Earnings

Transcat Raises Fiscal 2027 Service Organic Growth Outlook

The Tip Desk · November 10, 2026 · 3 min read

Service organic revenue rose 16% to $60.4 million in the fiscal second quarter as the company lifted its full-year outlook to low double digits.

Transcat, Inc. (TRNS), a provider of accredited calibration, repair and instrument services, raised its full-year fiscal 2027 Service organic revenue growth outlook to the low double digits from a prior high-single-digit range, citing calibration strength and a faster pace of Service gross-margin expansion.

For the fiscal second quarter ended September 26, 2026, Service organic revenue was $60.4 million, up 16% from $52.1 million a year earlier after $3.5 million of acquired revenue and freight billed to customer. Service revenue rose 23% to $64.8 million. The company said year-over-year Service gross-margin expansion was 220 basis points, up from 90 basis points in the first quarter. Sequentially, Service revenue growth slowed to 23% from 27% in the first quarter, while Service organic growth remained double-digit and Service gross-margin expansion accelerated.

Service segment gross margin was 34.4%, up 220 basis points from 32.2% a year earlier. Service operating income was $3.7 million versus $0.9 million. President and CEO Jaime Irick said the quarter marked the seventieth consecutive quarter of Service revenue growth and that the company believes it is gaining market share in calibration through organic growth, acquisitions and a more productive sales organization.

Total revenue increased 18% to $97.1 million, with gross profit up 22% and gross margin up 110 basis points to 33.6%. Adjusted EBITDA rose 23% to $14.9 million and Adjusted EBITDA margin expanded 70 basis points to 15.4%. Net income was $2.4 million, up 90% from $1.3 million; diluted EPS was $0.25 versus $0.14; adjusted diluted EPS was $0.64 versus $0.44.

Distribution revenue grew 10% to $32.3 million on continued strength in rentals and product sales. Distribution segment gross margin was 32.0%, down 120 basis points from 33.2% a year earlier, which the company attributed primarily to lower-margin used equipment sales that enable reinvestment in the rental asset portfolio. Distribution operating income fell 47% to $1.4 million. Sequentially, Distribution revenue growth slowed to 10% from 11% in the first quarter, and total revenue growth slowed to 18% from 22%.

Operating expenses were $27.6 million, an increase of $4.3 million, or 18.7%, driven by incremental expenses from acquired businesses, including intangible assets amortization, increased stock-based compensation, and executive transition costs.

The company completed an August acquisition of Southeastern Biomedical, described as advancing scale in regulated, high cost-of-failure end markets and extending biomedical calibration reach to a larger geography. Looking ahead, assuming the broader economic environment remains stable, Transcat now expects Service organic revenue growth in the low double digits for the full fiscal year 2027, along with Service gross-margin expansion. It expects year-over-year Service gross-margin expansion of at least 100 basis points in the second half, driven by Lean process improvements, mix and pricing, and technology including AI.

On September 26, 2026, the company had $5.8 million in cash and cash equivalents and $33.1 million available for borrowing under its secured revolving credit facility. Total long-term debt was $116.9 million versus $99.9 million on March 28, 2026; net debt was $111.1 million versus $94.9 million. Net cash provided by operations for the six months ended September 26, 2026 was $19.0 million versus $16.5 million a year earlier; operating free cash flow for the six months was $10.9 million versus $7.5 million.

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