Transcat, Inc.

Welcome to Transcat Inc. Fourth Quarter and Full Fiscal Year 2025 Financial Results Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tom Barbato, Chief Financial Officer. Thank you, Tom. You may begin.

Thank you, Sherry, 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'll begin the call with some prepared remarks, and then we'll open the call for questions. Our earnings release crossed the wire after market 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 two, as you are aware, We may 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 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 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 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. Thank you for joining us on the call today. The fiscal 2025 consolidated revenue was up 7%. to $278.4 million on continued consistent demand for both our services and products. Service revenue grew 7% to $181.4 million driven by strength in our core calibration business. Distribution revenue grew 8% to $97 million on continued growth in our rental platform. Operating cash flow for the full fiscal 2025 year was a record $38.6 million, a year-over-year increase of 18%. Additionally, on December 9th, we acquired the coveted Martin Calibration, the largest acquisition in Transcat's history. Martin is a very profitable, well-run company with over $25 million of mostly calibration service revenue. The Martin deal is highly synergistic and fulfills all three of our strategic acquisition drivers, including geographic expansion into the Minneapolis and Chicago regions of the Midwest, expanded capabilities and expertise, particularly on the dimensional and mechanical measuring side of the business, and finally, two bolt-on opportunities where we can leverage our current infrastructure in Southern California and Phoenix, Arizona. Turning to the fourth quarter results for our service segment, Transcat's calibration services business continues to perform well and benefit from high levels of regulation and recurring revenue streams. In the fourth quarter, calibration services achieved double-digit revenue growth of 11 percent, of which organic growth was in the high single-digit range when normalized for the 53rd week and excluding solutions. We reported a service gross margin of 36.2 percent in the fourth quarter, which expanded 50 basis points. versus the prior year. Margin expansion was driven by organic revenue growth and the associated inherent leverage in our calibration lab operating model, along with increased productivity from continued automation and process improvement. Turning to the fourth quarter results for our distribution segment, distribution revenue grew 4 percent, driven by growth in the rental channel. It's important to note Our associated e-commerce platform continues to be an important component to lead generation for the service segment. Transcat's distribution platform, including rentals, uniquely positions the company to achieve its consistent organic service growth. Barriers to entry in this respect have defended and we expect will continue to defend both our unique value proposition and strong brand across both operating segments. With that, I'll turn things over to Tom for a more detailed look at our Q4 and full year financial performance.