Executive Summary

Q4 FY25: Revenue up 8.8% to $77.1M, Service revenue +11.3% with gross margin +50bps to 36.2%, Adjusted EBITDA +9% to $12.7M; GAAP diluted EPS fell to $0.48 on higher OpEx, while adjusted EPS was $0.64 .
Street comparison: Revenue modestly above consensus ($77.1M vs $76.4M*) and adjusted EPS materially above ($0.64 vs $0.34*). GAAP EPS ($0.48) was below adjusted, reflecting acquisition and amortization impacts. Values retrieved from S&P Global.*
Mix headwind: Distribution gross margin declined 210bps to 28.2% (mix and product sales), pressuring consolidated gross margin (-30bps YoY to 33.6%) despite Service strength .
Outlook: Management reiterated expectation for high single-digit Service organic growth once macro normalizes; FY26 tax rate guided to 27–29%; net CapEx expected at $14–$16M; leverage ratio 0.78x with $49.1M availability on revolver .
Catalyst narrative: Service margin expansion from automation and productivity; rental platform resilience; acquisition integration (Martin) progressing ahead of schedule .

What Went Well and What Went Wrong

What Went Well

Service segment delivered double-digit revenue growth (+11.3% to $52.0M) and margin expansion (+50bps to 36.2%) driven by calibration demand and automation/productivity gains .
Adjusted EBITDA increased 9% to $12.7M; Service adjusted EBITDA +16.5% to $10.2M, highlighting inherent operating leverage in Services .
Management highlighted Martin Calibration as highly synergistic and integration “ahead of schedule,” expanding Midwest presence and dimensional/mechanical expertise; quote: “The early Martin integration activities are going very well and ahead of schedule.” .

What Went Wrong

GAAP diluted EPS declined to $0.48 (from $0.77) as OpEx rose 27.9% YoY on acquired business expenses, higher amortization, and sales incentives; adjusted EPS down slightly to $0.64 (from $0.66) .
Distribution gross margin fell 210bps to 28.2% on product sales mix; Distribution adjusted EBITDA -13% YoY in Q4 .
Macro volatility and tariffs created near-term uncertainty; management cautioned customers may be pulling forward orders before tariffs, complicating read-through in Distribution .

Financial Results

Metric	Q4 2024	Q3 2025	Q4 2025
Revenue ($USD Millions)	$70.913	$66.754	$77.134
GAAP Diluted EPS ($)	$0.77	$0.25	$0.48
Adjusted Diluted EPS ($)	$0.66	$0.45	$0.64
Gross Margin (%)	33.9%	29.5%	33.6%
Adjusted EBITDA ($USD Millions)	$11.682	$7.914	$12.745
Adjusted EBITDA Margin (%)	16.5%	11.9%	16.5%

Segment breakdown:

Segment	Metric	Q4 2024	Q3 2025	Q4 2025
Service	Revenue ($M)	$46.732	$41.557	$52.010
Service	Gross Margin (%)	35.7%	29.7%	36.2%
Distribution	Revenue ($M)	$24.181	$25.197	$25.124
Distribution	Gross Margin (%)	30.3%	29.1%	28.2%

KPIs (reported for FY25 unless noted):

KPI	Value
Operating Cash Flow (FY25, $M)	$38.985
Operating Free Cash Flow (FY25, $M)	$25.8 (up $6.5M YoY)
Total Debt (Quarter-end, $M)	$32.7
Cash & Equivalents (Quarter-end, $M)	$1.5
Revolver Availability (Quarter-end, $M)	$49.1
Leverage Ratio (quarter-end)	0.78x

Note: TRNS issued a corrected press release clarifying incremental Service revenue from acquisitions in Q4: $6.8M (not $10.4M, which is the FY amount) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Service organic revenue growth	FY26	Return to high single-digit by first half FY26	High single-digit once macro normalizes; resilient recurring revenue base	Maintained (timing nuance)
Income tax rate	FY26	N/A	27%–29%	New
Net CapEx	FY26	N/A	$14–$16M expected	New
Distribution margins	2H FY25 / forward	North of 30% expected in 2H FY25	“Consistently north of 30%” achievable with rental mix	Maintained/clarified
Solutions/NEXA trajectory	FY26	Return to growth 1H FY26	Integration underway; improving pipeline; return to growth expected	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3 FY25)	Current Period (Q4 FY25)	Trend
Automation & productivity	Targeted margin gains; mix headwinds from hurricanes/NEXA; reiterated automation as enabler	CEO: “around the fourth inning”; continued coding and lab rollouts; key to sustained margin expansion	Positive, mid-inning progress
Macro/tariffs	Q2: no systemic macro softness outside NEXA; Q3: December timing created shortfall	Tariffs add uncertainty; potential order pull-forward; distribution holding up but read-through murky	Mixed/volatile
Rental/platform	Q2: Becnel hurricane impact; margins expected >30% in 2H	Rental interest may rise in tough macro; CFO sees path to >30% margins with mix	Improving mix supports margins
Solutions/NEXA	Q2: underperformance; integrate into Transcat sales/marketing; rename Transcat Solutions	Integration continuing; “all roads lead to calibration”; expected contribution to organic Service growth	Repair progressing
M&A (Martin)	Q3: closed; largest deal; Midwest footprint; dimensional/mechanical capabilities	Integration ahead of schedule; synergy drivers reaffirmed	Positive integration
Working capital	Q3: inventory focus to improve CCC	Strong operating FCF, leverage 0.78x; ample revolver capacity	Strengthened liquidity

Management Commentary

“Service gross margins expanded 50bps on double-digit revenue growth in Q4… Q4 EBITDA grew 9%… Operating free cash flow expanded by $6.5 million… leverage ratio 0.78x and $49 million available from our credit facility” — CFO Tom Barbato .
“Calibration services achieved double-digit revenue growth… margin expansion driven by… automation and process improvement” — CEO Lee Rudow .
“The macroeconomic backdrop, including tariffs, has become more uncertain… however, our business model is resilient… recurring revenue in highly regulated markets” — CEO Lee Rudow .
“Early Martin integration activities are going very well and ahead of schedule” — CEO Lee Rudow .

Q&A Highlights

Cadence and pipeline: January saw bounce-back from December pent-up demand; pipeline strong with some delays amid volatility; expectation to return to historic growth as macro normalizes .
Distribution/tariffs: Current steadiness may reflect tariff-related pull-forward; rentals could benefit in a tighter CapEx environment, supporting margins .
OpEx discipline: Cost alignment with revenue and macro backdrop; some normalization expected (e.g., incentives) in FY26 .
Automation depth: “Around the fourth inning”; ongoing coding rollout across labs to sustain Service margin gains .
Solutions integration: Cultural alignment via Transcat brand and sales engine; “all roads lead to calibration”; contribution expected to overall organic Service growth over time .

Estimates Context

Q4 FY25 actuals vs Wall Street consensus (S&P Global):

Metric	Consensus	Actual
Revenue ($USD Millions)	$76.4*	$77.1
Adjusted EPS ($)	$0.34*	$0.64

Values retrieved from S&P Global.*
Note: GetEstimates tracked adjusted EPS actuals; GAAP diluted EPS was $0.48 . The revenue beat was modest, while adjusted EPS significantly exceeded consensus.

Key Takeaways for Investors

Service-led quarter: Double-digit Service revenue growth and margin expansion highlight the core calibration engine and benefits from automation; expect continued leverage as integration of Martin and process improvements deepen .
Mix pressure in Distribution: Product sales mix compressed Distribution margins; watch rental mix and tariff dynamics—management sees path to >30% margins with stronger rental contribution .
Strong cash generation and balance sheet: FY25 operating FCF $25.8M (+$6.5M YoY), leverage 0.78x, and $49.1M revolver availability support ongoing M&A and organic investments .
Guidance: High single-digit Service organic growth contingent on macro normalization; FY26 tax 27–29%; net CapEx $14–$16M—modeling upside tied to rental mix and Solutions stabilization .
Narrative drivers: Automation progress (“fourth inning”), Martin synergy realization, and Solutions integration into Transcat’s sales motion should underpin medium-term margin and growth trajectory .
Watch points: Tariff-driven ordering patterns may distort near-term Distribution signals; GAAP EPS compression from acquisition/non-cash items vs adjusted results—focus on adjusted EPS/EBITDA for underlying performance .

TRANSCAT INC (TRNS)·Q4 2025 Earnings Summary