What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2025-05-27 compared with 2024-05-28 · 46 added, 37 removed, 238 unchanged (26% of the section changed)

6 unchanged sentences

and global economy, including financial and economic conditions that are outside of our control.

We are subject to risks arising from adverse changes in general economic market conditions, including supply chain delays or interruptions, labor shortages, wage pressures, the ongoing inflationary environment, changes in interest rates, volatility in the banking industry, geopolitical events, political instability, global health crises, including epidemics and pandemics, such as the COVID-19 pandemic, or interruptions and other force majeure events.

We are subject to risks arising from adverse changes in general economic market conditions, including supply chain delays or interruptions, labor shortages, wage pressures, the ongoing inflationary environment, changes in interest rates, geopolitical events, political instability, global health crises, including epidemics and pandemics, or interruptions and other force majeure events.

Inflation has persisted in the United States and globally due in part to geopolitical events, a rise in energy prices, and strong consumer demand.

1 unchanged sentence

In addition, economic conditions could impact and reduce the number of customers who purchase our products or services as credit becomes more expensive or unavailable.

Although interest rates have increased and may continue to increase or remain relatively high for a sustained period, inflation may continue.

Further, uncertainty resulting from interest rate policy or changes to interest rates in the future could have a negative effect on the securities markets generally which may, in turn, have a material adverse effect on the market price of our common stock.

Although interest rates may remain relatively high for a sustained period, inflation may continue or prices for goods and energy may rise as a result of the imposition or threatened imposition of tariffs.

Further, uncertainty resulting from interest rate policy, trade policy or changes to interest rates in the future could have a negative effect on the securities markets generally which may, in turn, have a material adverse effect on the market price of our common stock.

Further, uncertainty about future economic conditions could negatively affect our current and prospective customers causing them to delay purchase of services or test and measurement instruments.

25 unchanged sentences

A number of our Service segment customers operate life science, pharmaceutical, biotechnology, medical device and other FDA-regulated businesses.

Federal and state budget pressures and changes in grant allocation policies may result in lower funding for certain of our life science customers, which may cause those customers to delay or halt spending on capital-intensive projects.

We also serve the industrial manufacturing, energy and utilities, chemical manufacturing, aerospace and defense industries.

This concentration of our customer base affects our overall risk profile, since a significant portion of our customers would be similarly affected by changes in economic, political, regulatory, and other industry conditions.

In the oil and gas industry, customer demand for our services is sensitive to fluctuations in commodity prices, access to capital, and the regulatory environment, with less demand expected in a deregulatory environment.

The concentration of our customer base affects our overall risk profile, since a significant portion of our customers would be similarly affected by changes in economic, political, regulatory, and other industry conditions.

An abrupt or unforeseen change in conditions in these industries could adversely affect customer demand for our services, which could have a material adverse effect on our financial results.

4 unchanged sentences

In addition, we may record goodwill when we acquire or make an investment in a business based on the purchase price and the value of the acquired tangible and intangible assets.

We have significantly increased our goodwill because of our acquisitions.

We may subsequently experience unforeseen issues with the businesses we acquire, which may adversely affect the anticipated returns of the business or value of the intangible assets and trigger an evaluation of the recoverability of the recorded goodwill and intangible assets for the business.

Future determinations of significant write-offs of goodwill or intangible assets because of an impairment test or any accelerated amortization of other intangible assets could have a material negative impact on our results of operations and financial condition.

Tariffs imposed by the United States and other countries, as well as changing trade relations, regional and international conflicts, and political conditions could have a material adverse effect on our business and results of operations.

Determinations of significant write-offs of goodwill or intangible assets because of an impairment test or any accelerated amortization of other intangible assets could have a material negative impact on our results of operations and financial condition.

Tariffs imposed or threatened by the United States and other countries, as well as changing trade relations, regional and international conflicts, and political conditions could have a material adverse effect on our business and results of operations.

Changes in United States and foreign governments’ trade policies, as well as volatility caused by regional and international conflicts, such as the conflict between Russia and Ukraine, Israel and Hamas, and the political climate in the United States, China, and Taiwan, have resulted in, and may continue to result in, tariffs on imports into and exports from the United States.

For example, the United States has recently instituted or proposed changes in trade policies that include the negotiation or termination of trade agreements, the imposition of higher tariffs on imports into the United States, economic sanctions on individuals, corporations or countries, and other government regulations affecting trade between the United States and other countries.

A number of other nations have proposed or instituted similar measures directed at trade with the United States in response.

Tariffs on certain products can increase our costs of doing business.

If we are unable to recover these costs, our profit margins may be negatively impacted.

Similarly, if our customers are negatively impacted by the imposition or threatened imposition of tariffs, it may result in negative sentiment which may negatively impact demand for our products and services, which could negatively impact our results of operations.

If our vendors or suppliers are unable to source products we purchase, our Distribution business may be negatively impacted.

Diminished trade relations, conflicts between the United States and other countries, and any escalation of tariffs could have a material adverse effect on our financial performance and results of operations.

3 unchanged sentences

If our brand is negatively impacted, we may lose existing customer relationships, which would reduce our sales and negatively impact our results of operations and financial condition, and we may be unable to attract and retain key personnel, which would negatively impact our prospects.

The impact of widespread public health crises, pandemics or other epidemics is difficult to predict and could materially and adversely affect our business and results of operations .

Any adverse widespread public health crises in locations where we conduct business, as well as any measures implemented to control these events, could have a material adverse impact on our business and results of operations.

Further, any actions taken to mitigate any health crises could lead to an economic recession.

Such extraordinary events, like the COVID-19 pandemic, and their aftermath can cause investor fear and panic, which could further materially and adversely affect our operations, the economies in which we operate, and the financial markets generally in ways that cannot be predicted, but may amplify many of the other risk factors disclosed elsewhere in this "Item 1A.

Risk Factors."

Risks Related to Acquisitions

We may not successfully integrate business acquisitions.

We completed three acquisitions during fiscal year 2024 and four acquisitions during fiscal year 2023.

We completed two acquisitions during fiscal year 2025 and three acquisitions during fiscal year 2024.

We have a robust and diverse acquisition pipeline and may complete additional acquisitions in the future.

3 unchanged sentences

Implementing or remediating controls, procedures, and policies at the acquired company;

Integrating of the acquired company’s accounting and other administrative systems;

Integrating the acquired company’s accounting, enterprise resource management and other administrative systems;

In the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political, and regulatory risks associated with specific countries;

Currency and regulatory risks associated with operations in foreign countries;

The difficulty of developing and marketing new products and services;

The difficulty of developing, marketing and forecasting demand for new products and services;

Assessing the technology infrastructure and cyber and data security risk profile of the acquired company and integrating its systems into our IT systems, networks and services;

Diverting management’s attention while evaluating, negotiating and integrating acquisitions;

1 unchanged sentence

The potential loss of key employees of an acquired operation.

In addition, we may seek acquisitions in adjacent or new markets where we have limited experience.

Challenges in assessing acquisitions in adjacent or new markets and integrating such acquisitions due to our level of experience in such markets could result in a material adverse impact on our financial condition, operating results and stock price.

For example, the acquisition of NEXA (recently rebranded to Transcat Solutions), a service segment business focused on the technical, consulting and staffing solutions market, expanded the scope of services we offer beyond our traditional calibration services and required more time for us to fully integrate into our operating plan.

In addition, an acquisition could adversely impact cash flows and/or operating results, and dilute shareholder interests for many reasons, including:

36 unchanged sentences

Qualified skilled service technicians are in high demand and are subject to competing offers.

The ability to meet our labor needs while controlling costs associated with hiring and training new employees is subject to external factors such as unemployment levels and prevailing wage rates.

The ability to meet our labor needs while controlling costs associated with hiring and training new employees is subject to external factors such as unemployment levels, prevailing wage rates and the available labor pool in locations where we operate.

The loss of services of any member of our senior management team or key employees, and the inability to attract and retain other qualified personnel, especially skilled service technicians, could affect our ability to achieve our stated corporate objectives and could adversely impact our business and results of operations.

The profitability of our subsidiary, NEXA, depends to a large extent on our ability to achieve or maintain adequate utilization and pricing rates for our technical service providers.

In our Service segment our subsidiary, NEXA, provides all of its services in the technical, consulting and staffing solutions market by providing services to improve asset management programs for our customers.

The profitability of NEXA depends in part on ensuring that our technical service providers maintain adequate utilization rates (i.e., the percentage of our provider’s working hours devoted to billable activities).

The profitability of our Transcat Solutions business depends to a large extent on our ability to achieve or maintain adequate utilization and pricing rates for our technical service providers.

In our Service segment, Transcat Solutions provides all of its services in the technical, consulting and staffing solutions market by providing services to improve asset management programs for our customers.

The profitability of Transcat Solutions depends in part on ensuring that our technical service providers maintain adequate utilization rates (i.e., the percentage of our provider’s working hours devoted to billable activities).

Our utilization rates are affected by a number of factors, including:

The number, scope and timing of ongoing customer engagements;

The timing of the commencement, completion and termination of engagements, which in many cases is unpredictable;

The timing of the commencement, completion and termination of engagements, which in many cases is unpredictable and subject to forces beyond our control;

Our ability to continually secure new business engagements;

1 unchanged sentence

Our ability to forecast demand for our services and thereby maintain appropriate headcount in each of our geographies and workforces;

Unanticipated changes in the scope of customer engagements;

Unanticipated changes in the scope or timing of customer engagements;

Our need to devote time and resources to sales, training, professional development and other non-billable activities;

2 unchanged sentences

General financial and economic conditions.

For example, in the Transcat Solutions business, our revenue has been negatively impacted in part by delayed starts for customer projects, which has prevented us from fully utilizing all of our technical service providers.

If the utilization rate for our technical service providers declines, our revenues, profit margin and profitability could decline, and our results of operations could be materially adversely affected.

The profitability of our Service segment, including the NEXA business, depends in part on the prices we are able to charge for our services .

The prices we charge for our services, including the NEXA business, are affected by a number of factors, including:

The profitability of our Service segment, including the Transcat Solutions business, depends in part on the prices we are able to charge for our services .

The prices we charge for our services, including the Transcat Solutions business, are affected by a number of factors, including:

Customers’ perception of our ability to add value through our services;

5 unchanged sentences

If we are unable to achieve and maintain adequate rates for our services, our profit margin and profitability could decline, and our results of operations could be materially adversely affected.

If we do not effectively compete in the rental test and measurement equipment market, our operating results may be adversely affected.

We compete in the rental market on the basis of a number of factors, including equipment availability, price, service and reliability.

Some of our competitors may offer similar equipment for rent at lower prices and may offer more extensive servicing, or financing options.

In addition, if the supply of rental equipment available on the market significantly increases, demand for and pricing of our rental products could be adversely impacted, lowering our gross margins on rentals.

Further, customers confronting competing budget priorities and more limited resources could lead to less demand for rental equipment and increased pressure on pricing.

Failure to adequately forecast the adoption of and demand for equipment may cause us not to meet our customers’ rental equipment requirements and may adversely affect our operating results.

If we do not effectively compete in the test and measurement equipment market, our operating results may be adversely affected.

We compete in the rental and distribution market on the basis of a number of factors, including equipment availability, price, service and reliability.

Some of our competitors may offer similar equipment for rent or purchase at lower prices and may offer more extensive servicing, or financing options.

In addition, if the supply of equipment available on the market significantly increases, demand for and pricing of our rental and distribution products could be adversely impacted, lowering our gross margins.

Further, customers confronting competing budget priorities and more limited resources could lead to less demand for equipment and increased pressure on pricing.

Failure to adequately forecast the adoption of and demand for equipment may cause us not to meet our customers’ equipment requirements and may adversely affect our operating results.

If we fail to adapt our technology to meet customer needs and preferences, the demand for our products and services may diminish.

32 unchanged sentences

Our future success may be affected by our current and future indebtedness.

Under our credit agreement, as of March 30, 2024, we owe d $4.2 mill ion to our secured creditor, a commercial bank, under a $15.0 million term loan to fund acquisitions and provide additional working capital.

Under our credit agreement, as of March 29, 2025 , we owed $32.7 million to our secured creditor, a commercial bank, including $1.8 million borrowed under a $15.0 million term loan to fund acquisitions and provide additional working capital.

We may borrow additional funds in the future to support our growth and working capital needs.

23 unchanged sentences

Hurricanes, other adverse weather events, national or regional catastrophes or natural disasters could negatively affect the local economies we serve or disrupt our operations, which could have an adverse effect on our business or results of operations .

Our market areas include the Gulf Coast and Mid-Atlantic regions of the United States, and Puerto Rico, which are susceptible to hurricanes.

Such weather events can disrupt our operations, result in damage to our properties and negatively affect the local economies in which we operate.

Future hurricanes or other extreme weather events could result in damage to certain of our facilities and the equipment located at such facilities, or equipment on rent with customers in those areas.

Our market areas include the Gulf Coast and Mid-Atlantic regions of the United States, and Puerto Rico, which are susceptible to hurricanes, and the Western United States, which is susceptible to wildfires.

Such weather events and natural disasters can disrupt our operations, result in damage to our properties and negatively affect the local economies in which we operate.

Future hurricanes, extreme weather events and natural disasters could result in damage to certain of our facilities and the equipment located at such facilities, or equipment on rent with customers in those areas.

Even if our properties suffer no direct damage from such events, the operations of our customers could be disrupted, and our supply chain impacted.

19 unchanged sentences

The following factors, among others, may have a significant effect on the market price of our common stock:

Developments in our relationships with significant customers in our service segment;

Developments in our relationships with current or future manufacturers of products we distribute;

2 unchanged sentences

Economic and other external factors, such as inflation, changes in interest rates, a recession, disasters or other national or global crises;

Public health issues including pandemics and epidemics, such as the COVID-19 pandemic;

Public health issues including pandemics and epidemics;

Sales of our common stock or other securities in the open market;

5 unchanged sentences

The relatively low trading volume of our common stock may limit your ability to sell your shares.

Although our shares of common stock are listed on the Nasdaq Global Market, we have historically experienced a relatively low trading volume of approximately 43,000 shares a day.

Although our shares of common stock are listed on the Nasdaq Global Market, we have historically experienced a relatively low trading volume , averaging approximately 68,000 shares a day in fiscal 2025.

If our low trading volume continues in the future, holders of our shares may have difficulty selling shares of our common stock in the manner or at a price that they desire.

20 unchanged sentences

In the event that additional rules, regulations or standards are implemented or any of the existing rules, regulations or standards to which we are subject undergoes additional material modification, we could be forced to spend significant financial and management resources to ensure our continued compliance, which could have an adverse effect on our results of operations.

For example, the additional reporting requirements relating to tracking greenhouse gas emissions and other climate-related disclosure from the SEC, U.S.

state regulators, and foreign jurisdictions could significantly increase our accounting, consulting and legal expenses.

For example, the additional reporting requirements relating to tracking greenhouse gas emissions and other climate-related disclosure from various U.S.

states and foreign jurisdictions could significantly increase our accounting, consulting and legal expenses.

Should we be or become unable to comply with any of such rules, regulations and standards, as they presently exist or as they may exist in the future, our results of operations could be adversely affected and the market price of our common stock could decline.

1 unchanged sentence

Our international operations are governed by various United States laws and regulations, including the Foreign Corrupt Practices Act (“FCPA”), and other foreign anti-bribery laws.

The FCPA generally prohibits companies and their intermediaries from making improper payments to foreign government officials for the purpose of obtaining or retaining business.

The FCPA and similar anti-corruption laws generally prohibits companies and their intermediaries from making improper payments to foreign government officials for the purpose of obtaining or retaining business.

Because of our international operations, we are subject to the anti-bribery laws of non-US jurisdictions where we operate.

Any alleged or actual violations of these or other relevant regulations may subject us to government scrutiny, severe criminal or civil sanctions and other liabilities and could negatively affect our business, reputation, operating results and financial condition.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors