TRANSCAT INC
For the period ended Jun 27, 2026. Filed Aug 4, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 27, 2026 · Filed Aug 4, 2026
TRNS$101.51+1.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-12-27; filed 2026-02-03.
0001437749-26-002800
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-27; filed 2026-08-04.
0001628280-26-052738
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 92 previous paragraphs and 74 current paragraphs.
24 unchanged; 32 reworded; 18 added; 34 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 28 previous and 19 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
As a percentage of total revenue, operating expenses were 29.1% in the first quarter of fiscal year 2027 and 26.8% in the first quarter of fiscal year 2026, an increase of 2.3%.
Current report
In addition to reporting service revenue, net income, diluted earnings per share and net cash provided by operating activities, which are U.S. generally accepted accounting principle ("GAAP") measures, we present service organic revenue, adjusted net income, adjusted EBITDA, adjusted diluted earnings per share and operating free cash flow, which are non-GAAP measures. Management uses these non-GAAP measures as indicators to better assess comparability between periods and as a basis for planning and forecasting because management believes these non-GAAP measures reflect our core business operations. These non-GAAP measures are not calculated through the application of U.S. GAAP and are not required forms of disclosure by the SEC. As such, they should not be considered a substitute for the corresponding GAAP measures and, therefore, they should not be used in isolation, but in conjunction with the GAAP measures. The use of any non-GAAP measure may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies.
Current report
Service Organic Revenue
Current report
(1) Defined as revenue generated by an acquired business for the twelve months after the closing of the acquisition.
Current report
(1)Costs incurred in connection with the CEO transition plan.
Current report
(2) Expenses incurred in connection with acquisitions.
Current report
Adjusted Net Income and Diluted Earnings Per Share
Current report
(1)Costs incurred in connection with the CEO transition plan.
Current report
(2) Expenses incurred in connection with acquisitions.
Current report
(3) Stock compensation expense incurred that is related to grants to employees that were acquired with recent acquisitions.
Current report
*Receivables: Accounts receivable and other receivables increased $1.6 million during the first three months of fiscal year 2027, inclusive of $0.4 million of accounts receivable acquired during the period. During the first three months of fiscal year 2026, accounts receivable and other receivables increased $2 million. The year-over-year variation reflects the Company's growth and is impacted by changes in the timing of collections. The following table illustrates our “days sales outstanding” as of June 27, 2026 and June 28, 2025 (dollars in thousands):
Current report
*Inventory: Our inventory strategy includes making appropriate large quantity, high dollar purchases with key manufacturers for various reasons, including maximizing on-hand availability of key products, expanding the number of SKUs stocked in anticipation of customer demand, reducing backorders for products with long lead times and optimizing vendor purchase and sales volume discounts. As a result, inventory levels may vary from quarter-to-quarter based on the timing of these large orders in relation to our quarter end. Any decreases in inventory are primarily due to the timing of shipments relative to strategic inventory purchases during the periods.
Current report
*Accounts Payable: Changes in accounts payable may or may not correlate with changes in inventory balances at any given quarter end due to the timing of vendor payments for inventory, as well as the timing of payments for outsourced Service vendors. Accounts payable increased $2.4 million during the first three months of fiscal year 2027, inclusive of $0.3 million assumed in an acquisition during the period. Accounts payable increased $3.3 million during the first three months of fiscal year 2026. The variances are largely due to the timing of inventory purchases, capital expenditures and other payments in the respective periods.
Current report
*Accrued Compensation and Other Current Liabilities: Accrued compensation and other current liabilities include, among other things, amounts paid to employees for non-equity performance-based compensation. At the end of any particular period, the amounts accrued for such compensation may vary due to many factors including changes in expected performance levels, the performance measurement period, and timing of payments to employees. During the first three months of fiscal year 2027, accrued compensation and other current liabilities decreased by $3.6 million, inclusive of $0.6 million of accrued compensation and other current liabilities related to a current year acquisition. Accrued payroll and incentives decreased $3 million. During the first quarter of fiscal year 2026, accrued compensation and other current liabilities decreased by $2.8 million, including a $1.0 million decrease in accrued payroll and incentives and a $2.0 million decrease in accrued acquisition holdbacks. The decreases in accrued payroll and incentives are largely due to the annual payment of incentive-based compensation.
Current report
Financing Activities: During the first quarter of fiscal year 2027, proceeds, net of repayments, from our revolving Credit Facility were $10.5 million.
Current report
The team delivered another sequential quarter of strong performance. Strength in the calibration business drove double-digit Service revenue growth, double-digit Service organic revenue* growth and Service gross margin expansion. Fueled by continued strength in rentals and product sales, Distribution revenue grew 11% during the quarter.
Current report
Looking forward, we believe Transcat will continue to gain market share given the Service segment's high customer retention, conversion of new business wins into revenue and continued strong demand in the regulated end markets that we serve. We expect high single-digit Service organic revenue* growth for the fiscal 2027 full year, assuming the broader economic environment remains stable.
Current report
Acquisitions that strengthen our fundamental value proposition will continue to be an important component of our go-forward strategy.
Removed paragraphs (34)
Previous report
Third QUARTER ENDED December 27, 2025 COMPARED TOThird QUARTER ENDED December 28, 2024* (dollars in thousands):**** ***
Previous report
As a percentage of total revenue, operating expenses were 30.0% in the third quarter of fiscal year 2026 and 26.3% in the third quarter of fiscal year 2025, an increase of 3.7%.
Previous report
Net (Loss) Income:
Previous report
Revenue:
Previous report
Total revenue was $242.6 million, an increase of $41.3 million, or 20.5%, in the first nine months of fiscal year 2026 compared to the first nine months of the prior fiscal year.
Previous report
Service revenue, which accounted for 64.2% and 64.3% of our total revenue in the first nine months of fiscal years 2026 and 2025, respectively, increased $26.2 million or 20.3% from the first nine months of fiscal year 2025 to the first nine months of fiscal year 2026. This year-over-year increase included $25.1 million in service revenue from the acquisitions of Martin and Essco.
Previous report
Distribution revenue, which accounted for 35.8% and 35.7% of our total revenue in the first nine months of fiscal years 2026 and 2025, respectively, increased $15.0 million or 20.9% from the first nine months of fiscal year 2025 to the first nine months of fiscal year 2026. This year-over-year increase included $3.4 million in revenue from the acquisitions of Martin and Essco and revenue increases across all distribution channels.
Previous report
Gross Profit:
Previous report
Total gross profit for the first nine months of fiscal year 2026 was $77.8 million, an increase of $14.3 million or 22.5% versus the first nine months of fiscal year 2025. Total gross margin was 32.1% in the first nine months of fiscal year 2026, slightly up from 31.6% in the first nine months of fiscal year 2025, a 0.5% increase.
Previous report
Service gross profit in the first nine months of fiscal year 2026 increased $6.8 million, or 16.4%, from the first nine months of fiscal year 2025. Service gross margin was 31.3% in the first nine months of fiscal year 2026, a 1.0% decrease versus 32.3% in the first nine months of fiscal year 2025. This small decrease in Service gross margin was the result of lower margins on traditional calibration services.
Previous report
Distribution gross profit in the first nine months of fiscal year 2026 increased $7.5 million, or 34.3%, from the first nine months of fiscal year 2025. Distribution gross margin was 33.6% in the first nine months of fiscal year 2026, a 3.4% increase versus 30.2% in the first nine months of fiscal year 2025. Distribution gross margin improvement is primarily due to a favorable sales mix driven by rental revenue.
Previous report
Operating Expenses:
Previous report
As a percentage of total revenue, operating expenses were 28.4% in the first nine months of fiscal year 2026 and 26.1% in the first nine months of fiscal year 2025, an increase of 2.3%.
Previous report
Income Taxes:
Previous report
Net income for the first nine months of fiscal year 2026 decreased $6.6 million or 65.9% versus the first nine months of fiscal year 2025. As a percentage of revenue, net income was 1.4% in the first nine months of fiscal year 2026, down from 5.0% in the first nine months of fiscal year 2025. The year-over-year decrease in net income was primarily due to higher interest expense, net, and higher depreciation and amortization expenses. The increase in interest expense is related to the borrowing for the acquisition of Essco as well as an increase in interest rates on the Company's Credit Agreement. Increased depreciation and amortization expense is primarily due to the Company's recent acquisitions.
Previous report
Total Adjusted EBITDA, a non-GAAP measure, for the first nine months of fiscal year 2026 was $34.0 million, an increase of $7.0 million or 25.8% versus the first nine 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 14.0% for the first nine months of fiscal year 2026 from 13.4% for the first nine months of fiscal year 2025. The increase in Adjusted EBITDA during the first nine months of fiscal year 2026 was primarily driven by depreciation and amortization expense, non-cash stock compensation, interest expense and income tax expense.
Previous report
Service Organic Revenue Growth
Previous report
In addition to reporting service revenue growth, a GAAP measure, we present service organic revenue growth (current period service revenue less freight billed to customer less acquired revenue less prior period service revenue/prior period service revenue less freight billed to customer less divested revenue times 100). Acquired revenue is revenue generated from acquisitions for twelve months subsequent to the acquisition date. Divested revenue is revenue in the prior period related to businesses that were divested in the last twelve months. The Company's management believes service organic revenue growth is an important measure of operating performance because the measure provides a basis for comparison of our business operations across periods to assess core operating performance. As such, the Company uses service organic revenue growth as a measure of performance when evaluating its Service segment and as a basis for planning and forecasting.
Previous report
Service organic growth is not a measure of financial performance under GAAP and is not calculated through the application of GAAP. As such, it should not be considered as a substitute or alternative for the GAAP measure of net income and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure. Service organic growth, as presented, may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies.
Previous report
Adjusted EBITDA
Previous report
In addition to reporting net income, a GAAP measure, we present Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, executive transition costs, non-cash stock compensation expense, gain on sale of assets, acquisition-related transaction expenses, contingent consideration, and certain other expenses), which is a non-GAAP measure. Our management believes Adjusted EBITDA is an important measure of our operating performance because it allows management, investors and others to evaluate and compare the performance of our core operations from period to period by removing the impact of the capital structure (interest), tangible and intangible asset base (depreciation and amortization), taxes, stock-based compensation expense, executive transition costs and other items, which is not always commensurate with the reporting period in which it is included. As such, our management uses Adjusted EBITDA as a measure of performance when evaluating our business segments and as a basis for planning and forecasting. Adjusted EBITDA is also commonly used by rating agencies, lenders and other parties to evaluate our credit worthiness.
Previous report
Adjusted EBITDA is not a measure of financial performance under GAAP and is not calculated through the application of GAAP. As such, it should not be considered as a substitute or alternative for the GAAP measure of net income and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure. Adjusted EBITDA, as presented, may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies.
Previous report
Adjusted Diluted Earnings Per Share
Previous report
In addition to reporting Diluted Earnings Per Share, a GAAP measure, we present Adjusted Diluted Earnings Per Share (net income plus acquisition-related amortization expense, acquisition-related transaction expenses, executive transition costs, acquisition-related stock-based compensation and acquisition amortization of backlog; divided by the average diluted shares outstanding during the period), which is a non-GAAP measure. Our management believes Adjusted Diluted Earnings Per Share is an important measure of our operating performance because it provides a basis for comparison of our business operations between current, past and future periods by excluding items that we do not believe are indicative of our core operating performance.
Previous report
Adjusted Diluted Earnings Per Share is not a measure of financial performance under GAAP and is not calculated through the application of GAAP. As such, it should not be considered as a substitute or alternative for the GAAP measure of Diluted Earnings Per Share and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure. Adjusted Diluted Earnings Per Share, as presented, may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies.
Previous report
Note: Income tax effect is calculated using the expected annual tax rate, which was 31.5% and 25.5% for the fiscal year 2026 and 2025 periods, respectively.
Previous report
During the first nine months of fiscal year 2025, $1.8 million in cash was generated from the issuance of common stock. In addition, we used $1.7 million for scheduled repayments of our term loan and $3.2 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 report
Non-GAAP Financial Measure
Previous report
Operating Free Cash Flow
Previous report
In addition to reporting net cash from operations, a GAAP measure, we present Operating Free Cash Flow (net cash from operations less capital expenditures), which is a non-GAAP measure. The Company’s management believes Operating Free Cash Flow is an important liquidity measure that reflects the cash generated by the business, after the purchases of technology, capabilities and assets, that can then be used for, among other things, strategic acquisitions, investments in the business and funding ongoing operations.
Previous report
Operating Free Cash Flow is not a measure of financial performance under GAAP and is not calculated through the application of GAAP. As such, it should not be considered as a substitute or alternative for the GAAP measure of net cash from operations and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure. Operating Free Cash Flow, as presented, may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies.
Previous report
Our team delivered a strong quarter of revenue and adjusted EBITDA (a non-GAAP measure) performance in the fiscal third quarter highlighted by double-digit service revenue and gross profit growth. Service organic revenue growth was 7%, Distribution revenue grew 19.8% in the quarter with a gross margin of 32.4%, driven primarily by the strategic mix increase of higher-margin rentals. While the Company's net income decreased by more than 100% over the prior year period, the team's execution and robust revenue growth enabled us to deliver 27% adjusted EBITDA (a non-GAAP measure) growth.
Previous report
We believe we are well-positioned to execute our acquisition strategy while returning to more historic levels of service organic growth.
Previous report
Looking forward, we are optimistic given the momentum building in our service segment driven by strong retention, increased customer activity levels, and realization of business wins. We expect high single-digit Service organic revenue growth for the balance of fiscal 2026, barring any increased economic uncertainty. We believe our strong value proposition along with the recent acquisitions of premier service calibration companies that expand our geographical footprint positions us well to drive sustainable, long-term shareholder value.
Reworded paragraphs (32)
Previous wording
ITEM 2. MANAGEMENT**’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Current wording
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Previous wording
Forward-Looking Statements. This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations, estimates, beliefs, assumptions and predictions of future events and are identified by words such as “anticipate,” “believes,” “continue,” “estimates,” “expects,” “focus,” “intend,” “potential,” “outlook,” “seek,” “strategy,” “target,” “could,” “can,” “may,” “will,” “would,” and other similar words. Forward-looking statements are not statements of historical fact and thus are subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or those expressed in such forward-looking statements. You should evaluate forward-looking statements in light of important risk factors and uncertainties that may affect our operating and financial results and our ability to achieve our financial objectives. These factors include, but are not limited to, general economic conditions applicable to our business, inflationary impacts and changes in interest rates, the highly competitive nature of the industries in which we compete and in the nature of our two business segments, the concentration of Service segment customers in the life science and other FDA-regulated businesses as well as the industrial manufacturing, aerospace, defense, energy and utilities industries, the significant competition we face in our Distribution segment, any impairment of our goodwill or intangible assets, tariffs and changing trade relations, regional and international conflicts and political conditions, negative publicity and other reputational harm, our ability to successfully complete and integrate business acquisitions, potential unexpected liabilities associated with companies we acquire, cybersecurity risks, the risk of significant disruptions in our information technology systems, our ability to recruit, train and retain quality employees, skilled technicians and senior management, fluctuations in our operating results, our ability to achieve or maintain adequate utilization and pricing rates for our technical service providers, the prices we are able to charge for our services in our Service segment, our ability to adapt our technology, reliance on our enterprise resource planning system, technology updates, supply chain delays, disruptions or product shortages, the risks related to current and future indebtedness, foreign currency rate fluctuations, risks related to protecting our intellectual property, geopolitical events, adverse weather events or other catastrophes, natural disasters or widespread public health crises, the volatility of our stock price, the relatively low trading volume of our common stock, changes in tax rates, changes in accounting standards, legal requirements and listing standards, and legal and regulatory risks related to our international operations. These risk factors and uncertainties …
Excerpt shortened here; the source contains the full paragraph.
Current wording
Forward-Looking Statements. This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations, estimates, beliefs, assumptions and predictions of future events and are identified by words such as “anticipate,” “believes,” “continue,” “estimates,” “expects,” “focus,” “intend,” “potential,” “outlook,” “seek,” “strategy,” “target,” “could,” “can,” “may,” “will,” “would,” and other similar words. Forward-looking statements are not statements of historical fact and thus are subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or those expressed in such forward-looking statements. You should evaluate forward-looking statements in light of important risk factors and uncertainties that may affect our operating and financial results and our ability to achieve our financial objectives. These factors include, but are not limited to, general economic conditions applicable to our business, inflationary impacts and changes in interest rates, the highly competitive nature of the industries in which we compete and in the nature of our two business segments, the concentration of Service segment customers in the life science and other FDA-regulated businesses as well as the industrial manufacturing, aerospace, defense, energy and utilities industries, the significant competition we face in our Distribution segment, any impairment of our goodwill or intangible assets, tariffs and changing trade relations, regional and international conflicts and political conditions, negative publicity and other reputational harm, our ability to successfully complete and integrate business acquisitions, potential unexpected liabilities associated with companies we acquire, cybersecurity risks, the risk of significant disruptions in our information technology systems, our ability to recruit, train and retain quality employees, skilled technicians and senior management, fluctuations in our operating results, our ability to achieve or maintain adequate utilization and pricing rates for our technical service providers, the prices we are able to charge for our services in our Service segment, our ability to adapt our technology, reliance on our enterprise resource planning system, technology updates, supply chain delays, disruptions or product shortages, the risks related to current and future indebtedness, foreign currency rate fluctuations, risks related to protecting our intellectual property, geopolitical events, adverse weather events or other catastrophes, natural disasters or widespread public health crises, involvement in legal proceedings, the volatility of our stock price, the relatively low trading volume of our common stock, the material weaknesses in our internal control over financial reporting, changes in tax rates, changes in accounting standards, legal requirements and listing standards, a…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
During our third quarter of fiscal year 2026, we had consolidated revenue of $83.9 million. This represented an increase of $17.1 million or 25.6% versus the third quarter of fiscal year 2025. This increase was primarily due to acquisitions, service organic revenue growth (a non-GAAP measure) and a $5.0 million increase in distribution revenue. Acquired revenue, which represents revenue generated from acquisitions for twelve months subsequent to the acquisition date, was $9.8 million. Service organic revenue increased by 7.3% versus the third quarter of fiscal year 2025. See "Non-GAAP Financial Measures" below for a description and reconciliation of the non-GAAP measure. 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 first quarter of fiscal year 2027, we had consolidated revenue of $92.9 million. This represented an increase of $16.5 million or 21.6% versus the first quarter of fiscal year 2026. This increase was primarily due to acquisitions, service organic revenue growth (a non-GAAP measure) and a $3.1 million increase in distribution revenue. Acquired revenue, which represents revenue generated from acquisitions for twelve months subsequent to the acquisition date, was $6.9 million. Service organic revenue increased by 12.8% versus the first quarter of fiscal year 2026. See "Non-GAAP Financial Measures" below for a description and reconciliation of the non-GAAP measure. 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 third quarter of fiscal year 2026 gross profit was $25.3 million. This was an increase of $5.6 million or 28.3% versus the third quarter of fiscal year 2025. Consolidated gross margin was 30.1%, an increase of 0.6% versus the third 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.
Current wording
Our first quarter of fiscal year 2027 gross profit was $30.7 million. This was an increase of $4.9 million or 19.0% versus the first quarter of fiscal year 2026. Consolidated gross margin was 33.1%, a decrease of 0.7% versus the first quarter of fiscal year 2026. This decrease in gross profit percentage was primarily due to lower margins from the Distribution segment when compared to the prior year period.
Previous wording
Total operating expenses were $25.2 million in the third quarter of fiscal year 2026, an increase of $7.6 million or 43.2% when compared to the prior fiscal year third quarter. Included in operating expenses during the third 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 30.0% in the third quarter of fiscal year 2026, up 3.7% from 26.3% in the third quarter of fiscal year 2025. Operating income was $0.1 million, a decrease of $2.0 million, or 95.8% and operating margin decreased from 3.1% in the third quarter of fiscal year 2025 to 0.1% in the third quarter of fiscal year 2026.
Current wording
Total operating expenses were $27.0 million in the first quarter of fiscal year 2027, an increase of $6.5 million or 31.9% when compared to the prior fiscal year first quarter. Included in operating expenses during the first quarter of fiscal year 2027 were more than $2.5 million of incremental operating expenses related to the SCM and Essco acquisitions, including customer base amortization, depreciation and acquisition-related costs, increased stock-based compensation and executive transition costs. As a percentage of total revenue, operating expenses were 29.1% in the first quarter of fiscal year 2027, up 2.3% from 26.8% in the first quarter of fiscal year 2026. Operating income was $3.7 million, a decrease of $1.6 million, or 30.3% and operating margin decreased from 7.0% in the first quarter of fiscal year 2026 to 4.0% in the first quarter of fiscal year 2027.
Previous wording
Net loss was $1.1 million in the third quarter of fiscal year 2026 versus net income of $2.4 million in the third quarter of fiscal year 2025. The decrease was primarily due to an increase in amortization of acquisition-related intangible assets, stock-based compensation, CEO transition costs and interest expense.
Current wording
Net income was $1.3 million in the first quarter of fiscal year 2027 versus net income of $3.3 million in the first quarter of fiscal year 2026. The decrease was primarily due to a $6.5 million increase in operating expenses, including an increase in amortization of acquisition-related intangible assets, stock-based compensation, executive transition costs and interest expense. The increase in expenses was partially offset by a $4.9 million increase in gross profit.
Previous wording
The following table presents, for the third 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 first quarter of fiscal year 2027 and fiscal year 2026, the components of our Condensed Consolidated Statements of Income:
Previous wording
Nine MONTHS ENDED December 27, 2025 COMPARED TO Nine MONTHS ENDED December 28, 2024* (dollars in thousands):**** ***
Current wording
THREE MONTHS ENDED JUNE 27, 2026 COMPARED TO THREE MONTHS ENDED JUNE 28, 2025 (dollars in thousands):
Previous wording
Total revenue was $83.9 million, an increase of $17.1 million, or 25.6%, in our fiscal year 2026 third quarter compared to the prior fiscal year third quarter.
Current wording
Total revenue was $92.9 million, an increase of $16.5 million, or 21.6%, in our fiscal year 2027 first quarter compared to the prior fiscal year first quarter.
Previous wording
Service revenue, which accounted for 64.0% and 62.3% of our total revenue in the third quarter of fiscal years 2026 and 2025, respectively, increased $12.1 million or 29.1% from the third quarter of fiscal year 2025 to the third quarter of fiscal year 2026 despite economic volatility. This year-over-year increase included $9.0 million of incremental service revenue from the acquisitions of Martin and Essco. Organic revenue increased 7.3% over the prior year period primarily due to successful integration of historical acquisitions and consistent demand in highly regulated end markets.
Current wording
Service revenue, which accounted for 67.3% and 64.3% of our total revenue in the first quarter of fiscal years 2027 and 2026, respectively, increased $13.4 million or 27.3% from the first quarter of fiscal year 2027 to the first quarter of fiscal year 2026. This year-over-year increase included $6.9 million of incremental service revenue from the acquisitions of Essco and SCM. Service organic revenue increased 12.8% over the prior year period primarily due to growth in client-based labs and calibration services for biomedical customers.
Previous wording
The following table presents the trailing twelve-month Service segment revenue for the first, second and third 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:
Current wording
The following table presents the trailing twelve-month Service segment revenue for the first quarter of fiscal year 2027 and each quarter in fiscal year 2026 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, second and third quarters 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 quarter of fiscal year 2027 and for each quarter during fiscal year 2026:
Previous wording
Our Distribution revenue accounted for 36.0% of our total revenue in the third quarter of fiscal year 2026 and 37.7% of our total revenue in the third quarter of fiscal year 2025. During the third quarter of fiscal year 2026, Distribution segment revenue was $30.2 million which was an increase of $5.0 million or 19.8%. This increase was primarily due to incremental traditional rental revenue and higher revenue from our non-rental products.
Current wording
Our Distribution revenue accounted for 32.7% of our total revenue in the first quarter of fiscal year 2027 and 35.7% of our total revenue in the first quarter of fiscal year 2026. During the first quarter of fiscal year 2027, Distribution segment revenue was $30.4 million which was an increase of $3.1 million or 11.4%. This increase was primarily due to continued strength in rentals and product sales.
Previous wording
The Distribution segment revenue increase for the third quarter of fiscal year 2026 versus the third quarter of fiscal year 2025 was primarily due to a favorable sales mix driven by rental revenue.
Current wording
The Distribution segment revenue increase for the first quarter of fiscal year 2027 versus the first quarter of fiscal year 2026 was primarily due to higher revenue from our non-rental products.
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, second and third 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 quarter of fiscal year 2027 and each quarter of fiscal year 2026:
Previous wording
Our total pending product shipments at the end of the third quarter of fiscal year 2026 were $6.3 million, an increase of $2.4 million versus the end of the third quarter of fiscal year 2025 and a decrease of $1.2 million since September 27, 2025. The decrease in pending product shipments and backorders since September 27, 2025 was due in part to a one-time significant order outstanding at the end of the second quarter of fiscal year 2026.
Current wording
Our total pending product shipments at the end of the first quarter of fiscal year 2027 were $6.7 million, an increase of $2.5 million versus the end of the first quarter of fiscal year 2026 and a decrease of $0.6 million since March 28, 2026. The increase compared to the first quarter of the prior year is primarily due to longer lead times.
Previous wording
Total gross profit for the third quarter of fiscal year 2026 was $25.3 million, an increase of $5.6 million or 28.3% versus the third quarter of fiscal year 2025. Total gross margin was 30.1% in the third quarter of fiscal year 2026, up from 29.5% in the third quarter of fiscal year 2025, a 0.6% increase.
Current wording
Total gross profit for the first quarter of fiscal year 2027 was $30.7 million, an increase of $4.9 million or 19.0% versus the first quarter of fiscal year 2026. Total gross margin was 33.1% in the first quarter of fiscal year 2027, down from 33.8% in the first quarter of fiscal year 2026, a 0.7% decrease.
Previous wording
Service gross profit in the third quarter of fiscal year 2026 increased $3.1 million, or 25.2%, from the third quarter of fiscal year 2025. Service gross margin was 28.8% in the third quarter of fiscal year 2026, a decrease of 0.9% compared to 29.7% in the third quarter of fiscal year 2025. This decrease in Service gross margin was the result of lower margin on traditional calibration services as we onboard new customers and an increase in outsourced services' costs, which was partially offset by strong margins on calibration services provided by recent acquisitions.
Current wording
Service gross profit in the first quarter of fiscal year 2027 increased $5.0 million, or 30.7%, from the first quarter of fiscal year 2026. Service gross margin was 33.9% in the first quarter of fiscal year 2027, an increase of 0.9% compared to 33.0% in the first quarter of fiscal year 2026. This increase in Service gross margin primarily resulted from client-based labs and specialty revenue, including biomedical, which was partially offset by an increase in outsourced services' costs.
Previous wording
Distribution segment gross margin was 32.4% in the third quarter of fiscal year 2026 versus 29.1% in the third quarter of fiscal year 2025, an increase of 3.3%. The increase in Distribution gross margin was primarily due to a favorable sales mix driven by rentals.
Current wording
Distribution segment gross margin was 31.4% in the first quarter of fiscal year 2027 versus 35.2% in the first quarter of fiscal year 2026, a decrease of 3.8%. The decrease in Distribution gross margin was primarily due to an increase in product sales relative to rental sales during the period.
Previous wording
Total operating expenses were $25.2 million in the third quarter of fiscal year 2026 versus $17.6 million during the third quarter of fiscal year 2025. The year-over-year increase in selling, marketing and warehouse expenses is primarily due to increased expenses related to recent acquisitions, including acquisition-related amortization expense and payroll costs. The increase in general and administrative expenses is primarily due to an increase in stock-based compensation, executive transition costs and increased payroll costs for new and acquired employees.
Current wording
Total operating expenses were $27.0 million in the first quarter of fiscal year 2027 versus $20.5 million during the first quarter of fiscal year 2026. The year-over-year increase in selling, marketing and warehouse expenses is primarily due to increased expenses related to recent acquisitions, including acquisition-related amortization expense and payroll costs. The increase in general and administrative expenses is primarily due to an increase in stock-based compensation, executive transition costs, professional fees and increased payroll costs for new and acquired employees.
Previous wording
Our effective tax rate for the third quarter of fiscal years 2026 and 2025 was (23.5)% and 24.7%, respectively. The decrease in effective tax rate is primarily due to a net loss for the period. 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 third quarter of fiscal years 2026 and 2025 were an expense of less than $0.1 million and a benefit of $0.1 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 first quarter of fiscal years 2027 and 2026 was 39.1% and 28.6%, respectively. The increase in effective tax rate compared to the prior year period is primarily related to discrete tax expenses for stock awards, a decrease in stock compensation-related windfall benefits, and nondeductible expenses. 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. 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
Net income for the third quarter of fiscal year 2026 decreased $3.5 million or 146.7% versus the third quarter of fiscal year 2025. As a percentage of revenue, net loss the third quarter of fiscal year 2026 was (1.3%), and net income in the third quarter of fiscal year 2025 was 3.5%. The year-over-year decrease in net income was primarily due to lower operating income and higher interest expense, net. The increase in interest expense is related to the borrowing for the acquisition of Essco as well as an increase in interest rates on the Company's Credit Agreement.
Current wording
Net income for the first quarter of fiscal year 2027 decreased $1.9 million or 59.2% versus the first quarter of fiscal year 2026. As a percentage of revenue, net income the first quarter of fiscal year 2027 was 1.4%, and net income in the first quarter of fiscal year 2026 was 4.3%. The year-over-year decrease in net income resulted from the changes outlined above as well as a $1.1 million increase in interest expense over the prior year period, which is related to the increase in debt outstanding under the Company's Credit Facility for the Essco and SCM acquisitions.
Previous wording
Total Adjusted EBITDA, a non-GAAP measure, for the third quarter of fiscal year 2026 was $10.1 million, an increase of $2.2 million or 27.2% versus the third 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 12.0% for the third quarter of fiscal year 2026 from 11.9% for the third quarter of fiscal year 2025. The increase in Adjusted EBITDA during the third quarter of fiscal year 2026 was primarily driven by depreciation and amortization expense, non-cash stock compensation, interest expense and executive transition costs.
Current wording
Total Adjusted EBITDA, a non-GAAP measure, for the first quarter of fiscal year 2027 was $14.0 million, an increase of $2.2 million or 18.6% versus the first quarter of fiscal year 2026. 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 slightly decreased to 15.0% for the first quarter of fiscal year 2027 from 15.4% for the first quarter of fiscal year 2026.
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, and for the acquisition of Essco.
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.
Previous wording
As of December 27, 2025, $150.0 million was available for borrowing, subject to covenant restrictions, under the Credit Facility, of which, $99.9 million was outstanding. During the first nine months of fiscal year 2026, we used approximately $83.0** **million, drawn from the Credit Facility, for a business acquisition.
Current wording
As of June 27, 2026, $150.0 million was available for borrowing, subject to covenant restrictions, under the Credit Facility, of which, $110.4 million was outstanding. During the first three months of fiscal year 2027, we used approximately $13.0 million, drawn from the Credit Facility, for a business acquisition.
Previous 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%.
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. The applicable margin ranges from 0.00% to 0.75% for base rate loans and 1.00% to 1.75% for SOFR loans. We 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%.
Previous 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 2.00 on December 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 nine months of fiscal year 2026.
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 2.21 on June 27, 2026, compared with 2.03 on March 28, 2026. 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 during the first three months of fiscal year 2027.
Previous wording
Operating Activities: Net cash provided by operating activities was $28.6 million during the first nine months of fiscal year 2026 compared to $28.4 million of net cash provided by operating activities during the first nine months of fiscal year 2025. The significant working capital fluctuations were as follows:
Current wording
Operating Activities: Net cash provided by operating activities was $8.8 million during the first three months of fiscal year 2027 compared to $3.6 million of net cash provided by operating activities during the first three months of fiscal year 2026. The significant working capital fluctuations were as follows:
Previous wording
Investing Activities: During the first nine months of fiscal years 2026 and 2025, we invested $11.7 million and $10.5 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 three months of fiscal years 2027 and 2026, we invested $4.0 million and $4.6 million, respectively, in capital expenditures that was used primarily for customer-driven expansion of Service segment capabilities and our rental business.
Previous wording
During the first nine months of fiscal years 2026 and 2025, we used $82.5 million and $86.1 million, respectively, for business acquisitions.
Current wording
During the first three months of fiscal year 2027, we used $12.8 million for business acquisitions.
Previous wording
Financing Activities: During the first nine months of fiscal year 2026, net proceeds and repayments from our revolving Credit Facility was $68.6 million, and $0.7 million in cash was generated from the issuance of common stock. In addition, we used $1.8 million for repayments of our term loan.
Current wording
During the first quarter of fiscal year 2026, proceeds, net of repayments, from our revolving Credit Facility were $2.3 million. In addition, we used $0.6 million for scheduled repayments of our term loan.
Previous 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.
Current wording
We expect our income tax rate to range between 30% and 32% for full fiscal year 2027. This estimate includes federal, various state, and international income taxes and reflects the discrete tax accounting associated with share-based payment awards.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Total operating expenses were $68.9 million in the first nine months of fiscal year 2026 versus $52.6 million during the first nine 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 and payroll-related costs. The increase in general and administrative expenses is primarily due to an increase in stock-based compensation, executive transition costs and an increase in payroll-related costs.
Previous report — wording carried elsewhere
Our effective tax rate for the first nine months of fiscal years 2026 and 2025 was 33.5% and 16.7%, 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 nine months of fiscal years 2026 and 2025 was an expense of less than $0.1 million and a benefit of $1.3 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.