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.