Transcat, Inc.

Greetings and welcome to the Transcat Inc. First Quarter Fiscal Year 2022 Financial Results Call. At this time, all participants are in a listen-only mode. A brief 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mark Doheny, Chief Financial Officer. Thank you, Mark. You may begin.

Thank you, operator, and good morning, everyone. We appreciate your time and your interest in TransCat. With me here on the call today is our president and CEO, Lee Rodo. We will begin the call with some prepared remarks, and then we will open up the call for questions. Our earnings release crossed the wire after markets closed yesterday and can be found on our website, transcat.com, in the investor relations section. The slides that accompany today's discussion are also posted 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. We undertake no obligation to publicly update or correct any of the forward-looking statements contained in this call, whether as 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. Additionally, 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've provided reconciliations of non-GAAP to comparable GAAP measures in the tables accompanying the earnings release. So with that, I'll turn the call over to Lee to begin the discussion. Lee?

Thank you, Mark. Good morning, everyone. Thank you for joining us on the call today. In the first quarter of fiscal 2022, we got off to a very strong start, achieving excellent results across all our key metrics. As I walk through the highlights of the first quarter, in addition to the prior year comparisons, I'm going to compare our current performance to the first quarter of fiscal 2020 prior to COVID provide additional insight and context to our current performance. Let's get started. Our broad-based performance was driven by consolidated revenue growth of 23%, a first quarter record for TransCAD. The quarter was highlighted by our service segment, which continues to perform at a high level. Organic service growth was roughly 17% as we continued to capture market share in a highly attractive highly regulated life science market. Throughout the pandemic, the life science market remained resilient and it continues to be strong. Compared to the first quarter of fiscal 20 prior to COVID, organic service revenue increased 12.5%. The second quarter represented our 49th straight quarter of service growth. We also delivered outstanding margin performance in the quarter. Gross margins for service increased 540 basis points to 31.8%. The margin improvement is a testament to our focus on continuous process improvement, productivity, and more than anything else, inherent operating leverage in our service business as organic revenue volumes increase. Compared to fiscal 20 first quarter prior to COVID, service gross margins improved by 780 basis points. Moving to distribution, reported revenue was up 27% on improving market trends and favorable comparisons to a significantly COVID-impacted prior year first quarter. Distribution gross margins also improved to 23.6%, a 260 basis point expansion from the prior year. The expansion was driven largely by favorable product mix. Strong performance across both service and distribution led the first quarter adjusted EBITDA of $6.1 million up 75% from the prior year, and up $2.2 million or 55% from the first quarter of fiscal 20, again, prior to COVID. Our balance sheet remains strong with a leverage ratio slightly under one. And it's important to note that in the quarter, we amended our credit facility to increase our revolving line of credit from $40 million to $80 million with very favorable terms. The increased revolver provides more flexibility to support the execution of our strategic plan, which includes capitalizing on the robust acquisition pipeline we have developed over the past couple of quarters. All in all, our first quarter results demonstrate the talent and commitment of our team, the continued strength of our unique value proposition, and the attractiveness and resiliency of the markets we serve. With that, I'll turn things over to Mark.