TRANSCAT INC

Previous wording

During our first quarter of fiscal year 2026, we had consolidated revenue of $76.4 million. This represented an increase of $9.7 million or 14.6% versus the first quarter of fiscal year 2025. This increase was primarily due to acquisitions. Acquired revenue, which represents revenue from acquisitions completed after the end of the prior period, was $7.9 million. Organic revenue increased by 4.1% versus the first quarter of fiscal year 2025. See Note 5 – “Business Acquisitions” to our unaudited consolidated financial statements in this report for more information about the impact of our acquisitions.

Current wording

During our second quarter of fiscal year 2026, we had consolidated revenue of $82.3 million. This represented an increase of $14.4 million or 21.3% versus the second quarter of fiscal year 2025. This increase was primarily due to acquisitions and a $5.7 million increase in distribution revenue. Acquired revenue, which represents revenue from acquisitions completed after the end of the prior period, was $9.8 million. Organic revenue, increased by 6.8% versus the second quarter of fiscal year 2025. See Note 5 – “Business Acquisitions” to our unaudited consolidated financial statements in this report for more information about the impact of our acquisitions.

Previous wording

Our first quarter of fiscal year 2026 gross profit was $25.8 million. This was an increase of $3.2 million or 14.0% versus the first quarter of fiscal year 2025. Consolidated gross margin was 33.8%, a decrease of 20 basis points versus the first quarter of fiscal year 2025. This decrease in gross profit percentage was due to low organic revenue increases and lower margins from the Transcat Solutions business.

Current wording

Our second quarter of fiscal year 2026 gross profit was $26.8 million. This was an increase of $5.6 million or 26.2% versus the second quarter of fiscal year 2025. Consolidated gross margin was 32.5%, an increase of 1.2% versus the second quarter of fiscal year 2025. This increase in gross profit percentage was primarily due to higher margins from the Distribution segment when compared to the prior year period.

Previous wording

Total operating expenses were $20.5 million in the first quarter of fiscal year 2026, an increase of $2.9 million or 16.7% when compared to the prior fiscal year first quarter. Included in operating expenses during the first quarter of fiscal year 2026 were incremental operating expenses from the acquisitions of Martin and Becnel, investments in technology and higher incentive-based employee costs due to higher sales. As a percentage of total revenue, operating expenses were 26.8% in the first quarter of fiscal year 2026, up 50 basis points from 26.3% in the first quarter of fiscal year 2025. Operating income was $5.3 million, an increase of $0.2 million, or 4.7% and operating margin decreased from 7.6% to 7.0% in the first quarter of fiscal year 2026.

Current wording

Total operating expenses were $23.3 million in the second quarter of fiscal year 2026, an increase of $5.8 million or 33.1% when compared to the prior fiscal year second quarter. Included in operating expenses during the second quarter of fiscal year 2026 were incremental operating expenses from the acquisitions of Martin and Essco, including customer base amortization and acquisition-related costs, increased stock-based compensation and higher incentive-based employee costs due to higher sales. As a percentage of total revenue, operating expenses were 28.3% in the second quarter of fiscal year 2026, up 2.5% from 25.8% in the second quarter of fiscal year 2025. Operating income was $3.5 million, a decrease of $0.2 million, or 6.2% and operating margin decreased from 5.5% to 4.3% in the second quarter of fiscal year 2026.

Previous wording

Net income was $3.3 million in the first quarter of fiscal year 2026 versus $4.4 million in the first quarter of fiscal year 2025. The decrease was primarily due to higher operating income offset by increases in interest expense and provision for income taxes.

Current wording

Net income was $1.3 million in the second quarter of fiscal year 2026 versus $3.3 million in the second quarter of fiscal year 2025. The decrease was primarily due to an increase in administrative costs, interest expense and income tax expense.

Previous wording

The following table presents, for the first quarter of fiscal year 2026 and fiscal year 2025, the components of our Condensed Consolidated Statements of Income:

Current wording

The following table presents, for the second quarter of fiscal year 2026 and fiscal year 2025, the components of our Condensed Consolidated Statements of Income:

Previous wording

First QUARTER ENDED June 28, 2025 COMPARED TOFirst QUARTER ENDED June 29, 2024* (dollars in thousands):**** ***

Current wording

Second QUARTER ENDED September 27, 2025 COMPARED TOSecond QUARTER ENDED September 28, 2024* (dollars in thousands):**** ***

Previous wording

Total revenue was $76.4 million, an increase of $9.7 million, or 14.6%, in our fiscal year 2026 first quarter compared to the prior fiscal year first quarter.

Current wording

Total revenue was $82.3 million, an increase of $14.4 million, or 21.3%, in our fiscal year 2026 second quarter compared to the prior fiscal year second quarter.

Previous wording

The following table presents the trailing twelve-month Service segment revenue for the first quarter of fiscal year 2026 and each quarter in fiscal year 2025 as well as the trailing twelve-month revenue growth as a comparison to that of the prior fiscal year period:

Current wording

The following table presents the trailing twelve-month Service segment revenue for the first and second quarters of fiscal year 2026 and each quarter in fiscal year 2025 as well as the trailing twelve-month revenue growth as a comparison to that of the prior fiscal year period:

Previous wording

Our strategy has been to focus our investments in the core electrical, temperature, pressure, physical/dimensional and radio frequency/microwave calibration disciplines. We expect to subcontract approximately 13% to 15% of our Service revenue to third-party vendors for calibration beyond our chosen scope of capabilities. We continually evaluate our outsourcing needs and make capital investments, as deemed necessary, to add more in-house capabilities and reduce the need for third-party vendors. Capability expansion through business acquisitions is another way that we seek to reduce the need for outsourcing. The following table presents the source of our Service revenue, and the percentage of Service revenue derived from each source for the first quarter of fiscal year 2026 and for each quarter during fiscal year 2025:

Current wording

Our strategy has been to focus our investments in the core electrical, temperature, pressure, physical/dimensional and radio frequency/microwave calibration disciplines. We expect to subcontract approximately 13% to 15% of our Service revenue to third-party vendors for calibration beyond our chosen scope of capabilities. We continually evaluate our outsourcing needs and make capital investments, as deemed necessary, to add more in-house capabilities and reduce the need for third-party vendors. Capability expansion through business acquisitions is another way that we seek to reduce the need for outsourcing. The following table presents the source of our Service revenue, and the percentage of Service revenue derived from each source for the first and second quarters of fiscal year 2026 and for each quarter during fiscal year 2025:

Previous wording

Our Distribution revenue accounted for 35.7% of our total revenue in the first quarter of fiscal year 2026 and 34.4% of our total revenue in the first quarter of fiscal year 2025. During the first quarter of fiscal year 2026, Distribution segment revenue was $27.3 million which was an increase of $4.4 million or 19.0%. This increase was due to $1.5 million of incremental revenue from the acquisition of Martin, incremental traditional rental revenue, and higher revenue from our non-rental products.

Current wording

Our Distribution revenue accounted for 35.8% of our total revenue in the second quarter of fiscal year 2026 and 35.0% of our total revenue in the second quarter of fiscal year 2025. During the second quarter of fiscal year 2026, Distribution segment revenue was $29.4 million which was an increase of $5.7 million or 24.0%. This increase was due to incremental traditional rental revenue, higher revenue from our non-rental products and $0.8 million of incremental revenue primarily related to the acquisition of Martin.

Previous wording

The Distribution segment revenue increase for the first quarter of fiscal year 2026 versus the first quarter of fiscal year 2025 was due to revenue from the acquisition of Martin, increases in traditional rental products and higher revenue from non-rental products.

Current wording

The Distribution segment revenue increase for the second quarter of fiscal year 2026 versus the second quarter of fiscal year 2025 was due to revenue primarily increases in traditional rental products, higher revenue from non-rental products, and incremental revenue related to the acquisition of Martin.

Previous wording

The following table presents our total pending product shipments and the percentage of total pending product shipments that were backorders at the end of the first quarter of fiscal year 2026 and each quarter of fiscal year 2025:

Current wording

The following table presents our total pending product shipments and the percentage of total pending product shipments that were backorders at the end of the first and second quarter of fiscal year 2026 and each quarter of fiscal year 2025:

Previous wording

Our total pending product shipments at the end of the first quarter of fiscal year 2026 were $4.2 million, a decrease of $0.5 million versus the end of the first quarter of fiscal year 2025 and an increase of $0.9 million since March 29, 2025. The increase in pending product shipments and backorders since March 29, 2025 was a result of increased orders.

Current wording

Our total pending product shipments at the end of the second quarter of fiscal year 2026 were $7.5 million, an increase of $3.4 million versus the end of the second quarter of fiscal year 2025 and an increase of $3.3 million since June 28, 2025. The increase in pending product shipments and backorders since June 28, 2025 was due in part to a one-time significant order.

Previous wording

Total gross profit for the first quarter of fiscal year 2026 was $25.8 million, an increase of $3.2 million or 14.0% versus the first quarter of fiscal year 2025. Total gross margin was 33.8% in the first quarter of fiscal year 2026, slightly down from 34.0% in the first quarter of fiscal year 2025, a 20 basis point decrease.

Current wording

Total gross profit for the second quarter of fiscal year 2026 was $26.8 million, an increase of $5.6 million or 26.2% versus the second quarter of fiscal year 2025. Total gross margin was 32.5% in the second quarter of fiscal year 2026, up from 31.3% in the second quarter of fiscal year 2025, a 1.2% increase.

Previous wording

Distribution segment gross margin was 35.2% in the first quarter of fiscal year 2026 versus 33.9% in the first quarter of fiscal year 2025, an increase of 130 basis points. The increase in Distribution gross margin was due to increased rental revenue and the mix of non-rental products sold.

Current wording

Distribution segment gross margin was 33.2% in the second quarter of fiscal year 2026 versus 27.9% in the second quarter of fiscal year 2025, an increase of 5.3%. The increase in Distribution gross margin was due to increased rental revenue and the mix of non-rental products sold.

Previous wording

Our effective tax rate for the first quarter of fiscal years 2026 and 2025 was 28.6% and 15.7%, respectively. The increase in effective tax rate is due to the timing of our discrete items in relation to the timing of our pre-tax net income. 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 the first quarter of fiscal years 2026 and 2025 was less than $0.1 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.

Current wording

Our effective tax rate for the second quarter of fiscal years 2026 and 2025 was 37.5% and 11.5%, respectively. The increase in effective tax rate is due to the timing of our discrete items in relation to the timing of our pre-tax net income. 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 the second quarter of fiscal years 2026 and 2025 was an expense of less than $0.1 million and a benefit of $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

Service revenue, which accounted for 64.3% and 65.6% of our total revenue in the first quarter of fiscal years 2026 and 2025, respectively, increased $5.4 million or 12.3% from the first quarter of fiscal year 2025 to the first quarter of fiscal year 2026. This year-over-year increase included $6.4 million in service revenue from the acquisition of Martin. Organic revenue decreased by 1.0% due to lower revenue from the Transcat Solutions business.

Current wording

Service revenue, which accounted for 64.3% and 65.3% of our total revenue in the first six months of fiscal years 2026 and 2025, respectively, increased $14.1 million or 16.1% from the first six months of fiscal year 2025 to the first six months of fiscal year 2026. This year-over-year increase included $16.1 million in service revenue from the acquisitions of Martin and Essco. Organic revenue, decreased by 1.7% primarily due to lower revenue from the Transcat Solutions business.

Previous wording

Service gross profit in the first quarter of fiscal year 2026 increased $1.3 million, or 8.9%, from the first quarter of fiscal year 2025. Service gross margin was 33.0% in the first quarter of fiscal year 2026, a 100 basis point decrease versus the 34.0% in the first quarter of fiscal year 2025. This decrease in Service gross margin was the result of organic revenue decreases and lower margins from the Transcat Solutions business.

Current wording

Service gross profit in the first six months of fiscal year 2026 increased $3.7 million, or 12.6%, from the first six months of fiscal year 2025. Service gross margin was 32.6% in the first six months of fiscal year 2026, a 0.9% decrease versus the 33.5% in the first six months of fiscal year 2025. This decrease in Service gross margin was the result of organic revenue decreases and lower margins from the Transcat Solutions business.

Previous wording

Total operating expenses were $20.5 million in the first quarter of fiscal year 2026 versus $17.6 million during the first quarter of fiscal year 2025. The year-over-year increase in selling, marketing and warehouse expenses is due to increased expenses related to recent acquisitions, primarily attributable to acquisition related amortization expense. The increase in general and administrative expenses is due to incremental expenses related to acquired companies, increased payroll costs for new employees and continued investments in technology.

Current wording

Total operating expenses were $43.7 million in the first six months of fiscal year 2026 versus $35.0 million during the first six months of fiscal year 2025. The year-over-year increase in selling, marketing and warehouse expenses is due to increased expenses related to recent acquisitions, primarily attributable to acquisition related amortization expense. The increase in general and administrative expenses is due to incremental expenses related to acquired companies, an increase in stock-based compensation and increased payroll costs for new employees.

Previous wording

Net income for the first quarter of fiscal year 2026 decreased $1.1 million or 26.0% versus the first quarter of fiscal year 2025. As a percentage of revenue, net income was 4.3% in the first quarter of fiscal year 2026, down from 6.6% in the first quarter of fiscal year 2025. The year-over-year decrease in net income was primarily due to higher operating income, offset by higher interest expense, net and provision for income taxes.

Current wording

Net income for the first six months of fiscal year 2026 decreased $3.2 million or 41.1% versus the first six months of fiscal year 2025. As a percentage of revenue, net income was 2.9% in the first six months of fiscal year 2026, down from 5.7% in the first six months of fiscal year 2025. The year-over-year decrease in net income was primarily due to higher interest expense, net and a higher provision for income taxes.

Previous wording

Total Adjusted EBITDA, a non-GAAP measure, for the first quarter of fiscal year 2026 was $11.8 million, an increase of $1.6 million or 15.2% versus the first quarter of fiscal year 2025. See “Non-GAAP Financial Measures” below for a description of the non-GAAP measures we use and a reconciliation to the most directly comparable GAAP measures. As a percentage of revenue, Adjusted EBITDA increased to 15.4% for the first quarter of fiscal year 2026 from 15.3% for the first quarter of fiscal year 2025. The increase in Adjusted EBITDA during the first quarter of fiscal year 2026 was primarily driven by increases in operating income, depreciation and amortization expense and non-cash stock compensation.

Current wording

Total Adjusted EBITDA, a non-GAAP measure, for the first six months of fiscal year 2026 was $23.9 million, an increase of $4.8 million or 25.2% versus the first six months of fiscal year 2025. See “Non-GAAP Financial Measures” below for a description of the non-GAAP measures we use and a reconciliation to the most directly comparable GAAP measures. As a percentage of revenue, Adjusted EBITDA increased to 15.0% for the first six months of fiscal year 2026 from 14.2% for the first six months of fiscal year 2025. The increase in Adjusted EBITDA during the first six months of fiscal year 2026 was primarily driven by increases in operating income, depreciation and amortization expense and non-cash stock compensation.

Previous wording

On July 29, 2025, we entered into a Credit Agreement (the “Credit Agreement”) with a group of three lenders establishing a new five-year $150.0 million secured revolving credit facility (the “Credit Facility”). Borrowing options under the Credit Facility include: (i) a revolving loan option; (ii) a swingline loan option; and (iii) letters of credit, each of which is provided on a committed basis. The Credit Facility replaced the Company’s former $80.0 million credit facility (the “Replaced Facility”), which included a letter of credit subfacility of $10.0 million and our 2018 term loan, with an original principal amount of $15.0 million (the “2018 Term Loan”). We used initial borrowings under the Credit Facility to repay amounts due under the Replaced Facility, including the remaining amounts under the 2018 Term Loan.

Current wording

On July 29, 2025, we entered into a Credit Agreement (the “Credit Agreement”) with a group of three lenders establishing a new five-year $150.0 million secured revolving credit facility (the “Credit Facility”). Borrowing options under the Credit Facility include: (i) a revolving loan option; (ii) a swingline loan option; and (iii) letters of credit, each of which is provided on a committed basis. The Credit Facility replaced the Company’s former $80.0 million credit facility (the “Replaced Facility”), which included a letter of credit subfacility of $10.0 million and our 2018 term loan, with an original principal amount of $15.0 million (the “2018 Term Loan”). We used initial borrowings under the Credit Facility to repay amounts due under the Replaced Facility, including the remaining amounts under the 2018 Term Loan, and for the acquisition of Essco.

Previous wording

Under the Replaced Facility, we could use up to $50.0 million for acquisitions in any single fiscal year. The Replaced Facility restricted our ability to complete acquisitions of businesses with a principal place of business located in the United Kingdom or the European Union to an aggregate purchase price of $40.0 million during the term of the Replaced Facility, if the acquisition was financed directly or indirectly with funds borrowed under the Replaced Facility. Under the Replaced Facility, we were permitted to make restricted payments up to $25.0 million in the aggregate over the term and $10.0 million in any single fiscal year to repurchase shares and pay dividends.

Current wording

Under the Credit Agreement, we can use up to $50.0 million for acquisitions in any single fiscal year, with an exception for the Essco acquisition. In addition, we are permitted to make restricted payments up to $25.0 million in the aggregate over the term of the Credit Facility and up to $10.0 million in any single fiscal year to repurchase shares and pay dividends.

Previous wording

As of June 28, 2025, $80.0 million was available for borrowing under the Replaced Facility, of which, $33.2 million was outstanding. During the first quarter of fiscal year 2025, we used $16.0** **million, drawn from cash and cash equivalents on hand, for a business acquisition.

Current wording

As of September 27, 2025, $150.0 million was available for borrowing, subject to covenant restrictions, under the Credit Facility, of which, $111.9 million was outstanding. During the first six months of fiscal year 2026, we used approximately $83.0** **million, drawn from the Credit Facility, for a business acquisition.

Previous wording

Most borrowings under the new Credit Facility bear interest, at our election, at a fixed base rate or the daily simple SOFR rate, plus a margin. Any swingline loan will bear interest at the fixed base rate plus a margin. The applicable margin is based on our then-current leverage ratio. Under the Credit Facility, the applicable margin was reduced for most levels of leverage ratio for comparable categories of borrowings under the Replaced Facility. The applicable margin ranges from 0.00% to 0.75% for base rate loans and 1.00% to 1.75% for SOFR loans. We will pay a commitment fee based on the daily unused amount under the Credit Facility multiplied by the applicable margin, which ranges from 0.10% to 0.20% for the commitment fee.

Current wording

Most borrowings under the Credit Facility bear interest, at our election, at a fixed base rate or the daily simple SOFR rate, plus a margin. Any swingline loan will bear interest at the fixed base rate plus a margin. The applicable margin is based on our then-current leverage ratio. Under the Credit Facility, the applicable margin was reduced for most levels of leverage ratio for comparable categories of borrowings under the Replaced Facility. The applicable margin ranges from 0.00% to 0.75% for base rate loans and 1.00% to 1.75% for SOFR loans. We will pay a commitment fee based on the daily unused amount under the Credit Facility multiplied by the applicable margin, which ranges from 0.10% to 0.20% for the commitment fee.

Previous wording

The Credit Agreement has certain financial covenants with which we must comply. The leverage ratio covenant under the Credit Facility requires us to maintain our ratio of outstanding indebtedness to consolidated EBITDA to be no greater than 3.00 to 1.00, provided that we may temporarily increase the leverage ratio covenant if we complete a material permitted acquisition under the terms of the Credit Agreement. We must also maintain a fixed charge coverage ratio of no less than 1.20 to 1.00.

Current wording

The Credit Agreement has certain financial covenants with which we must comply. The leverage ratio covenant under the Credit Agreement requires us to maintain our ratio of outstanding indebtedness to consolidated EBITDA to be no greater than 3.00 to 1.00, provided that we may temporarily increase the leverage ratio covenant if we complete a material permitted acquisition under the terms of the Credit Agreement. The Company's leverage ratio, as defined in the Credit Agreement, was 2.26 on September 27, 2025, compared with 0.78 on March 29, 2025. We must also maintain a fixed charge coverage ratio of no less than 1.20 to 1.00. We were in compliance with all loan covenants and requirements of the Credit Agreement and the Replaced Facility, as applicable, during the first six months of fiscal year 2026.

Previous wording

Operating Activities: Net cash provided by operating activities was $3.6 million during the first quarter of fiscal year 2026 compared to $8.9 million of net cash provided by operating activities during the first quarter of fiscal year 2025. The year-over-year decrease in cash provided by operating activities was 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 $16.5 million during the first six months of fiscal year 2026 compared to $15.8 million of net cash provided by operating activities during the first six months of fiscal year 2025. The year-over-year increase in cash provided by operating activities was primarily the result of changes in net working capital (defined as current assets less current liabilities). The significant working capital fluctuations were as follows:

Previous wording

Investing Activities: During the first quarter of fiscal years 2026 and 2025, we invested $4.6 million and $3.7 million, respectively, in capital expenditures that was used primarily for customer-driven expansion of Service segment capabilities and our rental business.

Current wording

Investing Activities: During the first six months of fiscal years 2026 and 2025, we invested $9.0 million and $7.6 million, respectively, in capital expenditures that was used primarily for customer-driven expansion of Service segment capabilities and our rental business.

Previous wording

Financing Activities: During the first quarter of fiscal year 2026, $2.3 million was borrowed from our revolving line of credit and $0.3 million in cash was generated from the issuance of common stock. In addition, we used $0.6 million for scheduled repayments of our term loan.

Current wording

Financing Activities: During the first six months of fiscal year 2026, net proceeds and repayments from our revolving Credit Facility was $81.0 million, and $0.5 million in cash was generated from the issuance of common stock. In addition, we used $1.8 million for repayments of our term loan.

Previous wording

During the first quarter of fiscal year 2025, $0.3 million in cash was generated from the issuance of common stock. In addition, we used $0.6 million for scheduled repayments of our term loan and $1.6 million for the “net” awarding of certain share awards to cover employee tax-withholding obligations for share award and stock option activity in fiscal year 2025, which are shown as a repurchase of shares of our common stock.

Current wording

During the first six months of fiscal year 2025, $0.8 million in cash was generated from the issuance of common stock. In addition, we used $1.2 million for scheduled repayments of our term loan and $3.0 million for the “net” awarding of certain share awards to cover employee tax-withholding obligations for share award and stock option activity in fiscal year 2025, which are shown as a repurchase of shares of our common stock.

Previous wording

Our team delivered solid revenue and adjusted EBITDA performance in the fiscal first quarter highlighted by double-digit service revenue growth and better-than-expected demand in our distribution segment. Distribution revenue grew 19% in the quarter with a record 35% gross margin driven primarily by strong rentals performance and strategic inventory purchases. Rentals are benefiting from more efficient sales and marketing processes and post-integration synergies. We continue to see measured improvement from our organic and inorganic initiatives, paired with another quarter of robust revenue growth and disciplined cost management that enabled us to deliver 15% adjusted EBITDA growth.

Current wording

Our team delivered another solid quarter of revenue and adjusted EBITDA (a non-GAAP measure) performance in the fiscal second quarter highlighted by double-digit revenue growth and continued high demand in our rentals channel. Distribution revenue grew 24% in the quarter with a gross margin of 33.2%, driven primarily by the strategic mix increase of higher-margin rentals. We continue to see measured improvement from our organic and inorganic initiatives, paired with another quarter of robust revenue growth and disciplined cost management that enabled us to deliver 37% adjusted EBITDA (a non-GAAP measure) growth.

Previous wording

Acquisitions continue to be a cornerstone of our growth strategy. We are extremely excited about the recent acquisition of Essco Calibration, the largest deal in our history, supported by our new, larger credit facility. Essco is a perfect fit into our calibration service portfolio and creates a strong presence for us in the New England market. With the Essco deal following the acquisition of Martin Calibration in December, we have acquired two leading regional calibration providers in an 8-month period. This demonstrates our ability to attract and acquire highly sought-after calibration companies to expand our capabilities and geographic reach, while increasing market share. Martin Calibration had another strong quarter in the Midwest, driven in part, by synergies with us. The integration of Martin is ahead of schedule as we deploy our well-honed integration playbook.

Current wording

Acquisitions continue to be a cornerstone of our growth strategy. We are extremely excited about the recent acquisition of Essco Calibration, the largest deal in our history, supported by our new, larger credit facility. Essco is a perfect fit into our calibration service portfolio and creates a strong presence for us in the New England market. With the Essco deal following the acquisition of Martin Calibration in December 2024, we have acquired two leading regional calibration providers in an 8-month period. This demonstrates our ability to attract and acquire highly sought-after calibration companies to expand our capabilities and geographic reach, while increasing market share.

Previous wording

Looking forward, the macro environment continues to be a challenge, but our diversified portfolio of product and services along with a strong financial profile will continue to differentiate us in fiscal 2026 and beyond. We expect continued revenue growth, benefiting from our new strength in the Midwest, larger presence in the New England market, and progressively improving Service organic revenue. Barring any further economic deterioration, we are confident in our expectation of a return to high single-digit Service organic revenue growth in the second half of Fiscal 2026. The inherent operating leverage in our Service model, along with automation of our calibration processes and focus on productivity, remain key enablers of Service margin expansion. Our acquisition pipeline remains strong, and we will continue to leverage our integration expertise. We believe strong execution combined with the differentiation of our portfolio, positions us well to drive sustainable, long-term shareholder value

Current wording

Looking forward, uncertainty in the macro environment remains a challenge, but our diversified portfolio of products and services combined with the ability to execute against strategic priorities will differentiate us in fiscal 2026 and beyond. We expect continued service revenue growth, benefiting from a larger presence in the New England and Midwest markets, and improving Service organic revenue. We expect a return to single-digit Service organic revenue growth in the second half of fiscal 2026. Our acquisition pipeline remains strong, and we will continue to leverage our integration expertise. We believe the combination of our talented team, portfolio differentiation, and strong financial profile positions us well to drive sustainable, long-term shareholder value.

Previous wording

We expect our income tax rate to range between 27% and 29% for full fiscal year 2026. This estimate includes federal, various state, Canadian and Irish income taxes and reflects the discrete tax accounting associated with share-based payment awards.

Current wording

We expect our income tax rate to range between 30% and 32% for full fiscal year 2026. This estimate includes federal, various state, Canadian and Irish income taxes and reflects the discrete tax accounting associated with share-based payment awards.