Transcat, Inc. · NASDAQ:TRNS
Transcat — ROTH 28th Annual Conference (March 2016)
27 slides from Transcat's conference presentation, Mar 16, 2016
Slide 1: ROTH 28th Annual Conference
March 16, 2016 ROTH 28th Annual Conference Lee D. Rudow President and CEO Michael J. Tschiderer Vice President of Finance 1
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains forward‐looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward‐looking statements are not statements of historical fact and thus are subject to risks, uncertainties and assumptions that often are identif
Slide 3: Leader in Fragmented Calibration & Compliance Service Market
Leader in Fragmented Calibration & Compliance Service Market and Distributor of Test, Measurement and Control Instrumentation Achieving critical revenue mass in the Service segment Long‐term operating earnings to grow faster than revenue Strong leadership in place to drive company to next leve
Slide 4: Two Complementary Segments
Two Complementary Segments Q3 FY 2016 TTM Revenue: $121.6MM Service Distribution $56MM $65MM (46%) (54%) Double digit Service growth Service driven by regulation Unique value proposition Strong cash generation Strong operating leverage Leverage between segments © 2016 Transcat Inc. 4
Slide 5: Calibration Services Market
Calibration Services Market $1.0 Billion Addressable Market¹ #2 in Market Share by Revenue for 3rd Party Service Providers2 25% 24% 22% 40% Transcat 20% 14% 35% 10% 10% OEMs Tektronix Transcat Regionals ($5mm‐$15mm) 3rd Party Service Providers Trescal Others (highly fragmented; In‐house Laboratories
Slide 6: Unique Service Value Proposition
Unique Service Value Proposition Fully Accredited Calibration Provider with Highest Quality in the Industry Flexible Service Delivery Options: Permanent on‐site Periodic on‐site Mobile In‐house Pickup & Delivery © 2016 Transcat Inc. 6
Slide 7: Broad and Diverse Blue Chip Customer Base
Broad and Diverse Blue Chip Customer Base Percentage of Service Revenue * Industrial Life Science / 29% FDA‐regulated 32% Energy / Utilities 8% Other Chemical 7% 24% *Revenue and Percentages as of FY 2015 © 2016 Transcat Inc. 7
Slide 8: Full Suite of Products and Services
Full Suite of Products and Services Unique Among Competition New Validation & Instrument Calibration Product Laboratory Calibration & Services Distribution Services Rental Superior Quality Serve an expanded Life Science market Mission critical services © 2016 Transcat Inc. 8
Slide 9: Financial Results
Financial Results 9
Slide 10: Executing our Strategy
Executing our Strategy Growing Revenue & Operating Income ($ in millions) Consolidated Revenue Consolidated Operating Income $118.5 $123.6 $121.6 $110.0 $112.3 $6.8 $7.2 $6.7 $5.4 $5.9 FY 2012 FY 2013 FY 2014 FY 2015 Q3 FY 2016 FY 2012 FY 2013 FY 2014 FY 2015 Q3 FY 2016 TTM TTM Distribution Service
Slide 11: Service Segment Operating Leverage
Service Segment Operating Leverage ($ in millions) Service Revenue $51.8 $56.1 Has grown to 46% of total $48.2 revenue $36.4 $40.7 27 consecutive quarters of year‐over‐year growth FY 2012 FY 2013 FY 2014 FY 2015 Q3 FY 2016 Strong operating leverage: TTM Revenue: +11% Service Operating Income O
Slide 12: Leveraging Distribution to Drive Growth
Leveraging Distribution to Drive Growth ($ in millions) Distribution Sales Sales impacted by: $73.6 $71.6 $71.8 $70.3 − Soft oil and gas market $65.5 − Strong U.S. dollar Opportunities – Rental service FY 2012 FY 2013 FY 2014 FY 2015 Q3 FY 2016 TTM – Expanding SKUs Distribution Operating Income
Slide 13: Strong Cash Generation and Bottom-Line
Strong Cash Generation and Bottom‐Line ($ in millions) Adjusted EBITDA* Consolidated Adjusted EBITDA $10.0 $10.3 $11.0 $8.8 $8.9 CAGR of 6% $2.0 $3.1 $4.6 $6.1 $7.3 Service: +41% CAGR $6.8 $5.8 $5.4 $4.1 $3.7 Distribution segment generates FY 2012 FY 2013 FY 2014 FY 2015 Q3 FY 2016 significant
Slide 14: Balance Sheet Supports Acquisition Strategy
Balance Sheet Supports Acquisition Strategy ($ in millions) Long Term Debt $12.2 $30 million revolving credit $10.5 facility $8.0 $7.6 $3.4 Financial flexibility – Meets working capital and FY 2012 FY 2013 FY 2014 FY 2015 Q3 FY 2016 capital expenditure needs Completed two acquisitions for Debt
Slide 15: Disciplined Capital Deployment
Disciplined Capital Deployment ($ in millions) Capital Expenditures $4.0‐$4.5 FY 2016 CapEx $3.5 $2.7 – Increasing lab capabilities $2.0 $1.4 $3.8 FY 2016 – Adding lab capacity YTD – Assets for rental business FY 2012 FY 2013 FY 2014 FY 2015 FY 2016E* Objective: Consistently generate returns in
Slide 16: Generating Cash to Drive Key Investments
Generating Cash to Drive Key Investments FY 2009 to Q3 FY 2016 ($ in millions) $70 $60 $2.4 ($17.5) $12.9 $50 $19.6 ($32.6) $40 $30 $23.4 $20 ($8.2) $10 $0.2 $0.2 $0 FY2009 Cash & Net D&A and Financing/Other FX Effect Capital Business Repurchase of Q3 FY2016 Investments, Income Working Capital Expen
Slide 17: Growth Strategy and Outlook
Growth Strategy and Outlook 17
Slide 18: Service Organic Growth Strategy
Service Organic Growth Strategy Taking market share Organic Growth Expanding addressable market Strategy Outsourcing of internal labs Upgraded sales talent Integrated sales model – Acquisition Enterprise sales Strategy Leveraging Distribution segment Growth‐focused investments © 2016 T
Slide 19: Digital Transformation to Drive Growth
Digital Transformation to Drive Growth E‐commerce and CMS platform Flexible and adaptable to changing e‐commerce market Robust promotional and lead nurturing engine Strong SEO integration Increased efficiency in content management Goals: ‐ Increase relevant traffic ‐ Higher conversion rate
Slide 20: Service Acquisition Strategy
Service Acquisition Strategy Drivers: Organic Growth Strategy − Geographic Expansion − Increased Capabilities /Expertise − Bolt‐On – Leverage Infrastructure Majority of opportunities: Acquisition Revenue range of $500K – $5MM Strategy Criteria: 4‐6x EBITDA Target IRR of 15% © 2016 Transcat Inc
Slide 21: Executing Acquisition Strategy
Executing Acquisition Strategy Calibration Technologies CMC Anacor ACA Instrument Compliance Ulrich Spectrum Westcon Tmetrix Services Services Metrology Technologies FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2015 FY 2016 United Wind Newark Cal‐Matrix Apex Dispersion Scale and Turbine Calibration Me
Slide 22: Acquisition Drivers
Acquisition Drivers Geographic Increased Leveraged Expansion Capabilities Infrastructure Dispersion Laboratory Spectrum Technologies Anmar Metrology Calibration Technologies Ulrich Metrology Cal‐Matrix Metrology © 2016 Transcat Inc. 22
Slide 23: Long-term Objectives
Long‐term Objectives* Financial performance (within 5 years) − $175 million to $200 million revenue − Double‐digit EBITDA margins Service segment − Acquisition strategy and organic sales plan to drive segment double‐digit top line growth Distribution Segment − Moving to more diversified portfo
Slide 24: ROTH 28th Annual Conference
March 16, 2016 ROTH 28th Annual Conference 24
Slide 25: Supplemental Information
Supplemental Information 25
Slide 26: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in thousands) Q3 FY 2016 FY 2012 FY 2013 FY 2014 FY 2015 TTM Service Operating Income (loss) $ (175) $ 1,311 $ 2,379 $ 3,693 $ 4,483 +Depreciation & Amortization 1,959 1,740 2,144 2,362 2,769 +Other (Expense) / Income (37) (84) (141) (138) (61) +Noncash Stock Comp 2
Slide 27: Seasoned Executive Team Driving Growth
Seasoned Executive Team Driving Growth 27 Years of Industry Experience John J. Zimmer Lee D. Rudow Demonstrated Growth Record Senior VP of Finance and CFO President & CEO Joined Transcat in 2011 Joined Transcat in 2006 Retiring 3/27/2016 Scott D. Sutter Rob A. Flack Michael J. Tschiderer Vice