TRANSCAT INC
For the period ended Mar 29, 2025. Filed May 27, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed May 27, 2025
TRNS$101.51+1.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-03-30; filed 2024-05-28.
0001437749-24-018456
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-03-29; filed 2025-05-27.
0001437749-25-018483
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 107 previous paragraphs and 105 current paragraphs.
53 unchanged; 48 reworded; 4 added; 5 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 22 previous and 22 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (4)
Current report
Our Service segment revenue growth was 7.0% for fiscal year 2025 from fiscal year 2024. This increase was primarily due to the acquisitions of Martin and Becnel. Acquired revenue, which represents revenue from acquisitions completed after the end of the prior year, was $10.4 million. Service Segment revenue was also impacted by the number of weeks. Fiscal year 2025 had 52 weeks, while fiscal year 2024 had 53 weeks. When adjusted for the 52/53 week impact, organic service revenue increased by 2.7%. The Service segment gross margin decreased by 40 basis points. Service segment gross margin decreases were primarily due to small organic revenue increases offset by decreased margins in the Transcat Solutions business.
Current report
Acquisitions continued to play a key role in Service revenue, including most recently Martin Calibration which we are swiftly integrating into our operations. Service organic growth was in the high single-digit range for the fourth quarter of fiscal year 2025 and the full fiscal year, when normalized for the 53rd week and excluding Transcat Solutions, driven by consistent demand in the Calibration business. Revenue growth in both segments combined with continued productivity gains from increased automation and process improvements drove EBITDA growth for the fourth quarter of fiscal year 2025 and the full fiscal year.
Current report
The macroeconomic backdrop, including tariffs, has become more uncertain since the beginning of the year. However, we believe our business model is resilient in any market environment due to the highly regulated markets we serve, particularly life science, aerospace, and defense, as our services are mandated. The stringent regulatory standards for manufacturers imposed by entities including the FDA, FAA and Department of Defense to ensure product safety and environmental protection drive the organic growth for our high-value calibration services. Our dedicated team has a proven track record of delivering profitable revenue growth over the past decade and a half. We believe our proven team in combination with the industry mandated service model, diversified portfolio with a Fortune 500 client base, and strong balance sheet will continue to differentiate us during fiscal year 2026 and beyond.
Current report
Looking ahead, while macroeconomic impacts on our business such as changes in product costs and customer demand for services are uncertain, we anticipate a return to high single-digit organic Service revenue growth once the environment normalizes. Automation of our calibration processes and focus on productivity remain key enablers of margin expansion. We have demonstrated the ability to leverage these tools to improve our operational efficiency and drive margin expansion over an extended period. We will continue to leverage our acquisition expertise and are pleased with the current flow of strategic opportunities. We believe strong execution, paired with strategic acquisitions, positions us well to drive long-term shareholder value.
Removed paragraphs (5)
Previous report
Our Service segment revenue growth was 17.0% for fiscal year 2024 from fiscal year 2023. This increase was primarily due to recently completed acquisitions and strong organic demand in our highly-regulated end markets. The Service segment gross margin increased by 160 basis points. Service segment gross profit and gross margin increases were primarily due to operating leverage on our fixed costs and increased technician productivity.
Previous report
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted. The CARES Act included a provision that allows the Company to defer the employer portion of social security payroll tax payments that would have been paid between the enactment date and December 31, 2020, with 50% payable by December 31, 2021 and 50% payable by December 31, 2022. During fiscal year 2021, the Company deferred $2.0 million of employer social security payroll taxes. The Company repaid $1.0 million of the deferred amounts and during each of fiscal year 2023 and fiscal year 2022.
Previous report
Recent Events
Previous report
Effective April 15, 2024, the Company acquired Becnel Rental Tools LLC (“Becnel”). This transaction aligned with a key component of our acquisition strategy of targeting businesses that expand the depth and breadth of our rental capabilities. The total purchase price of $50.8 million was paid in combination of $33.3 million in Company common stock and $17.5 million in cash, and is subject to certain customary holdback provisions, post-closing adjustments, and indemnification claims, if any. See Note 11 to our Consolidated Financial Statements in this report for further details.
Previous report
The Transcat team continues to deliver strong revenue growth and sustainable gross margin expansion as can be seen over the past decade and a half of profitable growth. As we think ahead into fiscal 2025, our business will continue to benefit from recurring revenue streams in highly regulated end markets, including life sciences, along with a growing Rentals business that performs well throughout various economic cycles. We expect another year of organic Service revenue growth in the high-single digit to low double-digit range when normalized for the extra week in fiscal 2024 and gross margin expansion. Automation of our calibration processes and overall process improvement will continue to be key enablers of future margin expansion.
Reworded paragraphs (48)
Previous wording
Our Service segment has shown consistent revenue growth over the past several years, ending fiscal year 2024 with its 60th consecutive quarter of year-over-year growth. This segment has benefited from both organic growth as well as acquisitions over those 60 quarters. The business acquisitions that we made have been focused on expanding our service capabilities, increasing our geographic reach and leveraging our Calibration Service Centers and other infrastructure to create operational synergies.
Current wording
Our Service segment has shown consistent revenue growth over the past several years, ending fiscal year 2025 with its 64th consecutive quarter of year-over-year growth. This segment has benef ited from both organic growth as well as acquisitions over those 64 quarters. The business acquisitions that we made have been focused on expanding our service capabilities, increasing our geographic reach and leveraging our Calibration Service Centers and other infrastructure to create operational synergies.
Previous wording
In fiscal year 2024, Distribution segment sales increased by 5.0%. This increase in sales primarily due to sales from the acquisition of Axiom.
Current wording
In fiscal year 2025, Distribution segment sales increased by 7.8%. This increase in sales primarily due to sales from the acquisition of Becnel and increases in traditional rental products.
Previous wording
The Distribution segment gross margin in fiscal year 2024 increased by 420 basis points. The increase in segment gross margin was primarily due to increased margins from rental revenue, which now includes Axiom, and a favorable mix of higher margin products sold.
Current wording
The Distribution segment gross margin in fiscal year 2025 increased by 20 basis points. The increase in segment gross margin was primarily due to increased margins from rental revenue, which now includes Becnel, and a favorable mix of higher margin products sold.
Previous wording
***Financial Overview.***In evaluating our results for fiscal year 2024, investors should consider that we operate on a 52/53-week fiscal year, ending the last Saturday in March. In a 52-week fiscal year, each of the four quarters is a 13-week period. In a 53-week fiscal year, the last quarter is a 14-week period. Fiscal year 2024 consisted of 53 weeks and fiscal year 2023 consisted of 52 weeks.
Current wording
***Financial Overview.***In evaluating our results for fiscal year 2025, investors should consider that we operate on a 52/53-week fiscal year, ending the last Saturday in March. In a 52-week fiscal year, each of the four quarters is a 13-week period. In a 53-week fiscal year, the last quarter is a 14-week period. Fiscal year 2025 consisted of 52 weeks and fiscal year 2024 consisted of 53 weeks.
Previous wording
A discussion regarding our financial condition and results of operations for the fiscal year ended March 25, 2023 and year-to-year comparisons between fiscal year 2023 and fiscal year 2022, which are not included in this Form 10-K, can be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended March 25, 2023 and are incorporated by reference herein.
Current wording
A discussion regarding our financial condition and results of operations for the fiscal year ended March 30, 2024 and year-to-year comparisons between fiscal year 2024 and fiscal year ended March 25, 2023 ("fiscal year 2023"), which are not included in this Form 10-K, can be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended March 30, 2024 and are incorporated by reference herein.
Previous wording
Total revenue for fiscal year 2024 was $259.5 million. This represented an increase of $28.9 million or 12.5% versus total revenue of $230.6 million for fiscal year 2023. This increase was primarily due to recently completed acquisitions, strong demand in our Service segment’s highly-regulated end markets and increased rental sales, which includes incremental revenue from an acquisition completed in fiscal year 2024.
Current wording
Total revenue for fiscal year 2025 was $278.4 million. This represented an increase of $18.9 million or 7.3% versus total revenue of $259.5 million for fiscal year 2024. This increase was primarily due to recently completed acquisitions, and increased rental sales, which includes incremental revenue from an acquisition completed in fiscal year 2025.
Previous wording
Service revenue was $169.5 million in fiscal year 2024, an increase of $24.6 million or 17.0%. Service revenue accounted for 65.3% of our total revenue during fiscal year 2024. Of our Service revenue in fiscal year 2024,86.6% was generated by our Calibration Service Centers and cost control and optimization services while 12.3% was generated through subcontracted third-party vendors, compared with 86.2% and 12.6%, respectively, in fiscal year 2023. The remainder of our Service revenue in each period was derived from freight charges.
Current wording
Service revenue was $181.4 million in fiscal year 2025, an increase of $11.9 million or 7.0%. Service revenue accounted for 65.2% of our total revenue during fiscal year 2025. Of our Service revenue infiscal year 2025, 86.0% was generated by our Calibration Service Centers and cost control and optimization services while 12.8% was generated through subcontracted third-party vendors, compared with 86.6% and 12.3%, respectively, in fiscal year 2024. The remainder of our Service revenue in each period was derived from freight charges.
Previous wording
Distribution sales were $90.0 million in fiscal year 2024, an increase of $4.3 million or 5.0%. Distribution sales accounted for 34.7% of our total revenue in fiscal year 2024.
Current wording
Distribution sales were $97.0 million in fiscal year 2025, an increase of $7.0 million or 7.8%. Distribution sales accounted for 34.8% of our total revenue in fiscal year 2025.
Previous wording
Sales to domestic customers comprised 92.6% of total Distribution sales in fiscal year 2024, while 5.9% were to Canadian customers and 1.5% were to customers in other international markets.
Current wording
Sales to domestic customers comprised 93.3% of total Distribution sales in fiscal year 2025, while 5.7% were to Canadian customers and 1.0% were to customers in other international markets.
Previous wording
Total gross profit was $83.8 million in fiscal year 2024 compared to $68.4 million in fiscal year 2023, an increase of $15.5 million or 22.6%. Total gross margin was 32.3%, which is a 270 basis point increase versus fiscal year 2023. Service gross margin was 33.8% in fiscal year 2024 compared with 32.2% in fiscal year 2023, a 160 basis point increase. Distribution gross margin was 29.5% in fiscal year 2024 compared with 25.3% in fiscal year 2023, a 420 basis point increase. This increase in service gross margin in fiscal year 2024 was primarily largely the result of operating leverage on our fixed costs and increased technician productivity. The increase in the distribution segment gross margin was primarily due to increased margins from rental revenue, which now includes Axiom, and a favorable mix of higher margin products sold.
Current wording
Total gross profit was$89.5 million in fiscal year 2025 compared to$83.8 million in fiscal year 2024, an increase of$5.6 million or 6.7%. Total gross margin was 32.1%, which is a 20 basis point decrease versus fiscal year 2024. Service gross margin was 33.4% in fiscal year 2025 compared with 33.8% in fiscal year 2024, a 40 basis point decrease. Distribution gross margin was 29.7% in fiscal year 2025 compared with 29.5% in fiscal year 2024, a 20 basis point increase. This decrease in service gross margin in fiscal year 2025 was primarily largely the result of lower revenue and gross margins for Transcat Solutions. The increase in the distribution segment gross margin was primarily due to increased margins from rental revenue, which now includes Becnel.
Previous wording
Operating expenses were $64.0 million, or 24.7% of total revenue, in fiscal year 2024 compared with $52.1 million, or 22.6% of total revenue, in fiscal year 2023. Operating income was $19.8 million, or 7.6% of total revenue, in fiscal year 2024 compared with $16.2 million, or 7.0% of total revenue, in fiscal year 2023. The year-over-year increase in selling, marketing and warehouse expenses was due to increased expenses related to recent acquisitions, especially acquisition related amortization expense, and higher incentive-based employee costs due to higher sales. The year-over-year increase in general and administrative expenses was due to incremental expe nses from acquired businesses (including stock expense), increased payroll costs for new employees and continued investments in technology.
Current wording
Operating expenses were$71.6 million, or 25.7% of total revenue, in fiscal year 2025 compared with$64.0 million, or 24.7% of total revenue, in fiscal year 2024. Operating income was$17.9 million, or 6.4% of total revenue, in fiscal year 2025 compared with$19.8 million, or 7.6% of total revenue, in fiscal year 2024. The year-over-year increase in selling, marketing and warehouse expenses was due to increased expenses related to recent acquisitions, especially acquisition related amortization expense, and higher incentive-based employee costs due to higher sales. The year-over-year increase in general and administrative expenses was due to incremental expenses from acquired businesses (including stock expense), increased payroll costs for new employees and continued investments in technology.
Previous wording
Net income for fiscal year 2024 was $13.6 million compared with $10.7 million in fiscal year 2023, a $3.0 million increase. Diluted earnings per share for fiscal year 2024 was $1.63 compared with $1.40 for fiscal year 2023, a $0.23 per diluted share increase.
Current wording
Net income for fiscal year 2025 was$14.5 million compared with$13.6 million in fiscal year 2024, a$0.9 million increase. Diluted earnings per share for fiscal year 2025 was$1.57 compared with$1.63 for fiscal year 2024, a$0.06 per diluted share decrease.
Previous wording
Accounts Receivable. Accounts receivable represent amounts due from customers in the ordinary course of business. These amounts are recorded net of the allowance for credit lossesand returns in the Consolidated Balance Sheets. The allowance for credit losses is based upon the expected collectability of accounts receivable. We apply a specific formula to our accounts receivable aging, which may be adjusted on a specific account basis where the formula may not appropriately reserve for loss exposure. After all attempts to collect a receivable have failed, the receivable is written-off against the allowance for credit losses. A returns reserve is calculated based upon the historical rate of returns applied to revenues over a specific timeframe. The returns reserve will increase or decrease as a result of changes in the level of revenues and/or the historical rate of returns. Management believes that the allowances are appropriate to cover anticipated losses under current conditions. However, unexpected changes or deterioration in economic conditions could materially change these expectations.
Current wording
Accounts Receivable. Accounts receivable represents amounts due from customers in the ordinary course of business. These amounts are recorded net of the allowance for credit lossesand returns in the Consolidated Balance Sheets. The allowance for credit losses is based upon the expected collectability of accounts receivable. We apply a specific formula to our accounts receivable aging, which may be adjusted on a specific account basis where the formula may not appropriately reserve for loss exposure. After all attempts to collect a receivable have failed, the receivable is written-off against the allowance for credit losses. A returns reserve is calculated based upon the historical rate of returns applied to revenues over a specific timeframe. The returns reserve will increase or decrease as a result of changes in the level of revenues and/or the historical rate of returns. Management believes that the allowances are appropriate to cover anticipated losses under current conditions. However, unexpected changes or deterioration in economic conditions could materially change these expectations.
Previous wording
***Goodwill and Intangible Assets.***Goodwill represents the excess of the purchase price over the values assigned to the underlying net assets of an acquired business and is not amortized. As of March 30, 2024, we had$105.6 million of recorded goodwill.
Current wording
***Goodwill and Intangible Assets.***Goodwill represents the excess of the purchase price over the values assigned to the underlying net assets of an acquired business and is not amortized. As of March 29, 2025, we had$176.9 million of recorded goodwill.
Previous wording
***Income Taxes.***We record deferred income taxes for the effects of timing differences between financial and tax reporting. These differences relate primarily to accrued expenses, reserves for credit losses, inventory reserves, operating leases, goodwill and intangible assets, depreciation and amortization and stock-based compensation. We base our deferred income taxes, accrued income taxes and provision for income taxes upon income, statutory tax rates, the legal structure of our Company, interpretation of tax laws and tax planning opportunities available to us in the various jurisdictions in which we operate. We file income tax returns in the U.S. federal jurisdiction, various states, Canada and Ireland. We are regularly audited by federal, state and foreign tax authorities, but a number of years may elapse before an uncertain tax position, for which we have unrecognized tax benefits, is audited and finally resolved. From time to time, these audits result in assessments of additional tax. If a loss is determined to be probable as a result of an audit, an accrual is established.
Current wording
***Income Taxes.***We record deferred income taxes for the effects of timing differences between financial and tax reporting. These differences relate primarily to operating leases, goodwill and intangible assets, depreciation and amortization and stock-based compensation. We base our deferred income taxes, accrued income taxes and provision for income taxes upon income, statutory tax rates, the legal structure of our Company, interpretation of tax laws and tax planning opportunities available to us in the various jurisdictions in which we operate. We file income tax returns in the U.S. federal jurisdiction, various states, Canada and Ireland. We have been audited by federal, state and foreign tax authorities, but a number of years may elapse before an uncertain tax position, for which we have unrecognized tax benefits, is audited and finally resolved. From time to time, these audits result in assessments of additional tax. If a loss is determined to be probable as a result of an audit, an accrual is established.
Previous wording
Recently Issued Accounting Pronouncements. In the normal course of business, management evaluates all new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) to determine the potential impact they may have on our consolidated financial statements. For a discussion of the newly issued accounting pronouncements see “Recently Adopted Accounting Pronouncements” and "Recent Accounting Guidance Not Yet Adopted" under Note 1 to the Consolidated Financial Statements included in Item 8 of Part II of this report.
Current wording
Recently Issued Accounting Pronounce ments. In the normal course of business, management evaluates all new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) to determine the potential impact they may have on our consolidated financial statements. For a discussion of the newly issued accounting pronouncements see “Recently Adopted Accounting Pronouncements” and "Recent Accounting Guidance Not Yet Adopted" under Note 1 to the Consolidated Financial Statements included in Item 8 of Part II of this report.
Previous wording
Total revenue was $259.5 million in fiscal year 2024 compared to $230.6 million in fiscal year 2023, an increase of $28.9 million or 12.5%. When normalizing for the extra days from fiscal year 2024’s 53 weeks, the Company estimates that its full year revenue growth was approximately 10.4%.
Current wording
Total revenue was$278.4 million in fiscal year 2025 compared to$259.5 million in fiscal year 2024, an increase of$18.9 million or 7.3%. When normalizing for the fewer days from fiscal year 2025's 52 weeks versus fiscal year 2024’s 53 weeks, the Company estimates that its full year revenue growth was approximately 9.1%.
Previous wording
Service revenue, which accounted for 65.3% and 62.8% of our total revenue in fiscal years 2024 and 2023, respectively, increased$24.6 million, or 17.0% from fiscal year 2023 to fiscal year 2024. This year-over-year increase included $5.9 million of incremental revenue from the acquisitions of TIC-MS, SteriQual and Axiom, and also included organic revenue growth of 11.3% driven by strong end-market demand and continued market share gains.
Current wording
Service revenue, which accounted for 65.2% and 65.3% of our total revenue in fiscal years 2025 and 2024, respectively, increased$11.9 million, or 7.0% from fiscal year 2024 to fiscal year 2025. This year-over-year increase included $10.4 million of incremental revenue from the acquisitions of Becnel and Martin. It also included organic revenue growth of 2.7% when adjusted for the 52/53 week impact, which was driven by continued market share gains, offset by comparatively lower revenue from the Transcat Solutions business.
Previous wording
The growth in fiscal year 2024 and fiscal year 2023 reflected both organic growth and acquisitions. The growth in Service segment revenue in fiscal year 2024 includes revenue from TIC-MS and SteriQual. The growth in Service segment revenue in fiscal year 2023 includes revenue from Alliance, e2b and Complete Calibration.
Current wording
The growth in fiscal year 2025 and fiscal year 2024 reflected both organic growth and acquisitions. The growth in Service segment revenue in fiscal year 2025 includes revenue from Becnel and Martin. The growth in Service segment revenue in fiscal year 2024 includes revenue from TIC-MS and SteriQual. The lower growth percentages in fiscal year 2025 are due to lower organic revenue growth compared to fiscal year 2024.
Previous wording
Our Distribution sales accounted for 34.7% and 37.2% of our total revenue in fiscal years 2024 and 2023, respectively. Distribution sales increased $4.3 million, or 5.0% in fiscal year 2024 compared to fiscal year 2023. This year-over-year increase is primarily due to $7.0 millionof incremental revenue from the acquisition of Axiom offset by slower demand for our non-rental products. The change in fiscal year 2023 versus fiscal year 2022 was due to increased demand for rental products and was all organic. Our fiscal years 2024 and 2023 Distribution sales growth in relation to prior fiscal year quarter comparisons were as follows:
Current wording
Our Distribution sales accounted for 34.8% and 34.7% of our total revenue in fiscal years 2025 and 2024, respectively. Distribution sales increased$7.0 million, or 7.8% in fiscal year 2025 compared to fiscal year 2024. This year-over-year increase is primarily due to $7.2 million of incremental revenue from the acquisitions of Becnel and Martin offset by slower demand for our non-rental products. The change in fiscal year 2024 versus fiscal year 2023 was due to incremental revenue from the acquisition of Axiom offset by slower demand for our non-rental products. Our fiscal years 2025 and 2024 Distribution sales growth in relation to prior fiscal year quarter comparisons were as follows:
Previous wording
Our total pending product shipments decreased $3.0 million, or 37.3%, at the end of fiscal year 2024 compared to the end of fiscal year 2023. Backorders at the end of fiscal year 2024 were $4.5 million, compared to $6.9 million at the end of fiscal year 2023. The year-over-year decrease in pending product shipments and backorders was a result of improved fulfillment of existing orders.
Current wording
Our total pending product shipments decreased $1.8 million, or 34.7%, at the end of fiscal year 2025 compared to the end of fiscal year 2024. Backorders at the end of fiscal year 2025 were $2.7 million, compared to $4.5 million at the end of fiscal year 2024. The year-over-year decrease in pending product shipments and backorders was a result of improved fulfillment of existing orders.
Previous wording
Total gross profit in fiscal year 2024 was $83.8 million compared to $68.4 million in fiscal year 2023, an increase of $15.5 million or 22.6%. As a percentage of total revenue, total gross margin was 32.3% in fiscal year 2024 compared to 29.6% in fiscal year 2023, a 270 basis point increase.
Current wording
Total gross profit in fiscal year 2025 was $89.5 million compared to $83.8 million in fiscal year 2024, an increase of $5.6 million or 6.7%. As a percentage of total revenue, total gross margin was 32.1% in fiscal year 2025 compared to 32.3% in fiscal year 2024, a 20 basis point decrease.
Previous wording
Service gross profit was $57.3 million, an increase of $10.6 million, or 22.8%, from fiscal year 2023 to fiscal year 2024. Our annual and quarterly Service segment gross margins are a function of several factors. Our organic Service revenue growth provides some incremental gross margin growth by leveraging certain fixed costs of this segment. The mix of services provided to customers may also affect gross margins in any given period. Service gross margin increased by 160 basis points in fiscal year 2024 versus fiscal year 2023. This increase in service gross margin in fiscal year 2024 was the result of increased revenue which allows us to leverage our fixed costs and improved technician productivity.
Current wording
Service gross profit was $60.7 million, an increase of $3.4 million, or 5.9%, from fiscal year 2024 to fiscal year 2025. Our annual and quarterly Service segment gross margins are a function of several factors. Our organic Service revenue growth provides some incremental gross margin growth by leveraging certain fixed costs of this segment. The mix of services provided to customers may also affect gross margins in any given period. Service gross margin decreased by 40 basis points in fiscal year 2025 versus fiscal year 2024. This decrease in service gross margin in fiscal year 2025 was the result of lower revenue and gross margins from Transcat Solutions.
Previous wording
Our Distribution gross margin includes net sales less the direct cost of inventory sold and the direct costs of equipment rental revenues, primarily depreciation expense for the fixed assets in our rental equipment pool, as well as the impact of rebates and cooperative advertising income we receive from vendors, freight billed to customers, freight expenses and direct shipping costs. We recorded vendor rebates of$0.6 million in both fiscal years 2024 and 2023, as a reduction of cost of Distribution sales. In general, our Distribution gross margin can vary based upon the mix of products sold, price discounting, the timing of periodic vendor rebates offered and cooperative advertising programs from suppliers.
Current wording
Our Distribution gross margin includes net sales less the direct cost of inventory sold and the direct costs of equipment rental revenues, primarily depreciation expense for the fixed assets in our rental equipment pool, as well as the impact of rebates and cooperative advertising income we receive from vendors, freight billed to customers, freight expenses and direct shipping costs. We recorded vendor rebates of $0.9 million in fiscal year 2025 and $0.6 million in fiscal year 2024, as a reduction ofcost of Distribution sales. In general, our Distribution gross margin can vary based upon the mix of products sold, price discounting, the timing of periodic vendor rebates offered and cooperative advertising programs from suppliers.
Previous wording
Distribution segment gross margin incre ased 420 basis points in fiscal year 2024 compared to fiscal year 2023. The increase in the Distribution segment gross margin was primarily due to increased margins from rental revenue, which now includes Axiom and a favorable mix of higher margin products sold.
Current wording
Distribution segment gross margin incre ased 20 basis points in fiscal year 2025 compared to fiscal year 2024. The increase in the Distribution segment gross margin was primarily due to increased margins from rental revenue, which now includes Becnel and a favorable mix of higher margin products sold.
Previous wording
Total operating expenses were$64.0 million in fiscal year 2024 compared to$52.1 million in fiscal year 2023. This represented an increase of$11.9 million, or 22.9%, compared to fiscal year 2023. As a percentage of total revenue, operating expenses increased 210 basis points from 22.6% in fiscal year 2023 to 24.7% in fiscal year 2024. The year-over-year increase in selling, marketing and warehouse expenses is due to increased expenses related to recent acquisitions, especially acquisition related amortization expense, and higher incentive-based employee costs due to higher sales. The increase in general and administrative expenses includes incremental expenses related to acquired companies, increased payroll costs for new employees and continued investments in technology.
Current wording
Total operating expenses were$71.6 million in fiscal year 2025 compared to$64.0 million in fiscal year 2024. This represented an increase of$7.6 million, or 11.8%, compared to fiscal year 2024. As a percentage of total revenue, operating expenses increased 100 basis points from 24.7% in fiscal year 2024 to 25.7% in fiscal year 2025. The year-over-year increase in selling, marketing and warehouse expenses is due to increased expenses related to recent acquisitions, especially acquisition related amortization expense, and higher incentive-based employee costs due to higher sales. The increase in general and administrative expenses includes incremental expenses related to acquired companies, increased payroll costs for new employees and continued investments in technology.
Previous wording
Our effective tax rate for fiscal years 2024 and 2023 was 26.0% and 20.8%, respectively. The increase in effective tax rate is due to tax expense recognized in fiscal year 2024 associated with executive compensation limitations that resulted from share-based awards. Our provision for income taxes is affected by discrete items that may occur in any given period but are not consistent from year to year. The discrete benefits related to share-based compensation activity in fiscal years 2024 and 2023 were$0.6 million and $0.4 million, respectively. We continue to evaluate our tax provision on a quarterly basis and adjust, as deemed necessary, our effective tax rate given changes in facts and circumstances expected in the future.
Current wording
Our effective tax rate for fiscal years 2025 and 2024 was 20.8% and 26.0%, respectively. The decrease in effective tax rate is due to the timing of our discrete items in relation to the timing of our pre-tax net income and due to tax expense recognized in fiscal year 2024 associated with executive compensation limitations that resulted from share-based awards. Our provision for income taxes is affected by discrete items that may occur in any given period but are not consistent from year to year. The discrete benefits related to share-based compensation activity in fiscal years 2025 and 2024 were $1.3 million and $0.6 million, respectively. We continue to evaluate our tax provision on a quarterly basis and adjust, as deemed necessary, our effective tax rate given changes in facts and circumstances expected in the future.
Previous wording
We expect to receive certain federal, state, Canadian and Irish tax credits in future years. We also expect to receive discrete tax benefits related to share-based compensation awards in fiscal year 2025. As such, we expect our effective tax rate in fiscal year 2025 to be between 24.0% and 26.0%.
Current wording
We expect to receive certain federal, state, Canadian and Irish tax credits in future years. We also expect to receive discrete tax benefits related to share-based compensation awards in fiscal year 2026. As such, we expect our effective tax rate in fiscal year 2026 to be between 27.0% and 29.0%.
Previous wording
Net income for fiscal year 2024 increased by $3.0 million or 27.7% compared to fiscal year 2023. As a percentage of revenue, net income was 5.3% in fiscal year 2024, up from 4.6% in fiscal year 2023. This year-over-year change reflects higher operating income discussed, lower interest expense, offset by a higher provision for income taxes.
Current wording
Net income for fiscal year 2025 increased by $0.9 million or 6.4% compared to fiscal year 2024. As a percentage of revenue, net income was 5.2% in fiscal year 2025, down from 5.3% in fiscal year 2024. The year-over-year increase in net income was primarily due to lower operating income, offset by lower interest expense, net and higher other income related to the sale of assets related to our United Scale division.
Previous wording
In addition to reporting net income, a GAAP measure, we present Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, non-cash stock compensation expense, acquisition related transaction expenses, non-cash loss on sale of building, and restructuring expense), which is a non-GAAP measure. Our management believes Adjusted EBITDA is an important measure of our operating performance because it allows management, investors and others to evaluate and compare the performance of our core operations from period to period by removing the impact of the capital structure (interest), tangible and intangible asset base (depreciation and amortization), taxes, stock-based compensation expense and other items, which is not always commensurate with the reporting period in which it is included. As such, our management uses Adjusted EBITDA as a measure of performance when evaluating our business segments and as a basis for planning and forecasting. Adjusted EBITDA is also commonly used by rating agencies, lenders and other parties to evaluate our credit worthiness.
Current wording
In addition to reporting net income, a GAAP measure, we present Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, non-cash stock compensation expense, acquisition related transaction expenses, contingent consideration, and certain other expenses), which is a non-GAAP measure. Our management believes Adjusted EBITDA is an important measure of our operating performance because it allows management, investors and others to evaluate and compare the performance of our core operations from period to period by removing the impact of the capital structure (interest), tangible and intangible asset base (depreciation and amortization), taxes, stock-based compensation expense and other items, which is not always commensurate with the reporting period in which it is included. As such, our management uses Adjusted EBITDA as a measure of performance when evaluating our business segments and as a basis for planning and forecasting. Adjusted EBITDA is also commonly used by rating agencies, lenders and other parties to evaluate our credit worthiness.
Previous wording
During fiscal year 2024, Adjusted EBITDA was $38.6 million, an increase of $8.2 million or 26.9% compared to fiscal year 2023. As a percentage of revenue, Adjusted EBITDA was 14.9% during fiscal year 2024 versus 13.2% during fiscal year 2023, a 170 basis point increase. The increase in Adjusted EBITDA during fiscal year 2024 was primarily driven by the increase in operating income, depreciation and amortization expense, transaction expense and non-cash stock compensation expense.
Current wording
During fiscal year 2025, Adjusted EBITDA was $39.7 million, an increase of $1.1 million or 2.9% compared to fiscal year 2024. As a percentage of revenue, Adjusted EBITDA was 14.3% during fiscal year 2025 versus 14.9% during fiscal year 2024, a 60 basis point decrease. The dollar increase in Adjusted EBITDA during fiscal year 2025 was primarily driven by increases in depreciation and amortization expense offset by lower operating income and lower noncash stock compensation.
Previous wording
In addition to reporting Diluted Earnings Per Share, a GAAP measure, we present Adjusted Diluted Earnings Per Share (net income plus acquisition related amortization expense, acquisition related transaction expenses, acquisition related stock-based compensation, acquisition amortization of backlog and restructuring expense; divided by the average diluted shares outstanding during the period), which is a non-GAAP measure. Our management believes Adjusted Diluted Earnings Per Share is an important measure of our operating performance because it provides a basis for comparison of our business operations between current, past and future periods by excluding items that we do not believe are indicative of our core operating performance.
Current wording
In addition to reporting Diluted Earnings Per Share, a GAAP measure, we present Adjusted Diluted Earnings Per Share (net income plus acquisition related amortization expense, acquisition related transaction expenses, acquisition related stock-based compensation, contingent consideration, and acquisition amortization of backlog; divided by the average diluted shares outstanding during the period), which is a non-GAAP measure. Our management believes Adjusted Diluted Earnings Per Share is an important measure of our operating performance because it provides a basis for comparison of our business operations between current, past and future periods by excluding items that we do not believe are indicative of our core operating performance.
Previous wording
Effective July 1, 2023, interest on outstanding borrowings under the revolving credit facility accrue, at our election, at either the variable Daily Simple SOFR or a fixed rate for a designated period at the SOFR corresponding to such period (subject to a 0.25% floor), in each case, plus a margin. Unused fees accrue based on the average daily amount of unused credit available on the revolving credit facility. Interest rate margins and unused fees are determined on a quarterly basis based upon our calculated leverage ratio. Our interest rate for the revolving credit facility for fiscal year 2024 ranged from 6.4% to 7.1%. Interest on outstanding borrowings under the 2018 Term Loan accrue at a fixed rate of 3.90% over the term of the loan.
Current wording
Effective July 1, 2023, interest on outstanding borrowings under the revolving credit facility accrue, at our election, at either the variable Daily Simple SOFR or a fixed rate for a designated period at the SOFR corresponding to such period (subject to a 0.25% floor), in each case, plus a margin. Unused fees accrue based on the average daily amount of unused credit available on the revolving credit facility. Interest rate margins and unused fees are determined on a quarterly basis based upon our calculated leverage ratio. Our interest rate for the revolving credit facility for fiscal year 2025 ranged from 5.1% to 6.2%. Interest on outstanding borrowings under the 2018 Term Loan accrue at a fixed rate of 3.90% over the term of the loan.
Previous wording
The Credit Agreement has certain covenants with which we must comply, including a fixed charge ratio covenant, which prohibits our fixed charge coverage ratio from being less than 1.15 to 1.00, and a leverage ratio covenant, which prohibits our leverage ratio from exceeding 3.00 to 1.00. Our leverage ratio, as defined in the Credit Agreement, was 0.10 at March 30, 2024, compared with 1.60 at March 25, 2023. We were in compliance with all loan covenants and requirements during fiscal years 2024 and 2023.
Current wording
The Credit Agreement has certain covenants with which we must comply, including a fixed charge ratio covenant, which prohibits our fixed charge coverage ratio from being less than 1.15 to 1.00, and a leverage ratio covenant, which prohibits our leverage ratio from exceeding 3.00 to 1.00. Our leverage ratio, as defined in the Credit Agreement, was 0.78 at March 29, 2025, compared with 0.10 at March 30, 2024. We were in comp liance with all loan covenants and requirements during fiscal years 2025 and 2024.
Previous wording
As of March 30, 2024,$80.0 million was available for borrowing under the revolving credit facility. As of March 30, 2024, there were no amounts outstanding under the revolving credit facility. After the closing of the Offering, we used approximately $50.0 million of the net proceeds to repay in full the amounts outstanding under the revolving credit facility. During fiscal year 2024 and 2023 we used$12.9 million and$9.1 million, respectively, from the revolving credit facility for business acquisitions.
Current wording
As of March 29, 2025,$80.0 million was available for borrowing under the revolving credit facility, of which, $30.9 million was outstanding. On September 25, 2023, we closed an underwritten public offering of our common stock for aggregate gross proceeds of $80.5 million (the “Offering”). In the Offering, we sold an aggregate of 847,371 shares at $95.00 per share for net proceeds of $75.2 million. After the closing of the Offering, we used approximately $50.0 million of the net proceeds to repay in full the amounts outstanding under the revolving credit facility. During fiscal year 2025 and 2024 we used $87.4 million and$12.9 million, respectively, drawn from cash on hand and from the revolving credit facility for business acquisitions.
Previous wording
As of March 30, 2024,$4.2 million was outstanding on the 2018 Term Loan, of which$2.3 million was included in current liabilities on the Consolidated Balance Sheets with the remainder included in long-term debt. The 2018 Term Loan requires total repayments (principal plus interest) of $0.2 million per month through December 2025.
Current wording
As of March 29, 2025, $1.8 million was outstanding on the 2018 Term Loan, which was included in current liabilities on the Consolidated Balance Sheets with the remainder included in long-term debt. The 2018 Term Loan requires total repayments (principal plus interest) of $0.2 million per month through December 2025.
Previous wording
Operating Activities: Net cash provided by operating activities was$32.6 million during fiscal year 2024 compared to$17.0 million during fiscal year 2023. The year-over-year increase in cash provided by operations is primarily the result of changes in net working capital (defined as current assets less current liabilities). The significant working capital fluctuations were as follows:
Current wording
Operating Activities: Net cash provided by operating activities** **was$39.0 million during fiscal year 2025 compared to$32.6 million during fiscal year 2024. The year-over-year increase in cash provided by operations is primarily the result of increases in depreciation and amortization. The significant working capital fluctuations were as follows:
Previous wording
Our inventory balance increased $0.5 million during fiscal year 2024, inclusive of $1.8 million of inventory acquired during the year. Our inventory balance increased $4.2 million during fiscal year 2023. The year-over-year change is a result of strategic inventory purchases during fiscal year 2024.
Current wording
Our inventory balance decreased $2.9 million during fiscal year 2025. Our inventory balance during fiscal year 2024 increased $0.5 million inclusive of $1.8 million of inventory acquired during the year. The year-over-year change is a result of strategic inventory purchases during fiscal year 2024.
Previous wording
Accounts payable decreased $4.4 million during fiscal year 2024, inclusive of $0.6 million of accounts payable acquired during the year. Accounts payable increased by $1.7 million during fiscal year 2023, inclusive of $0.1 million ofaccounts payable acquired during the year. The variance is largely due to the timing of inventory and capital expenditure purchases and other payments in the respective periods.
Current wording
Accounts payable increased $5.3 million during fiscal year 2025, inclusive of $0.3 million of accounts payable acquired during the year. Accounts payable decreased by $4.4 million during fiscal year 2024, inclusive of $0.6 million of accounts payable acquired during the year. The variance is largely due to the timing of inventory and capital expenditure purchases and other payments in the respective periods.
Previous wording
During fiscal year 2024, accrued compensation and other liabilities increased by $6.5 million, inclusive of $3.1 million from assumed liabilities, contingent consideration and purchase price holdbacks from acquisition transactions. During fiscal year 2023, accrued compensation and other liabilities decreased by $1.2 million.
Current wording
During fiscal year 2025, accrued compensation and other liabilities decreased by $1.3 million, inclusive of $1.2 million from assumed liabilities, contingent consideration and purchase price holdbacks from acquisition transactions. During fiscal year 2024, accrued compensation and other liabilities increased by $6.5 million, inclusive of $3.1 million from assumed liabilities, contingent consideration and purchase price holdbacks from acquisition transactions.
Showing the first 40 of 48 pairs. Open the source sections for the rest.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
On September 25, 2023, we closed an underwritten public offering of our common stock for aggregate gross proceeds of $80.5 million (the “Offering”). In the Offering, we sold an aggregate of 847,371 shares at $95.00 per share. We received net proceeds of $75.2 million in the Offering, a portion of which was used during the third quarter of fiscal year 2024 to repay in full our revolving credit facility. See “Liquidity and Capital Resources” below for more information.