Transcat, Inc. (NASDAQ: TRNS) reported Q3 EPS of $0.20, $0.05 worse than the analyst estimate of $0.25. Revenue for the quarter came in at $43.2 million versus the consensus estimate of $43.05 million.

• Record third quarter consolidated revenue of $43.2 million in fiscal 2020
• Solid Service segment organic revenue growth of 7.8% reflects continued market expansion, including within the highly regulated life sciences market
• Distribution segment revenue growth of 3.5%
• Generated $8.2 million in cash from fiscal year-to-date operations, up 13.6%

Lee D. Rudow, President and CEO, commented, “We had solid growth in the third quarter, despite being heavily impacted by holiday timing that caused an unusually slow December. This low volume in the last month of our third quarter weighed on margins and masked the improvements we are seeing throughout the organization. Our Service operations are more efficient and our productivity metrics have improved over the course of this fiscal year, reflecting our focused efforts to hire and train an appropriate number of technicians to support our continued growth and to ensure customer satisfaction.

“We have a strong pipeline of organic and acquisition opportunities, and our performance metrics are a solid leading indicator of customer retention, all of which support belief in our execution and long-term strategy.”

Outlook

Mr. Rudow concluded, “Our sales have bounced-back in January and early February from the slow, holiday-impacted December and we believe we remain on track to achieve record results in fiscal 2020. In addition, our acquisition pipeline is healthy and will remain a key element of our strategic growth plan.

“We are strategically positioned to capitalize on growth opportunities as we have added significant capacity to our lab network. We ended the third quarter with a net increase of 37 technicians over the prior-year period, a 12% increase in staffing. Availability of trained technical labor is now a key differentiator and competitive advantage for Transcat.

“We are also pleased with our progress in developing a culture centered on technology and increased productivity as imperatives. As we move forward, we expect to continue to improve on this important cultural advancement, and believe we are well-positioned to support double-digit Service growth with improved profitability margins going forward.”

Transcat lowered its income tax rate expectations for fiscal 2020 to range between 17% and 18%, from the previously provided range of 18% to 19%.

The Company lowered its capital expenditure expectations for fiscal 2020 to a range of $6.8 million to $7.1 million, from the previously provided range of $7.8 to $8.2 million, largely due to the timing of certain projects and less spend required on Service lab replacement assets.

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