Transcat, Inc. · NASDAQ:TRNS
Transcat — Investor Presentation (August 2017)
28 slides from Transcat's investor presentation, August 2017
Slide 1: Investor Presentation
August 2017 Investor Presentation Lee D. Rudow President and CEO Michael J. Tschiderer Chief Financial Officer NASDAQ: TRNS 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. Forward-looking state
Slide 3: A Leader in Calibration & Laboratory Instrument Service Market
NASDAQ: TRNS A Leader in Calibration & Laboratory Instrument Service Market and Value-Added Distributor of Test, Measurement & Control Instrumentation Service segment is our primary growth engine Achieving high-single digit organic revenue growth Acquisitions will continue to be part of our gr
Slide 4: Two Complementary Segments
Two Complementary Segments Service Distribution Double-digit growth New test equipment Recurring revenue stream Rentals Strong operating leverage Used equipment Driven by regulation Strong cash generation Q1 FY 2018 TTM Revenue: $147.0M (Service 49%, Distribution 51%) Unique value proposition Le
Slide 5: Taking Market Share
Taking Market Share $1.3 Billion Addressable #2 in Market Share by Revenue for Calibration Services Market¹ 3rd Party Service Providers2 18% 25% 40% 26% (fragmented) OEMs 3rd Party Transcat Service 15% Providers 22% (fragmented) 35% 11% In-house 8% Laboratories Tektronix Transcat Regionals ($5mm-$15
Slide 6: Flexible Service Value Proposition
Flexible Service Value Proposition 22 Locations to Serve Customers in the U.S., Canada and Puerto Rico Flexible Service Ottawa Montreal Delivery Options: Boston Permanent on-site Portland Toronto Rochester Periodic on-site Milwaukee Pittsburgh Philadelphia Mobile Harrisburg Ft. Wayne In-hous
Slide 7: Broad and Diverse Blue Chip Customer Base
Broad and Diverse Blue Chip Customer Base Percentage of Service Revenue* 5% Aerospace & Defense 6% Chemical/Process 7% Energy/Utilities 18% Other 21% Industrial 43% Life Science / FDA-regulated © 2017 Transcat Inc. * Company estimates 7
Slide 8: Unique Value Proposition
Unique Value Proposition Full Suite of Products and Services for Life Science, Industrial Manufacturing and Alternative Energy Markets Calibration Services New Instrument Calibration Superior Quality Validation & Laboratory Product Distribution Services and Rental © 2017 Transcat Inc. 8
Slide 9: Technology as a Competitive Advantage
Technology as a Competitive Advantage State-of-Art New, Seasoned Web Presence IT Leadership and Digital Transformation Proprietary “C3” Portal for Adopting “Lean” Customer Asset Best Practices Management © 2017 Transcat Inc. 9
Slide 10: Financial Results
Financial Results TRANSCAT Trust in every measure
Slide 11: Record Consolidated Results
Record Consolidated Results ($ in millions) Consolidated Revenue Consolidated Operating Income $143.9 $147.0 $7.9 $7.9 $118.5 $123.6 $122.2 $6.7 $6.8 $6.3 FY 2014 FY 2015 FY 2016 FY 2017 Q1 FY 2018 FY 2014 FY 2015 FY 2016 FY 2017 Q1 FY 2018 TTM TTM Distribution Service © 2017 Transcat Inc. *FY 2014
Slide 12: Service Segment Continues to Deliver
Service Segment Continues to Deliver ($ in millions) Service Revenue $72.4 Solid organic revenue growth $71.1 $59.2 $48.2 $51.8 Robust order level and pipeline throughout Q1 33 consecutive quarters of YOY FY 2014 FY 2015 FY 2016 FY 2017 Q1 FY 2018 revenue growth Service Operating Income Revenue: +15
Slide 13: Distribution Sales Up Double Digits
Distribution Sales Up Double Digits ($ in millions) Distribution Sales Diversification strategy drives sales growth and an improving $71.8 $72.8 $74.6 $70.3 US industrial market $63.0 Higher demand from core customers Growing rental and FY 2014 FY 2015 FY 2016 FY 2017 Q1 FY 2018 used equipment busin
Slide 14: Strong Cash Generation and Bottom-Line
Strong Cash Generation and Bottom-Line ($ in millions) Adjusted EBITDA¹ $14.5 $14.8 +13% Adjusted EBITDA (CAGR) $10.0 $10.3 $10.6 +25% Service (CAGR) $9.6 $9.5 $4.6 $6.1 $7.5 $5.4 $5.3 Net income: +4% CAGR $4.1 $3.1 $4.9 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Q1 Distribution Service TTM Expect tax
Slide 15: Financial Flexibility Supports Growth Strategy
Financial Flexibility Supports Growth Strategy ($ in millions) Total Debt Acquisitions: $13.9M in FY16; $7.0M in FY17 $32.0 $6.4 million available on credit facility as of $27.3 $19.1 June 24, 2017 $12.2 $7.6 Total debt to TTM Adjusted EBITDA¹ 2.2x Cash generation of $4.8M (Q1 FY18 TTM) FY 2014 FY 2
Slide 16: Generating Cash to Drive Key Investments
Generating Cash to Drive Key Investments FY 2009 (start of acquisition strategy) to Q1 FY 2018 ($ in millions) $100 $90 $32.6 $2.0 ($25.1) $80 $70 ($50.6) $60 $20.9 $50 $40 $30.3 $30 $20 ($9.7) $10 $0.2 $0.6 $0 FY2009 Cash & Net D&A and Financing/Other FX Effect Capital Business Repurchase of Q1 FY
Slide 17: Growth Strategy and Outlook
Growth Strategy and Outlook 17
Slide 18: Expanded Addressable Distribution Market
Expanded Addressable Distribution Market Why the pivot in strategy? Great synergies between Distribution and Service segments Leverage of current infrastructure Higher gross margins on used and rental equipment Well indexed web domain Differentiation through “value add” © 2017 Transcat Inc. 18
Slide 19: Diversification Driving Distribution
Diversification Driving Distribution Strong Rental Revenue Growth ($ in millions) Rentals provide higher margin $2.6 profile $2.3 Enhances value proposition Excalibur acquisition added incremental rental platform for higher-end electronic equipment $0.9 Used equipment business further $0.4 complemen
Slide 20: Drive Double-Digit Service Growth
Drive Double-Digit Service Growth Dominate our local markets with integrated sales/ operations focus Organic Growth Strategy Take market share from 3rd party providers and OEMs Capture outsourcing of internal labs Expansion of RF microwave Geographic expansion and high-end electronics Acquisition In
Slide 21: Executing Acquisition Strategy
Executing Acquisition Strategy Calibration Excalibur CMC Anacor Technologies Engineering ACA Instrument Compliance Ulrich Spectrum Westcon Tmetrix Services Services Metrology Technologies FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2015 FY 2016 FY 2017 United Wind Newark Cal-Matrix Apex Dispersion Sc
Slide 22: Recent Acquisition Drivers
Recent Acquisition Drivers Increased Geographic Capabilities and Leveraged Expansion Expertise Infrastructure Excalibur Engineering Dispersion Laboratory Spectrum Technologies Anmar Metrology Calibration Technologies © 2017 Transcat Inc. 22
Slide 23: Outlook -- Strong Momentum
Outlook* -- Strong Momentum Leverage technology to drive Operational Excellence Improve customer experiences, expand organic growth potential, and strengthen our acquisition integration process Fortifying structure with technology, people and processes Expect solid organic growth in the Service segm
Slide 24: Investor Presentation
August 2017 Investor Presentation 24
Slide 25: Supplemental Information
Supplemental Information 25
Slide 26: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in thousands) FY 2014 FY 2015 FY 2016 FY 2017 Q1 FY18 TTM Net Income $ 3,984 $ 4,026 $ 4,124 $ 4,522 $ 4,472 + Interest Expense 130 234 247 719 818 + Other Expense / (Income) 129 111 48 51 56 + Tax Provision 2,462 2,397 1,883 2,642 2,561 Operating Income $ 6,705 $ 6
Slide 27: Segment Adjusted EBITDA Reconciliation
Segment Adjusted EBITDA Reconciliation ($ in thousands) FY 2014 FY 2015 FY 2016 FY 2017 Q1 FY18 TTM Service Operating Income $ 2,379 $ 3,693 $ 4,155 $ 4,769 $ 4,610 + Depreciation & Amortization 2,144 2,362 3,216 4,660 4,523 + Other (Expense) / Income (141) (138) (64) (55) (56) + Noncash Stock Compe
Slide 28: Seasoned Executive Team Driving Growth
Seasoned Executive Team Driving Growth Lee D. Rudow More than 31 years of industry experience President and Demonstrated growth record Chief Executive Officer Joined Transcat in 2011 Ben Hawley Rob A. Flack Jennifer J. Nelson Mike W. West Michael J. Tschiderer Vice President Vice President of