Transcat Inc (TRNS, Financial), a leading provider of accredited calibration, repair, inspection, and laboratory instrument services, released its earnings report for the second quarter ended September 23, 2023, on October 31, 2023. The company reported strong second quarter results, driven by double-digit organic service growth and expanding gross margins.
Financial Highlights
Transcat Inc (TRNS, Financial) reported an 11.3% increase in consolidated revenue, up to $62.8 million. The company's service revenue saw a significant increase of 17.5%, with organic revenue growth of 10.0%. The service gross profit increased by 22.6%, with the service gross margin expanding by 140 basis points. The company's adjusted EBITDA grew by 23.9%, with the adjusted EBITDA margin expanding by 160 basis points. The adjusted diluted earnings per share for the second quarter were $0.60, an increase of $0.16 compared to the prior year.
We are extremely pleased with our strong second quarter results as Service gross margin expanded 140 basis points driven by double-digit organic Service growth of 10% and increased productivity throughout our network of labs. Service segment revenue grew 17% as demand in our highly regulated end markets, including life sciences, remained strong and our recent acquisitions continued to perform at a high level. Consolidated revenue was up 11% with gross margin expansion of 230 basis points year over year driven by our differentiated value proposition and execution of our automation and process improvement initiatives," commented Lee D. Rudow, President and CEO of Transcat Inc (TRNS, Financial).
Acquisitions and Future Outlook
Transcat Inc (TRNS) completed two acquisitions in the second quarter, including SteriQual, a provider of expert consulting services to the life sciences industry, and Axiom Test Equipment, a player in the test equipment rental market. These acquisitions are expected to contribute to the company's future growth and improve the margin profile of its Distribution segment.
We have demonstrated our ability to drive growth through various economic cycles over the past decade and a half, and we are confident that will continue. We expect organic Service revenue growth in the high-single digit to low double-digit range and gross margin expansion for the fiscal 2024 year. We believe our unique value proposition drives a sustainable competitive advantage in the highly regulated markets that we serve, particularly the Life Science, Aerospace, and Defense markets. Additionally, we expect our successful and unique acquisition strategy will continue to drive synergistic growth opportunities and expand our addressable markets," added Mr. Rudow.
Transcat Inc (TRNS, Financial) expects its income tax rate to range between 24% and 26% in fiscal 2024. The company will host a conference call and webcast on October 31, 2023, to review the financial and operating results for the second quarter.
Explore the complete 8-K earnings release (here) from Transcat Inc for further details.
