TRANSCAT INC

NOTE1 – GENERAL

**Description of Business:**Transcat, Inc. (“Transcat,” “we,” “us,” “our” or the “Company”) is a leading provider of accredited calibration services, cost control and optimization services, and distribution and rental of value-added professional grade handheld test, measurement, and control instrumentation. The Company is focused on providing services and products to highly regulated industries, particularly the life science industry, which includes pharmaceutical, biotechnology, medical devices and other FDA-regulated businesses. Additional industries served include industrial manufacturing; energy and utilities, including oil and gas; chemical manufacturing; FAA-regulated businesses, including aerospace and defense and other industries that require accuracy in their processes, confirmation of the capabilities of their equipment, and for which the risk of failure is very costly.

**Principles of Consolidation:**The consolidated financial statements of Transcat include the accounts of Transcat and the Company’s wholly-owned subsidiaries, Transcat Canada, Inc, Cal OpEx Limited (d/b/a Transcat Ireland), Cal OpEx Inc. (d/b/a NEXA EAM), Axiom Test Equipment, LLC, Becnel Rental Tools, LLC, Martin Calibration, LLC, and Essco Calibration Laboratory, LLC. All intercompany balances and transactions have been eliminated in consolidation.

**Use of Estimates:*The preparation of Transcat’s Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States (“GAAP”) requires that the Company make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are used for, butnot limited to, revenue recognition, estimated lives of intangible assets, fair value of the Company's reporting units, income taxes, and the valuation of assets acquired, liabilities assumed and consideration transferred in business acquisitions. Future events and their effects cannot be predicted with certainty; accordingly, accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of the Consolidated Financial Statements may*change as new events occur, as more experience is acquired, as additional information is obtained and as the operating environment changes. Actual results could differ from those estimates. Such changes and refinements in estimation methodologies are reflected in reported results of operations in the period in which the changes are made and, if material, their effects are disclosed in the Notes to the Consolidated Financial Statements.

Fiscal Year:Transcat operates on a52/53-week fiscal year, ending the last Saturday in March.In a52-week fiscal year, each of thefour quarters is a13-week period. In a53-week fiscal year, the last quarter is a14-week period. The fiscal year ended March 28, 2026 and* March 29, 2025* ("fiscal year2026" and "fiscal year2025", respectively) consisted of52 weeks and the fiscal year ended on* March 30, 2024* ("fiscal year2024") consisted of53 weeks.

Cash and Cash Equivalents: Cash equivalents consist of highly liquid investments with an original maturity when purchased ofthree months or less and are stated at cost, which approximates fair value.

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 losses in the Consolidated Balance Sheets. The allowance for credit losses is based upon the expected collectability of accounts receivable. The Company applies a specific formula to its accounts receivable aging, which maybe adjusted on a specific account basis where the formula maynot 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 summary of changes in the Company’s allowance for credit losses is as follows (amounts in thousands):

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Inventory:Inventory consists of products purchased for resale and is valued at the lower of average cost or net realizable value. In the normal course of business, certain inventory items are transferred to property and equipment to be rented to customers. Costs are determined using the average cost method of inventory valuation. The Company performs physical inventory counts and cycle counts on inventory throughout the year and adjusts the recorded balance to reflect the results. Inventory is reduced for itemsnot saleable at or above cost by applying a specific loss factor, based on historical experience, to specific categories of inventory. The Company evaluates the valuation of inventory on a quarterly basis. The Company recorded inventory valuation adjustments totaling $0.2 million at March 28, 2026 and March 29, 2025.

**Property and Equipment, Depreciation and Amortization:**Property and equipment are stated at cost. Depreciation and amortization are computed under the straight-line method over the following estimated useful lives:

In the normal course of business, certain items that have been capitalized as property and equipment* maybe sold to customers as used equipment. Property and equipment determined to haveno* value are written off at their then remaining net book value. The Company capitalizes certain costs, including internal payroll costs incurred in the procurement and development of computer software used for internal purposes. Leasehold improvements are amortized under the straight-line method over the estimated useful life or the lease term, whichever is shorter. Maintenance and repairs are expensed as incurred. See Note2 for further information on property and equipment.

**Business Acquisitions:The Company applies the acquisition method of accounting for business acquisitions. Under the acquisition method, identifiable assets acquired, liabilities assumed, and consideration transferred are measured at their acquisition-date fair value. The Company uses a valuation hierarchy, as further described under Fair Value of Financial Instruments below, to determine the fair values. Historically, we have relied, in part, upon the use of reports fromthird-party valuation specialists to assist in the estimation of fair values. Purchase price allocations are subject to revision within the measurement period,not to exceedone year from the date of acquisition. Costs to acquire a business mayinclude, but arenot limited to, fees for accounting, legal and valuation services, and are expensed as incurred in the Consolidated Statements of Income.

**Goodwill and Intangible Assets:**Goodwill represents the excess of the purchase price over the fair values of the underlying net assets of an acquired business. Goodwill is allocated to the Company'stwo reporting units: Service and Distribution. The Company tests goodwill for impairment for each reporting unit on an annual basis as of thefirst day of thefourth quarter of each fiscal year, or more frequently if conditions indicate that such impairment could exist. The Company is permitted, butnot required, to qualitatively assess indicators of a reporting unit’s fair value, as it did in fiscal2025, or the Company can elect to perform a quantitative analysis, as it did for fiscal2026.

The Company estimated the fair values of each reporting unit for fiscal2026 utilizing the income and market approaches, weighted equally, to prepare the analysis. The projected cash flows used in the analysis reflect management’s expectations of revenue growth and margin expansion based on historical performance, anticipated customer demand, and current market conditions. The weighted-average cost of capital ("WACC") for the Service and Distribution reporting units was 10%, and the long-term growth rate assumed was 3%.

Based on the results of the Company's impairment assessments in fiscal2026 and fiscal2025, the Company was able to conclude that it was more likely thannot that the fair values of the reporting units exceeded the carrying values.

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A summary of changes in the Company’s goodwill is as follows (amounts in thousands):

As of* March 28, 2026,*no accumulated impairment loss has been recognized for the Company's goodwill.

The gross carrying amount and accumulated amortization of Transcat's acquired identifiable intangible assets as of* March 28, 2026* were as follows (in thousands):

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The gross carrying amount and accumulated amortization of Transcat's acquired identifiable intangible assets as of* March 29, 2025* were as follows (in thousands):

Intangible assets, namely customer base, covenantsnot to compete, and tradenames/trademarks, represent an allocation of purchase price to identifiable intangible assets of an acquired business. Intangible assets are evaluated for impairment when events or changes in business circumstances indicate that the carrying amount of the assets* may**not* be fully recoverable. There wereno indicators of impairment for fiscal2026 or fiscal2025. Amortization expense relating to intangible assets was $13.8 million in fiscal year2026 and $8.4 million in fiscal year2025 and is recorded in Selling, Marketing and Warehouse Expenses in the Company's Consolidated Statements of Income. Intangible amortization for future periods is expected to be the following (in $ millions):

**Deferred Taxes:**The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the consolidated financial statement carrying amounts and the tax bases of its assets and liabilities. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in income tax rates is recognized in the Consolidated Statements of Income in the period that includes the enactment date. The Company establishes valuation allowances if it believes that it is more-likely-than-not that some or all of its deferred tax assets willnot be realized. See Note4 for further discussion on income taxes.

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**Fair Value of Financial Instruments:The Company measures certain financial and nonfinancial assets and liabilities at fair value on a recurring and nonrecurring basis in accordance with ASC820, Fair Value Measurement. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Transcat has determined the fair value of debt and other financial instruments using a valuation hierarchy. The hierarchy, which prioritizes the inputs used in measuring fair value, consists ofthree levels. Level1 uses quoted prices in active markets for identical assets and liabilities; Level2 uses inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level3, which is defined as unobservable inputs in which little orno market data exists, requires the Company to develop its own assumptions about assumptions a market participant would use, developed based on the best information available under the circumstances. The carrying amount of debt on the Consolidated Balance Sheets approximates fair value due to variable interest rate pricing that approximates current market rates, and the carrying amounts for cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to their short-term nature. Investment assets, which funded the Company’s non-qualified deferred compensation plan, consist of mutual funds and are valued based on Level1 inputs. At March 28, 2026,there wereno investment assets. At March 29, 2025,investment assets totaled $0.1 million and are included as a component of other assets (non-current) on the Consolidated Balance Sheets. Certain nonfinancial assets and liabilities are measured at fair value on a nonrecurring basis, including assets acquired and liabilities assumed in connection with business combinations and assets subject to impairment testing. Valuations of identifiable intangible assets (such as customer relationships and trade names) and certain liabilities typically involve the use of valuation techniques such as the income approach (e.g., discounted cash flow or relief-from-royalty methods) and mayincorporate significant unobservable inputs, including: (i) forecasted revenues and cash flows, (ii) discount rates, (iii) customer attrition rates, and (iv) royalty rates and useful lives. These measurements are generally classified within Level3 of the fair value hierarchy.

Stock-Based Compensation: The Company measures the cost of services received in exchange for all equity awards granted, including stock options and restricted stock units, based on the fair market value of the award as of the grant date. The Company records compensation cost related to unvested equity awards by recognizing, on a straight-line basis, the unamortized grant date fair value over the remaining service period for awards expected to vest. Excess tax benefits for share-based award activity are reflected in the Consolidated Statements of Income as a component of the provision for income taxes. Excess tax benefits are realized benefits from tax deductions for exercised awards in excess of the deferred tax asset attributable to stock-based compensation costs for such awards. The Company didnot capitalize any stock-based compensation costs as part of an asset. The Company estimates forfeiture rates based on its historical experience. During fiscal years2026,2025 and2024, the Company recorded non-cash stock-based compensation cost in the amount of $7.5 million, $3.2 million and $4.5 million, respectively, in the Consolidated Statements of Income.

**Revenue Recognition:**The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic606, Revenue from Contracts with Customers. The Company generates revenue from distribution product sales, equipment rental arrangements, and service offerings.

The following is a description of principal activities from which the Company generates its revenue and how revenue is recognized:

Service Revenue

Calibration and other related service activities - Service revenue is generated from calibration, repair, inspection, analytical qualifications, preventative maintenance, and other related service activities, includingthird-party managed services. Revenue is generally recognized at a point in time when control transfers to the customer in accordance with the contract terms. For certain service arrangements involving managing customers’ calibration programs and technical, consulting, and staffing solutions, we recognize revenue over time, using the time-elapsed output method (for example, hours worked), as the customer simultaneously receives and consumes the benefits of the Company’s performance. These service arrangements are typically less than12 months, and are primarily recognized over time, including in certain cases using the “right to invoice” practical expedient.

Distribution Sales

Product Sales - Revenue from product sales is recognized at a point in time when control transfers to the customer, which often occurs upon shipment, when title and risk of loss pass to the customer.

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Equipment Rental - These arrangements provide customers with the right to use specified equipment for defined contractual periods. These contracts vary in duration with offerings including weekly, monthly and other extended durations. The related performance obligation is generally satisfied over time, and rental revenue is recognized using the time-elapsed output method, as this pattern depicts the transfer of control to the customer. Certain rental contracts provide a stand-ready obligation for equipment, and as a result, consideration is variable and based on the actual duration of use. Depending upon the structure of a particular arrangement, we (i) recognize revenue as each distinct service period is performed, (ii) recognize the estimate of variable consideration ratably over the period to which it relates, or (iii) apply the ‘right to invoice’ practical expedient and recognize revenue based on the amount invoiced to the customer during the period.

Revenue is measured based on the transaction price, which represents the amount of consideration the Company expects to receive in exchange for satisfying its performance obligations. Transaction prices are generally fixed and stated in customer contracts, which typically include payment terms ranging from net30 to90 days. Provisions for customer returns are estimated and recorded in the same period as the related revenue based on historical experience and have been immaterial.

Sales taxes and other similar taxes collected on behalf of governmental authorities are excluded from revenue.

The Company generally bills customers for freight charges, which are included in revenue. Shipping and handling activities are considered fulfillment activities rather than separate performance obligations.

For rental and certain service arrangements that extend across reporting periods, the Company records unbilled revenue or deferred revenue, as applicable, to reflect revenue recognized in advance of or subsequent to billing. Deferred revenue, unbilled revenue, and deferred contract costs recorded on the Company’s Consolidated Balance Sheets as of* March 28, 2026and March 29, 2025were immaterial. Revenue recognized during fiscal year2026* from performance obligations satisfied in prior periods was immaterial.

The application of ASC606 requires management to exercise judgment in identifying performance obligations, determining whether such obligations are satisfied at a point in time or over time, and estimating transaction prices. These judgments primarily relate to product shipment terms, service completion criteria, and the determination of the appropriate pattern of revenue recognition for rental and managed service arrangements.

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Estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period was $7.3 million and $3.3 million as of* March 28, 2026and March 29, 2025,respectively. These are expected to be recognized revenue inone year or less. As of March 28, 2026,the Company had a de minimis amount of unsatisfied performance obligations for contracts with an original expected duration of greater thanone* year. Accordingly, the Company has elected tonot disclose information about remaining performance obligations.

See Note7 for disaggregated revenue information related to the Company's segments and geographical data.

The following table presents a summary of the Company's net sales by revenue recognition method as a percentage of total net sales:

**Vendor Rebates:**Vendor rebates are generally based on specified cumulative levels of purchases and/or incremental distribution sales and are recorded as a reduction of cost of distribution sales. Purchase rebates are calculated and recorded quarterly based upon the volume of purchases with specific vendors during the quarter. Point of sale rebate programs that are based on year-over-year sales performance on a calendar year basis are recorded as earned, on a quarterly basis, based upon the expected level of annual achievement. Point of sale rebate programs that are based on year-over-year sales performance on a quarterly basis are recorded as earned in the respective quarter. The Company recorded vendor rebates of $1.4 million, $0.9 million and $0.6 million in fiscal years2026, 2025, and2024, respectively, as a reduction of cost of distribution sales.

Advertising Costs: Advertising costs, other than catalog costs, are expensed as they are incurred and are included in Selling, Marketing and Warehouse Expenses in the Consolidated Statements of Income. Advertising costs were approximately $2.6 million, $2.0 million and $1.6 million in fiscal years2026,2025 and2024, respectively.

**Shipping and Handling Costs:**Freight expense and direct shipping costs are included in the cost of revenue. These costs totaled approximately $3.7 million, $3.4 million and $3.2 million in fiscal years2026,2025 and2024, respectively. Direct handling costs, the majority of which represent direct compensation of employees who pick, pack, and prepare merchandise for shipment to customers, are reflected in selling, marketing and warehouse expenses. Direct handling costs were approximately $0.6 million, $0.6 million and $0.5 million in fiscal years2026,2025 and2024, respectively.

**Foreign Currency Translation and Transactions:**The accounts of Cal OpEx Limited (d/b/a Transcat Ireland), an Irish company, and Transcat Canada Inc., both of which are wholly-owned subsidiaries of the Company, are maintained in their local currencies, the Euro and the Canadian dollar, respectively, and have been translated to U.S. dollars. Accordingly, the amounts representing assets and liabilities have been translated at the period-end rates of exchange and related revenue and expense accounts have been translated at an average rate of exchange during the period. Gains and losses arising from translation of Cal OpEx Limited’s and Transcat Canada Inc.’s financial statements into U.S. dollars are recorded directly to the accumulated other comprehensive loss component of shareholders’ equity.

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Transcat records foreign currency gains and losses on business transactions denominated in foreign currency. The net foreign currency loss was $0.2 million in fiscal year2026, a loss of $0.1 million in fiscal year2025 and a loss of $0.1 million in fiscal year2024. The Company has utilized short-term foreign exchange forward contracts to reduce the risk that its future earnings denominated in Canadian dollars would be adversely affected by changes in currency exchange rates.** The Company didnot apply hedge accounting and therefore the net change in the fair value of the contracts, which totaled a loss of less than $0.1 million, a gain of $0.2 million and a loss of $0.1 million in fiscal years2026,2025 and2024, respectively, was recognized as a component of Other (Income) Expense in the Consolidated Statements of Income. The change in the fair value of the contracts was offset by the change in fair value on the underlying accounts receivables denominated in Canadian dollars being hedged. On March 28, 2026, the Company didnot hold a foreign exchange contract. The Company doesnot use hedging arrangements for speculative purposes.

Other Comprehensive Income (Loss): Other comprehensive income (loss) is composed of currency translation adjustments, unrecognized prior service costs from post-retirement plan, net of tax, and unrealized gains or losses on other assets, net of tax.

The Company determines the expense and obligations for its post-retirement plans using assumptions related to discount rates, expected long-term rates of return on invested plan assets, and certain other factors. The Company determines the fair value of plan assets and benefit obligations as of the end of each fiscal year. The unrecognized portion of the gain or loss on plan assets is included in the consolidated balance sheets as a component of accumulated other comprehensive loss in shareholders’ equity and is recognized into the plans’ expense over time. See Note5 for further discussion on the Company’s post-retirement plan.

The Company has a non-qualified deferred compensation plan for the benefit of certain management employees and non-employee directors. Investment assets, which fund the Company’s non-qualified deferred compensation plan, consist of mutual funds. The unrecognized portion of the gain or loss on plan assets is included in the Consolidated Statements of Income.

At* March 28, 2026*, accumulated other comprehensive loss consisted of cumulative currency translation losses of $0.8 million, unrecognized prior service costs, net of tax, of $0.2 million and an unrealized loss on other assets, net of tax, of less than $0.1 million. At* March 29, 2025*, accumulated other comprehensive loss consisted of cumulative currency translation losses of $1.5 million, unrecognized prior service costs, net of tax, of $0.1 million and an unrealized gain on other assets, net of tax, of less than $0.1 million.

**Earnings Per Share:**Basic earnings per share of the Company's common stock, par value $0.50 per share ("common stock"), are computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share of common stock reflect the assumed conversion of stock options and unvested restricted stock units using the treasury stock method in periods in which they have a dilutive effect. In computing the per share effect of assumed conversion, proceeds received from the exercise of options and unvested restricted stock units are considered to have been used to purchase shares of common stock at the average market prices during the period, and the resulting net additional shares of common stock are included in the calculation of average shares of common stock outstanding.

For fiscal years2026, 2025 and2024, the net additional common stock equivalents had a $(0.01), $(0.01) and $(0.03) per share effect on the calculation of dilutive earnings per share, respectively. The average shares outstanding used to compute basic and diluted earnings per share are as follows (amounts in thousands):

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Other Liabilities: A summary of other current and non-current liabilities is as follows (amounts in thousands):

Recently Adopted Accounting Pronouncements:

In* December 2023,the FASB issued Accounting Standards Update ("ASU")2023-09, Income Taxes (Topic740*): Improvements to Income Tax Disclosures. The ASU expands the income tax disclosure requirements, principally related to the rate reconciliation table and income taxes paid. ASU2023-09 is effective for annual periods beginning in fiscal2026, with early adoption permitted. The prospective adoption of the ASU didnot have a material impact on the Company’s financial statement disclosures. See Note4.

Recent Accounting GuidanceNot Yet Adopted:

In* November 2024,the FASB issued ASU2024*-03 “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic220-40): Disaggregation of Income Statement Expenses” which requires public entities to disclose specified information about certain costs and expenses. ASU2024-03 is effective for annual reporting periods beginning in fiscal2028, and interim reporting periods beginning after* December 15, 2027,with early adoption permitted. The adoption of the ASU isnot* expected to have a material impact on the Company’s financial statement disclosures.

In* July**2025,* the FASB issued ASU2025-05 “Financial Instruments—Credit Losses (Topic326): Measurement of Credit Losses for Accounts Receivable and Contract Assets,” which introduces a practical expedient for the application of the current expected credit loss model to current accounts receivable and contract assets. ASU2025-05 is effective for interim and annual reporting periods beginning in fiscal2027, with early adoption permitted. The adoption of the ASU isnot expected to have a material impact on the Company’s financial statement disclosures.

The Company has reviewed all other recently issued, butnot yet effective, accounting pronouncements and has determined that there areno standards that are expected to have a material impact on its consolidated financial statements or related disclosures.

Reclassification of Amounts:**Certain reclassifications of financial information for prior fiscal years have been made to conform to the presentation for the current fiscal year. Specifically, the Company: (1) separated the noncash lease expense from the change in lease liabilities in the operating activities section of the cash flow statement; (2) separated proceeds from revolving credit facility from repayments of the revolving credit facility in the financing activities section of the cash flow statement; (3) separated accumulated amortization by intangible asset class in Note1; (4) enhanced the segment disclosure to include additional data for each segment in Note7; and (5) updated prior periods' acquisition disclosures to include the useful lives of the intangible assets in Note9. These changes in presentation didnot affect net income, operating income, total assets, liabilities, or stockholders’ equity for any period presented.

NOTE2 – PROPERTY AND EQUIPMENT, NET

Property and equipment consists of (amounts in thousands):

Total depreciation and amortization expense relating to property and equipment amounted to $12.1 million, $10.1 million and $7.8 million in fiscal years2026,2025 and2024, respectively. Of these amounts, $10.3 million, $8.2 million and $5.9 million was charged to cost of service revenue and cost of distribution sales in fiscal years2026, 2025 and2024, respectively. The remaining depreciation and amortization expense was charged to Selling, Marketing and Warehouse Expenses and General and Administrative Expenses on the Company's Consolidated Statements of Income.

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NOTE3 – LONG-TERM DEBT

On* July 29, 2025,the Company entered into a Credit Agreement (the “Credit Agreement”) with a group ofthree lenders establishing a newfive*-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 the Company’s2018 term loan, with an original principal amount of $15.0 million (the*“2018* Term Loan”).

In connection with the Credit Agreement, the Company entered into a syndicated loan. The lender of the Replaced Facility participated in the Credit Agreement. For accounting purposes, the transaction was accounted for as a debt modification; however, there wereno remaining unamortized costs from the Replaced Facility. The Company incurred financing costs that will be deferred and amortized on a straight-line basis over the term of the Credit Agreement. These amounts are included in Other Assets in the Consolidated Balance Sheets.

On* July 7, 2021,the Company entered into the Replaced Facility with Manufacturers and Traders Trust Company (“M&T”), that amended and restated in its entirety the Company’s prior credit agreement with M&T. The Replaced Facility provided for a revolving credit commitment of $80.0 million through June 2026,with a letter of credit subfacility of $10.0 million. The2018* Term Loan was also provided for under the Replaced Facility.

The Credit Agreement allows the Company to use up to $50.0 million under the Credit Facility for acquisitions in any single fiscal year with an exception for the acquisition of Essco. 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 $10.0 million in any single fiscal year to repurchase shares and pay dividends.

As of* March 28, 2026,*$150.0 million was available for borrowing, subject to covenant restrictions, under the Credit Facility, of which $99.9 million was outstanding.

Interest and Other Costs: Effective* July 1, 2023,interest on outstanding borrowings under the revolving credit facility accrued, at Transcat’s 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 1.00% floor), in each case, plus a margin. Unused fees accrued 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 the Company’s calculated leverage ratio. The Company’s weighted average interest rate for the revolving credit facility for fiscal year2026* was 5.6%.

Covenants: The Credit Facility has certain covenants with which the Company is required to comply, including a fixed charge ratio covenant, which prohibits the Company's fixed charge ratio from being less than 1.20 to1.00, and a leverage ratio covenant, which prohibits the Company's leverage ratio of outstanding indebtedness to consolidated EBITDA from exceeding 3.00 to1.00. The Company was in compliance with all financial covenants and requirements during fiscal years2026 and2025.

Other Terms: The Company pledged all of its U.S. tangible and intangible personal property, the equity interests of its U.S.-based subsidiaries, and a majority of the common stock of Transcat Canada Inc. and Cal Op Ex Limited as collateral security for the loans made under the Credit Facility.

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NOTE4 – INCOME TAXES

Transcat’s income before income taxes on the Consolidated Statements of Income is as follows (amounts in thousands):

The provision for income taxes for fiscal years2026,2025 and2024 is as follows:

A reconciliation of the income tax provision computed by applying the statutory U.S. federal income tax rate and the income tax provision reflected in the Consolidated Statements of Income for fiscal year2026 is as follows (amounts in thousands):

^ The state and local jurisdictions that contribute the majority (greater than50%) of the tax effect in this category are Massachusetts, Minnesota, California, New York, Pennsylvania and Puerto Rico.

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A reconciliation of the income tax provision computed by applying the statutory U.S. federal income tax rate and the income tax provision reflected in the Consolidated Statements of Income for fiscal years2025 and2024 is as follows (amounts in thousands):

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Income taxes paid (net of refunds) for the year ended* March 28, 2026,*are disaggregated by jurisdiction as follows (in thousands):

The Company files income tax returns with the U.S. government and various states as well as foreign governments. Open fiscal years subject to U.S. Government federal examination are 2023 through2025. Open fiscal years subject to state examination are 2021 through2025. The Company also files in Canada and Ireland. Open fiscal years subject to examination for Canada are 2022 through2025; open fiscal years subject to examination for Ireland are 2022 to2025. There areno income tax years currently under examination by the Internal Revenue Service, states, Canadian and Irish tax authorities. The Company's foreign subsidiary undistributed earnings are considered to be permanently reinvested. At* March 28, 2026,the Company had net operating loss (NOL) carryforwards of $1.3 million in the U.S. and $0.7 million in Ireland, which could be used to offset future taxable income and reduce income tax expense. These NOL carryforwards donot* expire.

The Company’s policy regarding interest and/or penalties related to income tax matters is to recognize such items as a component of the income tax provision. The Company recognizedno interest expense or penalties associated with uncertain tax benefits accrued for fiscal years2026,2025 and2024. In accordance with applicable accounting guidance, the amount of unrecognized tax liability from uncertain positions was $0 at year-end for fiscal years2026,2025 and2024.

The Company assesses its deferred tax assets annually for expected utilization. If deemed necessary, valuation allowances are established to reduce the deferred tax assets to their net realizable value to the extent it is more likely thannot that some portion or all of the deferred tax assets willnot be realized based on the character of the carryforward item, the associated taxing jurisdiction, the relevant history for the particular item, the applicable expiration dates, and identified actions under the control of the Company in realizing such assets. The Company assesses the available positive and negative evidence surrounding the recoverability of the deferred tax assets and applies its judgment in estimating the amount of valuation allowance necessary. The Company has determined that a valuation allowance of $0 is appropriate for fiscal years2026,2025 and2024.

On* July 4, 2025,the One Big Beautiful Bill Act (the “OBBBA”) was enacted into law. The legislation includes several changes to U.S. federal income tax law that generally allow for more favorable deductibility of certain business expenses beginning in calendar year2025,* including the restoration of immediate expensing for domestic research and development expenditures and the reinstatement of100% bonus depreciation for qualified property. The OBBBA also includes certain modifications to the U.S. taxation of foreign activity, including changes to rules governing foreign tax credits, Global Intangible Low-Taxed Income (“GILTI”), Foreign-Derived Intangible Income (“FDII”), and the Base Erosion and Anti-Abuse Tax (“BEAT”), among other changes. Most of these modifications to the U.S. taxation of foreign activity are generally effective for tax years beginning after* December 31, 2025.Certain benefits from the OBBBA, such as utilizing the restored100%* bonus depreciation rules for assets acquired after* January 19, 2025,were included in the provision for income taxes for fiscal year2026.* The impacts of the benefits of the OBBBA werenot material to the provision for income taxes for fiscal year2026.

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NOTE5 – EMPLOYEE BENEFIT PLANS

Defined Contribution Plan. All of Transcat’s U.S. based employees are eligible to participate in a defined contribution plan, the Long-Term Savings and Deferred Profit Sharing Plan (the “Plan”), provided they meet certain qualifications. In fiscal years2026,2025 and2024, the Company matched 50% of thefirst 6% of pay that eligible employees contribute to the Plan.

In the long-term savings portion of the Plan (the*“401K* Plan”), plan participants are entitled to a distribution of their vested account balance upon termination of employment or retirement. Plan participants are fully vested in their contributions while Company contributions are fully vested afterthree years of service. The Company’s matching contributions to the401K Plan were approximately $2.1 million, $1.8 million and $1.5 million in fiscal years2026,2025 and2024, respectively, and were recorded in general and administrative expenses in the accompanying Consolidated Statements of Income.

In the deferred profit sharing portion of the Plan, Company contributions are made at the discretion of the Company’s Board of Directors. The Company madeno profit sharing contributions in fiscal years2026,2025 and2024.

**Employee Stock Purchase Plan.**The Company has an Employee Stock Purchase Plan (the “ESPP”) that allows for eligible employees as defined in the ESPP to purchase common shares of the Company through payroll deductions at a price that is 85% of the closing market price on thesecond last business day of each calendar month (the “Investment Date”).650,000 shares can be purchased under the ESPP. The difference between the closing market price on the Investment Date and the price paid by employees is recorded as a general and administrative expenses in the accompanying Consolidated Statements of Income. The expense related to the ESPP was $0.1 million in fiscal year2026 and less than $0.1 million in fiscal years2025 and2024.

Non-Qualified Deferred Compensation Plan. The Company has available a non-qualified deferred compensation plan (the “NQDC Plan”) for directors and officers. Participants are fully vested in their contributions. At its discretion, the Company* mayelect to match employee contributions, subject to legal limitations in conjunction with the401K* Plan, which fully vest afterthree years of service. During fiscal years2026,2025 and2024, the Company didnot match any employee contributions. Participant accounts are adjusted to reflect performance, whether positive or negative, of selected investment options chosen by each participant during the deferral period. In the event of bankruptcy, the assets of the NQDC Plan are available to satisfy the claims of the Company’s general creditors. The liability for compensation deferred under the NQDC Plan was de minimis as of* March 28, 2026* and $0.1 million as of* March 29, 2025*, and is included as a component of other liabilities (non-current) on the Consolidated Balance Sheets.

Post Retirement Health Care Plans. The Company has a defined benefit post retirement health care plan which provides long-term care insurance benefits, medical and dental insurance benefits and medical premium reimbursement benefits to eligible retired corporate officers and their eligible spouses (the “Officer Plan”).

The change in the post retirement benefit obligation is as follows (amounts in thousands):

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The accumulated post retirement benefit obligation is included as a component of other liabilities (non-current) in the Consolidated Balance Sheets. The components of net periodic post-retirement benefit cost and other amounts recognized in other comprehensive income are as follows (amounts in thousands):

The prior service cost is amortized over the average remaining life expectancy of active participants in the Officer Plan. The estimated prior service cost that will be amortized from accumulated other comprehensive income into net periodic post-retirement benefit cost during fiscal year2027 is less than $0.1 million.

The post retirement benefit obligation was computed by an independentthird-party actuary. Assumptions used to determine the post retirement benefit obligation and the net periodic postretirement benefit cost were as follows:

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Benefit payments are funded by the Company as needed. Payments toward the cost of a retiree’s medical and dental coverage are initially determined as a percentage of a base coverage plan in the year of retirement and are limited to increase at a rate ofno more than50% of the annual increase in medical and dental costs, as defined in the plan document. The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows (amounts in thousands):

Increasing the assumed health care cost trend rate byone percentage point would increase the accumulated post retirement benefit obligation and the annual net periodic post retirement benefit cost by $0.1 million. Aone percentage point decrease in the healthcare cost trend would decrease the accumulated post retirement benefit obligation and the annual net periodic post-retirement benefit cost by $0.1 million.

NOTE6 – STOCK-BASED COMPENSATION

In* September 2021,the Transcat, Inc.2021 Stock Incentive Plan (the“2021* Plan”) was approved by shareholders and became effective. The2021 Plan provides for, among other awards, grants of restricted stock units and stock options to directors, officers and key employees at the fair market value at the date of grant. At* March 28, 2026*,0.4 million shares of common stock were available for future grant under the2021 Plan.

The Company receives an excess tax benefit related to restricted stock vesting and stock options exercised and redeemed. The discrete benefits related to share-based compensation and stock option activity in fiscal years2026,2025 and2024 were $0.7 million, $1.3 million and $0.6 million, respectively.

**Restricted Stock Units:**The Company grants time-based and performance-based restricted stock units as a component of executive and key employee compensation. Expense for restricted stock unit grants is recognized on a straight-line basis for the service period of the stock award based upon fair value of the award on the date of grant. The fair value of the restricted stock unit grants is the quoted market price for the Company’s common stock on the date of grant. These restricted stock units are either time vested, or vest following thethird fiscal year from the date of grant subject to cumulative diluted earnings per share (ending with fiscal year2025) or cumulative Adjusted EBITDA targets over the eligible period.

During fiscal year2026, on the date of the annual meeting of shareholders, the Company’s non-employee directors received an annual grant of restricted stock units valued at $120,000 that vests afterone year. During fiscal years2025 and2024, the Company's non-employee directors received an annual grant of restricted stock units valued at $85,000 and $50,000, respectively, that vested afterone year.

Compensation cost ultimately recognized for performance-based restricted stock units will equal the grant date fair market value of the unit that coincides with the actual outcome of the performance conditions. On an interim basis, the Company records compensation cost based on the estimated level of achievement of the performance conditions. The expense relating to the time vested restricted stock units is recognized on a straight-line basis less estimate for forfeitures over the requisite service period for the entire award. Performance-based restricted stock units can be earned up to a maximum of 150% of shares awarded.

On* January 6, 2026,the Compensation Committee (the "Committee") of the Board of Directors of the Company granted a specialone*-time equity award to certain members of the executive team under the2021 Plan (the “Retention Awards”). The Committee granted approximately 56,000 restricted stock units with a grant date fair value of approximately $3.4 million. The Retention Awards will vest on* January 6, 2028,*subject to continued employment and except as otherwise described in the form of award agreement.

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The following table summarizes the non-vested restricted stock units outstanding as of* March 28, 2026 (*in thousands, except per unit data):

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Total expense relating to restricted stock units, based on grant date fair value and the achievement criteria, was $6.8 million, $2.4 million and $3.2 million in fiscal years2026,2025 and2024, respectively. As of* March 28, 2026*, unearned compensation, to be recognized over the grants’ respective service periods, totaled $12.0 million based on estimated achievement levels as of* March 28, 2026.*If the maximum performance levels were achieved, the unearned compensation could be a maximum of $12.6 million.

**Stock Options:**The Company grants stock options to employees and directors with an exercise price equal to the quoted market price of the Company’s stock at the date of the grant. The fair value of stock options is estimated using the Black-Scholes option pricing formula that requires assumptions for expected volatility, expected dividends, the risk-free interest rate and the expected term of the option. Expense for stock options is recognized on a straight-lined basis over the requisite service period for each award. Options vest over a period of up tofive years either in annual tranches or cliff vesting and expire either five years orten years from the date of grant.

The following weighted-average assumptions were used to value options granted during fiscal years2026,2025 and2024:

The Company calculates expected volatility for stock options by taking an average of historical volatility over the expected term. The computation of expected term was determined based on safe harbor rules, giving consideration to the contractual terms of the stock-based awards and vesting schedules. The interest rate for periods within the contractual life of the award is based on the U.S. Treasury yield in effect at the time of grant. We assumeno expected dividends.

The expense related to all stock option awards was $0.7 million, $0.8 million and $1.3 million in fiscal years2026, 2025 and2024, respectively.

The following table summarizes the Company’s options for fiscal year2026 (amounts in thousands, except per option data):

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of fiscal year2026 and the exercise price, multiplied by the number of in-the-money stock options) that would have been received by the option holders had all holders exercised their options on* March 28, 2026*. The amount of aggregate intrinsic value will change based on the fair market value of the Company’s common stock.

Total unrecognized compensation cost related to non-vested stock options as of* March 28, 2026* was $0.7 million, which is expected to be recognized over a period ofthree years. The aggregate intrinsic value of stock options exercised in fiscal years2026,2025 and2024 was less than $0.1 million, $3.2 million and $1.3 million, respectively. Cash received from the exercise of options in fiscal years2026,2025 and2024 was less than $0.1 million, $1.3 million and $1.5 million, respectively.

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NOTE7 – SEGMENT AND GEOGRAPHIC DATA

An operating segment is a component of the Company that engages in business activities from which it* may*recognize revenues and incur expenses whose operating results are regularly reviewed by the public entity’s chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. Once operating segments were identified, the Company determined which of those operating segments are required to be presented as reportable segments based on the quantitative thresholds.

Transcat hastwo reportable segments: Service and Distribution. Through its Service segment, the Company offers calibration, repair, inspection, analytical qualifications, preventative maintenance, consulting and other related services. Through its Distribution segment, the Company sells and rents national and proprietary brand instruments to customers globally. There areno intersegment revenues.

The Company's CODM is the President & Chief Executive Officer. Both of the Company's reportable segments are regularly reviewed by the CODM through monthly revenue, operating income and consolidated financial forecast updates and through regular and monthly meetings with the executive leadership team. The primary financial measures used by the CODM for the Company's reportable segments are revenue and operating income (loss). These measures are used by the CODM to make decisions on resource allocation, assess the performance of the business, and monitor budget versus actual results. Significant expenses that are regularly reviewed by the CODM include segment cost of revenue, segment selling, general and administrative expenses and various items affecting comparability, which are primarily related to the Company's acquisitive nature. The primary drivers of segment cost of revenue include labor, product and facilities costs, and the primary drivers of segment selling, general and administrative expenses include payroll, benefit and incentive costs. Items affecting comparability include depreciation, amortization, executive transition costs, transaction expenses and non-cash stock compensation.

The CODM doesnot review assets or other balance sheet information in evaluating the results of the Company's segments, and therefore, such information isnot presented.

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The following table presents geographic data for fiscal years2026,2025 and2024 (dollars in thousands):

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NOTE8 – COMMITMENTS AND CONTINGENCIES

Leases:

The Company determines if an arrangement is a lease at inception. Payments under our lease arrangements are primarily fixed. Lease assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value of the future lease payments is our incremental borrowing rate, because the interest rate implicit in our leases isnot readily determinable. Our incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. Our lease terms include periods under options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Our lease agreements generally contain lease and non-lease components. Historically, non-lease components such as utilities have been immaterial.

Transcat leases facilities, equipment, and vehicles under various non-cancelable operating leases. As of* March 28, 2026*, the remaining lease terms on our operating leases range from approximatelyone year tofifteen years, and include any renewal and/or termination options that are reasonably certain to be exercised by the Company. There isno transfer of title or option to purchase the leased assets upon expiration. The Company recognizes short-term leases on an as incurred basis and doesnot record a related lease asset or liability for such leases. Short-term lease expense was immaterial in fiscal years2026,2025 and2024.

The components of lease expense for the current and prior-year comparative periods were as follows (dollars in thousands):

Supplemental cash flow information related to leases was as follows:

The minimum future annual rental payments under the non-cancelable leases at* March 28, 2026* are as follows (in millions):

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The weighted average remaining lease term and weighted average discount rate for operating and finance leases are as follows:

Contingencies:

In the normal course of business, the Company* mayhave pending claims and legal proceedings. The Company maintains accrued expense balances for the estimated amounts of legal costs expected to be billed related to any significant matter. In the opinion of management, based on information available at this time, there areno* current claims and proceedings that would have a material adverse effect on the consolidated financial statements. However, the outcomes of such legal claims and proceedings are subject to inherent uncertainties.

NOTE9 – BUSINESS ACQUISITIONS

**Essco:Effective August 5, 2025,the Company acquired 100% of the membership units of Essco Calibration Laboratory, LLC (“Essco”), a privately-held calibration services corporation located in the Boston Metro area that is ISO17025 certified. This transaction aligned with a key component of the Company’s acquisition strategy of targeting businesses that expand the Company’s geographic reach and the depth and breadth of the Company’s service capabilities.

The Essco goodwill is primarily attributable to the workforce acquired, as well as operational synergies and other intangibles that donot qualify for separate recognition. The goodwill and intangible assets related to the Essco acquisition have been allocated to the Service segment. Intangible assets related to the Essco acquisition are being amortized for financial reporting purposes on an accelerated basis over the estimated useful lives of up to 15 years and are deductible for tax purposes. Amortization of goodwill related to the Essco acquisition is deductible for income tax purposes.

The Essco Customer Base & Contracts intangible asset was calculated using the MPEEM (Multi-Period Excess Earnings Method) under the Income approach and adjusting for the cash flow benefit of tax amortization of purchased intangibles. The fair value was determined to be $34.0 million and was assigned a useful life of 15 years. The Essco Trademarks and Tradenames intangible asset was calculated using the Relief-From-Royalty Method, which is a variant of the income approach and the market approach, and adjusting for the cash flow benefit of tax amortization of purchased intangibles. The fair value was determined to be $2.7 million and was assigned a useful life ofseven years. The weighted average useful life of acquired intangible assets acquired is 14 years.

The total purchase price for Essco is approximately $85.4 million, consisting of $82.8 million in cash paid at closing and $2.8 million in accrued liabilities related to certain post-closing adjustments and payments less $0.2 million working capital receivable. There was a measurement period adjustment in* December 2025related to working capital that resulted in a $0.2 million decrease in goodwill. Subsequent to March 28, 2026,the working capital settlement was received. As of March 28, 2026,$2.8 million remains unpaid and is reflected in accrued compensation and other current liabilities in the Consolidated Balance Sheets. The purchase was primarily financed by a draw on the Credit Agreement. See Note3* - Long-Term Debt for more details.

The Company has preliminarily estimated fair values for the assets purchased and liabilities assumed as of the date of the acquisition. The amounts reported are considered preliminary as the Company is completing the valuations required to allocate the purchase price. The following is a summary of the preliminary purchase price allocation, in the aggregate, to the fair value of Essco's assets and liabilities acquired on* August 5, 2025 (*in thousands):

Since the acquisition, Essco has contributed revenue of $14.9 million and operating income of $0.2 million, which includes the negative impact of amortization of the acquired intangible assets.

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Martin: Effective* December 10, 2024,the Company acquired a 100% membership interest in Martin Calibration, LLC, a Delaware limited liability calibration services company ("Martin"). Martin is ISO17025* certified. This transaction aligned with a key component of the Company’s acquisition strategy of targeting businesses that expand the depth and breadth of the Company’s service capabilities.

The Martin goodwill is primarily attributable to the workforce acquired, as well as operational synergies and other intangibles that donot qualify for separate recognition. The goodwill and intangible assets relating to the Martin acquisition have been allocated to the Service segment. Intangible assets related to the Martin acquisition are being amortized for financial reporting purposes on an accelerated basis over the estimated useful life of up to 14 years and are deductible for tax purposes. Amortization of goodwill related to the Martin acquisition is deductible for income tax purposes.

The Martin Customer Base & Contracts intangible was calculated using the MPEEM (Multi-Period Excess Earnings Method) approach and adjusting for the cash flow benefit of tax amortization of purchased intangibles. The fair value was determined to be $32.0 million and was assigned a useful life of 14 years. The Martin Trademarks and Tradenames asset was calculated using the relief from royalty approach, which is a variant of the income approach, and adjusting for the cash flow benefit of tax amortization of purchased intangibles. The fair value was determined to be $3.2 million and was assigned a useful life of 11 years. The weighted average useful life of acquired intangible assets acquired is 14 years.

The total purchase price for Martin was $81.7 million, consisting of $71.9 million in cash and the issuance of common stock valued at $9.9 million, including $2.0 million placed in escrow for certain post-closing adjustments and claims against the sellers, if any. There was a measurement period adjustment related to working capital that resulted in a $0.1 million decrease in goodwill. The $2.0 million escrow was released to the sellers in* December 2025.*

The following is a summary of the final purchase price allocation, in the aggregate, to the fair value of Martin's assets and liabilities acquired on* December 10, 2024 (*in thousands):

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Becnel: Effective* April 15, 2024,the Company acquired Becnel Rental Tools, LLC, a Louisiana limited liability company ("Becnel"), pursuant to an Agreement and Plan of Merger (the “Becnel agreement”), by and among the Company, Becnel and the other parties thereto. Becnel is an ISO9001:2015* certified provider of rental tools and services primarily utilized in the decommissioning and maintenance of oil wells. This transaction aligned with a key component of the Company’s acquisition strategy of targeting businesses that expand the depth and breadth of the Company’s service and rental capabilities.

The Becnel goodwill is primarily attributable to the workforce acquired, as well as operational synergies and other intangibles that donot qualify for separate recognition. The goodwill and intangible assets relating to the Becnel acquisition have been allocated to both the Service and Distribution segment. Intangible assets related to the Becnel acquisition are being amortized for financial reporting purposes on an accelerated basis over the estimated useful life of up toeleven years and are deductible for tax purposes. Amortization of goodwill related to the Becnel acquisition is deductible for income tax purposes.

The Becnel Customer Base & Contracts intangible was calculated using the MPEEM approach and adjusting for the cash flow benefit of tax amortization of purchased intangibles. The fair value was determined to be $7.2 million and was assigned a useful life of 10 years. The Becnel Trademarks and Tradenames asset was calculated using the relief from royalty approach, which is a variant of the income approach and adjusting for the cash flow benefit of tax amortization of purchased intangibles. The fair value was determined to be $0.8 million and was assigned a useful life of 11 years. The weighted average useful life of acquired intangible assets acquired is 10 years.

The total purchase price for Becnel was $49.8 million consisting of up to $17.5 million in cash and the issuance of our common stock valued at $32.3 million. Pursuant to the Becnel agreement, the Company held back approximately $2.5 million of the purchase price for certain potential post-closing adjustments. This included $0.5 million withheld for ordinary post-closing adjustments and $2.0 million withheld that was subject to revenue target achievement. The $0.5 million holdback was paid to the sellers in* April 2025.*

Pursuant to the Becnel agreement, the purchase price was subject to reduction by $2.0 million if certain revenue targets werenot met through* April 15, 2026.As of April 15, 2024,the estimated fair value of this contingent consideration, classified as Level3* in the fair value hierarchy, was approximately $1.5 million.50% of this contingent consideration was payable in cash and 50% of this contingent consideration was payable in 9,283 shares of Transcat common stock. The cash portion of the contingent consideration was initially classified as a liability and recorded in other liabilities in the Consolidated Balance Sheets. The stock portion of the contingent consideration was classified as equity and recorded in shareholders equity in the Consolidated Balance Sheets. The cash portion of the contingent consideration was remeasured quarterly. After reviewing the fiscal year2026 forecast, the Company revalued the contingent consideration payout during thefourth quarter of fiscal year2025 and recognized a non-cash gain of approximately $0.8 million, which left a contingent liability ofzero as of* March 29, 2025.The gain was recorded in general and administrative expenses in its Consolidated Statement of Income. As of March 28, 2026,the estimated fair value of the contingent consideration, classified as Level3* in the fair value hierarchy, remained zero. Subsequent to year end, on* April 15, 2026,the adjustment period expired and revenue targets werenot* met.

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The following is a summary of the final purchase price allocation of Becnel's assets and liabilities acquired on* April**15,* 2024 (in thousands):

**NEXA:**In connection with the acquisition of NEXA, there were potential earn-out payments of up to $7.5 million over thefour-year period following the closing of the transaction based upon NEXA achieving certain annual revenue and EBITDA goals.

During fiscal year2024, the Company entered into an Amendment to the Share Purchase Agreement with NEXA (the “First Amendment”). Pursuant to the First Amendment, the potential earn-out payments would have been up to $7.1 million for the Earn-Out years of calendar year2023, 2024 and2025 based upon NEXA achieving certain EBITDA goals. If achieved, the earn-out payments would be made in shares of common stock unless certain criteria was met for cash payment. In fiscal year2025, the Company entered into an Amendment to the Share Purchase Agreement with NEXA (the “Second Amendment”). Pursuant to the Second Amendment, the Company agreed to pay approximately $0.5 million for the Earn-Out year of calendar year2023 and removed the entitlement for any future earn-out payments. This payment was made during fiscal year2025.

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The results of acquired businesses are included in Transcat’s consolidated operating results as of the dates the businesses were acquired. The following unaudited pro forma information presents the Company’s results of operations as if the acquisitions of Essco had occurred at the beginning of fiscal year2025. The pro forma results donot purport to represent what the Company’s results of operations actually would have been if the transactions had occurred at the beginning of the period presented or what the Company’s operating results will be in future periods.

Certain of the Company’s acquisition agreements include provisions for contingent consideration and other holdback amounts. The Company accrues for contingent consideration and holdback provisions based on their estimated fair value at the date of acquisition and at subsequent remeasurement periods, as applicable. As of* March 28, 2026*, no contingent consideration and $2.2 million of other holdback amounts were unpaid and are reflected in accrued compensation and other current liabilities on the Consolidated Balance Sheets. As of* March 29, 2025,no contingent consideration and $2.8 million of other holdback amounts were unpaid and reflected in current liabilities on the Consolidated Balance Sheets and $1.6 million of other holdback amounts unpaid were reflected in other liabilities in the Consolidated Balance Sheets. $2.7 million of holdback amounts were paid in fiscal year2026* and2025, respectively. During fiscal year2024, $0.8 million of holdback amounts were paid.

During fiscal years2026,2025 and2024, acquisition costs of $0.7 million, $1.3 million and $1.2 million, respectively, were recorded as incurred as general and administrative expenses in the Consolidated Statements of Income.

NOTE10 –** SHAREHOLDERS' EQUITY**

On* September 21, 2023,the Company entered into an underwriting agreement with Oppenheimer & Co. Inc., as representative of several underwriters, for the sale of common stock in an underwritten public offering at a public offering price of $95.00 per share (the “Offering”). The Offering closed on September 25, 2023*and the Company sold an aggregate of 847,371 shares in the Offering, which included 110,526 shares issued upon the exercise by the underwriters of their over-allotment option, for total gross proceeds of $80.5 million. Net proceeds received after direct costs in the Offering were $75.2 million. A portion of the net proceeds from this Offering were used to pay off the revolving credit facility in full.

The Company allows its employees the option of satisfying the employee tax withholding obligations with either cash or a net share issuance. The net issuance of shares was due to covering employee tax-withholding obligations for share award and stock option activity, totaling $0.4 million in fiscal year2026, $3.6 million in fiscal year2025 and $4.9 million in fiscal year2024.

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NOTE11 –** **SUBSEQUENT EVENTS

Effective* March 29, 2026,Jaime Irick became the Company's President and Chief Executive Officer. The Company entered into an executive employment agreement (the “Employment Agreement”) with Mr. Irick that is effective as of March 29, 2026.Pursuant to the Employment Agreement, Mr. Irick will be entitled to an initial base salary of $650,000 per annum, a target performance-based cash incentive award of100%* of his base salary for fiscal2027, and equity incentive awards under the Company’s long-term incentive compensation plan, consistent with the Company’s historical awards for executive officers, with a target value of $2.3 million for fiscal2027. Mr. Irick will be subject to the Company’s stock ownership objectives for directors and executive officers and is eligible to participate in and receive benefits under the Company’s standard benefit programs.

On* April 9, 2026,the Company acquired SCM Metrology and Laboratories S.A, a privately-held calibration services provider, based in Costa Rica to advance the Company's strategy to grow alongside customers in high-growth, highly regulated markets. The acquisition price of approximately $13 million was paid in cash and is subject to customary adjustments and holdback provisions. The acquisition will be accounted for as a business combination under ASC805,* Business Combinations. As of the date these financial statements were issued, the Company hasnot completed its initial accounting for the acquisition because the valuation of certain assets acquired and liabilities assumed, including butnot limited to identifiable intangible assets, property and equipment, and contingent liabilities, is still in process. Accordingly, the Company is unable to provide the disclosures required by ASC805, including the preliminary allocation of purchase consideration and certain pro forma financial information.

The Company expects to finalize the initial accounting for the acquisition as soon as practicable during the measurement period.

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