Transcat, Inc.

Greetings and welcome to the Transcat Inc. Second Quarter Fiscal Year 2026 Financial Results Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, John Howe, Senior Director of Financial Planning and Analysis. Thank you, John. You may begin.

Thank you, Operator, and good afternoon, 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 Financial Officer, Tom Barbato. We will begin the call with some prepared remarks, and then we will open the call for questions. Our earnings release crossed the wire after markets closed this afternoon. 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 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 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 paired 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.

Okay, thank you, John. Good afternoon, everyone. Thank you for joining us on the call today. Transcat delivered strong performance again in our second quarter of fiscal 2026. The key to Transcat's ongoing success is the consistent execution of our unique strategy which includes the diversity of our product and service portfolio. As a reminder, there are four key elements to our strategy, organic service growth, inherent operating leverage in our service platform, strategic acquisitions, and growth in our highly profitable rental channel. The combination of all four creates a unique and proven resiliency in our business model, which can be seen clearly in the first half of our fiscal 2026 year. And in the second quarter, despite continued economic uncertainty and volatility, consolidated revenue increased 21% to $83 million. Stable calibration revenue driven by customer retention, strong performances by our two recent acquisitions, Martin Calibration and Esco Calibration, and significant growth in our rental channel drove double-digit revenue growth in both our service and distribution segments. In addition, In the second quarter, consolidated gross profit grew 26 percent and gross margins expanded 120 basis points. Our differentiated strategy also enabled adjusted EBITDA growth of 37 percent with 160 basis points of margin expansion. Amidst macroeconomic uncertainty and continued headwinds, the team did an excellent job finding ways to win, grow, and position the company for sustainable long-term growth throughout both segments. Turning to the service results in the second quarter, service revenue increased 20% and recorded its 66th straight quarter of year-over-year growth. Early results of our most recent acquisition, ESCO calibration, have been very strong. As expected, ESCO is a perfect fit, and as we like to say, right down the fairway for TransCAD. ESCO, like the Martin calibration acquisition earlier in the fiscal year, demonstrates our ability to attract and acquire highly sought-after calibration companies that expand our capabilities, geographic footprint, leadership, and most importantly, our ability to deliver long-term organic service growth. Transcat's reputation as a strategic acquirer of choice in the calibration industry continues to be an important differentiator. we firmly believe our methodology and culture around integration and synergy capture is second to none. The acquisitions of both Esco and Martin had made Transcat a very difficult company to compete with. Turning to distribution in the second quarter, distribution revenue grew 24% from high demand, especially in our rental channel. Gross margin expanded 530 basis points versus prior year, driven primarily by an increase in the mix of higher margin rental revenue within the distribution segment. The strength of our balance sheet continues to support TransCat's proven growth strategy. Our new syndicated credit facility nearly doubles TransCat's resources to execute on proven acquisition and growth strategies, automation, and many new AI programs in the works. We expect AI to generate new data streams and associated insights that will benefit both sales and operations, from productivity to capacity planning, from marketing to customer retention. We are engaged in a new level of data management and delivery. Overall, we're pleased with our second quarter performance, which, like the first quarter, remains strong despite continued economic headwinds. With that, I'll turn things over to Tom for a more detailed look at the second quarter financial results.

Thanks, Lee. I'll start on slide five of the earnings deck, which provides detail regarding our revenue on a consolidated basis and by segment for the second quarter of fiscal 2026. Second quarter consolidated revenue of 82.3 million was up 21% versus prior year as both segments grew double digits. Looking at it by segment, service revenue grew 20% despite continued economic volatility. Distribution revenue of 29.4 million grew 24%, primarily due to strong performance from the higher margin rental business. Turning to slide six, our consolidated gross profit for the second quarter of $26.8 million was up 26% from the prior year. Service gross profit increased 17% versus prior year. We continue to leverage higher levels of technician productivity in our differentiated value proposition. That said, service margins continue to be pressured by lower than historic levels of organic growth, as well as lower year-over-year Transcat Solutions revenue. Distribution segment gross profit of $9.8 million was up 48%, with 530 basis points of gross margin expansion, driven primarily from the performance in our rental channel. Turning to slide seven, Q2 net income of $1.3 million decreased $2 million versus the prior year. driven by higher interest expense and increased tax rate within the quarter. Q2 net income was negatively impacted by both one-time expenses related to the company's CEO succession plan and a higher effective income tax rate. The income tax rate was impacted by higher than anticipated excluded compensation expenses, also tied to the CEO succession plan. Diluted earnings per share came in at 14 cents, We expect additional one-time CEO succession costs and a similar resulting impact on the company's effective tax rate in the second half of fiscal 2026. We report adjusted diluted earnings per share as well to normalize for the impact of upfront and ongoing acquisition-related costs. Q2 adjusted diluted earnings per share was 44 cents. A reconciliation of diluted earnings per share to adjusted diluted earnings per share can be found and the supplemental schedules attached to this presentation. Flipping to slide eight, where we show our consolidated adjusted EBITDA and adjusted EBITDA margin, we use adjusted EBITDA, which is non-GAAP, to gauge the performance of our business because we believe it is the best measure of our operating performance and ability to generate cash. As we continue to execute on our acquisition strategy, This metric becomes even more important to highlight as it does adjust for one-time deal related transaction costs as well as increased levels of non-cash expenses that will hit our income statement from acquisition purchase accounting. Second quarter consolidated adjusted EBITDA of 12.1 million increased 37% from the same quarter in the prior year with 160 basis points of margin expansion. Please note that segment non-GAAP results are now labeled adjusted operating income, but the calculation did not change. As always, a reconciliation of adjusted EBITDA to operating income and net income can be found in the supplemental section of this presentation. Moving to slide nine, operating cash flow is up 5 percent versus the prior year, and CapEx is in line with expectations and continues to be centered around service segment capabilities, rental pool assets, technology, and future growth projects. Slide 10 highlights our strong balance sheet. At quarter end, we had total debt of $111,900,000, $38.1 million available for borrowings under our secured revolving credit facility, and a leverage ratio of 2.25x. We were pleased to close the ESCO calibration deal in the second quarter. ESCO was a coveted calibration company that is highly synergistic and fulfills all of our strategic acquisition drivers. Our expanding adjusted EBITDA margin will drive a lower leverage ratio in subsequent quarters. Lastly, our Form 10-Q will be filed November 5th after the market closes. With that, I'll turn it back to you, Lee.

All right. Thank you, Tom. As I mentioned earlier, our diversified portfolio of products and services, along with a strong financial profile, has generated consistent results over an extended period of time and through various economic cycles. This should not be understated as our business model continues to demonstrate its resiliency. In addition, we will continue to leverage technology as a competitive advantage by investing in state-of-the-art capabilities, systems, processes, and AI, all of which drive sustainable growth and efficiencies into our business model. This is the TransCat way. As previously discussed, we expect to return to high single-digit organic service growth in the second half of fiscal 2026. In addition, we would expect margin expansion as we return to historical rates of organic growth. We have a strong acquisition pipeline to support an increase in our geographic footprint, capabilities, and overall market share. And where it makes sense, we will continue to expand our addressable markets through acquisition. Our leadership team across multiple levels of the organization continues to get stronger and is a major contributor to our ability to continue to deliver sustainable long-term value for our shareholders. With that operator, we can open the call up for questions.

Thank you. And at this time, if you would like to ask a question, please press the star and one on your telephone keypad. You may withdraw your question by pressing star two. Once again, to ask a question, please press the star and 1 on your telephone keypad. We'll take our first question from Greg Palm with Greg Hallam. Please go ahead. Your line is open.

Hi. Hi. Good afternoon. Thanks for taking the questions. I wanted to start with just in terms of the quarter distribution was, I think, the highlight again, so maybe a two-parter, but Number one, what's driving the rentals acceleration? I don't know if it's, you know, how much is market related versus, you know, company specific that you're doing to drive incremental sales. And are you able to give us kind of the mix of what was rentals in the quarter as a percent of distribution?

Yeah, Greg, it's Tom. How you doing? So I think, you know, when we talk about rentals, I think there's, there's two things, you know, driving the growth there. I think one is, and we've talked about this before, right? I mean, we, We acquired Axiom test equipment about two years ago, and we made a conscious effort to focus last year on really accelerating the integration of that business. And I think part of what we're seeing is that that integrated team is performing at a very high level. I'll just say winning more opportunities that are presented to them and really helping to drive you know, some of the growth we're seeing. I think there is some, you know, rent versus buy impact to the results as well, you know, given some of the macroeconomic challenges that exist. But I think this one is heavily weighted towards execution on our part and the benefits of the integration work we did last year. And I think, you know, year over year, the Becknell rental business is also you know, performing very well on a year-over-year basis. And we're seeing, you know, consistent demand there as well.

What kind of visibility levels do you have for the second half of that business? Because obviously the revenue growth in the first half is, you know, from a number standpoint, it's pretty incredible.

Yeah. I think, you know, we started seeing in the second half of last year, we started seeing some of the benefits of of, you know, better performance, better execution, you know, post-integration. So, I think, you know, it's not a reasonable expectation to think that we're going to continue to see, you know, the growth rates we saw in the first half of the year. But, you know, I'm still expecting, you know, reasonable, you know, margin expansion, not to the tune, you know, on a year-to-date basis. We're seeing north of 500 basis points of margin expansion year over year. I think you know, we'll continue to see margin expansion, probably something more, you know, in the, you know, 250 to 300 basis points. But, you know, you should expect to continue to see good performance.

Okay. And then on the service side, you know, I think by my math, still, you know, kind of low single-digit organic decline. What gives you the confidence to to sit here today and still say, yes, we're going to return to high single digit organic in the, in the back half of the year, because it strikes me going from a low single digit decline to a high single digit. Um, that's a, that's a pretty big move, pretty big uptick.

So, so I'll, I'll take this one. Um, Craig, this is Lee. So, you know, if you factor out solutions, we like to look at it both ways. The growth was probably in the 1%, 2% range. And we're going to call that pretty stable given this environment. We have no real issues on the retention. The customers that we have today continue to do business with us as they have in the past. Where we've struggled a little bit in this fiscal year has been on retention. closing new business and starting new business. I think the economy is such that the longer time to close has become more normal. The incremental cost for our customers to change vendors at this particular time with some of the uncertainty has been a challenge. But the reason why we're still quoting in the high single-digit range is because a number of accounts have been won and recently and will come to fruition. And we expect revenue as we drive through the third quarter into the fourth. And so I think there's enough there that, you know, we have a fairly good sight lines into more growth than we've experienced in the first half, which, by the way, is what we know we've been guiding to softly for the last several quarters. This is what we thought would happen. And it's not too far off from original expectations.

Okay. Understood. That's it for me. Best of luck. Thanks.

Okay, thanks, Rick.

Thank you. Our next question comes from Max Michaelis with Lake Street Capital Markets. Please go ahead. Your line is open.

Hey, guys. Thanks for taking my questions. Congrats on the quarter. Maybe just a question towards ESCO. Maybe looking back 90 days since you guys acquired them on the 5th of August, maybe are there some things with that acquisition that have become more of a positive than you originally thought? And then maybe On the other hand, some negatives that you, or maybe some obstacles you've run in with the ESCO acquisition as well.

Yeah, this is Lee Max. Very, very few obstacles. I mean, we, in addition to acquiring the company, we acquired a really good management team. They understand their business. And that business has done really well. We don't really count in our organic growth numbers when our acquisitions grow in the first year, but We've had really impressive growth from Esco. Actually, we have from Martin as well. So both those companies are in a double-digit range for growth since we acquired them, and I expect that to continue. And as far as negatives, I really can't think of any. I mean, there's always some challenges just trying to get to know people, but most of the planning sessions have gone well. Our sales are integrated almost day one without any real issues whatsoever that have been, you know, at least come to my attention. I think it's It's been as smooth as we've experienced, and I think you're going to get that with the better quality companies. We saw it with Martin. We're seeing it again. That's almost commonplace, and it's part of, you know, you get what you pay for, and we've been pleased, really pleased.

Yeah, and I guess kind of go back to sort of the question Greg had just with the back half of the second year – second half of the year with service returning to organic growth. And you talk about some economic uncertainty barring any economic uncertainty further obstacles. I mean, like, what is that? Like, how would you define that of, like, this economic uncertainty stalling you guys from growing in the second half of the year? I mean, just kind of getting a gauge on, like, what is kind of what we should be looking for, I guess, to kind of model out the second half of the year for service growth.

Well, I think what we're alluding to, Max, is maybe kind of more of what we've seen in the first half of the year. A lot of uncertainty around tariff levels and where things are going from an interest rate environment standpoint. I think it's got some of our customers reacting a little slower than what we normally see. And I think with recent news, I think we're expecting that to improve some, but it just seems like in this environment we're operating in, things are subject to changes at any point in time.

Have you seen customer sales cycles shrink since maybe three, four months ago up until now?

I don't think the sales cycle has shrunk. I think we've experienced for the last half a year to three quarters of a year, we've had consistent delays for customers who originally expressed, yeah, yes, we're going to go with Transcat. We like the value proposition. Here's when we're going to make the change. And then it seems to get delayed and delayed again. And so, you know, I've seen this before. It's not uncommon. It's why we try not to focus quarter to quarter, try to look at the bigger picture of who we are, where we're headed, where we've been in terms of a service company. We love the position we're in. But you're going to have... economic cycles like this that are just going to be a little bit softer than than you like but our revenue and retention relative to our revenue relative to retention has been solid we've made two terrific acquisitions in the space um you know 20 growth in services this is what you want and to do it in an economic you know environment like this i think says a lot about our company which i tried to allude to in the script so um we're we're right on target You know, and I consider this really good performance given some of the headwinds we have. So we'll see how it all plays out. You know, we are seeing sight lines. We are seeing signs of customers, you know, actually giving us the go, you know, on new orders. And that's where the confidence is coming from in the back half.

Awesome. Thanks, guys. Great quarter. Thanks, Mac.

Thank you. Our next question comes from Ted Jackson with Northland Securities. Please go ahead. Your line is open.

Thanks very much. It's not really a question, but it is a question, but just with regards to rental, the rental business has been going really well. You keep it buried in distribution. What's going to get you to break that out? And why I ask is, You know, I mean, it's becoming a pretty important piece of business and it's an important piece of your CapEx. You know, I don't mean I'm not mistaken. I don't think you even you break your rental CapEx out. But, you know, the CapEx is, you know, it's substantially larger than it was before. You're clearly investing in your rental assets. You know, I mean, at what point do we get to where you're going to start showing a little more about that so we can get a better handle on you know, the return you're getting off that investment rather than deciding it just via growth right from the top. So that's my first question.

Yeah. Hey, Ted, it's Tom. So, you know, one of the beauties of the rental business, right, and part of the way that we got this business started, right, is that to a large extent, you know, we're renting equipment that we would otherwise sell through the distribution channel, right? So there was a low cost of entry, right? We could take something off the distribution shelf and put it on the rental shelf. And if there was a customer that was willing to pay, you know, to rent it, we would be able to do that in a kind of seamless way. So, and, you know, what that, the kind of the beauty in having that flexibility and be able to execute that and grow that business from nothing to something is also, you know, internally there's a lot of, I'll just say, blurred lines in terms of, you know, we have the same people supporting, like in our warehouse, right, it's the same people supporting distribution and supporting rental. You know, we're working with the same vendors. You know, there's a lot of overlap between those businesses, and so it's not easy to necessarily kind of break it apart. And, you know, I think at some point in time, you know, we may be there, but currently it's kind of operated as one business, you know, internally from a resource standpoint, you know, so on and so forth. I think, you know, when we talk about CapEx, you know, I would just think in the context of, you know, about a third of our CapEx budget is allocated towards rentals. And you know, when we talk about rentals, you got to think about CapEx from a net standpoint, right? Because anytime you have an effective rental business, you also have to have a way to, you know, identify slow moving equipment and have a used program to, you know, churn that equipment out, generate cash and reinvest it in, you know, assets that do have demand, right? So I would just say on a net basis, you know, it's about a third of our CapEx budget. Yep.

And what is it in terms of a piece of your PP&E? You know, I mean, because it would not be in your inventory. It would be in your, you know.

I don't have that number off the top of my head, but I can follow up with you.

I mean, you get where I'm going with it. I mean, it's turning into like, you know, it's an important turning into an important business driver. And I just think there needs to be some more metrics around it. That's all. The next question is on the solutions business. You know, I mean, it's been. Now we have all these new headwinds, but prior to the election and everything that's taken place, it's been a drag for the business for quite a bit of time. You've signaled in the past that it's come to a point where it's stabilized. Can you give a little more color? When you look at that solutions business for the third quarter, you know, what was it relative to the second quarter? How did it come in? What was it relative to the prior year period? And, you know, kind of how is it performing vis-a-vis your expectations when you went into the quarters?

Yeah, this is Lee Ted. I think it's in line. I'll say it's within pretty close range of our expectations. you know, we wanted the business to be stable, meaning, you know, it had gotten to a certain point, there was a significant drop-off, and now we're not seeing drop-offs anywhere near what we saw, you know, back a year ago. That's what we're shooting for. From a, you know, sequential standpoint, if you look from Q1 to Q2, you did see stability, which is what we expected, what we guided towards. If you look year over year, you still see declines, but I'm going to say and characterize them within the range of what we thought were the possible expectations. So that business, it's an important business because in time and over time, it will help us drive organic service growth. And we like it for that reason. But we would expect once we get to the place where we think the business can go, its growth rate should be similar than our normal, than what our typical overall growth rates are for calibration services. We'll see. But right now, you know, it's close and I would say it's in range of the expectations that we set a year ago.

So if we, if let's just say it was flat sequentially and it just trends, you know, flat, I mean, not saying that that's your expectation or anything, but if it did that, at what point would you, you know, would it stop being a drag with regards to growth metrics in the top line?

Yeah. I mean, if it, if it, if it was a flat business, then it's a business that, that, you know, we're going to maintain a flat business. It's going to be for one reason only, and that is that it's a means to an end and it drives calibration business for us, and therefore it's a channel that we see value in. We don't see it today as a flat business in the long term. I think once we get it stabilized and, you know, get everything lined up the way we think we're capable of doing, that should be a growth business.

No, no, I preface my question with that. I'm just kind of, where I'm driving to is, you know, to be honest, at what point does it stop being a drag with regards to top-line growth? That's really where I'm coming at with it, given the idea that if you'd stabilize it.

Yeah, very soon. I mean, as we get through this fiscal year and the back half of the year, that's exactly what we would expect. So we shouldn't be talking about the solutions business like we've talked about it for last year as we get through third and fourth quarter. This is the time when we solve the declines. This is when we thought we'd get stabilized, we're close. So I think, yeah, that conversation is going to be over in the next quarter or two.

Okay. And then the last thing, with regards to your transitions and stuff and the kind of added expenses and impacts on tax and stuff, that's not in your pro forma calcs for earnings at all? It's still flowing through the bottom line in your pro forma calcs, or is that being removed?

It's adjusted out for the adjusted EBITDA number, and it's adjusted out for the adjusted EPS number per the reconciliation.

Okay. I just wanted to make sure that, yeah, so that, what is it, 44 cents of adjusted earnings, that has that removed. That's what I was asking.

That's correct.

That's correct. All right. Hey, thanks very much. I'll step out of line. Take care.

Thank you. Our next question comes from Martin Yang with Oppenheimer. Please go ahead. Your line is open.

Martin Yang Hi. Thank you for taking my question. So I wanted to make sure I understand the different growth dynamics between newly acquired ESCO and Martin and then your other service business. Other service systems overall have organic growth rate at low single digits, But you also mentioned Esken Martin's double-digit growth. So what created such different growth profiles?

Anything you can do to bridge to?

Okay, so I guess the question is, why are those businesses doing well?

Yeah, so much better than the rest of your service.

Right. So, you know, there's probably a couple of reasons that I would point towards. Martin, you know, first and foremost, it really depends. Like, for example, ESCO is in the New England area, which is their strength. And there are certain life science customers that are doing very, very well. And, you know, we do a lot of research. We churn a lot of data out. to figure out which customers are growing, which ones are descending, which ones, you know, have troubles, which ones are building plants, which ones are not. And we knew in due diligence that their portfolio of customers was a really strong portfolio. We expected them to grow. You know, some of the ones that we have are just a little bit different. We have some of the same customers, but in some cases they're different. And part of what made Esco, Esco different is that the strength of their customer base and their trajectory of growth. So that's not surprising to us. Really the same thing with Martin, too. In the particular region that they're in, which is Minneapolis, the life science companies that are there and the med device primarily that are there are companies that are performing really well. So as you go around the country, I mean, we have 34 commercial labs. You know, I would say, you know, 80% of our, don't hold me to this number, but a large percentage of our commercial labs are growing. You know, it's just, we have different pockets in different regions for different reasons where, you know, we've got some headwinds and that's normal. So we bought those companies for a reason and we expected them to grow even with these headwinds and they're doing that. So they're meeting our expectation.

Got it. Another question on the next quarter. So Part of the market's performance will be characterized as organic growth come next quarter, correct?

That's correct. The end of the quarter, yeah.

Yeah. Are you able to quantify how much that can contribute to your organic growth target?

You know, I would just say, Martin, it's, you know, 25% million on a base of um on a full year on a base of um you know 225 or 230 million dollars of of service revenue right so you know it's it's it kind of gets diluted because it's you know it's 10 of the total um but um yeah i don't i don't know how else how else to characterize it i don't have a specific martin to

Would you expect Martin and ESCO to sustain their double-digit growth?

I think we expect them to continue to perform well.

But I'm not sure how comfortable I am saying that they're continuing to perform, you know, double-digit growth, right? I mean, because every year you do that, you know, the base gets larger. And at some point, what Lee just said about their customer base, we could see some slowdowns there, but we expect them to continue to perform well. I'm just not sure we could say that they're going to continue to perform in the double-digit range.

Understood. Thank you, Tom. Thank you, Lee.

Thank you. Thanks, Martin.

Thank you. And we do have a follow-up from Greg Palm with Greg Hallam. Please go ahead. Your line is open.

Yeah, thanks. Just a couple of follow-ups. On distribution, you know, I feel like every year it almost sort of builds throughout the year. And so I guess my question is, I mean, from a seasonality standpoint, do you expect anything different this year, or is there anything – You know, any reason why you would have maybe higher than normal first half revenues? I don't know if that's just timing or what you sort of see right now based on, you know, visibility levels, but just kind of curious how you think distribution plays out more specifically in the second half. You're right.

I think we're going to see it continue to be strong. You know, I mean, typically third quarter is a strong quarter for historically for distribution. But when we look at, we look at pulse, so pulse for us would be, you know, things like daily quotes and activity levels and so on and so forth. And the pulse for distribution continues to be strong into third quarter, which is what we expected. And I don't see anything right now on the radar and I'll, and I'll defer to Tom as well. that would lead me to believe there's a drop-off coming from the strong performance we've had.

Certainly not a drop-off, but I think, as I mentioned earlier, I think when we talk about rentals and some of the benefits that we're seeing from the execution as a result of our integration, we started to see some meaningful acceleration and growth towards the back half of last year. So I think as we look ahead to the second half of this year, I don't think You know, we're certainly not going to see, you know, things reverse, but I think the growth will moderate a little bit. And that's why, you know, I'm also not expecting, you know, 500 plus basis points of margin expansion. I think, you know, something, as I mentioned earlier, 250 to 300 is probably, you know, more reasonable on, you know, slightly lower growth.

Yep. Okay. Fair enough. And then I was wondering if you could comment at all on the competitive landscape in the service segment with a couple of things going on. I don't know how that sort of relates to your expectations of accelerated organic service growth, but just kind of curious to get your thoughts there.

Well, you know, when you look at the competitive landscape, you know, there's, there's a group of traditional customers that we've always competed against, you know, you're talking to Simcoe's the, the Tektronix, the Trescals, and, and, you know, from the information that we gather from the marketplace, um, and at least a couple of cases, you know, you know, those companies are struggling a bit, you know, with, with these particular headwinds that we have. Um, and there's reasons for that. I mean, over the longer term, Transcat has been so committed to the calibration market. We've invested year in and year out, not only in our people and our training, but the assets we put in, capabilities, the types of acquisitions we make. The competitors that I just referred to have not done that. They haven't acquired companies and increased capabilities. They have not put a lot of capital into their businesses. So when you hit, look, this is my opinion from the information that I have. And so when you come up against headwinds, we're much better suited to withstand them than that group of competitors. And I think we've done an excellent job I'm doing that. I'm very proud, actually, of the organization. And, yeah, maybe our organic growth is in a flat or low single-digit range, but I think relative to others that are traditional.

Much better diversified.

Better positioned, better diversified. I use the word diversified a couple times in my script for that very, very reason, Greg. Now, we also compete these days with a new group of competitors. There's some private equity in our business space who have sort of consolidated several, in some cases, smaller companies. But again, longer term, if you don't integrate those companies and you can't take advantage of the synergies, particularly the growth synergies, I think you're going to end up with the same scenario. So if you invest the way we invest, you integrate the way we integrate, acquire the types of companies we acquire, I think we're going to continue to fare well with the old competition, which I described, and the new competition, which is more PE-backed. I like the position we're in. It doesn't mean we're not going to face headwinds like everybody else. I just think we're going to fare better, and in the longer term, we're going to be in a better position. And we've proven that over time, and I think we're proving it right now.

Yeah, okay, makes sense. All right, appreciate the call there. Thanks. No problem.

Thanks, Greg.

Thank you. And this will conclude our Q&A session. I will now turn the call back to John Howe.

Thank you all for joining us on the call today. We have a number of upcoming conferences in the month of November. On November 11th, we will be attending the Bayard 2025 Global Industrial Conference in Chicago. On November 17th, we will be attending the Raymond James Sonoma Small Cap Summit in Sonoma, California. And finally, on November 19th, we will be attending the Stevens Annual Investor Conference in Nashville, Tennessee. For those attending the conferences, we look forward to seeing you there. Otherwise, feel free to reach out to us at any time. Thanks again for your interest in TransCAD.

Thank you. And this does conclude today's program. Thank you for your participation. You may disconnect at any time.