.5 million to $4.5 million, or 23.2% of Product segment sales, primarily due to competitive pricing pressures and a $0.2 million reduction in volume-based rebate income.
  • Product segment operating income decreased $0.6 million to $1.2 million in the third quarter of fiscal 2013 primarily as a result of the contraction in gross profit. Operating margin was 6.4% and 9.6% of Product segment sales in the third quarter of fiscal 2013 and 2012, respectively.
  • Product segment EBITDA was $1.5 million, or 7.8% of segment sales, in the third quarter of fiscal 2013, compared with $2.1 million, or 11.0% of segment sales, in the prior-year period. See Note 1 on page 4 for a description of this non-GAAP financial measure and page 9 for the EBITDA Reconciliation table.

Nine-Month Review

Total revenue increased to $81.2 million in the first nine months of fiscal 2013, up 2.5% from total revenue of $79.2 million in the first nine months of fiscal 2012. Revenue increases in the Service segment were partially offset by lower sales in the Product segment.

  • Service segment revenue increased 10.7% to $28.5 million in the first nine months of fiscal 2013, compared with $25.7 million in the first nine months of fiscal 2012. Incremental revenue from recent acquisitions complemented by organic growth was partially offset by the strategic decision not to renew $0.8 million in low margin revenue from the Company outsourcing primarily non-calibration services for a specific customer.
  • Product segment sales were $52.8 million in the first nine months of fiscal 2013, a decrease of 1.5% from $53.5 million in the same period of the prior fiscal year. Sales to both direct and reseller customers declined slightly, reflecting general economic conditions.

Gross margin was 23.3% in the first nine months of fiscal 2013 compared with 24.3% in the same period of the prior fiscal year.

  • Service segment gross margin improved 60 basis points to 22.8% in the first nine months of fiscal 2013 compared with 22.2% in the same period of the prior fiscal year. Revenue growth in the Service segment included incremental revenue from recent acquisitions, which provided limited short-term gross margin expansion opportunity.
  • Product segment gross margin was 23.6% and 25.3% for the first nine months of fiscal 2013 and 2012, respectively. The decline was primarily a result of $0.7 million less in manufacturer rebates as well as increased price discounts extended to customers, partially offset by a$0.3 million increase in cooperative advertising income.

Operating expenses increased modestly to $15.9 million in the first nine months of fiscal 2013, compared with the first nine months of the prior fiscal year. As a percentage of total revenue, operating expenses in the fiscal 2013 year-to-date period improved to 19.6% from 19.9% in the prior-year period reflecting lower performance-based compensation and acquisition-related expenses, partially offset by one-time sales organization restructuring charges and increased investments in our CRM software Salesforce.com.

2 of 6

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs