TRANSCAT INC
For the period ended Sep 26, 2026. Filed Nov 3, 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.
Sep 26, 2026 · Filed Nov 3, 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 2026-06-27; filed 2026-08-04.
0001628280-26-052738
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-26; filed 2026-11-03.
0001628280-26-069462
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 74 previous paragraphs and 90 current paragraphs.
35 unchanged; 35 reworded; 17 added; 4 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 19 previous and 15 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 (17)
Current report
Total operating expenses were $27.6 million in the second quarter of fiscal year 2027, an increase of $4.3 million or 18.7% when compared to the prior fiscal year second quarter. As a percentage of total revenue, operating expenses were 28.4% in the second quarter of fiscal year 2027 and 28.3% in the second quarter of fiscal year 2026. Operating income was $5.0 million, an increase of $1.5 million, or 43.6% and operating margin increased from 4.3% in the second quarter of fiscal year 2026 to 5.2% in the second quarter of fiscal year 2027.
Current report
SECOND QUARTER ENDED SEPTEMBER 26, 2026 COMPARED TO SECOND QUARTER ENDED SEPTEMBER 27, 2025:
Current report
As a percentage of total revenue, operating expenses were 28.4% in the second quarter of fiscal year 2027 and 28.3% in the second quarter of fiscal year 2026, an increase of 0.1%.
Current report
Net income for the second quarter of fiscal year 2027 increased $1.1 million or 90.1% versus the second quarter of fiscal year 2026. As a percentage of revenue, net income in the second quarter of fiscal year 2027 was 2.5%, and net income in the second quarter of fiscal year 2026 was 1.5%. The year-over-year increase in net income resulted from the changes outlined above.
Current report
Revenue:
Current report
Total revenue was $190.0 million, an increase of $31.3 million, or 19.7%, in the first six months of fiscal year 2027 compared to the first six months of the prior fiscal year.
Current report
Service revenue, which accounted for 67.0% and 64.3% of our total revenue in the first six months of fiscal years 2027 and 2026, respectively, increased $25.3 million or 24.9% from the first six months of fiscal year 2026 to the first six months of fiscal year 2027. This year-over-year increase included $10.4 million in service revenue from the acquisitions of Essco, SCM and Southeastern. The remaining growth is attributable to high customer retention, continued strong demand in life sciences, aerospace & defense and other regulated end markets as well as growth in client-based labs and calibration services for biomedical customers.
Current report
Distribution revenue, which accounted for 33.0% and 35.7% of our total revenue in the first six months of fiscal years 2027 and 2026, respectively, increased $6.0 million or 10.6% from the first six months of fiscal year 2026 to the first six months of fiscal year 2027. This year-over-year increase included $2.7 million in revenue from the acquisitions of Essco, SCM, and Southeastern and revenue increases across all distribution channels.
Current report
Gross Profit:
Current report
Total gross profit for the first six months of fiscal year 2027 was $63.4 million, an increase of $10.8 million or 20.5% versus the first six months of fiscal year 2026. Total gross margin was 33.3% in the first six months of fiscal year 2027, slightly up from 33.1% in the first six months of fiscal year 2026, a 0.2% increase.
Current report
Service gross profit in the first six months of fiscal year 2027 increased $10.2 million, or 30.9%, from the first six months of fiscal year 2026. Service gross margin was 34.1% in the first six months of fiscal year 2027, a 1.5% increase versus 32.6% in the first six months of fiscal year 2026. The increase in Service gross margin primarily resulted from inherent operating leverage, a focus on operational excellence and maturing of new customer relationships as well as margin improvements from client-based labs and specialty revenue, including biomedical.
Current report
Distribution gross profit in the first six months of fiscal year 2027 increased $0.5 million, or 2.8%, from the first six months of fiscal year 2026. Distribution gross margin was 31.8% in the first six months of fiscal year 2027, a 2.4% decrease versus 34.2% in the first six months of fiscal year 2026. Distribution gross margin decline is primarily due to an unfavorable sales mix.
Current report
Operating Expenses:
Current report
As a percentage of total revenue, operating expenses were 28.7% in the first six months of fiscal year 2027 and 27.6% in the first six months of fiscal year 2026, an increase of 1.1%.
Current report
Income Taxes:
Current report
Net Income:
Current report
Looking ahead, we remain optimistic about the Service segment’s momentum, supported by high customer retention, conversion of new business wins into revenue, and continued strong demand in life sciences, aerospace and defense, and the other regulated end markets we serve. For the full fiscal year 2027, assuming the broader economic environment remains stable, we now expect Service organic revenue growth in the low double digits, up from our prior outlook of high single digits, along with Service gross margin expansion. We expect year-over-year Service gross margin expansion of at least 100 bps in the second half, driven by our teams’ continuous improvement focus across three key areas: business mix, Lean operating principles, and technology/AI initiatives.
Removed paragraphs (4)
Previous report
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 report
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 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%.
Previous 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.
Reworded paragraphs (35)
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, 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.
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,” “growth,” “intend,” “plans,” “potential,” “projects,” “outlook,” “seek,” “should,” “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, le…
Excerpt shortened here; the source contains the full paragraph.
Previous 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.
Current wording
During our second quarter of fiscal year 2027, we had consolidated revenue of $97.1 million. This represented an increase of $14.8 million or 18.0% versus the second quarter of fiscal year 2026. This increase was primarily due to acquisitions, service organic revenue growth (a non-GAAP measure) and a $2.9 million increase in distribution revenue. Acquired revenue, which represents revenue generated from acquisitions for twelve months subsequent to the acquisition date, was $5.5 million. Service revenue increased by 22.6% and service organic revenue increased by 15.8% versus the second quarter of fiscal year 2026. Service organic revenue increased as a result of high customer retention and continued strong demand. 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 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.
Current wording
Our second quarter of fiscal year 2027 gross profit was $32.6 million. This was an increase of $5.9 million or 21.9% versus the second quarter of fiscal year 2026. Consolidated gross margin was 33.6%, an increase of 110 basis points when compared to the second quarter of fiscal year 2026. The increase in gross profit percentage was primarily due to strong organic service revenue growth and service mix when compared to the prior year period.
Previous 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.
Current wording
Net income was $2.4 million in the second quarter of fiscal year 2027 versus net income of $1.3 million in the second quarter of fiscal year 2026. The increase was primarily due to a $5.9 million increase in gross profit that was mostly offset by a $4.3 million increase in operating expenses, including an increase in amortization of acquisition-related intangible assets, stock-based compensation, and executive transition costs.
Previous 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.
Current wording
Total revenue was $97.1 million, an increase of $14.8 million, or 18.0%, in our fiscal year 2027 second quarter compared to the prior fiscal year second quarter.
Previous 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.
Current wording
Service revenue, which accounted for 66.7% and 64.2% of our total revenue in the second quarter of fiscal years 2027 and 2026, respectively, increased $11.9 million, or 22.6%, from the second quarter of fiscal year 2026 to the second quarter of fiscal year 2027. This year-over-year increase included $3.5 million of incremental service revenue from the acquisitions of Essco, SCM and Southeastern. Service organic revenue increased 15.8% over the prior year period primarily due to high customer retention and continued strong demand in life sciences, aerospace and defense, and other regulated end markets.
Previous 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:
Current wording
The following table presents the trailing twelve-month Service segment revenue for the first and second quarters 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 quarter of fiscal year 2027 and for each quarter during fiscal year 2026:
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 16% 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 two quarters of fiscal year 2027 and for each quarter during fiscal year 2026:
Previous 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.
Current wording
Our Distribution revenue accounted for 33.3% of our total revenue in the second quarter of fiscal year 2027 and 35.8% of our total revenue in the second quarter of fiscal year 2026. During the second quarter of fiscal year 2027, Distribution segment revenue was $32.3 million, which was an increase of $2.9 million or 9.8%, and included $2.0 million of revenue from acquisitions. This increase was primarily due to continued strength in rentals and product sales.
Previous wording
The following table presents our total pending product shipments and the percentage of total pending product shipments that were backorders at the end of the first quarter of fiscal year 2027 and each quarter of fiscal year 2026:
Current wording
The following table presents our total pending product shipments and the percentage of total pending product shipments that were backorders at the end of the first and second quarter of fiscal year 2027 and each quarter of fiscal year 2026:
Previous 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.
Current wording
Our total pending product shipments at the end of the second quarter of fiscal year 2027 were $9.1 million, an increase of $1.6 million versus the end of the second quarter of fiscal year 2026 and an increase of $1.9 million since March 28, 2026. The increase compared to the second quarter of the prior year is primarily due to longer lead times.
Previous 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.
Current wording
Total gross profit for the second quarter of fiscal year 2027 was $32.6 million, an increase of $5.9 million or 21.9% versus the second quarter of fiscal year 2026. Total gross margin was 33.6% in the second quarter of fiscal year 2027, up from 32.5% in the second quarter of fiscal year 2026, a 1.1% increase.
Previous 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.
Current wording
Service gross profit in the second quarter of fiscal year 2027 increased $5.3 million, or 31.1%, from the second quarter of fiscal year 2026. Service gross margin was 34.4% in the second quarter of fiscal year 2027, an increase of 2.2% compared to 32.2% in the second quarter of fiscal year 2026. This increase in Service gross margin primarily resulted from inherent operating leverage, a focus on operational excellence and maturing of new customer relationships.
Previous 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.
Current wording
Distribution segment gross margin was 32.0% in the second quarter of fiscal year 2027 versus 33.2% in the second quarter of fiscal year 2026, a decrease of 1.2%. The decrease in Distribution gross margin was primarily driven by lower-margin used equipment sales that enable reinvestment in our rental asset portfolio.
Previous 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.
Current wording
Total operating expenses were $27.6 million in the second quarter of fiscal year 2027 versus $23.3 million during the second quarter of fiscal year 2026. The year-over-year increase in selling, marketing and warehouse expenses of $1.1 million, or 10.6%, 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 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.
Current wording
Our effective tax rate for the second quarter of fiscal years 2027 and 2026 was 24.1% and 37.5%, respectively. The decrease in the effective tax rate compared to the prior year period is primarily attributable todiscrete tax benefits related to stock compensation activity recognized during fiscal year 2027 and lower estimated permanent differences. 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
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.
Current wording
Total Adjusted EBITDA, a non-GAAP measure, for the second quarter of fiscal year 2027 was $14.9 million, an increase of $2.8 million or 23.1% versus the second 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 increased to 15.4% for the second quarter of fiscal year 2027 from 14.7% for the second quarter of fiscal year 2026.
Previous wording
THREE MONTHS ENDED JUNE 27, 2026 COMPARED TO THREE MONTHS ENDED JUNE 28, 2025 (dollars in thousands):
Current wording
SIX MONTHS ENDED SEPTEMBER 26, 2026 COMPARED TO SIX MONTHS ENDED SEPTEMBER 27, 2025
Previous 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:
Current wording
The following table presents, for the first six months of fiscal year 2027 and fiscal year 2026, the components of our Condensed Consolidated Statements of Income:
Previous 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.
Current wording
Net income for the first six months of fiscal year 2027 decreased $0.8 million or 17.4% versus the first six months of fiscal year 2026. As a percentage of revenue, net income was 2.0% in the first six months of fiscal year 2027, down from 2.9% in the first six months of fiscal year 2026. The year-over-year decrease in net income was primarily due to higher interest expense, net. The increase in interest expense is related to the borrowings for the Essco acquisition in the second quarter of fiscal year 2026 as well as SCM and Southeastern in fiscal year 2027.
Previous wording
Under the Credit Agreement, we can use up to $50.0 million for acquisitions in any single fiscal year, with an exception for the Essco acquisition. In addition, we are permitted to make restricted payments up to $25.0 million in the aggregate over the term of the Credit Facility and up to $10.0 million in any single fiscal year to repurchase shares and pay dividends.
Current wording
Under the Credit Agreement, we can use up to $50.0 million for acquisitions in any single fiscal year. In addition, we are permitted to make restricted payments up to $25.0 million in the aggregate over the term of the Credit Facility and up to $10.0 million in any single fiscal year to repurchase shares and pay dividends.
Previous wording
As of June 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.
Current wording
As of September 26, 2026, up to $150.0 million is available for borrowing, subject to covenant restrictions, under the Credit Facility, of which, $116.9 million was outstanding. During the first six months of fiscal year 2027, we used approximately $19.5 million, drawn from the Credit Facility, for business acquisitions and repaid $2.5 million.
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 2.21 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.
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 2.18 on September 26, 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 six months of fiscal year 2027.
Previous 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:
Current wording
Operating Activities: Net cash provided by operating activities was $19.0 million during the first six months of fiscal year 2027 compared to $16.5 million of net cash provided by operating activities during the first six months of fiscal year 2026. The significant working capital fluctuations were as follows:
Previous wording
*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 wording
*Receivables: Accounts receivable and other receivables increased $6.0 million during the first six months of fiscal year 2027, inclusive of $1.4 million of accounts receivable acquired during the period. During the first six months of fiscal year 2026, accounts receivable and other receivables increased $3.6 million inclusive of $2.9 million of accounts receivable acquired during the period. 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 September 26, 2026 and March 28, 2026 (dollars in thousands):
Previous wording
*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 wording
*Inventory: Inventory increased $1.2 million during the first six months of fiscal year 2027, inclusive of $1.2 million of inventory acquired during the period. During the first six months of fiscal year 2026, inventory decreased $1.4 million. 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.
Previous wording
*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 wording
*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 $3.2 million during the first six months of fiscal year 2027, inclusive of $0.3 million assumed in an acquisition during the period. Accounts payable decreased $1.6 million during the first six months of fiscal year 2026 inclusive of $0.2 million assumed in acquisition during the period. The variances are largely due to the timing of inventory purchases, capital expenditures and other payments in the respective periods.
Previous wording
*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 wording
*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 six months of fiscal year 2027, accrued compensation and other current liabilities decreased by $3.9 million, inclusive of $0.7 million of accrued compensation and other current liabilities related to current year acquisitions. During the first six months of fiscal year 2026, accrued compensation and other current liabilities increased by $4.5 million inclusive of $3.2 million of accrued compensation and other current liabilities assumed during the period. The decreases in accrued payroll and incentives are largely due to the annual payment of incentive-based compensation.
Previous 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.
Current wording
Investing Activities: During the first six months of fiscal years 2027 and 2026, we invested $8.1 million and $9.0 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 three months of fiscal year 2027, we used $12.8 million for business acquisitions.
Current wording
During the first six months of fiscal year 2027, we used $25.9 million for business acquisitions.
Previous wording
Financing Activities: During the first quarter of fiscal year 2027, proceeds, net of repayments, from our revolving Credit Facility were $10.5 million.
Current wording
Financing Activities: During the first six months of fiscal year 2027, proceeds, net of repayments, from our revolving Credit Facility were $17.0 million.
Previous 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.
Current wording
During the first six months of fiscal year 2026, proceeds, net of repayments, from our revolving Credit Facility was $81.0 million. Inaddition, we used $1.8 million for scheduled repayments of our term loan.
Previous wording
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 wording
The second quarter of fiscal year 2027 marked the 70th consecutive quarter of Service revenue growth. Continued strength in the calibration business drove double-digit Service revenue growth, double-digit Service organic revenue* growth and Service gross margin expansion. Distribution revenue grew 10% during the second quarter, fueled by continued strength in rentals and product sales.
Previous 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.
Current wording
We expect our income tax rate to range between 28% and 30% 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.
Previous wording
Acquisitions that strengthen our fundamental value proposition will continue to be an important component of our go-forward strategy.
Current wording
Over the next three to five years, the Company expects highly fragmented, large market opportunities to highlight a path to $500 million revenue and top-tier margins. We believe we'll continue to gain market share with consistent strong organic growth and operational excellence. Growth in rentals is expected to increase to low double digits over time. Acquisitions that strengthen our fundamental value proposition will continue to be an important component of our go-forward strategy. We plan to expand margins by improving customer-facing processes, deploying Lean Six Sigma tools, optimizing business mix and pricing, and applying AI to enhance productivity.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
The following table presents, for the quarters ended September 26, 2026 and September 27, 2025, the components of our Condensed Consolidated Statements of Income:
Current report — wording carried from elsewhere
Total operating expenses were $54.6 million in the first six months of fiscal year 2027 versus $43.7 million during the first six months of fiscal year 2026. The year-over-year increase in selling, marketing and warehouse expenses of $3.0 million 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 payroll-related costs, including stock-based compensation.
Current report — wording carried from elsewhere
Our effective tax rate for the first six months of fiscal years 2027 and 2026 was 30.2% and 31.3%, respectively. The decrease in the effective tax rate is primarily attributable tolower estimated permanent differences and discrete tax benefits related to stock compensation activity recognized during fiscal 2027. 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.