Transcat, Inc.

Good evening. Welcome to the Transcat Inc. Third Quarter Fiscal Year 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I'll now turn the conference over to your host, Craig Mahaly, Investor Relations for Transcat. You may begin.

Yeah, thank you. And good morning, everyone. We certainly appreciate your time today and your interest in Transcat. With me here on the call today, we have our President, Chief Executive Officer Lee Rudow, and our Chief Financial Officer, Mark Duhini. After formal remarks, we'll open the call for questions. If you don't have the news release across the wire after markets yesterday, you can find it at our website at transcat.com. The slides that accompany today's discussion are also on our website. If you would, please refer to slide two. As you are aware, we may make forward-looking statements during the formal presentation and Q&A portion of this teleconference. Those statements apply to future events, which are subject to risks and uncertainties, as well as other factors that could cause the actual results to differ materially from where we are today. These factors are outlined in the news release, as well as with documents filed by the company with the Securities and Exchange Commission. You can find those on our website, where we regularly post information about the company, as well as on the SEC's website at sec.gov. We undertake no obligation to publicly update or correct any of the forward-looking statements contained in this call, whether a result of new information, future events, or otherwise, except as required by law. Please review our forward-looking statements in conjunction with these precautionary factors. I'd like to point out as well that during today's call, we will discuss certain non-GAAP measures, which we believe will be useful in evaluating our performance. You should not consider the presentation of this additional information in isolation, or as a substitute for results prepared in accordance with GAAP. We have provided reconciliations of non-GAAP to comparable GAAP measures in the tables accompanying the earnings release. So with that, let me turn the call over to Lee to begin the discussion. Lee?

Thanks, Greg. Good morning, everyone. Thank you for joining us on the call today. Some of you have already met with Mark, spoken with Mark, but being that this is his first earnings call with TransCAD, I'd like to introduce him before we move on to the third quarter results. Mark was named CFO in November, succeeding Mike Chitter, who retired at the end of the calendar year. The transition went very smoothly. Mark is well-versed in our business and strategy and is an excellent addition to the executive team. We anticipate Mark's extensive background in M&A and operations will be of great value in the execution and acceleration of our strategic plan, including the continued investment in technology and technology-based infrastructure. Turning to our third quarter results, we are pleased by our performance, especially given the continued adverse condition caused by the COVID-19 pandemic. The team's responsiveness and dedication throughout the pandemic has been impressive, and the business continues to effectively provide critical support and service to many essential businesses, including the research, manufacturing, and distribution of the COVID-19 vaccines. In the third quarter, we achieved consolidated top-line growth driven by 12% growth in our service segment, 5.9% of which was organic. The growth represents our 47th consecutive quarter of year-over-year service growth. That's nearly 12 years. The business continues to demonstrate resiliency, and our unique value proposition continues to resonate. Platbets.com, which we acquired in February last year, continues to perform well, and together with the recently acquired biotech services, has strengthened our life science service portfolio and geographic footprint. It is our expectation that the two complementary businesses will be integrated quickly and achieve both sales and operational synergies over the next several quarters. The service segment continues to deliver outstanding margin performance. In the quarter, gross margin increased 590 basis points and operating margin increased 570 basis points. The increase in service margin was primarily driven by higher technician productivity and operating leverage on organic service growth. Distribution revenue was down 8.6% versus prior year. We anticipate that distribution will continue to be negatively impacted by the current pandemic. Focus will remain on capitalizing on our unique position in the market by leveraging every distribution interaction and every distribution lead to organically grow our service business. On the rental front, the channel performed very well, up 12% in the third quarter. Operating income for the third quarter exceeded expectations and increased by 20% over the same prior year period. To date, in fiscal 2021, we have achieved outstanding cash generation of $15.6 million, driving the reduction of debt, supporting continued investment in technology, infrastructure, and growth opportunities. And with that, I'll turn things over to Mark.