EX-99.1 2 l20371aexv99w1.htm EX-99.1 PRESS RELEASE EX-99.1 Press Release
 

News Release
Corporate Offices
35 Vantage Point Drive, Rochester, New York 14624
Telephone: 585-352-7777 Fax: 585-352-7788
     
Contact:
    
 
    
Charles P. Hadeed, COO, VP Finance & CFO
  Van Negris/Lexi Terrero
Transcat, Inc.
  Van Negris & Company, Inc.
585-352-7777
  212-759-0290
FOR IMMEDIATE RELEASE
Transcat Announces Fiscal Year 2006 and Fourth Quarter Results;
Revenues and Profitability Rise in Fiscal Year 2006
ROCHESTER, NY — May 16, 2006 — 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 2006 and the fourth quarter ended March 25, 2006.
 
Fiscal Year 2006 and Fourth Quarter Overview
•   Net sales increased 9.3% to $60.5 million in fiscal year 2006 and 3.2% to $16.1 million in the fiscal year 2006 fourth quarter.
•   Gross profit ratio for fiscal year 2006 decreased 0.1 points to 25.0% from fiscal year 2005. Gross profit ratio for the fiscal year 2006 fourth quarter decreased 2.8 points to 25.1% from the fiscal year 2005 fourth quarter, primarily because of the timing of purchase rebates earned in the fiscal year 2005 fourth quarter.
•   Operating income for fiscal year 2006 increased $0.6 million to $1.5 million from fiscal year 2005. Operating income for the fiscal year 2006 fourth quarter decreased $0.4 million to $0.3 million from the fiscal year 2005 fourth quarter, primarily because of the timing of purchase rebates earned in the fiscal year 2005 fourth quarter.
•   In the fourth quarter of fiscal year 2006, a substantial portion of the net deferred tax asset valuation reserve was reversed, resulting in a net tax credit for the quarter and the year of $2.7 million.
•   Net income for fiscal year 2006 was $3.6 million, or $0.50 per diluted share, compared with net income of $0.3 million, or $0.04 per diluted share, in fiscal year 2005. Net income for the 2006 fiscal year fourth quarter was $2.8 million, or $0.38 per diluted share, compared with net income of $0.5 million, or $0.07 per diluted share, in the 2005 fiscal year fourth quarter.
•   Distribution Products - Net sales increased 10.1% to $40.8 million in fiscal year 2006 from $37.1 million in fiscal year 2005. Net sales increased 4.6% to $10.5 million in the fiscal year 2006 fourth quarter from $10.1 million in the fiscal year 2005 fourth quarter. Distribution Products gross profit ratio for fiscal year 2006 increased 0.4 points to 24.0% from fiscal year 2005. Distribution Products gross profit ratio for the fiscal year 2006 fourth quarter decreased 2.4 points to 23.1% from the fiscal year 2005 fourth quarter, the majority of which was attributable to the timing of certain product purchase rebates earned in the fiscal year 2005 fourth quarter.
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Transcat, Inc.
Page Two - May 16, 2006
•   Calibration Services - Net sales increased 7.9% to $19.7 million in fiscal year 2006 from $18.2 million in fiscal year 2005. Net sales slightly increased 0.7% to $5.54 million in the fiscal year 2006 fourth quarter from $5.50 million in the fiscal year 2005 fourth quarter. Calibration Services gross profit ratio for fiscal year 2006 decreased 1.2 points to 26.9% from fiscal year 2005. Calibration Services gross profit ratio for the fiscal year 2006 fourth quarter decreased 3.3 points to 28.9% from the fiscal year 2005 fourth quarter, impacted by ongoing investments in service infrastructure and sales mix.
Operations Review
Commenting on the fiscal year 2006 and fourth quarter results, Carl E. Sassano, Chairman of the Board, President and Chief Executive Officer, stated: “We delivered significant value to our shareholders in fiscal year 2006 as our fiscal year 2006 pre-tax earnings were more than three times the pre-tax earnings of fiscal year 2005.
“We achieved sales growth in both Distribution Products and Calibration Services in relation to prior fiscal year quarter comparisons, resulting in a very positive 9.3% overall sales growth rate for the fiscal year.
“Operating earnings for fiscal year 2006 increased 69% to $1.5 million, inclusive of investments in calibration sales and service infrastructure, product marketing initiatives and increased manpower. The Company’s strong operating cash flow was used to reduce our debt by 41% over the course of the year.
“Our excellent results for fiscal year 2006 are due to the continued implementation of our strategic plan. Transcat’s customers in the Process, Utility, Pharmaceutical and Electrical industries have an ongoing need for both our products and calibration service for those products. Our strategy of cross-selling to these customers is expanding our presence in these strategically targeted market segments.
“The continued growth in revenues in fiscal years 2005 and 2006, resulting from the execution of the Company’s strategic plan and aggressive management of operating expenses, has strengthened our balance sheet and improved cash flow. As a result of the Company’s continued profitability over the last four years and our belief that our future performance will result in sustained profitability and taxable income, we have reversed a significant portion of the Company’s deferred tax valuation reserve. We believe that Transcat’s business turnaround from problems of the late 90’s has been accomplished.
“In February 2006, we were pleased to announce the acquisition of N.W. Calibration Inspection, Inc. in Fort Wayne, Indiana, which has expanded the Transcat Calibration Services Laboratories network to 12 Transcat Calibration Centers of Excellence. Our strategic acquisition of NWCI has expanded the services we offer our customers. The addition of these new services, working with our customers’ Quality Engineering departments on new product development projects, which include First Part Inspection and Reverse Engineering, is allowing Transcat to increase Calibration Services sales and become a more integral service supplier within our identified target markets.”
Looking Ahead
Mr. Sassano continued: “As we look ahead, we expect to build on the solid foundation that has been established over the previous four years, with continued steady growth in revenues. In fiscal year 2007, our goals are to achieve Distribution Products sales growth in the high single digits and Calibration Services sales growth in the low to mid teens.
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Transcat, Inc.
Page Three - May 16, 2006
“We are confident that the strategies and resources we have in place will win us greater recognition in our markets and generate increased demand for our services and products. I believe the interests of our shareholders, customers and employees have been advanced by the strategic initiatives we have been implementing and I expect this to continue in the future.”
Fiscal Year 2006 and Fourth Quarter Financial Summary
For fiscal year 2006, net sales were $60.5 million, an increase of $5.2 million, or 9.3%, compared with net sales of $55.3 million for fiscal year 2005. Distribution Products net sales for fiscal year 2006 were $40.8 million, an increase of $3.7 million, or 10.1%, compared with net sales of $37.1 million for fiscal year 2005. Calibration Services net sales for fiscal year 2006 were $19.7 million, an increase of $1.4 million, or 7.9%, compared with net sales of $18.2 million for fiscal year 2005.
For the fiscal year 2006 fourth quarter, net sales were $16.1 million, an increase of $0.5 million, or 3.2%, compared with net sales of $15.6 million during the fiscal year 2005 fourth quarter. Distribution Products net sales for the fourth quarter of fiscal year 2006 were $10.5 million, an increase of $0.5 million, or 4.6%, compared with net sales of $10.1 million for the fourth quarter of fiscal year 2005. Calibration Services net sales for the fourth quarter of fiscal year 2006 were $5.54 million, a slight increase of $0.04 million, or 0.7%, compared with net sales of $5.50 million for the fourth quarter of fiscal year 2005.
Net income for fiscal year 2006 was $3.6 million, or $0.50 per fully diluted share, which includes a net tax credit of $2.7 million, as compared with $0.3 million, or $0.04 per fully diluted share, in fiscal year 2005. Net income for the fiscal year 2006 fourth quarter was $2.8 million, or $0.38 per fully diluted share, which includes a net tax credit of $2.7 million, compared with $0.5 million, or $0.07 per fully diluted share, for the fiscal year 2005 fourth quarter.
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 twelve 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.
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Transcat, Inc.
Page Four - May 16, 2006
Transcat, Inc.
Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
                                 
    (Unaudited)        
    Fourth Quarter Ended     Twelve Months Ended  
    March     March     March     March  
    25, 2006     26, 2005     25, 2006     26, 2005  
Product Sales
   $ 10,517     $ 10,058     $ 40,814     $ 37,086  
Service Sales
     5,537       5,499       19,657       18,221  
 
                        
Net Sales
     16,054       15,557       60,471       55,307  
 
                        
 
                                
Cost of Products Sold
     8,085       7,486       31,002       28,307  
Cost of Services Sold
     3,939       3,732       14,370       13,108  
 
                        
Total Cost of Products and Services Sold
     12,024       11,218       45,372       41,415  
 
                        
 
                                
Gross Profit
     4,030       4,339       15,099       13,892  
 
                        
 
                                
Selling, Marketing, and Warehouse Expenses
     2,354       2,196       8,553       7,948  
Administrative Expenses
     1,421       1,465       5,028       5,045  
 
                        
Total Operating Expenses
     3,775       3,661       13,581       12,993  
 
                        
 
                                
Operating Income
     255       678       1,518       899  
 
                        
 
                                
Interest Expense
     106       116       427       350  
Other Expense
     32       58       162       293  
 
                        
Total Other Expense
     138       174       589       643  
 
                        
 
                                
Income Before Income Taxes
     117       504       929       256  
Benefit for Income Taxes, net
     2,648       -       2,648       -  
 
                        
 
                                
Net Income
   $ 2,765     $ 504     $ 3,577     $ 256  
 
                        
 
                                
Basic Earnings Per Share
   $ 0.41     $ 0.08     $ 0.54     $ 0.04  
Average Shares Outstanding
     6,754       6,478       6,647       6,396  
 
                                
Diluted Earnings Per Share
   $ 0.38     $ 0.07     $ 0.50     $ 0.04  
Average Shares Outstanding
     7,336       7,165       7,176       6,966  
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Transcat, Inc.
Page Five - May 16, 2006
Transcat, Inc.
Consolidated Balance Sheets
(In Thousands, Except Share and Per Share Amounts)
                 
    March     March  
    25, 2006     26, 2005  
ASSETS
                
Current Assets:
                
Cash
   $ 115     $ 106  
Accounts Receivable, less allowance for doubtful accounts of $63 and $56 as of March 25, 2006 and March 26, 2005, respectively
     7,989       8,089  
Other Receivables
     -       358  
Finished Goods Inventory, net
     3,952       5,952  
Prepaid Expenses and Deferred Charges
     732       630  
Deferred Tax Assets
     1,038       -  
 
            
Total Current Assets
     13,826       15,135  
Property, Plant and Equipment, net
     2,637       1,984  
Capital Leases, net
     50       115  
Goodwill
     2,967       2,524  
Prepaid Expenses and Deferred Charges
     113       188  
Deferred Tax Assets
     1,624       -  
Other Assets
     271       261  
 
            
Total Assets
   $ 21,488     $ 20,207  
 
            
 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
Current Liabilities:
                
Accounts Payable
   $ 4,219     $ 4,544  
Accrued Payrolls, Commissions, and Other
     2,530       2,126  
Income Taxes Payable
     102       100  
Current Portion of Term Loan
     667       758  
Current Portion of Capital Lease Obligations
     56       66  
Revolving Line of Credit
     3,252       5,498  
 
            
Total Current Liabilities
     10,826       13,092  
Term Loan, less current portion
     353       1,020  
Capital Lease Obligations, less current portion
     -       56  
Deferred Compensation
     118       181  
Deferred Gain on TPG Divestiture
     1,544       1,544  
 
            
Total Liabilities
     12,841       15,893  
 
            
 
                
Stockholders’ Equity:
                
Common Stock, par value $0.50 per share, 30,000,000 shares authorized; 7,048,028 and 6,700,505 shares issued as of March 25, 2006 and March 26, 2005, respectively; 6,791,240 and 6,453,241 shares outstanding as of March 25, 2006 and March 26, 2005, respectively
     3,524       3,350  
Capital in Excess of Par Value
     4,641       3,995  
Warrants
     329       430  
Unearned Compensation
     (15 )     (17 )
Accumulated Other Comprehensive Gain
     181       96  
Retained Earnings (Deficit)
     875       (2,702 )
Less: Treasury Stock, at cost, 256,788 and 247,264 shares as of March 25, 2006 and March 26, 2005, respectively
     (888 )     (838 )
 
            
Total Stockholders’ Equity
     8,647       4,314  
 
            
Total Liabilities and Stockholders’ Equity
   $ 21,488     $ 20,207  
 
            
Certain reclassifications of prior year’s financial information have been made to conform with current fiscal year’s presentation.
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Transcat, Inc.
Page Six - May 16, 2006
Transcat, Inc.
Consolidated Statements of Cash Flows
(In Thousands)
                 
    For the Years Ended  
    March     March  
    25, 2006     26, 2005  
Cash Flows from Operating Activities:
                
Net Income
   $ 3,577     $ 256  
Adjustments to Reconcile Net Income to Net Cash
                
Provided by (Used in) Operating Activities:
                
Loss on Disposal of Assets
     -       16  
Deferred Taxes Valuation Allowance
     (2,662 )     -  
Depreciation and Amortization
     1,401       1,486  
Provision for Doubtful Accounts Receivable
     40       69  
Provision for Returns
     (1 )     (32 )
Provision for Slow Moving or Obsolete Inventory
     6       13  
Common Stock Expense
     78       170  
Amortization of Unearned Compensation
     46       135  
Changes in Assets and Liabilities, excluding acquisition:
                
Accounts Receivable and Other Receivables
     499       (376 )
Inventories
     1,994       (2,229 )
Income Taxes Payable
     2       144  
Prepaid Expenses, Deferred Charges, and Other
     (592 )     (507 )
Accounts Payable
     (325 )     405  
Accrued Payrolls, Commissions, and Other
     404       468  
Deferred Compensation
     (32 )     (24 )
 
            
Net Cash Provided by (Used in) Operating Activities
     4,435       (6 )
 
            
 
                
Cash Flows from Investing Activities:
                
Purchase of Property, Plant and Equipment
     (914 )     (866 )
Purchase of N.W. Calibration Inspection, Inc.
     (863 )     -  
 
            
Net Cash Used in Investing Activities
     (1,777 )     (866 )
 
            
Cash Flows from Financing Activities:
                
Revolving Line of Credit, net
     (2,246 )     (943 )
Payments on Term Loans
     (758 )     (890 )
Proceeds from Term Loan Borrowings
     -       2,000  
Payments on Capital Leases
     (66 )     (61 )
Issuance of Common Stock
     416       162  
 
            
Net Cash (Used in) Provided by Financing Activities
     (2,654 )     268  
 
            
 
                
Effect of Exchange Rate Changes on Cash
     5       163  
 
            
 
                
Net Increase (Decrease) in Cash
     9       (441 )
Cash at Beginning of Period
     106       547  
 
            
Cash at End of Period
   $ 115     $ 106  
 
            
 
                
Supplemental Disclosure of Non-Cash Financing Activity:
                
Expiration of Warrants
   $ 101     $ 88  
Treasury Stock Acquired in Cashless Exercise of Stock Options
   $ 50     $ 385  
Disposal of Fully Reserved Obsolete Inventory
   $ 104     $ -  
Non-Cash Issuance of Common Stock
   $ 153     $ -  
Stock Issued in Connection with Business Acquisition
   $ 100     $ -  
Certain reclassifications of prior year’s financial information have been made to conform with current fiscal year’s presentation.
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