Transcat, Inc. (NASDAQ: TRNS) reported Q1 EPS of $0.23, $0.03 better than the analyst estimate of $0.20. Revenue for the quarter came in at $42.4 million versus the consensus estimate of $38.89 million.

• Consolidated revenue grew 15.7% to a first quarter record of $42.4 million, driven by double-digit organic growth
• Transcat continued to take market share in regulated markets with Service segment organic revenue growth of 11.9%
• Achieved net income of $1.7 million, or $0.23 per diluted share
• Acquired calibration automation software company last week to accelerate operational excellence initiatives

“Our first quarter double-digit organic growth validates the successful execution of our growth strategy. We believe our investment in growth is gaining us greater market share although also constricting margin expansion as we continue to hire new technicians who need mentoring and training to achieve full productivity levels. Our operational excellence initiatives, combined with automation initiatives provided by our acquisition last week of Infinite Integral Solutions Inc. (“IIS”), are expected to help offset this impact. We believe in our plan and are intent upon improving our margin profile, but believe that expanding our market position is paramount,” commented Lee D. Rudow, President and CEO.

Mr. Rudow added, “Our acquisition of IIS is a unique opportunity to own technology that is expected to advance our Service segment efficiencies and aid productivity improvement throughout our lab network by automating a number of calibration disciplines.”

Outlook

Mr. Rudow concluded, “All signs point to continued strength on the Service revenue front as our pipelines for new business and acquisitions remain robust. We still expect our operational excellence initiatives to benefit gross and operating margins during this fiscal year, and certainly more so over the long term.

“While we saw strong Distribution sales growth in the first quarter, a good portion was from the alternative energy sector and sales of used equipment, both of which can vary quarter-to-quarter.”

Transcat slightly adjusted its expected income tax rate for full year fiscal 2020 down to 21% to 22% from the previously provided range of 22% to 23%.

The Company’s expected capital expenditure plan for fiscal 2020 remains in the $7.8 million to $8.2 million range. Capital investments are expected to be primarily focused on technology infrastructure to drive operational excellence and organic growth opportunities within both operating segments, and for rental pool assets.

For earnings history and earnings-related data on Transcat, Inc. (TRNS) click here.