Transcat, Inc.

Greetings and welcome to Transcat Incorporated fourth quarter fiscal year 2024 financial results. At this time, all participants are on 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. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Tom Barbato. Thank you. 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 Rudow, and our chief operating officer, Mike West. We will begin the call with some prepared remarks, and then we'll open up the call for questions. Our earnings release crossed the wire after markets closed yesterday. Both the earnings release and the slides that we will reference during our prepared remarks can be found on our website, transcat.com, in the investor relations section. If you would, please refer to slide number two. As you are aware, we make forward-looking statements during the formal presentation and Q&A portion of this teleconference. These 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 in the documents filed by the company with the SEC. 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 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'll 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 compare GAAP measures in the tables accompanying the earnings release. With that, I'll turn the call over to Lee.

Thank you, Tom. Good morning, everyone. We appreciate you joining us on the call today. Fiscal 2024 was another strong year for TransCat. Our excellent operating results included double-digit organic service growth, significant and continued gross margin expansion, and dynamic growth in EBITDA and operating cash flow. We fortified our strong position in core markets by enhancing our differentiated value proposition and expanded our addressable markets. It was a great year, and we're very proud of the team, their continued hard work, and their accomplishments. In fiscal 2024, we generated double-digit organic service growth of 11% and total service growth of 17%. Consolidated revenue was up 13% to $259 million, and demand for our products and services remained strong. Consolidated gross margins expanded 270 basis points to 32.3%, driven by organic service revenue, inherent leverage in our service operating model, improved productivity in our labs, and a higher rental mix in our distribution segment. Adjusted EBITDA, a key metric for us given our acquisition strategy, grew 27% from prior year to $38.6 million. Accretive acquisitions played an important role in fiscal 2024 as we acquired three companies, Tick MS, Stairclaw, and Axiom test equipment. The acquisitions expanded our addressable markets, widened the breadth of our service offering, and allowed us to leverage our existing infrastructure. As always, the key differentiator of Transcat's acquisition strategy is the effectiveness of our integration process that enables us to quickly achieve growth synergies and capitalize on compelling, cross-selling organic growth opportunities. In fiscal 2024, service growth margins continue to expand margins expanded 160 basis points to 33.8%. Service margins benefited from our differentiated suite of services, which continues to resonate throughout our highly regulated and expanded addressable markets. Transcat customers continue to recognize and value Transcat's role servicing markets where the cost of failure is high and risk mitigation is a top priority. I'll touch upon the fourth quarter results for our service segment. In the fourth quarter of fiscal 2024, our service segment recorded 60th straight quarter of year-over-year growth. We generated 18% total service growth and 13% organic service growth driven by recurring revenue streams and high year-over-year retention. Increases in productivity driven primarily by automation and process improvement drove year-over-year increases in the fourth quarter service growth margin by 170 basis points to 35.7%. Turning to distribution for the full fiscal 2024 year, revenue grew 5% and benefited from the high-performing Axiom acquisition. Gross margins expanded 420 basis points from prior year. In the fourth quarter, distribution revenue grew 8%, and gross margins expanded 510 basis points, again, driven by the increased mix of the rental business. With that, I'll turn things over to Tom Barbato for a more detailed look at the fiscal 2024 financials.