What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-05-27 compared with 2024-05-28 · 328 added, 303 removed, 903 unchanged (41% of the section changed)

15 unchanged sentences

Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected in a timely manner.

Effective December 10, 2024, the Company acquired Martin Calibration Inc.

and effective April 15, 2024, the Company acquired Becnel Rental Tools, LLC.

The financial results of these acquisitions are included in the consolidated financial statements as of and for the year ended March 29, 2025 and represent approximately 6% of total revenues and 6% of total assets excluding intangible assets and goodwill related to the acquisitions, respectively.

Management is currently integrating Martin and Becnel into our operations and internal control processes and, pursuant to the SEC’s guidance that an assessment of a recently acquired business may be omitted from the scope of an assessment in the year of acquisition, the Company is excluding the internal control over financial reporting of Martin and Becnel from its evaluation of the effectiveness of the Company’s disclosure controls and procedures as of March 29, 2025.

An evaluation was performed under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, of the effectiveness of the design and operation of our procedures and internal control over financial reporting using the framework and criteria described in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, our management, including our principal executive officer and our principal financial officer, concluded that our internal control over financial reporting was effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles as of March 29, 2025.

Freed Maxick CPAs, P.C., our independent registered public accounting firm, has audited and reported on the consolidated financial statements of the Company and the Company’s internal control over financial reporting, as stated in their report included in this Annual Report on Form 10-K.

Freed Maxick, P.C., our independent registered public accounting firm, has audited and reported on the consolidated financial statements of the Company and the Company’s internal control over financial reporting, as stated in their report included in this Annual Report on Form 10-K.

Report of Independent Registered Public Accounting Firm

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We have audited the accompanying consolidated balance sheets of Transcat, Inc.

and subsidiaries (the Company) as of

March 30, 2024 and

March 25, 2023, and the related consolidated statements of income, comprehensive income, cash flows and changes in shareholders' equity for each of the three years in the period ended

March 30, 2024, and the related notes to the consolidated financial statements (collectively, the financial statements).

We also have audited the Company’s internal control over financial reporting as of

March 30, 2024, based on criteria established in

Internal Control —

Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

and subsidiaries (the Company) as of March 29, 2025 and March 30, 2024, and the related consolidated statements of income, comprehensive income, cash flows and changes in shareholders' equity for each of the three years in the period ended March 29, 2025, and the related notes to the consolidated financial statements (collectively, the financial statements).

We also have audited the Company’s internal control over financial reporting as of March 29, 2025, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 29, 2025 and March 30, 2024, and the results of its operations and its cash flows for each of the three years in the period ended March 29, 2025, in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 29, 2025, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

As described in Management’s Annual Report on Internal Control Over Financial Reporting, management has excluded Becnel Rental Tools, LLC (Becnel) and Martin Calibration, Inc.

(Martin) from its assessment of internal control over financial reporting as of March 29, 2025, because they were acquired by the Company in a purchase business combination during fiscal year 2025 .

We have also excluded Becnel and Martin from our audit of internal control over financial reporting.

Becnel and Martin are wholly owned subsidiaries.

Becnel and Martin’s total assets, excluding intangible assets and goodwill related to the acquisitions, and total revenues represent approximately 6% and 6%, respectively, of the related consolidated financial statement amounts as of and for the year ended March 29, 2025.

Basis for Opinions

The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting.

The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

16 unchanged sentences

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Business Combinations

Critical Audit Matter Description

As discussed in Notes 1 and 9 to the consolidated financial statements, during the year ended March 30, 2024, the Company completed multiple business combinations for an aggregate purchase of approximately $52.7 million.

As discussed in Notes 1 and 9 to the consolidated financial statements, during the year ended March 29, 2025, the Company completed multiple business combinations for an aggregate purchase price of approximately $131.6 million.

The Company applied the acquisition method of accounting for the acquisitions.

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Due to the subjectivity involved we identified the fair value estimate of assets acquired as a critical audit matter, which required a higher degree of auditor judgement as well as the use of professionals with specialized skill and knowledge.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the estimation of fair value of assets acquired associated with the business combinations included the following, among others:

We obtained an understanding of the process and assumptions used by management to develop the estimate of the fair value of assets acquired and consideration transferred.

We obtained an understanding of management’s controls and tested the operating effectiveness of the controls.

We engaged an internal valuation specialist to test certain assumptions and approaches used.

We tested management’s estimate of the fair value of assets identified.

This included testing the completeness and accuracy of source information used, testing the mathematical accuracy of management’s calculations, and evaluating the reasonableness and consistency of methodology and assumptions used.

Nexa Earn-Out

Critical Audit Matter Description

As discussed in Notes 1, 8 and 9 to the consolidated financial statements as a result of a business combination in a previous year the Company is still obligated under a contingent consideration arrangement where the potential payout is up to $7.1 million.

This arrangement is recorded at fair value at each reporting period, which was estimated as zero as of March 25, 2023.

During the year ended March 30, 2024 the Company entered into an Amendment to the Share Purchase Agreement.

Pursuant to the Amendment, the potential earn-out payments remained the same.

The Amendment changed the conditions necessary for the sellers to receive potential earn-out payments as well as the lines of business included in the calculation of EBITDA.

Assumptions used to estimate fair value include the discount rate, risk free rate, asset volatility, as well as forecasted EBITDA.

As a result of the Amendment, the fair value of the contingent consideration was initially determined to be $2.8 million for which the Company recorded a liability.

Later in the year ended March 30, 2024 the Company determined the fair value of the contingent consideration was $0.5 million and recognized a net $2.3 million non-cash gain.

The Company’s determination of the fair value of the contingent consideration is based upon assumptions of the future performance of the acquisition and other factors.

Due to the subjectivity involved we identified the fair value estimate of the contingent consideration as a critical audit matter, which required a higher degree of auditor judgement as well as the use of professionals with specialized skill and knowledge.

If, as a result of remeasurement, the value of the contingent consideration changes, any charges or income will be included in the Company’s Consolidated Statements of Income.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the estimation of fair value of the contingent consideration included the following, among others:

We obtained an understanding of the terms of the Amendment.

We obtained an understanding of the process and assumptions used by management to develop the estimate.

We obtained an understanding of the associated controls and tested those controls.

We updated our understanding of the associated controls and tested controls.

We engaged an internal valuation specialist to test certain assumptions and approaches used.

● We tested management’s assumptions to determine fair value of the earn-out including projected EBITDA, discount rate, risk-free rate and asset volatility.

We also tested the completeness and accuracy of source information used, tested mathematical accuracy of management’s calculations, and evaluated reasonableness and consistency of methodology and assumptions.

/s/ Freed Maxick CPAs, P.C.

We tested identification of appropriate reporting units, including assignment of assets acquired, liabilities assumed, consideration and goodwill to the reporting units.

We tested management’s valuation of intangible assets acquired, including valuation of any contingent consideration.

This included testing the completeness and accuracy of source information used, mathematical accuracy of management’s calculations, and evaluating the reasonableness and consistency of methodology and assumptions used.

/s/ Freed Maxick P.C.

(f/k/a Freed Maxick CPAs, P.

We have served as the Company’s auditor since 2012.

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Interest Income

Other Expense

Total Interest and Other

( 825 ) ( 808 ) -

Other (Income) Expense

( 425 ) 315 344

Total Interest and Other (Income)/Expense, net

( 452 ) 1,342 2,761

Income Before Provision for Income Taxes

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Other, net of tax effects of $ 24 , $( 26 ) and $ 14 for the years ended March 29, 2025, March 30, 2024 and March 25, 2023 respectively.

99 ( 49 ) 425

Total Other Comprehensive Income (Loss)

Total Other Comprehensive (Loss)/Income

( 520 ) 251 ( 967 )

61 unchanged sentences

Cash Flows from Operating Activities:

$ 14,515 $ 13,647 $ 10,688

Adjustments to Reconcile Net Income to Net Cash

Provided by Operating Activities:

Net Loss on Disposal of Property and Equipment

Net (Gain) Loss on Disposal of Property and Equipment

Deferred Income Taxes

( 5 ) ( 1,597 ) ( 186 )

Depreciation and Amortization

18,567 13,544 10,955

Gain on Sale of Assets

Provision for Accounts Receivable and Inventory Reserves

Stock-Based Compensation Expense

3,248 4,512 3,377

Changes in Assets and Liabilities, net of acquisitions:

Accounts Receivable and Other Receivables

( 1,292 ) ( 1,259 ) ( 5,226 )

4,393 2,318 ( 3,377 )

Prepaid Expenses and Other Current Assets

( 992 ) ( 299 ) 1,119

Accounts Payable

4,940 ( 5,005 ) 1,600

Accrued Compensation and Other Current Liabilities

( 914 ) 3,397 ( 2,161 )

Income Taxes Payable

( 2,925 ) 2,899 -

Net Cash Provided by Operating Activities

38,985 32,616 16,951

Cash Flows from Investing Activities:

Purchase of Property and Equipment

( 13,197 ) ( 13,280 ) ( 9,414 )

Proceeds from Sale of Property and Equipment

Business Acquisitions, net of cash acquired

Purchases of Marketable Securities

( 87,436 ) ( 12,859 ) ( 9,109 )

Proceeds from Sale of Assets

Sales/(Purchases) of Marketable Securities

15,533 ( 15,533 ) -

Net Cash Used in Investing Activities

( 84,000 ) ( 41,672 ) ( 18,513 )

Cash Flows from Financing Activities:

(Repayment of) Proceeds from Revolving Credit Facility, net

Proceeds from (Repayment of) Revolving Credit Facility, net

30,891 ( 42,713 ) 2,786

Repayments of Term Loan

( 2,338 ) ( 2,248 ) ( 2,121 )

Issuance of Common Stock, net of direct costs

1,874 77,266 658

Repurchase of Common Stock

( 3,565 ) ( 4,906 ) ( 447 )

Net Cash Provided by Financing Activities

26,862 27,399 876

Effect of Exchange Rate Changes on Cash

Net Increase in Cash and Cash Equivalents

24 ( 228 ) 821

Net (Decrease) Increase in Cash and Cash Equivalents

( 18,129 ) 18,115 135

Cash and Cash Equivalents at Beginning of Fiscal Year

19,646 1,531 1,396

Cash and Cash Equivalents at End of Fiscal Year

$ 1,517 $ 19,646 $ 1,531

Supplemental Disclosures of Cash Flow Activity:

Cash paid during the fiscal year for:

$ ( 151 ) $ 1,240 $ 2,263

Income Taxes, net

$ 7,843 $ 3,099 $ 1,116

Supplemental Disclosure of Non-Cash Investing and Financing Activities:

Common stock issued for acquisitions

$ 45,410 $ 34,769 $ 145

Assets Acquired and Liabilities Assumed in Business Combinations:

Contingent consideration related to NEXA acquisition

Contingent consideration treated as equity related to acquisitions

$ 750 $ - $ -

Accrued holdback consideration related to acquisitions

$ 2,773 $ 4,859 $ 590

Balance Sheet Reclassification of Property and Equipment, net to Inventory

$ 1,510 $ 1,056 $ 752

See accompanying notes to consolidated financial statements.

6 unchanged sentences

Balance as of March 26, 2022

7,529 $ 3,765 $ 23,900 $ ( 233 ) $ 58,744 $ 86,176

Proceeds from Issuance of Common Stock

14 6 797 - - 803

Repurchase of Common Stock

( 7 ) ( 3 ) ( 175 ) - ( 269 ) ( 447 )

Stock-Based Compensation

Other Comprehensive Income

26 13 3,364 - - 3,377

Other Comprehensive Loss

- - - ( 967 ) - ( 967 )

- - - - 10,688 10,688

Balance as of March 25, 2023

7,562 3,781 27,886 ( 1,200 ) 69,163 99,630

Proceeds from Issuance of Common Stock

1,267 634 116,724 - - 117,358

Direct costs of Stock Offering

- - ( 5,323 ) - - ( 5,323 )

Repurchase of Common Stock

( 50 ) ( 25 ) ( 2,145 ) - ( 2,736 ) ( 4,906 )

Stock-Based Compensation

Other Comprehensive Loss

60 30 4,482 - - 4,512

Other Comprehensive Income

- - - 251 - 251

- - - - 13,647 13,647

Balance as of March 30, 2024

8,839 4,420 141,624 ( 949 ) 80,074 225,169

Proceeds from Issuance of Common Stock

Direct costs of Stock Offering

466 233 47,800 - - 48,033

Repurchase of Common Stock

( 30 ) ( 15 ) ( 1,485 ) - ( 2,065 ) ( 3,565 )

Stock-Based Compensation

Other Comprehensive Income

40 20 3,228 - - 3,248

Other Comprehensive Loss

- - - ( 520 ) - ( 520 )

- - - - 14,515 14,515

Balance as of March 29, 2025

9,315 $ 4,658 $ 191,167 $ ( 1,469 ) $ 92,524 $ 286,880

See accompanying notes to consolidated financial statements.

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Principles of Consolidation:

The consolidated financial statements of Transcat include the accounts of Transcat and the Company’s wholly-owned subsidiaries, Transcat Canada, Inc., WTT Real Estate Acquisition, LLC, Cal OpEx Limited (d/b/a Transcat Ireland), Cal OpEx Inc.

(d/b/a NEXA EAM), SteriQual LLC, Tangent Labs LLC, TIC-MS, LLC and Axiom Test Equipment, LLC.

The consolidated financial statements of Transcat include the accounts of Transcat and the Company’s wholly-owned subsidiaries, Transcat Canada, Inc, Cal OpEx Limited (d/b/a Transcat Ireland), Cal OpEx Inc.

(d/b/a NEXA EAM), Axiom Test Equipment, LLC, Becnel Rental Tools, LLC and Martin Calibration, Inc.

All interco mpany balances and transactions have been eliminated in consolidation.

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After all attempts to collect a receivable have failed, the receivable is written-off against the allowance for credit losses.

The accounts receivable balance, less the allowance, as of March 26, 2022, was $ 39.7 million.

The accounts receivable bala nce, less the allowance, as of March 25, 2023, was $ 44.7 million.

Inventory consists of products purchased for resale and is valued at the lower of average cost or net realizable value.

1 unchanged sentence

The Company performs physical inventory counts and cycle counts on inventory throughout the year and adjusts the recorded balance to reflect the results.

Inventory is reduced by a reserve for items not saleable at or above cost by applying a specific loss factor, based on historical experience, to specific categories of inventory.

Inventory is reduced by a reserve for items not saleable at or above cost by applying a specific loss fact or, based on historical experience, to specific categories of inventory.

The Company evaluates the adequacy of the reserve on a quarterly basis.

The Company had reserves for inventory losses totalin g $ 0.3 mil lion at both March 30, 2024 and March 25, 2023 .

The Company had reserves for inventory losses totaling $ 0.2 million at March 29, 2025 and $ 0.3 million at March 30, 2024 .

Property and Equipment, Depreciation and Amortization:

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The Company is permitted, but not required, to qualitatively assess indicators of a reporting unit’s fair value to determine whether it is necessary to perform the two -step goodwill impairment test.

If a quantitative test is deemed necessary, a discounted cash flow analysis is prepared to estimate fair value.

If a quantitative test is deemed necessary, a discounted cash flow analysis is prepared to estimate fair val ue.

The Company determined that no impairment was indicated as of March 29, 2025 and March 30, 2024 .

Intangible assets consists of (amount in thousands):

Customer Base

$ 84,755 $ 45,725

Covenant not to Compete

Tradenames/Trademarks

Total Intangibles

93,303 50,247

Accumulated Amortization

( 38,526 ) ( 30,260 )

Total Intangibles, net

$ 54,777 $ 19,987

Intangible assets, namely customer base and covenants not to compete, represent an allocation of purchase price to identifiable intangible assets of an acquired business.

5 unchanged sentences

- 5,094 5,094 - 3,576 3,576

Measurement Period Adjustments

- ( 203 ) ( 203 ) - - -

- - - ( 199 ) ( 4,255 ) ( 4,454 )

Currency Translation Adjustment

3 unchanged sentences

26,758 9,393 36,151 7,900 3,983 11,883

Measurement Period Adjustments

- - - ( 1,355 ) ( 4,342 ) ( 5,697 )

- - - ( 199 ) ( 4,255 ) ( 4,454 )

Currency Translation Adjustment

11 unchanged sentences

Catalog Costs:

Transcat capitalizes the cost of each master catalog mailed and amortizes the cost over the respective catalog’s estimated productive life.

Transcat capitalizes the cost of each master catalog mailed and amortizes the cost over the respective catalog’s estimated product ive life.

The Company reviews response results from catalog mailings on a continuous basis, and if warranted, modifies the period over which costs are recognized.

The Company amortizes the cost of each master catalog over an eighteen -month period and amortizes the cost of each catalog supplement over a three -month period.

There were no unamortized catalog costs at March 30, 2024.

Total unamortized catalog costs, included as a component of prepaid expenses and other current assets on the Consolidated Balance Shee ts, were $ 0.1 million at March 25, 2023 .

There were no unamortized catalog costs at March 29, 2025 or at March 30, 2024 .

Deferred Taxes:

11 unchanged sentences

The carrying amount of debt on the Consolidated Balance Sheets approximates fair value due to variable interest rate pricing on a portion of the debt with the balance bearing an interest rate approximating current market rates, and the carrying amounts for cash and cash equivalents, marketable securities, accounts receivable and accounts payable approximate fair value due to their short-term nature.

Investment assets, which fund the Company’s non-qualified deferred compensation plan, consist of mutual funds and are valued based on Level 1 inputs.

At March 30, 2024 and March 25, 2023 , investment assets totaled $ 0.1 million and $ 0.2 mil lion, respectively and are included as a component of other assets (non-current) on the Consolidated Balance Sheets.

Investment assets, which fund the Company’s non-qualified deferred compensation plan, consist of mutual funds and are valued based on Level 1 inpu ts.

At both March 29, 2025 and March 30, 2024 , investment assets totaled $ 0.1 million and are included as a component of other assets (non-current) on the Consolidated Balance Sheets.

Stock-Based Compensation:

5 unchanged sentences

The Company estimates forfeiture rates based on its historical experience.

During fiscal years 2024 , 2023 and 2022 , the Company recorded non-cash stock-based compensation cost in the am ount of $ 4.5 million, $ 3.4 million and $ 2.3 million, respectively, in the Consolidated Statements of Income.

During fiscal years 2025 , 2024 and fiscal year ended March 25, 2023 ( "fiscal year 2023" ), the Company recorded non-cash stock-based compensation cost in the amount of $ 3.2 million, $ 4.5 million and $ 3.4 million, respectively, in the Consolidated Statements of Income.

Revenue Recognition:

Distribution non-rental sales are recorded when an order’s title and risk of loss transfers to the customer, which is generally upon shipment.

Distribution rental sales are recognized over time using the time-elapsed output method as this portrays the transfer of control to the customer.

Revenue is recognized in accordance with Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers and Topic 842, Leases.

Distribution product sales are recorded when an order’s title and risk of loss transfers to the customer, which is generally upon shipment.

The Company recognizes the majority of its Service revenue based upon when the calibration or other activity is performed and then shipped and/or delivered to the customer.

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Revenue is measured as the amount of consideration the Company expects to receive in exchange for product shipped or services performed.

Rental revenue is accounted for as an operating lease.

We recognize revenue from equipment rentals in the period earned, regardless of the timing of billing to customers.

A rental contract includes rates for daily, weekly or monthly use, and rental revenues are earned on a daily basis as rental contracts remain outstanding.

As some rental contracts can extend across multiple reporting periods, we record unbilled rental revenue and deferred rental revenue at the end of a reporting period so rental revenue earned is appropriately stated for the periods presented.

Sales taxes and other taxes billed and collected from customers are excluded from revenue.

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Provisions for customer returns are provided for in the period the related revenue is recorded based upon historical data.

Under Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers, we use judgments that could potentially impact both the timing of our satisfaction of performance obligations and our determination of transaction prices used in determining revenue recognized.

Under ASC Topic 606, Revenue from Contracts with Customers, we use judgments that could potentially impact both the timing of our satisfaction of performance obligations and our determination of transaction prices used in determining revenue recognized.

Such judgments include considerations in determining our transaction prices and when our performance obligations are satisfied for our standard product sales that include general payment terms that are between net 30 and 90 days.

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Purchase rebates are calculated and recorded quarterly based upon the volume of purchases with specific vendors during the quarter.

Point of sale rebate programs that are based on year-over-year sales performance on a calendar year basis are recorded as earned, on a quarterly basis, based upon the expected level of annual achievement.

Point of sale rebate programs that a re based on year-over-year sales performance on a calendar year basis are recorded as earned, on a quarterly basis, based upon the expected level of annual achievement.

Point of sale rebate programs that are based on year-over-year sales performance on a quarterly basis are recorded as earned in the respective quarter.

3 unchanged sentences

The Company records cash consideration received from these vendors for advertising as a reduction of cost of distribution sales.

The Company recorded consideration in the amount of $ 1.1 millio n, $ 1.0 million and $ 0.8 million in fiscal years 2024 , 2023 and 2022 , respectively, in connection with these programs.

The Company recorded consider ation in the amount of $ 0.9 million, $ 1.1 million and $ 1.0 million in fiscal years 2025 , 2024 and 2023 , respectively, in connection with these programs.

Advertising Costs:

Advertising costs, other than catalog costs, are expensed as they are incurred and are included in Selling, Marketing and Warehouse Expenses in the Consolidated Statements of Income.

Advertising costs were approxim ately $ 1.6 million, $ 1.2 m illion and $ 1.1 million in fiscal years 2024 , 2023 and 2022 , respectively.

Advertising costs, other than catalog costs, are expensed as they are incurred and are included in Selling, Marketing and Warehouse Expenses in the Consolidated Statements of Incom e.

Advertising costs were approximately $ 2.0 million, $ 1.6 million and $ 1.2 million in fiscal years 2025 , 2024 and 2023 , respectively.

Shipping and Handling Costs:

Freight expense and direct shipping costs are included in the cost of revenue.

These costs totaled approximatel y $ 3.1 milli on, $ 2.9 million and $ 2.7 million in fiscal years 2024 , 2023 and 2022 , respectively.

Direct handling costs, the majority of which represent direct compensation of employees who pick, pack, and prepare merchandise for shipment to customers, are reflected in selling, marketing and warehouse expenses.

Freight expense and direct shipping costs are included in the cost of revenu e.

These costs totaled approximately $ 3.4 million, $ 3.2 million and $ 3.1 million in fiscal years 2025 , 2024 and 2023 , respectively.

D irect handling costs, the majority of which represent direct compensation of employees who pick, pack, and prepare merchandise for shipment to customers, are reflected in selling, marketing and ware house expenses.

Direct handling costs were approximately $ 0.6 million, $ 0.5 million and $ 0.7 million in fiscal years 2025 , 2024 and 2023 , respectively.

5 unchanged sentences

Transcat records foreign currency gains and losses on business transactions denominated in foreign currency.

The net foreign currency loss was $ 0.1 million in fiscal year 2024 , a loss of $ 0.7 million in fiscal year 2023 and a gain of $ 0.1 million in fiscal year 2022 .

The net foreign currency loss was $ 0.1 million in fiscal year 2025 , a loss of $ 0.1 million in fiscal year 2024 and a loss of $ 0.7 million in fiscal year 2023 .

The Company continually utilizes short-term foreign exchange forward contracts to reduce the risk that its future earnings denominated in Canadian dollars would be adversely affected by changes in currency exchange rates.

The Company does not apply hedge accounting and therefore the net change in the fair value of the contracts, which totaled a loss of less tha n $ 0.1 million, a gain of $ 0.4 million and a loss of less than $ 0.1 million in fiscal year 2024 , 2023 and 2022 , respectively, was recognized as a component of Interest and Other Expenses, net in the Consolidated Statements of Income.

The Company does not apply hedge accounting and therefore the net change in the fair value of the contracts, which totaled a gain than $ 0.2 million, a loss of $ 0.1 million and a gain of $ 0.4 million in fiscal years 2025 , 2024 and 2023 , respectively, was recognized as a component of Interest and Other Expenses, net in the Consolidated Statements of Income.

The change in the fair value of the contracts is offset by the change in fair value on the underlying accounts receivables denominated in Canadian dollars being hedged.

On March 30, 2024 , the Company had a foreign exchange contract, which matured in April 2024, outstanding in the notional amount of $ 1.8 millio n.

On March 29, 2025 , the Company had a foreign exchange contract, which matured in April 2025, outstanding in the notional amount of $ 1.1 million.

This contract was subsequently renewed and remains in place.

6 unchanged sentences

See Note 5 for further discussion on the Company’s post-retirement plan.

The Company has a non-qualified deferred compensation plan for the benefit of certain management employees and non-employee directors.

The Company has a non-qualified deferred com pensation plan for the benefit of certain management employees and non-employee directors.

Investment assets, which fund the Company’s non-qualified deferred compensation plan, consist of mutual funds.

1 unchanged sentence

At March 29, 2025 , accumulated other comprehensive loss consisted of cumulative currency translation losses of $ 1.5 million, unrecognized prior service costs, net of tax, of less than $ 0.1 million and an unrealized gain on other assets, net of tax, of less than $ 0.1 million.

At March 25, 2023 , accumulated other comprehensive loss consisted of cumulati ve currency translation losses of $ 1.1 million, unrecognized prior service costs, net of tax, of $ 0.1 million and an unrealized gain on other assets, net of tax, of less than $ 0.1 million.

At March 30, 2024 , accumulated other comprehensive loss consisted of cumulative currency translation losses of $ 0.9 million, unrecognized prior service costs, net of tax, of $ 0.1 million and an unrealized gain on other assets, net of tax, of less than $ 0.1 million.

Earnings Per Share:

Basic earnings per share of the Company's common stock, par value $ 0.50 per share ("common stock"), are computed based on the weighted average number of shares of common stock outstanding during the period.

Diluted earnings per share of common stock reflect the assumed conversion of stock options and unvested restricted stock units using the treasury stock method in periods in which they have a dilutive effect.

Diluted earnings per share of common stock reflect the assumed conversion of stock options and unve sted restricted stock units using the treasury stock method in periods in which they have a dilutive effect.

In computing the per share effect of assumed conversion, proceeds received from the exercise of options and unvested restricted stock units are considered to have been used to purchase shares of common stock at the average market prices during the period, and the resulting net additional shares of common stock are included in the calculation of average shares of common stock outstanding.

For the fiscal year 2024 , the net additional common stock equivalents had a $( 0.03 ) per s hare effect on the calculation of dilutive earnings per share.

For each of fiscal years 2023 and 2022 , the net additional common stock equivalents had a $( 0.02 ) per s hare effect on the calculation of dilutive earnings per share.

For fiscal years 2025, 2024 and 2023 , the net additional common stock equivalents had a $( 0.01 ), $( 0.03 ) and $( 0.02 ) per share effect on the calculation of dilutive earnings per share, respectively.

The average shares outstanding used to compute basic and diluted earnings per share are as follows (amounts in thousands) :

27 unchanged sentences

Recently Adopted Accounting Pronouncements:

In June 2016, the Financial Accounting Standard Board (“FASB”) issued ASU 2016 - 13, Financial Instruments - Credit Losses (Topic 326 ), which significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.

The ASU replaces the “incurred loss” model with an “expected credit loss” model that requires entities to estimate an expected lifetime credit loss on financial assets, including trade accounts receivable.

The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022.

Allowance for credit losses for accounts receivable is the most significant item for the Company under this ASU.

The Company adopted ASU 2016 - 13 effective on March 26, 2023.

The adoption of this standard did not have a material impact on our consolidated financial statements.

In November 2023, the FASB issued ASU 2023 - 07 “Segment Reporting (Topic 280 ):

Improvements to Reportable Segment Disclosures” to expand the disclosure requirements for reportable segments.

The standard expands reportable segment disclosure requirements for public business entities primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment operating income.

The Company adopted ASU 2023 - 07 in fiscal year 2025.

The adoption of this new accounting standard did not have an impact on the Company's res ults of operations, financial position or cash flows.

See Note 7 to our Consolidated Financial Statements in this report for financial information for these segments.

Recent Accounting Guidance Not Yet Adopted:

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The adoption of the ASU is not expected to have a material impact on the Company’s financial statement disclosures.

In November 2024, the FASB issued ASU 2024 - 03 “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220 - 40 ):

Disaggregation of Income Statement Expenses” which requires public entities to disclose specified information about certain costs and expenses.

ASU 2024 - 03 is effective for annual reporting periods beginning in fiscal 2028, and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

The adoption of the ASU is not expected to have a material impact on the Company’s financial statement disclosures.

Reclassification of Amounts:

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$ 50,024 $ 38,944

Total depreciation and amortization expense relating to property and equipment amounted to $ 7.8 mill ion, $ 6.5 million and $ 5.7 million in fiscal years 2024 , 2023 and 2022 , respectively.

Total depreciation and amortization expense relating to property and equipment amou nted to $ 10.1 million, $ 7.8 million and $ 6.5 million in fiscal years 2025 , 2024 and 2023 , respectively.

NOTE 3 – LONG-TERM DEBT

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Under the Credit Agreement, the Company may make restricted payments up to $ 25.0 million in the aggregate over the term of the Credit Agreement and $ 10.0 million in any single fiscal year to repurchase shares and pay dividends.

As of March 30, 2024 , $ 80.0 million was available for borrowing under the revolving credit facility.

As of March 30, 2024 there were no amounts out standing under the revolving credit facility.

During fiscal year 2024 , $ 12.9 million from the revolving credit facility was used for three business acquisitions.

As of March 30, 2024 , $ 4.2 million was outstanding on the 2018 Term Loan, of which $ 2.3 million was included in current liabilities on the Consolidated Balance Sheets with the remainder included in long-term debt.

As of March 29, 2025 , $ 80.0 million was available for borrowing under the revolving credit facility, of which $ 30.9 million was out standing.

During fiscal year 2025 , $ 87.4 million from cash on hand and the revolving credit facility was used for two business acquisitions.

As of March 29, 2025 , $ 1.8 million was outstanding on the 2018 Term Loan, which was included in current liabilities on the Consolidated Balance Sheets.

The 2018 Term Loan requires total repayments (principal plus interest) of $ 0.2 million per month through December 2025.

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The Company’s interest rate for the revolving credit facility for fiscal year 2025 ranged from 5.1 % to 6.2 %.

The Company's interest rate for the revolving credit facility at March 29, 2025 was 5.2 %.

Interest on outstanding borrowings under the 2018 Term Loan accrue at a fixed rate of 3.90 % over the term of the loan.

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The Company was in compliance with all loan covenants and requirements during fiscal years 2025 and 2024 .

The Company's leverage ratio, as defined in the Credit Agreemen t, was 0.10 at March 30, 2024 , compared with 1.60 at March 25, 2023 .

The Company has pledged all of its U.S.

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federal income tax rate and the income tax provision reflected in the Consolidated Statements of Income is as follows (amounts in thousands):

Effective Tax Rate

Federal Income Tax at Statutory Rate

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Non-Deductible Acquisition Costs

71 0.4 % 6 206

GILTI and 78 Gross Up

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Inventory Reserves

Net Operating losses

Non-Qualified Deferred Compensation Plan

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Capitalized Inventory Costs

Capitalized Acquisition Costs

Total Deferred Tax Assets

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The Company's foreign subsidiary undistributed earnings are considered to be permanently reinvested.

At March 29, 2025, the Company had net operating loss (NOL) carryforwards of $ 1.2 million in the U.S.

and $ 0.3 million in Ireland, which could be used to offset future taxable income and reduce income tax expense.

These NOL carryforwards will not expire.

The Company’s policy regarding interest and/or penalties related to income tax matters is to recognize such items as a component of the income tax provision.

The Company recognized no interest expense or penalties associated with uncertain tax benefits accrued for fiscal years 2025 , 2024 and 2023 .

In accordance with applicable accounting guidance, the amount of unrecognized tax liability from uncertain positions was $ 0 at year-end fiscal year 2024 , 2023 and 2022 .

In accordance with applicable accounting guidance, the amount of unrecognized tax liability from uncertain positions was $ 0 at year-end fiscal years 2025 , 2024 and 2023 .

The Company assesses its deferred tax assets annually for expected utilization.

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Plan participants are fully vested in their contributions while Company contributions are fully vested after three years of service.

The Company’s matching contributions to the 401K Plan were approximat ely $ 1.5 million, $ 1.2 million and $ 1.1 million in fiscal years 2024 , 2023 and 2022 , respectively.

The Company’s matching contributions to the 401K P lan were approximately $ 1.8 million, $ 1.5 million and $ 1.2 million in fiscal years 2025 , 2024 and 2023 , respectively.

In the deferred profit sharing portion of the Plan, Company contributions are made at the discretion of the Company’s Board of Directors.

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In the event of bankruptcy, the assets of the NQDC Plan are available to satisfy the claims of the Company’s general creditors.

The liability for compensation deferred under the NQDC Plan was $ 0.1 mill ion as of March 30, 2024 and $ 0.2 million as of March 25, 2023 , and is included as a component of other liabilities (non-current) on the Consolidated Balance Sheets.

The liability for compensation deferred under the NQDC Plan was $ 0.1 million as of both March 29, 2025 and March 30, 2024 , and is i ncluded as a component of other liabilities (non-current) on the Consolidated Balance Sheets.

Post-retirement Health Care Plans.

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( 102 ) ( 121 ) ( 136 )

Actuarial (gain) loss

Actuarial (gain)

( 89 ) ( 85 ) ( 179 )

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The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows (amounts in thousands):

Increasing the assumed health care cost trend rate by one percentage point would increase the accumulated post-retirement benefit obligation and the annual net periodic post-retirement benefit c ost by $ 0.1 million.

A one percentage point decrease in the healthcare cost trend would decrease the accumulated post-retirement benefit obligation and the annual net periodic post-retirement benefit co st by $ 0.1 mill ion.

NOTE 6 – STOCK-BASED COMPENSATION

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The 2021 Plan provides for, among other awards, grants of restricted stock units and stock options to directors, officers and key employees at the fair market value at the date of grant .

At March 30, 2024 , 0.6 mi llion shares of common stock were available for future grant under the 2021 Plan.

The Company receives an excess tax benefit related to restricted stock vesting and stock options exercised and redeemed.

The discrete benefits related to share-based compensation and stock option activity in fiscal years 2024 , 2023 and 2022 w ere $ 0.7 million , $ 0.4 million and $ 1.4 million, respectively.

At March 29, 2025 , 0.6 million shares of common stock were available for future grant under the 2021 Plan.

The Company receives an excess tax benefit related to restricted stock v esting and stock options exercised and redeemed.

The discrete benefits related to share-based compensation and stock option activity in fiscal years 2025 , 2024 and 2023 were $ 1.3 million, $ 0.6 million and $ 0.4 million, respectively.

Restricted Stock Units:

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These restricted stock units are either time vested, or vest following the third fiscal year from the date of grant subject to cumulative diluted earnings per share or cumulative Adjusted EBITDA targets over the eligible period.

On the date of each annual meeting of shareholders, the Company’s non-employee directors receive an annual grant of restricted stock units valued at $ 50,000 that vest after one year.

During fiscal year 2025, on the date of the annual meeting of shareholders, the Company’s non-employee directors received an annual grant of restricted stock units valued at $ 85,000 that vests after one year.

During fiscal years 2024 and 2023, the Company's non-employee directors received an annual grant of restricted stock units valued at $ 50,000 that vested after one year.

Compensation cost ultimately recognized for performance-based restricted stock units will equal the grant date fair market value of the unit that coincides with the actual outcome of the performance conditions.

On an interim basis, the Company records compensation cost based on the estimated level of achievement of the performance conditions.

The expense relating to the time vested restricted stock units is recognized on a straight-line basis over the requisite service period for the entire award.

During fiscal year 2024 , 38 ,000 s hares of time-vested restricted stock units were granted and 10,000 shares of performance-based restricted stock units were granted.

The expense relating to the time vested restricted stock units is recognized on a straight-line basis less estimate for forfeitures over the requisite service period for the entire award.

During fiscal year 2025 , 32,000 shares of time-vested restricted stock units were granted and 10,000 shares of performance-based restricted stock units were granted.

During fiscal year 2022 , 30,000 shares of time-vested restricted stock units were granted and 15,000 shares of performance-based stock units were granted.

During fiscal year 2024 , 38,000 shares of time-vested restricted stock units were granted and 10,000 shares of performance-based restricted stock units were granted.

During fiscal year 2023 , 19,000 shares of time-vested restricted stock units were granted and 11,000 shares of performance-based restricted stock units were granted.

Performance-based restricted stock units can be earned up to a maximum of 150 % of shares awarded.

The following table summarizes the restricted stock units vested and shares issued during fiscal years 2025 , 2024 and 2023 (amounts in thousands, except per unit data):

April 2019 – March 2022

1 $ 15.65 Time Vested

April 2017 – March 2020

20 $ 23.50 82 % 16 May 2022

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7 September 2022

October 2018 – September 2020

1 $ 20.81 Time Vested

1 October 2020

3 $ 34.68 Time Vested

3 January 2021

April 2018 – March 2021

29 $ 15.30 Time Vested

29 March 2021

April 2018 – March 2021

1 $ 15.65 Time Vested

April 2018 – March 2021

29 $ 15.30 64 % 19 May 2021

September 2022

September 2020 – September 2021

September 2022

1 $ 73.30 Time Vested

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April 2020 - March 2023

2 $ 26.25 Time Vested 2 April 2023

July 2020 - July 2023

26 $ 27.08 Time Vested

20 March 2022

April 2019 – March 2022

20 $ 23.50 82 % 16 May 2022

September 2020

September 2020 - July 2023

4 $ 28.54 Time Vested

September 2020

September 2021 – September 2022

September 2020 - July 2023

5 $ 29.76 Time Vested

September 2022

September 2022 - September 2023

5 $ 73.80 Time Vested

5 September 2023

September 2020

September 2020 - September 2023

3 $ 29.76 Time Vested

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October 2018 – September 2023

1 $ 20.81 Time Vested 1 October 2023

June 2021 - March 2024

11 $ 53.17 Time Vested 11 March 2024

June 2021 - March 2024

10 $ 53.17 136 % 14 May 2024

January 2022 - March 2024

1 $ 90.92 136 % 1 May 2024

May 2023 - April 2024

1 $ 89.70 Time Vested

1 October 2022

April 2020 - March 2023

2 $ 26.25 Time Vested 2 April 2023

July 2020 - July 2023

26 $ 27.08 Time Vested 26 July 2023

August 2023 - August 2024

6 $ 90.56 Time Vested 6 August 2024

September 2023

September 2020 - July 2023

4 $ 28.54 Time Vested 4 July 2023

September 2023 - September 2024

4 $ 109.55 Time Vested

4 September 2024

September 2020 - July 2023

5 $ 29.76 Time Vested 5 July 2023

September 2021

September 2021 - September 2024

5 $ 73.80 Time Vested 5 September 2023

4 $ 67.76 Time Vested

4 September 2024

September 2020 - September 2023

3 $ 29.76 Time Vested 3 September 2023

October 2018 – September 2023

October 2018 - October 2024

1 $ 20.81 Time Vested 1 October 2024

June 2021 - March 2024

March 2022 - March 2025

1 $ 76.31 Time Vested 1 March 2025

May 2022 - March 2025

9 $ 63.17 Time Vested 9 March 2025

The following table summarizes the non-vested restricted stock units outstanding as of March 29, 2025 (amounts in thousands, except per unit data):

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4 $ 20.81 Time Vested

May 2021 – May 2024

1 $ 54.21 Time Vested

June 2021 – March 2024

10 $ 53.17 136% of target level

September 2021

September 2021 – September 2024

4 $ 67.76 Time Vested

January 2022 – March 2024

May 2022 - March 2025

9 $ 63.17 0% of target level

January 2022 – January 2025

1 $ 90.41 Time Vested

March 2022 – March 2025

August 2022 - August 2025

1 $ 78.04 Time Vested

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8 $ 89.70 Time Vested

August 2022 - August 2025

May 2023 – May 2026

11 $ 89.70 Time Vested

September 2022

September 2022 – September 2023

April 2024 - April 2027

2 $ 107.13 Time Vested

December 2022

December 2022 - December 2025

April 2024 - April 2027

1 $ 108.04 Time Vested

December 2022

December 2022 - December 2025

May 2024 - May 2027

1 $ 119.45 Time Vested

May 2024 - May 2027

1 $ 124.12 Time Vested

May 2024 - March 2027

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10 $ 124.12 Time Vested

May 2023 – May 2026

July 2024 - July 2027

1 $ 116.91 Time Vested

August 2023 – August 2024

September 2024

September 2024 - September 2025

6 $ 120.66 Time Vested

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September 2024 - September 2027

1 $ 123.33 100% of target level

September 2024

September 2024 - September 2027

1 $ 123.33 Time Vested

Total expense relating to restricted stock units, based on grant date fair value and the achievem ent criteria, was $ 3.2 million, $ 2.0 million and $ 1.6 million in fiscal years 2024 , 2023 and 2022 , respectively.

December 2024

December 2024 - December 2027

9 $ 103.44 Time Vested

Total expense relating to restricted stock units, based on grant date fair va lue and the achievement criteria, was $ 2.4 million, $ 3.2 million and $ 2.0 million in fiscal years 2025 , 2024 and 2023 , respectively.

As of March 29, 2025 , unearned compensation, to be recognized over the grants’ respective service periods, totaled $ 4.2 million based on estimated achievement levels as of March 30, 2025.

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Expected Term (in Years)

6.34 4.58 6.25

Annual Dividend Rate

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Under FASB ASC Topic 718, “Compensation – Stock Compensation”, the Company has elected to account for forfeitures as they occur.

During fiscal year 2025 , the Company granted options for 10,000 shares of common stock in the aggregate to Company employees that vest over three years.

During fiscal year 2024 , the Company granted options for 7,000 shares of common stock in the aggregate to Company employees that vest over three years, an option for 10,000 shares of common stock to a Company employee that vests over five years and options for 30,000 shares of common stock ( 10,000 each) to three Company directors that vest over five years.

During fiscal year 2023 , the Company granted options for 46,000 shares of common stock in the aggregate to Company employees that vest over three years and an option for 10,000 shares of common stock to a Company director that vests over five years .

During fiscal year 2022 , the Company granted an option for 10,000 shares of common stock each to two Company directors ( 20,000 shares in the aggregate) that vest over five years, an option for 2,000 shares of common stock each to five employees ( 10,000 shares in the aggregate) that vests over three years, and an option for 90,000 shares of common stock in the aggregate to employees during an acquisition that vests over five years and an option for 6,000 shares of common stock to a Company employee that vests over three years.

The expense related to all stock option awards w as $ 1.3 mi llion in fiscal year 2024 , $ 1.4 million in fiscal year 2023 and $ 0.7 million in fiscal year 2022 .

The expense related to all stock option awards was $ 0.8 million, $ 1.3 million and $ 1.4 million in fiscal years 2025, 2024 and 2023, respectively.

The following table summarizes the Company’s options for fiscal years 2025 , 2024 and 2023 (amounts in thousands, except per option data):

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68 $ 61.59 5 $ 796

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of fiscal year 2024 and the exercise price, multiplied by the number of in-the-money stock options) that would have been received by the option holders had all holders exercised their options on March 30, 2024 .

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of fiscal year 2025 and the exercise price, multiplied by the number of in-the-money stock options) that would have been received by the option holde rs had all holders exercised their options on March 29, 2025 .

The amount of aggregate intrinsic value will change based on the fair market value of the Company’s common stock.

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The aggregate intrinsic value of stock options exercised in fiscal years 2025 , 2024 and 2023 was $ 3.2 million, $ 1.3 million and $ 0.3 million, respectively.

Cash received from the exercise of options in fiscal years 2024 , 2023 and 2022 was $ 1.5 million, $ 0.1 milli on and $ 1.0 million, respectively.

Cash received from the exercise of options in fiscal years 2025 , 2024 and 2023 was $ 1.3 million, $ 1.5 million and $ 0.1 million, respectively.

NOTE 7 – SEGMENT AND GEOGRAPHIC DATA

The basis for determining our operating segments is the manner in which financial information is used in monitoring our operations.

Operating segments represent a component of the Company that engages in business activities from which it may recognize revenues and incur expenses whose operating results are regularly reviewed by the public entity’s chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Once operating segments are identified, the Company determined which of those operating segments are required to be presented as reportable segments based on the quantitative thresholds.

Transcat has two reportable segments:

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Through our Distribution segment, we sell and rent national and proprietary brand instruments to customers globally.

The Company has no inter-segment sales.

We believe that reporting performance at the operating income level is the best indicator of segment performance.

The following table presents segment and geographic data for fiscal years 2024 , 2023 and 2022 (dollars in thousands):

$ 169,525 $ 144,883 $ 122,005

89,956 85,686 82,954

259,481 230,569 204,959

Gross Profit:

There are no intersegment revenues.

Our CODM is Lee Rudow, President & Chief Executive Officer.

Both of our reportable segments are regularly reviewed by the CODM through monthly revenue, gross profit, operating income and consolidated financial forecast updates and through regular and monthly meetings with the executive leadership team.

The primary financial measure used by the CODM for our reportable segments is Operating Income, as reported in our Consolidated Statements of Income and is most consistent with the measurement principles used in the consolidated financial statements.

This is used by the CODM to make decisions on resource allocation, assess the performance of the business, and monitor budget versus actual results.

Significant expenses reviewed by the CODM consist of cost of revenue and operating expenses, which individually are consistent in total with what is shown on the face of the consolidated statements of income.

The CODM does not review assets in evaluating the results of our segments, and therefore, such information is not presented.

$ 96,993 $ 181,428 $ 278,421

Cost of Revenue

68,199 120,769 188,968

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26,101 45,478 71,579

Distribution (1)

21,815 16,891 16,189

64,025 52,107 44,296

Operating Income

2,693 15,181 17,874

Capital Expenditures

5,189 8,008 13,197

Depreciation and Amortization

7,485 11,082 18,567

Unallocated Amounts:

Interest and Other Expense, net

$ 89,956 $ 169,525 $ 259,481

Provision for Income Taxes

Cost of Revenue

63,403 112,272 175,675

26,553 57,253 83,806

Operating Expenses

21,815 42,210 64,025

Total Assets:

Operating Income

4,738 15,043 19,781

Capital Expenditures

7,139 6,141 13,280

Depreciation and Amortization

4,284 9,193 13,477

$ 85,686 $ 144,883 $ 230,569

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Depreciation and Amortization (2) :

Cost of Revenue

63,969 98,245 162,214

21,717 46,638 68,355

Operating Expenses

16,891 35,216 52,107

Capital Expenditures:

Operating Income

4,826 11,422 16,248

Capital Expenditures

3,845 5,569 9,414

Depreciation and Amortization

2,155 8,800 10,955

The following table presents geographic data for fiscal years 2025 , 2024 and 2023 (dollars in thousands):

Geographic Data:

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$ 50,024 $ 38,944 $ 29,064

Operating expense allocations between segments are based on actual amounts, a percentage of revenues, headcount, and management’s estimates.

Including amortization of catalog costs and intangible assets.

Revenues are attributed to the countries based on the destination of a product shipment or the location where service is rendered.

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The Company determines if an arrangement is a lease at inception.

Our lease agreements generally contain lease and non-lease components.

Historically, non-lease components such as utilities have been immaterial.

Payments under our lease arrangements are primarily fixed.

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Our lease terms include periods under options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

Our lease agreements generally contain lease and non-lease components.

Historically, non-lease components such as utilities have been immaterial.

Transcat leases facilities, equipment, and vehicles under various non-cancelable operating leases.

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There is no transfer of title or option to purchase the leased assets upon expiration.

The weighted average discount rate for fiscal years 2024 , 2023 and 2022 was 4.1 %, 3.9 % and 4.2 %, respectively.

The weighted average discount rate for fiscal years 2025 , 2024 and 2023 was 4.4 %, 4.1 % and 3.9 %, re spectively.

The weighted average remaining lease term is approximately eleven years.

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$ 9,723 $ 4,965 $ 4,519

Total rental expense was approximatel y $ 6.6 millio n, $ 5.3 million and $ 4.3 million in fiscal years 2024 , 2023 and 2022 , respectively.

Total rental expense was approximately $ 7.3 million, $ 6.6 million and $ 5.3 million in fiscal years 2025 , 2024 and 2023 , respectively.

The minimum future annual rental payments under the non-cancelable leases at March 29, 2025 are as follows (in millions):

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Present value of remaining lease payments

Effective December 2018, the Company has term loan repayments (principal plus interest) of $ 0.2 million per month through December 2025.

Principal payments relating to the 2018 Term Loan will be $ 2.3 million in fiscal year 2025 and $ 1.8 million in fiscal year 2026.

Contingent Consideration:

In connection with the acquisition of NEXA, there were potential earn-out payments of up to $ 7.5 million over the four -year period following the closing of the transaction based upon NEXA achieving certain annual revenue and EBITDA goals.

As of March 25, 2023, the estimated fair value for the earn-out payments was zero.

During fiscal year 2024, the Company entered into an Amendment to the Share Purchase Agreement (the “First Amendment”).

During fiscal year 2024, the Company entered into an Amendment to the Share Purchase Agreement with NEXA (the “First Amendment”).

Pursuant to the First Amendment, the potential earn-out payments would have been up to $ 7.1 million for the Earn-Out years of calendar year 2023, 2024 and 2025 based upon NEXA achieving certain EBITDA goals.

If achieved, the earn-out payments would be made in shares of common stock unless certain criteria is met for cash payment.

Subsequent to fiscal year 2024, the Company entered into an Amendment to the Share Purchase Agreement (the “Second Amendment”).

Subsequent to fiscal year 2024, the Company entered into an Amendment to the Share Purchase Agreement with NEXA (the “Second Amendment”).

Pursuant to the Second Amendment, the Company agreed to pay approximately $ 0.5 million for the Earn-Out year of calendar year 2023 and removed the entitlement for any future earn-out payments.

As of March 30, 2024, the estimated fair value of the 2023 earn-out payment was approximately $ 0.5 million.

As of March 30, 2024, the estimated fair value of the 2024 and 2025 earn-out payments was zero.

This payment was made during fiscal year 2025.

As of March 29, 2025 and March 30, 2024, the estimated fair value of the 2024 and 2025 earn-out payments was zero.

NOTE 9 – BUSINESS ACQUISITIONS

Effective December 10, 2024, the Company acquired all of the membership units of Martin Calibration, Inc, a privately-held Minnesota calibration services company ("Martin").

Martin is ISO 17025 certified.

This transaction aligned with a key component of the Company’s acquisition strategy of targeting businesses that expand the depth and breadth of the Company’s service capabilities.

The Martin goodwill is primarily attributable to the workforce acquired, as well as operational synergies and other intangibles that do not qualify for separate recognition.

The goodwill and intangible assets relating to the Martin acquisition have been allocated to the Service segment.

Intangible assets related to the Martin acquisition are being amortized for financial reporting purposes on an accelerated basis over the estimated useful life of up to 30 years and are deductible for tax purposes.

Amortization of goodwill related to the Martin acquisition is deductible for income tax purposes.

The total purchase price for Martin was approximately $ 81.8 million consisting of $ 71.9 million in cash and the issuance of our common stock valued at $ 9.9 million, including $ 2.0 million in cash placed in escrow for certain post-closing adjustments and indemnification claims, if any.

As of March 29, 2025, $ 2.2 million remains unpaid and is reflected in current liabilities in the Consolidated Balance Sheets.

The purchase price allocation is subject to revision based upon our final review of tangible and intangible asset valuation assumptions, working capital adjustments, assets acquired, liabilities assumed and consideration transferred.

The following is a summary of the preliminary purchase price allocation, in the aggregate, to the fair value, based on Level 3 inputs, of Martin's assets and liabilities acquired on December 10, 2024 ( in thousands):

Intangible Assets – Customer Base & Contracts

Intangible Assets – Trademarks and Tradenames

Accounts Receivable

Property and Equipment

Right To Use Assets

Other Current Assets

Current Liabilities

Lease Liabilities

Total Purchase Price

From the date of acquisition through the end of fiscal year 2025, Martin has contributed revenue of $ 8.8 million and an operating income of $ 0.5 million, which includes the negative impact of amortization of the acquired intangible assets.

Effective April 15, 2024, the Company acquired Becnel, pursuant to an Agreement and Plan of Merger (the “Becnel agreement”), by and among the Company, Becnel and the other parties thereto.

Becnel is an ISO 9001:2015 certified provider of rental tools and services primarily utilized in the decommissioning and maintenance of oil wells.

This transaction aligned with a key component of the Company’s acquisition strategy of targeting businesses that expand the depth and breadth of the Company’s service and rental capabilities.

The Becnel goodwill is primarily attributable to the workforce acquired, as well as operational synergies and other intangibles that do not qualify for separate recognition.

The goodwill and intangible assets relating to the Becnel acquisition have been allocated to both the Service and Distribution segment.

Intangible assets related to the Becnel acquisition are being amortized for financial reporting purposes on an accelerated basis over the estimated useful life of up to eleven years and are deductible for tax purposes.

Amortization of goodwill related to the Becnel acquisition is deductible for income tax purposes.

The total purchase price for Becnel was approximately $ 49.8 million consisting of up to $ 17.5 million in cash and the issuance of our common stock valued at $ 32.3 million.

Pursuant to the Becnel agreement, the Company held back approximately $ 2.5 million of the purchase price for certain potential post-closing adjustments.

This includes $ 0.5 million withheld for ordinary post-closing adjustments and $ 2.0 million withheld that is subject to revenue target achievement.

Pursuant to the Becnel agreement, the purchase price is subject to reduction by $ 2.0 million if certain revenue targets are not met through April 15, 2026.

As of April 15, 2024 and December 28, 2024, the estimated fair value of this contingent consideration, classified as Level 3 in the fair value hierarchy, was approximately $ 1.5 million and $ 1.6 million, respectively.

This amount was calculated using a Geometric Brownian motion distribution that was then used in a Monte Carlo simulation model.

Assumptions used in the Monte Carlo simulation model included:

1 ) discount rate of 11.00 %, 2 ) risk-free interest rate of 5.00 %, 3 ) asset volatility of 30.00 %, and 4 ) forecasted revenue.

50 % of this contingent consideration is payable in cash and 50 % of this contingent consideration is payable in 9,283 shares of Transcat common stock.

The cash portion of the contingent consideration is classified as a liability and is recorded in other liabilities in the Consolidated Balance Sheets.

The stock portion of the contingent consideration is classified as equity and is recorded in shareholders equity in the Consolidated Balance Sheets.

The contingent consideration payout will either be $ 0 or $ 2.0 million depending on the revenue target achievement.

This cash portion of the contingent consideration is remeasured quarterly.

If, as a result of remeasurement, the value of the cash portion of the contingent consideration changes, any charges or income will be included in the Company’s Consolidated Statements of Income.

After reviewing the fiscal year 2026 forecast, the Company revalued the contingent consideration payout during the fourth quarter of fiscal year 2025.

As of March 29, 2025, the estimated fair value of the contingent consideration, classified as Level 3 in the fair value hierarchy, was zero.

This amount was calculated using a Geometric Brownian motion distribution that was then used in a Monte Carlo simulation model.

Assumptions used in the Monte Carlo simulation model included:

1 ) discount rate of 14.50 %, 2 ) risk-free interest rate of 4.01 %, 3 ) asset volatility of 30.00 %, and 4 ) forecasted revenue.

The Company recognized a non-cash gain of approximately $ 0.8 million, which was recorded in general and administrative expenses in its Consolidated Statement of Income for the quarter ended March 29, 2025.

Due to the uncertainty with utilizing these significant unobservable inputs for this Level 3 fair value measurement, materially higher or lower fair value measurements may be recognized at subsequent remeasurement periods.

The following is a summary of the purchase price allocation, in the aggregate, to the fair value, based on Level 3 inputs, of Becnel's assets and liabilities acquired on April 15, 2024 (in thousands):

Intangible Assets – Customer Base & Contracts

Intangible Assets – Trademarks and Tradenames

Accounts Receivable

Property and Equipment

Other Current Assets

Current Liabilities

Total Purchase Price

From the date of acquisition through the end of fiscal year 2025, Becnel has contributed revenue of $ 9.0 million and an operating loss of $ 1.0 million, which includes the negative impact of amortization of the acquired intangible assets.

Effective August 8, 2023, Transcat purchased all of the outstanding capital stock of Axiom Test Equipment, Inc.

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Pursuant to the asset purchase agreement, the Company held back approximately $ 3.9 million of the purchase price for certain potential post-closing adjustments.

The following is a summary of the preliminary purchase price allocation, in the aggregate, to the fair value, based on Level 3 inputs, of Axiom's assets and liabilities acquired on August 8, 2023 ( in thousands):

During fiscal year 2025, $ 2.3 million was paid to settle a holdback for Axiom.

At March 29, 2025, $ 1.6 million remains as a holdback and is reflected in other liabilities on the Consolidated Balance Sheets.

The following is a summary of the purchase price allocation, in the aggregate, to the fair value, based on Level 3 inputs, of Axiom's assets and liabilities acquired on August 8, 2023 ( in thousands):

Intangible Assets – Customer Base & Contracts

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Total Purchase Price

From the date of acquisition throu gh the end of fiscal year 2024, Axi om has contributed revenue o f $ 7.2 million and operating income of $ 0.7 million, which in cludes the negative impact of amortization of the acquired intangible assets.

During fiscal year 2025, Axiom contributed revenue of $ 8.6 million and operating income of $ 0.2 million, which includes the negative impact of amortization of the acquired intangible assets.

Effective July 12, 2023, Transcat purchased all of the outstanding capital stock of SteriQual, Inc.

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Pursuant to the asset purchase agreement, the purchase price is subject to reduction by $ 0.5 million if certain revenue targets are not met through July 12, 2024.

This contingent consideration is remeasured quarterly.

If, as a result of remeasurement, the value of the contingent consideration changes, any charges or income will be included in the Company’s Consolidated Statements of Income.

The purchase price was reduced to $ 3.8 million as of December 23, 2023 as the Company recorded a receivable in the amount of $ 0.5 million related to the revenue target contingent consideration.

This receivable was recognized based on the facts and circumstances at the date of acquisition and is recognized as a component of goodwill and not recorded in the Consolidated Statement of Income.

The following is a summary of the preliminary purchase price allocation, in the aggregate, to the fair value, based on Level 3 inputs, of SteriQual's assets and liabilities acquired on July 12, 2023 ( in thousands):

The revenue targets were not met and the remaining $ 0.4 million of the holdback was paid during the second quarter of fiscal year 2025.

The following is a summary of the purchase price allocation, in the aggregate, to the fair value, based on Level 3 inputs, of SteriQual's assets and liabilities acquired on July 12, 2023 ( in thousands):

Intangible Assets – Customer Base & Contracts

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Total Purchase Price

From the date of acquisitio n through the end of fiscal year 2024, SteriQual has contributed revenue of $ 2.6 million and operating income of $ 0.3 million, which in cludes the negative impact of amortization of the acquired intangible assets.

During fiscal year 2025, SteriQual contributed revenue of $ 2.2 million and an operating loss of $ 0.2 million, which includes the negative impact of amortization of the acquired intangible assets.

Effective March 27, 2023, Transcat purchased all of the outstanding capital stock of TIC-MS, Inc.

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5 million placed in escrow for contingent consideration, certain post-closing adjustments and indemnification claims, if any, and the issuance of 77,387 shares of our common stock valued at $ 6.9 million.

Pursuant to the asset purchase agreement, the purchase price was be subject to reduction by up to $ 0.5 million if a key customer relationship was not retained through March 27, 2024.

Pursuant to the asset purchase agreement, the purchase price was subject to reduction by up to $ 0.5 million if a key customer relationship was not retained through March 27, 2024.

As of March 30, 2024, we continued to retain this key customer relationship.

As a result, there has not been a receiv able recognized relating to the $ 0.5 million contingent consideration.

As a result, there was no receiv able recognized relating to the $ 0.5 million contingent consideration.

The following is a summary of the purchase price allocation, in the aggregate, to the fair value, based on Level 3 inputs, of TIC-MS's assets and liabilities acquired on March 27, 2023 ( in thousands):

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Total Purchase Price

From the date of acquisition through the end of fiscal year 2024, TIC-MS has contributed revenue of $ 3.2 million and operating income of $ 1.3 million, which includes the negative impact of amortization of the acquired intangible assets.

Effective February 2, 2023, Transcat acquired substantially all of the assets of Elite Calibration LLC (“Elite”), a California based provider of calibration services.

This transaction aligned with a key component of the Company’s acquisition strategy of targeting businesses that can leverage the Company’s already existing operating infrastructure.

All the goodwill related to the Elite acquisition has been allocated to the Service segment.

Amortization of goodwill related to the Elite acquisition is deductible for tax purposes.

The goodwill is primarily attributable to the workforce acquired, as well as operational synergies and other intangibles that do not qualify for separate recognition.

The total purchase price for the assets of Elite was approximately $ 0.9 million, of which $ 0.8 million was paid in cash.

Pursuant to the asset purchase agreement, the Company held back $ 0.1 million of the purchase price for certain potential post-closing adjustments.

As of March 30, 2024, no amounts have been paid.

The following is a summary of the purchase price allocation, in the aggregate, to the fair value, based on Level 3 inputs, of Elite’s assets and liabilities acquired on February 2, 2023 ( in thousands):

Accounts Receivable

Total Purchase Price

Since this operation was integrated immediately into our existing operations, its separate contributed revenue and operating income is undeterminable.

Complete Calibrations :

Effective September 28, 2022, Transcat purchased all of the outstanding capital stock of Galium Limited (d/b/a Complete Calibrations) ("Complete Calibrations"), an Irish company.

This transaction aligned with a key component of the Company’s acquisition strategy of targeting businesses that expand the depth and breadth of the Company’s Service capabilities.

All the goodwill related to the Complete Calibrations acquisition has been allocated to the Service segment.

Amortization of goodwill related to the Complete Calibrations acquisition is not deductible for tax purposes.

The goodwill is primarily attributable to the workforce acquired, as well as operational synergies and other intangibles that do not qualify for separate recognition.

The total purchase price paid for Complete Calibrations was approximately $ 1.2 million in cash.

In connection with this transaction, the Company also entered into a Technology License Agreement with Calibration Robots Limited, an Irish company and related party to Complete Calibrations, for the use of their proprietary robotics in completing calibrations.

The Technology License Agreement includes transactional royalties in the amount of 3 Euros ($ 3.19 ) per calibration performed by technology covered under this license agreement, with a royalty term of up to ten years commencing from the earlier of (i) the date on which cumulative revenue earned from technology covered under this license agreement equals 0.75 million Euros ($ 0.80 million), and (ii) March 28, 2024.

In addition to the transactional royalties, as long as a key employee is employed by the Company, there is an annual royalty fee of 0.1 million Euros ($ 0.11 million).

For purposes of this paragraph, we used a conversion rate of 1.0851 to c onvert Euro to U.S.

dollar as of March 30, 2024 .

As of March 30, 2024 , the key employee is still employed by the Company.

The following is a summary of the purchase price allocation, in the aggregate, to the fair value, based on Level 3 inputs, of Complete Calibrations’ assets and liabilities acquired on September 28, 2022 ( in thousands):

Total Purchase Price

During fiscal year 2024, Complete Calibrations has contributed revenue of $ 0.4 million and operating loss of less than $ 0.1 million.

Effective September 27, 2022, Transcat acquired substantially all of the assets of e2b Calibration ( “e2b” ), an Ohio based provider of calibration services.

This transaction aligned with a key component of the Company’s acquisition strategy of targeting businesses that expand the depth and breadth of the Company’s Service capabilities.

The e2b goodwill is primarily attributable to the workforce acquired, as well as operational synergies and other intangibles that do not qualify for separate recognition.

All the goodwill and intangible assets relating to the e2b acquisition has been allocated to the Service segment.

Intangible assets related to the e2b acquisition are being amortized for financial reporting purposes on an accelerated basis over the estimated useful life of up to fifteen years and are deductible for tax purposes.

Amortization of goodwill related to the e2b acquisition is deductible for tax purposes.

The total purchase price paid for the assets of e2b was approximately $ 3.1 million in cash.

Pursuant to the asset purchase agreement, the Company held back $ 0.9 million of the purchase price in escrow for certain potential post-closing adjustments.

During the third quarter of fiscal year 2023, $ 0.6 million of the escrow was released to the sellers.

During the third quarter of fiscal year 2024, $ 0.3 million was released to the sellers.

As of March 30, 2024 , there is no money remaining in escrow.

The following is a summary of the purchase price allocation, in the aggregate, to the fair value, based on Level 3 inputs, of e2b’s assets and liabilities acquired on September 27, 2022 ( in thousands):

Intangible Assets – Customer Base & Contracts

Intangible Assets – Covenant Not to Compete

Accounts Receivable

Other Current Assets

Property and Equipment

Current Liabilities

Total Purchase Price

During fiscal year 2024, e2b has contributed revenue of $ 3.1 million and operating income of $ 0.4 million, which includes the negative impact of amortization of the acquired intangible assets.

Effective May 31, 2022, Transcat acquired substantially all of the assets of Charlton Jeffmont Inc., Raitz Inc.

and Toolroom Calibration Inc.

d/b/a Alliance Calibration (“Alliance”), an Ohio based provider of calibration services.

This transaction aligned with a key component of the Company’s acquisition strategy of targeting businesses that expand the depth and breadth of the Company’s Service capabilities.

The Alliance goodwill is primarily attributable to the workforce acquired, as well as operational synergies and other intangibles that do not qualify for separate recognition.

All the goodwill and intangible assets relating to the Alliance acquisition has been allocated to the Service segment.

Intangible assets related to the Alliance acquisition are being amortized for financial reporting purposes on an accelerated basis over the estimated useful life of up to fifteen years and are deductible for tax purposes.

Amortization of goodwill related to the Alliance acquisition is deductible for tax purposes.

The purchase price for Alliance was approximately $ 4.7 million and was paid with $ 4.0 million in cash and the issuance of 2,284 shares of our common stock valued at $ 0.1 million.

Pursuant to the asset purchase agreement, the Company held back $ 0.5 million of the purchase price for certain potential post-closing adjustments, and the purchase price would have been subject to reduction by $ 0.5 million if a key customer relationship was not retained.

During the first quarter of fiscal year 2024, $ 0.5 million of the holdback was released to the sellers.

The following is a summary of the purchase price allocation, in the aggregate, to the fair value, based on Level 3 inputs, of Alliance’s assets and liabilities acquired on May 31, 2022 ( in thousands):

Intangible Assets – Customer Base & Contracts

Intangible Assets – Covenant Not to Compete

Accounts Receivable

Property and Equipment

Current Liabilities

Total Purchase Price

During fiscal year 2024, Alliance has contributed revenue of $ 2.4 million and operating income of $ 0.7 million, whic h includes the negative impact of amortization of the acquired intangible assets.

During fiscal year 2025, TIC-MS contributed revenue of $ 3.2 million and operating income of $ 1.5 million, which includes the negative impact of amortization of the acquired intangible assets.

Effective August 31, 2021, Transcat purchased all of the outstanding capital stock of Cal OpEx Limited (d/b/a NEXA Enterprise Asset Management), an Irish company, which owns all of the issued and outstanding capital stock of its U.S.-based subsidiary, Cal OpEx Inc., a Delaware corporation (collectively, “NEXA”).

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As of March 30, 2024, the 2023 calendar Earn-Out Year was $ 0.5 million.

This will be paid during the first quarter of fiscal year 2025.

Contingent consideration is remeasured quarterly.

If, as a result of remeasurement, the value of the contingent consideration changes, any charges or income will be included in the Company’s Consolidated Statements of Income.

This was paid during the first quarter of fiscal year 2025.

Pursuant to the Second Amendment, the Company agreed to pay approximately $ 0.5 million for the 2023 Earn-Out Year and removed the entitlement for any future earn-out payments.

The results of acquired businesses are included in Transcat’s consolidated operating results as of the dates the businesses were acquired.

The following unaudited pro forma information presents the Company’s results of operations as if the acquisitions of Axiom, SteriQual, TIC-MS, Elite, Complete Calibrations, e2b and Alliance had occurred at the beginning of fiscal year 2022 .

The following unaudited pro forma information presents the Company’s results of operations as if the acquisitions of Martin, Becnel, Axiom, SteriQual, TIC-MS, Elite, Complete Calibrations, e2b and Alliance had occurred at the beginning of fiscal year 2023 .

The pro forma results do not purport to represent what the Company’s results of operations actually would have been if the transactions had occurred at the beginning of the period presented or what the Company’s operating results will be in future periods.

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The Company accrues for contingent consideration and holdback provisions based on their estimated fair value at the date of acquisition and at subsequent remeasurement periods, as applicable.

As of March 30, 2024 , $ 0.5 million of contingent consideration and $ 2.6 million of other holdback amounts were unpaid and are reflected in current liabilities on the Consolidated Balance Sheets and $ 1.6 mill ion of other holdback amounts unpaid are reflected in other liabilities on the Consolidated Balance Sheets.

During fiscal year 2024 , $ 0.8 mi llion of holdback amounts were paid.

During fiscal years 2023 and 2022 , no contingent consideration or other holdback amounts were paid.

During fiscal years 2024 , 2023 and 2022 , acquisition cos ts of $ 1.2 million, $ 0.2 million and $ 0.9 million, respectively, were recorded as incurred as general and administrative expenses in the Consolidated Statements of Income.

As of March 29, 2025 , no contingent consideration and $ 2.8 million of other holdback amounts were unpaid and are reflected in current liabilities on the Consolidated Balance Sheets and $ 1.6 million of other holdback amounts unpaid are reflected in other liabilities in the Consolidated Balance Sheets.

During fiscal year 2025, $ 2.7 million of holdback amounts were paid.

During fiscal year 2024, $ 0.8 million of holdback amounts were paid.

During fiscal year 2023 , no contingent consideration or other holdback amounts were paid.

During fiscal years 2025 , 2024 and 2023 , acquisition costs of $ 1.3 million, $ 1.2 million and $ 0.2 million, respectively, were recorded as incurred as general and administrative expenses in the Consolidated Statements of Income.

NOTE 10 – SHAREHOLDERS' EQUITY

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A portion of the net proceeds from this Offering were used to pay off the revolving credit facility in full.

During fiscal years 2024 , 2023 and 2022 , the Company repurchased and subsequently retired less tha n 0.1 mill ion shares, less than 0.1 million shares and 0.1 million shares, respectively, of its common stock.

During each of fiscal years 2025 , 2024 and 2023 , the Company repurchased and subsequently retired less tha n 0.1 mill i on shares of its common stock.

The Company allows its employees the option of satisfying the employee tax withholding obligations with either cash or a net share repurchase.

The repurchase of shares was for the net awarding of certain share awards to cover employee tax-withholding obligations for share award and stock option activity, tot aling $ 4.9 million i n fiscal year 2024 , $ 0.4 million in fiscal year 2023 and $ 6.7 million in fiscal year 2022 .

There were no stock option redemptions during fiscal year 2024 , fiscal year 2023 or fiscal year 2022 .

NOTE 11 – SUBSEQUENT EVENT

Effective April 15, 2024, the Company acquired Becnel Rental Tools, LLC, a privately-held Louisiana limited liability company (“Becnel”), pursuant to an Agreement and Plan of Merger (the “Agreement”), by and among the Company, Becnel and the other parties thereto.

Becnel is an ISO 9001:2015 certified provider of rental tools and services primarily utilized in the decommissioning and maintenance of oil wells.

This transaction aligned with a key component of the Company’s acquisition strategy of targeting businesses that expand the depth and breadth of the Company’s rental capabilities.

Pursuant to the Agreement, the Company acquired Becnel for approximately $ 50.8 million, consisting of a combination of (i) $ 17.5 million in cash and (ii) approximately $ 33.3 million of common stock, or 301,707 shares of common stock.

Of the acquisition consideration, approximately $ 1.5 million in cash and approximately $ 1.0 million in shares of common stock, or 9,283 shares, are subject to certain customary holdback provisions.

The purchase price allocation has not been finalized, due to the timing of the acquisition and the filing date of this Annual Report on Form 10 -K.

Therefore, the allocation of the purchase price to the assets acquired and liabilities assumed, including values to be recognized for goodwill and other intangible assets, will be disclosed in the Quarterly Report on Form 10 -Q for the fiscal quarter ending June 29, 2024.

The pro forma results of operations from the Becnel acquisition will be disclosed in the Quarterly Report on Form 10 -Q for the fiscal quarter ending June 29, 2024.

The goodwill related to Becnel is not expected to be deductible for income tax purposes.

The goodwill and intangible assets relating to the Becnel acquisition will be allocated to the Distribution segment.

On May 20, 2024, the Company entered into the Second Amendment to the Purchase Agreement relating to the purchase of all of the outstanding capital stock of NEXA to amend the earn-out terms under the Purchase Agreement.

See Note 9 for further information on the Second Amendment.

The repurchase of shares was for the net awarding of certain share awards to cover employee tax-withholding obligations for share award and stock option activity, totaling $ 3.6 million in fiscal year 2025 , $ 4.9 million in fiscal year 2024 and $ 0.4 million in fiscal year 2023 .

The re were no stock option redemptions during fiscal year 2025 , fiscal year 2024 or fiscal year 2023 .

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data