What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2026-05-27 compared with 2025-05-27 · 180 added, 192 removed, 205 unchanged (64% of the section changed)

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Our common stock is traded on the Nasdaq Global Market under the symbol “TRNS”.

As of May 22, 2025, w e had approximately 500 shareholders of r ecord.

As of May 22, 2026, we had approximately 150 shareholders of record.

Our credit agreement limits our ability to pay cash dividends to certain amounts in any single fiscal year and over the term of the credit agreement.

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We believe our Service segment offers an opportunity for long-term growth and the potential for continuing revenue from established customers with regular calibration cycles and recurring laboratory instrument service requirements.

Our Service segment has shown consistent revenue growth over the past several years, ending fiscal ye ar 2025 with its 64th consecutive quarter of year-over-year growth.

This segment has benef ited from both organic growth as well as acquisitions over those 64 quarters.

Our Service segment has shown consistent revenue growth over the past several years, ending fiscal year 2026 with its 68th consecutive quarter of year-over-year growth.

This segment has benefited from both organic growth as well as acquisitions over those 68 quarters.

The business acquisitions that we made have been focused on expanding our service capabilities, increasing our geographic reach and leveraging our Calibration Service Centers and other infrastructure to create operational synergies.

Our Service segment revenue growth was 19.7% for fiscal year 2026 from fiscal year 2025.

This increase was primarily due to the acquisitions of Martin and Becnel.

Acquired revenue, which represents revenue from acquisitions completed after the end of the prior year, was $10.4 million.

Service Segment revenue was also impacted by the number of weeks.

Fiscal year 2025 had 52 weeks, while fiscal year 2024 had 53 weeks.

When adjusted for the 52/53 week impact, organic service revenue increased by 2.7%.

The Service segment gross margin decreased by 40 basis poin ts.

Service segment gross margin decreases were primarily due to small organic revenue increases offset by decreased margins in the Transcat Solutions business.

This increase was primarily due to the acquisitions of Essco and Martin.

Acquired revenue, which represents revenue generated from acquisitions for twelve months subsequent to the acquisition date, was $30.9 million.

The Service segment gross margin decreased by 90 basis points.

Service segment gross margin decreases were primarily due to costs associated with new customer wins and lower than expected levels of organic growth in the first half of the fiscal year, which rebounded in the second half of the year.

In our Distribution segment, we sell and offer for rent, professional grade handheld test and measurement instruments.

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In fiscal year 2026, Distribution segment sales increased by 18.2%.

This increase in sales primarily due to sales from the acquisition of Becnel and increases in traditional rental products.

This increase in sales primarily due to rentals of $7.5 million, product sales of $10.2 million, including contributions from the Martin and Essco acquisitions of $4.4 million.

The Distribution segment gross margin in fiscal year 2026 increased by 320 basis points.

The increase in segment gross margin was primarily due to increased margins from rental revenue, which now includes Becnel, and a favorable mix of higher margin products sold.

Initiatives implemented within this segment include adding new in-demand vendors and product lines, expanding the number of SKUs that we offer with and without pre-shipment calibration and offering equipment rental and used equipment options.

The increase in segment gross margin was primarily due to increased margins from rental revenue and a favorable mix of higher margin products sold.

Our focus remains on adding new in-demand vendors and product lines, expanding the number of SKUs that we offer with and without pre-shipment calibration and offering equipment rental and used equipment options.

Management believes this diversification strategy will mitigate the impact that any particular industry or sector will have on the overall performance of this segment as well as help to further differentiate us from our competitors going forward.

Financial Overview.

In evaluating our results for fiscal year 2025, investors should consider that we operate on a 52/53-week fiscal year, ending the last Saturday in March.

In a 52-week fiscal year, each of the four quarters is a 13-week period.

In a 53-week fiscal year, the last quarter is a 14-week period.

Fiscal year 2025 consisted of 52 weeks and fiscal year 2024 consisted of 53 weeks.

A discussion regarding our financial condition and results of operations for the fiscal year ended March 29, 2025 and year-to-year comparisons between fiscal year 2025 and fiscal year ended March 30, 2024 ("fiscal year 2024"), which are not included in this Form 10-K, can be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended March 29, 202 5 and are incorporated by reference herein.

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This represented an increase of $53.5 million or 19.2% versus total revenue of $278.4 million for fiscal year 2025.

This increase was primarily due to recently completed acquisitions, and increased rental sales, which includes incremental revenue from an acquisition completed in fiscal year 2025.

This increase was primarily due to recently completed acquisitions, increased rental sales, subcontracted third-party vendor sales and product/equipment sales.

Service revenue was $217.2 million in fiscal year 2026, an increase of $35.8 million or 19.7%.

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Distribution sales accounted for 34.6% of our total revenue in fiscal year 2026.

Sales to d omestic customers comprised 93.3% of total Distribution sales in fiscal year 2025 , while 5.7% were to Canadian customers and 1.0% were to customers in other international markets.

Total gross profit was $89.5 million in fiscal year 2025 compared to $83.8 million in fiscal year 2024 , an increase of $5.6 million or 6.7% .

Total gross margin was 32.1% , which is a 20 basis point decrease versus fiscal year 2024 .

Service gross margin was 33.4% in fiscal year 2025 compared with 33.8% in fiscal year 2024 , a 40 basis point decrease.

Distribution gross margin was 29.7% in fiscal year 2025 compared with 29.5% in fiscal year 2024 , a 20 basis point increase.

This decrease in service gross margin in fiscal year 2025 was primarily largely the result of lower revenue and gross margins for Transcat Solutions.

The increase in the distribution segment gross margin was primarily due to increased margins from rental revenue, which now includes Becnel.

Sales to domestic customers comprised 94.4% of total Distribution sales in fiscal year 2026, while 4.6% were to Canadian customers and 1.0% were to customers in other international markets.

Operating expenses were $95.0 million, or 28.6% of total revenue, in fiscal year 2026 compared with $71.6 million, or 25.7% of total revenue, in fiscal year 2025.

Operating income was $13.3 million, or 4.0% of total revenue, in fiscal year 2026 compared with $17.9 million, or 6.4% of total revenue, in fiscal year 2025.

The year-over-year increase in selling, marketing and warehouse expenses was due to increased expenses related to recent acquisitions, especially acquisition related amortization expense, and higher incentive-based employee costs due to higher sales.

The year-over-year increase in general and administrative expenses was due to incremental expenses from acquired businesses (including stock expense), increased payroll costs for new employees and continued investments in technology.

Net income for fiscal year 2025 was $14.5 million compared with $13.6 million in fiscal year 2024 , a $0.9 million increase.

Diluted earnings per share for fiscal year 2025 was $1.57 compared with $1.63 for fiscal year 2024 , a $0.06 per diluted share decrease.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Use of Estimates.

The preparation of our Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States (“GAAP”) requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Significant estimates and assumptions are used for, but not limited to, allowance for credit losses and returns, inventory reserves, estimated levels of achievement for performance-based restricted stock units, fair value of stock options, depreciable lives of fixed assets, estimated lives of major catalogs and intangible assets, fair value of the goodwill reporting units, and the valuation of assets acquired, liabilities assumed and consideration transferred in business acquisitions.

Future events and their effects cannot be predicted with certainty;

accordingly, our accounting estimates require the exercise of judgment.

The accounting estimates used in the preparation of our Consolidated Financial Statements will change as new events occur, as more experience is acquired, as additional information is obtained, and as our operating environment changes.

Our estimates are evaluated on an ongoing basis and are drawn from historical experience and other assumptions that we believe to be reasonable under the circumstances.

Actual results could differ from those estimates.

Such changes and refinements in estimation methodologies are reflected in reported results of operations in the period in which the changes are made and, if material, their effects are disclosed in the Notes to our Consolidated Financial Statements.

The year-over-year increase in selling, marketing and warehouse expenses was primarily due to amortization expense of $5.3 million related to recent acquisitions, $3.1 million due to employee compensation, including incentive-based employee costs due to higher sales.

The year-over-year increase in general and administrative expenses was due to incremental expenses from acquired businesses (including stock expense of $3.8 million), increased payroll costs of $5.9 million, executive transition costs of $1.7 million and continued investments in technology of $1.1 million.

CRITICAL ACCOUNTING ESTIMATES

An appreciation of our critical accounting policies and estimates is necessary to understand our financial results.

These policies may require management to make difficult and subjective judgments regarding uncertainties, including the business and economic uncertainty resulting from volatile geopolitical conditions and the high interest rate and inflationary cost environment, and as a result, such estimates may significantly impact our financial results.

The precision of these estimates and the likelihood of future changes depend on a number of underlying variables and a range of possible outcomes.

We applied our critical accounting estimation methods consistently in all material respects and for all periods presented.

Our critical accounting estimates are:

revenue recognition;

goodwill and other intangible assets;

business combinations;

income taxes.

The following items in our Consolidated Financial Statements require significant estimation or judgment:

Accounts Receivable.

Accounts receivable represents amounts due from customers in the ordinary course of business.

These amounts are recorde d net of the allowance for credit losses and returns in the Consolidated Balance Sheets.

The allowance for credit losses is based upon the expected collectability of accounts receivable.

We apply a specific formula to our accounts receivable aging, which may be adjusted on a specific account basis where the formula may not appropriately reserve for loss exposure.

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

A returns reserve is calculated based upon the historical rate of returns applied to revenues over a specific timeframe.

The returns reserve will increase or decrease as a result of changes in the level of revenues and/or the historical rate of returns.

Management believes that the allowances are appropriate to cover anticipated losses under current conditions.

However, unexpected changes or deterioration in economic conditions could materially change these expectations.

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

Costs are determined using the average cost method of inventory valuation.

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

Inventory is at risk of obsolescence if economic conditions change.

Relevant economic conditions include changing consumer demand, customer preferences or increasing competition.

We believe these risks are largely mitigated because our inventory typically turns several times per year.

We evaluate the adequacy of the reserve on a quarterly basis.

Business Acquisitions.

We apply the acquisition method of accounting for business acquisitions.

Under the acquisition method, identifiable assets acquired, liabilities assumed and consideration transferred are measured at their acquisition-date fair value.

We use a valuation hierarchy to determine the fair values used.

Historically, we have relied, in part, upon the use of reports from third-party valuation specialists to assist in the estimation of fair values.

Purchase price allocations are subject to revision within the measurement period, not to exceed one year from the date of acquisition.

The fair value of contingent consideration is determined at each reporting period with changes reflected in the statement of operations.

Administration costs to acquire a business may include, but are not limited to, fees for accounting, legal and valuation services and are recorded as incurred in our Consolidated Statement of Income.

Revenue Recognition.

Revenues are recorded based on the amount of consideration we expect to be entitled to as a result of satisfying our performance obligations.

Revenue on our point in time contracts is recognized when the customer obtains control of the product.

Revenue on our over time contracts is recognized using the output method as this portrays the transfer of control to the customer.

The transaction price for our contracts represents our best estimate of the consideration we will receive and includes assumptions regarding variable consideration, as applicable.

We estimate and reserve for our expected credit loss exposure based on our experience with past due accounts and collectibility, write-off history, the aging of accounts receivable, our analysis of customer data, and forward-looking information, leveraging estimates of creditworthiness and projections of default and recovery rates for certain of our customers.

We assess the goods and services promised in our contracts to identify separate performance obligations.

This evaluation requires judgment, particularly in determining whether goods or services are distinct and should be accounted for separately or combined.

Changes in these judgments could affect the timing of revenue recognition.

The transaction price may include fixed and variable consideration, such as discounts, rebates, refunds, or credits.

We estimate variable consideration using either the expected value or most likely amount method, subject to the constraint that it is probable that a significant reversal of revenue will not occur.

Estimating variable consideration requires significant judgment, including historical experience, current and expected market conditions and customer-specific factors.

See Note 1 to our consolidated financial statements for further information on our revenue recognition and related policies.

Goodwill and Intangible Assets.

Goodwill represents the excess of the purchase price over the values assigned to the underlying net assets of an acquired business and is not amortiz ed.

As of March 29, 2025 , we had $176.9 million of recorded goodwill.

Goodwill represents the excess of the purchase price over the values assigned to the underlying net assets of an acquired business and is not amortized.

As of March 28, 2026, we had $218.2 million of recorded goodwill allocated to the Company's two reporting units - Service and Distribution.

We test goodwill for impairment, typically by assessing qualitative factors, for each reporting unit on an annual basis during the fourth quarter of each fiscal year or more frequently if conditions indicate that such impairment could exist.

Events that would indicate impairment and trigger an interim impairment assessment include, but are not limited to, current economic and market conditions, including a decline in market capitalization, a significant adverse change in legal factors, business climate or operational performance of the business, and an adverse action or assessment by a regulator.

In addition to a qualitative analysis, accounting guidance allows for a company to elect to perform a quantitative analysis in lieu of the qualitative analysis.

The Company elected to perform a quantitative analysis in fiscal year 2026, which considers whether the carrying amount of a reporting unit exceeds its fair value, in which case an impairment charge is recorded to the extent the reporting unit’s carrying value exceeds its fair value.

We estimated the fair value of our two reporting units, Service and Distribution, using the fair market value measurement requirement.

Estimated fair value is determined using discounted cash flows and requires an analysis of several estimates including future cash flows or income consistent with management’s strategic business plans, annual sales growth rates, perpetuity growth assumptions and the selection of assumptions underlying a discount rate (weighted-average cost of capital) based on market data available at the time.

Significant management judgment is necessary to estimate the impact of competitive operating, macroeconomic and other factors (including those related to volatile geopolitical conditions and a high interest rate and inflationary cost environment) to estimate future levels of sales, operating profit or cash flows.

All assumptions used in our impairment evaluations for goodwill, such as forecasted growth rates (including perpetuity growth assumptions) and weighted-average cost of capital, are based on the best available market information and are consistent with our internal forecasts and operating plans.

A deterioration in these assumptions could adversely impact our results.

Additionally, goodwill resulting from recent acquisitions is more susceptible to impairment because it is recorded at fair value at the time of acquisition.

These assumptions could be adversely impacted by certain of the risks described in “Item 1A.

Risk Factors”.

The quantitative analysis showed that the estimated fair values of each of the reporting units exceed the carrying values.

Based on the results of our qualitative impairment testing performed during the fourth quarter of fiscal year 2025, we determined that it was more likely than not that the fair values exceeded the carrying values for each reporting unit and there were no impairments as of March 29, 2025.

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

These intangible assets are amortized over their estimated useful lives and are reviewed for impairment if and when indicators are present.

We test goodwill for impairment for each reporting unit on an annual basis during the fourth quarter of each fiscal year or immediately if conditions indicate that such impairment could exist.

We estimate the fair value of our reporting units using the fair market value measurement requirement.

We have the option to perform a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit has declined below its carrying value.

This assessment considers various financial, macroeconomic, industry and segment specific qualitative factors.

Based on the results of our qualitative impairment testing, we have determined that it was more likely than not that the fair values exceeded the carrying values of goodwill for each reporting unit and there were no impairments as of each of March 29, 2025 and March 30, 2024.

Intangible assets, net of accumulated amortization, were $77.7 million as of March 28, 2026.

Intangible assets are evaluated for impairment when events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable.

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There were no intangible asset impairment indicators identified during the years ended March 28, 2026 or March 29, 2025.

Business Combinations.

We apply the acquisition method of accounting for business combinations and allocate the purchase price of an acquisition to the various tangible and intangible assets acquired and liabilities assumed based on their estimated fair values.

Historically, we have relied, in part, upon the use of reports from third-party valuation specialists to assist in the estimation of fair values using assumptions about future revenues and expenses, as well as discount factors and income tax rates.

Purchase price allocations are subject to revision within the measurement period, not to exceed one year from the date of acquisition.

The fair value of contingent consideration is determined at each reporting period with changes reflected in the statement of operations.

Income Taxes.

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While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, we believe that our unrecognized tax benefits reflect the most likely outcome.

Stock-Based Compensation.

We measure the cost of services received in exchange for all equity awards granted, including stock options and restricted stock units, based on the fair market value of the award as of the grant date.

The Company uses the Black-Scholes option pricing model to estimate the fair value of stock options granted.

The application of this pricing model involves assumptions that require judgment and are sensitive in the determination of compensation expense.

The fair market value of our common stock on the date of each option grant is determined based on the most recent closing price on our primary trading stock exchange, currently the Nasdaq Global Market.

We record compensation cost related to unvested equity awards by recognizing, on a straight-line basis, the unamortized grant date fair value over the remaining service period for awards expected to vest.

In accordance with Accounting Standards Updates (“ASU”) 2016-09, excess tax benefits for share-based award activity are reflected in the Consolidated Statement of Income as a component of the provision for income taxes.

Excess tax benefits are realized benefits from tax deductions for exercised awards in excess of the deferred tax asset attributable to stock-based compensation costs for such awards.

We did not capitalize any stock-based compensation costs as part of an asset.

We estimate forfeiture rates based on our historical experience.

We grant timed-based and performance-based restricted stock units as a component of executive and key employee compensation.

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 growth targets over the eligible period.

Compensation cost ultimately recognized for these 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, we record compensation cost based on the expected 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.

Stock options vest either immediately or over a period of up to five years using a straight-line basis and expire either five years or ten years from the date of grant.

The expense relating to options is recognized on a straight-line basis over the requisite service period for the entire award.

See Note 6 to our Consolidated Financial Statements for further disclosure regarding our stock-based compensation.

Post-retirement Health Care Plans.

The Company has a defined benefit post-retirement health care plan which provides long-term care insurance benefits, medical and dental insurance benefits, and medical premium reimbursement benefits to eligible retired corporate officers and their eligible spouses.

For accounting purposes, the defined benefit post-retirement health care plan requires assumptions to estimate the projected and accumulated benefit obligations, including the following variables:

discount rate;

certain employee-related factors, such as retirement age and mortality;

and health care cost trend rates.

These and other assumptions affect the annual expense and obligations recognized for the underlying plans.

Our assumptions reflect our historical experiences and management's best judgment regarding future expectations.

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 cost 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 cost by $0.1 million.

Recently Issued Accounting Pronounce ments .

Recently Issued Accounting Pronouncements .

In the normal course of business, management evaluates all new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) to determine the potential impact they may have on our consolidated financial statements.

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Total revenue was $331.9 million in fiscal year 2026 compared to $278.4 million in fiscal year 2025, an increase of $53.5 million or 19.2%.

When normalizing for the fewer days from fiscal year 2025's 52 weeks versus fiscal year 2024’s 53 weeks, the Company estimates that its full year revenue growth was approximately 9.1%.

Service revenue, which accounted for 65.4% and 65.2% of our total revenue in fiscal years 2026 and 2025, respectively, increased $35.8 million, or 19.7% from fiscal year 2025 to fiscal year 2026.

This year-over-year increase included $10.4 million of incremental revenue from the acquisitions of Becnel and Martin.

It also included organic revenue growth of 2.7% when adjusted for the 52/53 week impact, which was driven by continued market share gains, offset by comparatively lower revenue from the Transcat Solutions business.

This year-over-year increase included $30.9 million of incremental revenue from the acquisitions of Essco and Martin.

It also included service organic revenue growth of 3.0%, which was driven by continued market share gains.

Service organic revenue is a non-GAAP measure.

See "Non-GAAP Financial Measures” below.

Our fiscal years 2026 and 2025 service revenue growth in relation to prior fiscal year quarter comparisons, was as follows:

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The growth in fiscal year 2026 and fiscal year 2025 reflected both organic growth and acquisitions.

The growth in Service segment revenue in fiscal year 2026 includes revenue from Essco and Martin.

The growth in Service segment revenue in fiscal year 2025 includes revenue from Becnel and Martin.

The growth in Service segment revenue in fiscal year 2024 includes revenue from TIC-MS and SteriQual.

The lower growth percentages in fiscal year 2025 are due to lower organic revenue growth compared to fiscal year 2024.

The higher growth percentages in fiscal year 2026 are due to higher acquisition and organic revenue growth compared to fiscal year 2025.

Within any year, while we add new customers, we also have customers from the prior year whose service orders may not repeat for any number of factors.

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Distribution sales increased $17.7 million, or 18.2% in fiscal year 2026 compared to fiscal year 2025.

This year-over-year increase is primarily due to $7.2 million of incremental revenue from the acquisitions of Becnel and Martin offset by slower demand for our non-rental products.

The change in fiscal year 2024 versus fiscal year 2023 was due to incremental revenue from the acquisition of Axiom offset by slower demand for our non-rental products.

This year-over-year increase is primarily due to $7.5 million of incremental revenue from rentals and $10.2 million of higher distribution sales orders, including $4.4 million from the acquisitions of Essco and Martin.

Our fiscal years 2026 and 2025 Distribution sales growth in relation to prior fiscal year quarter comparisons were as follows:

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Management uses pending product shipments and backorders as measures of our future business performance and financial performance within the Distribution segment.

Our total pending product shipments decreased $1.8 million, or 34.7%, at the end of fiscal year 2025 compared to the end of fiscal year 2024 .

Our total pending product shipments increased $3.9 million, or 118.6%, at the end of fiscal year 2026 compared to the end of fiscal year 2025.

Backorders at the end of fiscal year 2026 were $6.3 million, compared to $2.7 million at the end of fiscal year 2025.

The year-over-year decrease in pending product shipments and backorders was a result of improved fulfillment of existing or ders.

The increase in pending product shipments and backorders was due to longer lead times.

The following table presents the percentage of total pending product shipments that were backorders at the end of each quarter in fiscal years 2026 and 2025 and our historical trend of total pending product shipments:

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Total gross profit in fiscal year 2026 was $108.3 million compared to $89.5 million in fiscal year 2025, an increase of $18.9 million or 21.1%.

As a percentage of total revenue, total gross margin was 32.1% in fiscal year 2025 compared to 32.3% in fiscal y ear 2024 , a 20 basis point decrease.

As a percentage of total revenue, total gross margin was 32.6% in fiscal year 2026 compared to 32.1% in fiscal year 2025, a 50 basis point increase.

Service gross profit was $70.5 million, an increase of $9.9 million, or 16.3%, from fiscal year 2025 to fiscal year 2026.

Our annual and quarterly Service segment gross margins are a function of several factors.

Our organic Service revenue growth provides some incremental gross margin growth by leveraging certain fixed costs of this segment.

The mix of services provided to customers may also affect gross margins in any given period.

Service gross margin decreas ed by 40 basis poin ts in fiscal year 2025 versus fiscal year 2024.

This decrease in service gross margin in fiscal year 2025 was the result of lower revenue and gross margins from Transcat Solutions.

The following table presents the quarterly historical trend of our Service gross margin as a percent of Service revenue:

Service Gross Margin

The mix of services provided to customers may also affect gross margins in any given period, in addition to the volume of throughput.

Service gross margin decreased by 90 basis points in fiscal year 2026 versus fiscal year 2025.

This decrease in service gross margin in fiscal year 2026 was the result of costs associated with new customer wins and lower than expected levels of organic growth in the first half of the fiscal year, which rebounded in the second half of the year.

Our Distribution gross margin includes net sales less the direct cost of inventory sold and the direct costs of equipment rental revenues, primarily depreciation expense for the fixed assets in our rental equipment pool, as well as the impact of rebates and cooperative advertising income we receive from vendors, freight billed to customers, freight expenses and direct shipping costs.

We recorded vendor rebates of $0.9 million in fisca l year 2025 and $0.6 million in fiscal year 2024 , as a reduction of cost of Distribution sales.

We recorded vendor rebates of $1.4 million in fiscal year 2026 and $0.9 million in fiscal year 2025, as a reduction of cost of Distribution sales.

In general, our Distribution gross margin can vary based upon the mix of products sold, price discounting, the timing of periodic vendor rebates offered and cooperative advertising programs from suppliers.

The following table reflects the quarterly historical trend of our Distribution gross margin as a percent of Distribution sales:

Distribution Gross Margin

Distribution segment gross margin incre ased 20 basis poi nts in fiscal year 2025 compared to fiscal year 2024.

The increase in the Distribution segment gross margin was primarily due to increased margins from rental revenue, which now includes Becnel and a favorable mix of higher margin products sold.

Distribution segment gross margin increased 320 basis points in fiscal year 2026 compared to fiscal year 2025.

The increase in the Distribution segment gross margin was primarily due to increased margins from rental revenue and a favorable mix of higher margin products sold.

Operating Expenses:

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This represented an increase of $23.5 million, or 32.8%, compared to fiscal year 2025.

As a percentage of total revenue, operating expenses increased 100 bas is points from 24.7% in fiscal year 2024 to 25.7% in fiscal year 2025.

The year-over-year increase i n selling, marketing and warehouse expenses is due to increased expenses related to recent acquisitions, especially acquisition related amortization expense, and higher incentive-based employee costs due to higher sales.

The increase in general and administrative expenses includes incremental expenses related to acquired companies, increased payroll costs for new employees and continued investments in technology.

As a percentage of total revenue, operating expenses increased 290 basis points from 25.7% in fiscal year 2025 to 28.6% in fiscal year 2026.

The year-over-year increase in selling, marketing and warehouse expenses is due to increased expenses related to recent acquisitions, especially acquisition related amortization expense, and higher payroll related employee costs.

The increase in general and administrative expenses includes incremental expenses related to acquired companies (including stock based compensation), increased payroll costs, executive transition costs and continued investments in technology.

Provision for Income Taxes:

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Provision for Income Taxes

Our effective tax rate for fiscal years 2025 and 2024 was 20.8% and 26.0% , respectiv ely.

The decrease in effective tax rate is due to the timing of our discrete items in relation to the timing of our pre-tax net income and due to tax expense recognized in fiscal year 2024 associated with executive compensation limitations that resulted from share-based awards.

Our effective tax rate for fiscal years 2026 and 2025 was 32.7% and 20.8%, respectively.

The increase in effective tax rate is due to the timing of our discrete items in relation to the timing of our pre-tax net income and due to tax expense recognized in fiscal year 2026 associated with executive compensation limitations that resulted from share-based awards.

Our provision for income taxes is affected by discrete items that may occur in any given period but are not consistent from year to year.

The discrete benefits related to share-based compensation activity in fiscal years 2025 and 2024 w ere $1.3 mi llion and $0.6 million, respectively.

The discrete items related to share-based compensation activity in fiscal years 2026 and 2025 were $0.1 million tax expense and $1.1 million tax benefit, respectively.

We continue to evaluate our tax provision on a quarterly basis and adjust, as deemed necessary, our effective tax rate given changes in facts and circumstances expected in the future.

We expect to receive certain federal, st ate, Canadian and Irish tax credits in future years.

We expect to receive certain federal, state, Canadian and Irish tax credits in future years.

We also expect to receive discrete tax benefits related to share-based compensation awards in fiscal year 2027.

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Fiscal Year Ended

Net income for fiscal year 2025 increased by $0.9 million or 6.4% compared to fiscal year 2024.

As a percentage of revenue, net income was 5.2% in fiscal year 2025, down f rom 5.3% in fiscal year 2024.

The year-over-year increase in net income was primarily due to lower operating income, offset by lower interest expense, net and higher other income related to the sale of assets related to our United Scale division.

Net income for fiscal year 2026 decreased by $9.1 million or 63.0% compared to fiscal year 2025.

As a percentage of revenue, net income was 1.6% in fiscal year 2026, down from 5.2% in fiscal year 2025.

The year-over-year decrease in net income was primarily due to lower operating income and higher interest expense.

The interest expense increased due to higher outstanding debt balances.

The debt was incurred to fund the Essco acquisition.

Non-GAAP Financial Measures

Service Organic Revenue

In addition to reporting service revenue, a measure that is calculated in accordance with accounting principles generally accepted in the United States (“GAAP”), we present service organic revenue (current period service revenue less freight billed to customer less acquired revenue).

Acquired revenue is revenue generated from acquisitions for twelve months subsequent to the acquisition date.

The Company's management believes service organic revenue is an important measure of operating performance because the measure provides a basis for comparison of our business operations across periods to assess core operating performance.

As such, the Company uses service organic revenue as a measure of performance when evaluating its Service segment and as a basis for planning and forecasting.

Service organic revenue is not a measure of financial performance under GAAP and is not calculated through the application of GAAP.

As such, it should not be considered as a substitute or alternative for the GAAP measure of service revenue and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure.

Service organic revenue, as presented, may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies.

Service Revenue

Acquired Revenue

Freight Billed to Customer

Service Organic Revenue

Adjusted EBITDA:

In addition to reporting net income, a GAAP measure, we present Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, non-cash stock compensation expense, acquisition related transaction expenses, contingent consideration, and certain other expenses), which is a non-GAAP measure.

In addition to reporting net income, a GAAP measure, we present Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, non-cash stock compensation expense, acquisition related transaction expenses, executive transition costs, and certain other expenses), which is a non-GAAP measure.

Our management believes Adjusted EBITDA is an important measure of our operating performance because it allows management, investors and others to evaluate and compare the performance of our core operations from period to period by removing the impact of the capital structure (interest), tangible and intangible asset base (depreciation and amortization), taxes, stock-based compensation expense and other items, which is not always commensurate with the reporting period in which it is included.

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Fiscal Year Ended

+ Interest Expense, net

+ Other Expense

+ Interest Expense (Income), Net

+ Tax Provision

Operating Income

+ Executive Transition Costs

+ Depreciation & Amortization

+ Transaction Expense

+ Other Expense

+ Gain on Acquisition/Divestiture-related items

+ Noncash Stock Compensation

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During fiscal year 2026, Adjusted EBITDA was $48.7 million, an increase of $9.0 million or 22.7% compared to fiscal year 2025.

As a percentage of revenue, Adjusted EBITDA was 14.3% during fiscal year 2025 versus 14.9% during fisca l year 2024 , a 60 bas is point decrease.

The dollar increase in Adjusted EBITDA during fiscal year 2025 was primarily driven by increases in depreciation and amortization expense offset by lower operating income and lower noncash stock compensation.

Adjusted Diluted Earnings Per Share:

In addition to reporting Diluted Earnings Per Share, a GAAP measure, we present Adjusted Diluted Earnings Per Share (net income plus acquisition related amortization expense, acquisition related transaction expenses, acquisition related stock-based compensation, contingent consideration, and acquisition amortization of backlog;

divided by the average diluted shares outstanding during the period), which is a non-GAAP measure.

Our management believes Adjusted Diluted Earnings Per Share is an important measure of our operating performance because it provides a basis for comparison of our business operations between current, past and future periods by excluding items that we do not believe are indicative of our core operating performance.

Adjusted Diluted Earnings Per Share is not a measure of financial performance under GAAP and is not calculated through the application of GAAP.

As such, it should not be considered as a substitute or alternative for the GAAP measure of Diluted Earnings Per Share and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure.

Adjusted Diluted Earnings Per Share, as presented, may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies.

As a percentage of revenue, Adjusted EBITDA was 14.7% during fiscal year 2026 versus 14.3% during fiscal year 2025, a 40 basis point increase.

The increase in Adjusted EBITDA during fiscal year 2026 was primarily driven by increased revenue.

Adjusted Net Income and Adjusted Diluted Earnings Per Share:

In addition to reporting Net Income and Diluted Earnings Per Share, GAAP measures, we present Adjusted net income (net income plus acquisition related amortization expense, acquisition related transaction expenses, acquisition related stock-based compensation, executive transition costs, and acquisition amortization of backlog, as applicable) and Adjusted diluted earnings per share (Adjusted net income divided by the average diluted shares outstanding during the period), which are non-GAAP measures.

Our management believes Adjusted net income and Adjusted diluted earnings per share are important measures of our operating performance because they provide a basis for comparison of our business operations between current, past and future periods by excluding items that we do not believe are indicative of our core operating performance.

Adjusted net income and Adjusted diluted earnings per share are not measures of financial performance under GAAP and are not calculated through the application of GAAP.

As such, they should not be considered as a substitute or alternative for the GAAP measures of Net Income and Diluted Earnings Per Share and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measures.

Adjusted net income and Adjusted diluted earnings per share, as presented, may produce results that vary from the GAAP measures and may not be comparable to similarly defined non-GAAP measures used by other companies.

Fiscal Year Ended

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+ Acquisition Amortization of Backlog

+ Executive Transition Costs

+ Acquisition Deal Costs

+ Acquisition Stock Expense

+ Income Tax Effect

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Diluted Earnings Per Share – GAAP

+ Amortization of Intangible Assets

+ Acquisition Amortization of Backlog

+ Executive Transition Costs

+ Acquisition Deal Costs

+ Acquisition Stock Expense

+ Income Tax Effect

Adjusted Diluted Earnings Per Share

Operating Free Cash Flow

In addition to reporting net cash provided by operating activities, a GAAP measure, we present Operating Free Cash Flow (net cash provided by operating activities less capital expenditures), which is a non-GAAP measure.

The Company’s management believes Operating Free Cash Flow is an important liquidity measure that reflects the cash generated by the business, after the purchases of technology, capabilities and assets, that can then be used for, among other things, strategic acquisitions, investments in the business and funding ongoing operations.

Operating Free Cash Flow is not a measure of financial performance under GAAP and is not calculated through the application of GAAP.

As such, it should not be considered as a substitute or alternative for the GAAP measure of net cash provided by operating activities and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure.

Operating Free Cash Flow, as presented, may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies.

Net Cash Provided by Operating Activities

Capital Expenditures

Operating Free Cash Flow

In addition to reporting debt, a GAAP measure, we present net debt (debt less cash and cash equivalents), which is a non-GAAP measure.

The Company’s management believes net debt is an important measure of financial leverage.

Net debt is not a measure of financial performance under GAAP and is not calculated through the application of GAAP.

As such, it should not be considered as a substitute or alternative for the GAAP measure of debt and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure.

Net debt, as presented, may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies.

Cash & Cash Equivalents

LIQUIDITY AND CAPITAL RESOURCES

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To the extent that the Company does not satisfy its liquidity requirements through cash and cash equivalents, anticipated cash flows from operations and borrowings from our revolving credit facility, it intends to satisfy such requirements through proceeds from the issuance of common stock.

Under our Second Amended and Restated Credit Facility Agreement (the “Credit Agreement”) with Manufacturers and Traders Trust Company (“M&T”), we have access to a revolving credit commitment (the “revolving credit facility”) of $80.0 million through June 2026, with a letter of credit subfacility of $10.0 million.

Our 2018 term loan, with an original principal amount of $15.0 million (the “2018 Term Loan”), is also provided for under the Credit Agreement.

The Credit Agreement allows us to use up to $50.0 million under the revolving credit facility for acquisitions in any single fiscal year.

The Credit Agreement restricts our ability to complete acquisitions of businesses with a principal place of business located in the United Kingdom or the European Union to an aggregate purchase price of $40.0 million during the term of the Credit Agreement, if the acquisition is financed directly or indirectly with the revolving credit facility.

Under the Credit Agreement, we 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.

Effective July 1, 2023, interest on outstanding borrowings under the revolving credit facility accrue, at our election, at either the variable Daily Simple SOFR or a fixed rate for a designated period at the SOFR corresponding to such period (subject to a 0.25% floor), in each case, plus a margin.

Unused fees accrue based on the average daily amount of unused credit available on the revolving credit facility.

Interest rate margins and unused fees are determined on a quarterly basis based upon our calculated leverage ratio.

Our interest rate for the revolving credit facility for fiscal year 2025 ranged from 5.1% to 6.2%.

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

The Credit Agreement has certain covenants with which we must comply, including a fixed charge ratio covenant, which prohibits our fixed charge coverage ratio from being less than 1.15 to 1.00, and a leverage ratio covenant, which prohibits our leverage ratio from exceeding 3.00 to 1.00.

Our leverage ratio, as defined in the Credit Agreeme nt, was 0.78 at March 29, 2025 , compared with 0.10 at March 30, 2024 .

We were in comp liance with all loan covenants and requirements during fiscal years 2025 and 2024.

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

On September 25, 2023, we closed an underwritten public offering of our common stock for aggregate gross proceeds of $80.5 million (the “Offering”).

In the Offering, we sold an aggregate of 847,371 shares at $95.00 per share for net proceeds of $75.2 million.

Af ter the closing of the Offering, we used approximately $50.0 million of the net proceeds to repay in fu ll the amounts outstanding under the revolving credit facility.

During fiscal year 2025 and 2024 we used $87.4 million and $12.9 million, respectively, drawn from cash on hand and from the revolving credit facility for 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 C onsolidated Balance Sheets with the remainder included in long-term debt.

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

On July 29, 2025, we entered into a Credit Agreement (the “Credit Agreement”) with a group of three lenders establishing a new five-year $150.0 million secured revolving credit facility (the “Credit Facility”).

Borrowing options under the Credit Facility include:

(i) a revolving loan option;

(ii) a swingline loan option;

and (iii) letters of credit, each of which is provided on a committed basis.

The Credit Facility replaced the Company’s former $80.0 million credit facility (the “Replaced Facility”), which included a letter of credit subfacility of $10.0 million and our 2018 term loan, with an original principal amount of $15.0 million (the “2018 Term Loan”).

We used initial borrowings under the Credit Facility to repay amounts due under the Replaced Facility, including the remaining amounts under the 2018 Term Loan, and for the acquisition of Essco.

Under the Credit Agreement, we can use up to $50.0 million for acquisitions in any single fiscal year, with an exception for the Essco acquisition.

In addition, we are permitted to make restricted payments up to $25.0 million in the aggregate over the term of the Credit Facility and up to $10.0 million in any single fiscal year to repurchase shares and pay dividends.

Most borrowings under the Credit Facility bear interest, at our election, at a fixed base rate or the daily simple SOFR rate, plus a margin.

Any swingline loan will bear interest at the fixed base rate plus a margin.

The applicable margin is based on our then-current leverage ratio.

Under the Credit Facility, the applicable margin was reduced for most levels of leverage ratio for comparable categories of borrowings under the Replaced Facility.

The applicable margin ranges from 0.00% to 0.75% for base rate loans and 1.00% to 1.75% for SOFR loans.

We pay a commitment fee based on the daily unused amount under the Credit Facility multiplied by the applicable margin, which ranges from 0.10% to 0.20%.

The Credit Agreement has certain financial covenants with which we must comply.

The leverage ratio covenant under the Credit Agreement requires us to maintain our ratio of outstanding indebtedness to consolidated EBITDA to be no greater than 3.00 to 1.00, provided that we may temporarily increase the leverage ratio covenant if we complete a material permitted acquisition under the terms of the Credit Agreement.

The Company's leverage ratio, as defined in the Credit Agreement, was 2.03 on March 28, 2026, compared with 0.78 on March 29, 2025.

We must also maintain a fixed charge coverage ratio of no less than 1.20 to 1.00.

We were in compliance with all loan covenants and requirements of the Credit Agreement and the Replaced Facility, as applicable, during fiscal year 2026, and the Company expects to remain in compliance for fiscal year 2027.

As of March 28, 2026, $150.0 million was available for borrowing, subject to covenant restrictions, under the Credit Facility, of which, $99.9 million was outstanding.

During fiscal year 2026, we used approximately $83.0 million, drawn from the Credit Facility, for a business acquisition.

The following table is a summary of our Consolidated Statements of Cash Flows (dollars in thousands):

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Net cash provided by operating activities was $34.8 million during fiscal year 2026 compared to $39.0 million during fiscal year 2025.

The year-over-year increase in cash provided by operations is primarily the result of increases in depreciation and amortization.

The significant working capital fluctuations were as follows:

Accounts receivable increased by a net amount of $8.2 million during fiscal year 2025 , inclusive of $7.7 million of accounts receivable acquired as part of two acquisitions completed during the year.

Accounts receivable increased by a net amount of $3.1 million during fiscal year 2024 , inclusive of $2.1 million of accounts receivable acquired as part of three acquisitions completed during the period.

Accounts receivable increased by a net amount of $9.2 million during fiscal year 2026, inclusive of $2.9 million of accounts receivable acquired as part of an acquisition completed during the year.

Accounts receivable increased by a net amount of $8.2 million during fiscal year 2025, inclusive of $7.7 million of accounts receivable acquired as part of two acquisitions completed during the period.

The year-over-year change reflects the timing of collections.

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As a result, inventory levels may vary from quarter-to-quarter based on the timing of these large orders in relation to our quarter end.

Our inventory balance decreased $2.9 million during fiscal year 2025.

Our inventory balance during fiscal year 2024 increased $0.5 million inclusive of $1.8 million of inventory acquired during the year .

The year-over-year change is a result of strategic inventory purchases during fiscal year 2024 .

Our inventory balance decreased $0.8 million and $2.9 million during fiscal years 2026 and 2025, respectively.

The year-over-year change is related to the timing of strategic inventory purchases.

Accounts Payable:

Changes in accounts payable may or may not correlate with changes in inventory balances at any given quarter end due to the timing of vendor payments for inventory, as well as the timing of payments for outsourced Service vendors and capital expenditures.

Accounts payable increased $5.3 million during fiscal year 2025 , inclusive of $0.3 million of accounts payable acquired during the year.

Accounts payable decreased by $4.4 million during fiscal year 2024 , inclusive of $0.6 million of accounts payable acquired during the year .

The variance is largely due to the timing of inventory and capital expenditure purchases and other payments in the respective periods.

Accounts payable increased $1.2 million during 2026, inclusive of $0.2 million assumed in an acquisition during the period.

Accounts payable increased $5.3 million during fiscal year 2025, inclusive of $0.3 million assumed in acquisitions during the period.

The variances are largely due to the timing of inventory purchases, capital expenditures and other payments in the respective periods.

Accrued Compensation and Other Current Liabilities:

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At the end of any particular period, the amounts accrued for such compensation may vary due to many factors including, but not limited to, changes in expected performance levels, the performance measurement period, and the timing of payments to employees.

During fiscal year 2026, accrued compensation and other liabilities increased by $6.2 million, inclusive of $3.3 million from assumed liabilities and purchase price holdbacks from acquisition transactions.

Accrued payroll and incentives increased $4.2 million, the current portion of lease liabilities increased $0.7 million and other current liabilities increased $1.9 million.

Accrued acquisition holdbacks decreased $0.5 million.

During fiscal year 2025, accrued compensation and other liabilities decreased by $1.3 million, inclusive of $1.2 million from assumed liabilities, contingent consideration and purchase price holdbacks from acquisition transactions.

During fiscal year 2024 , accrued compensation and other liabilities increased by $6.5 million, inclusive of $3.1 million from assumed liabilities, contingent consideration and purchase price holdbacks from acquisition transactions.

Income Taxes Payable:

Income Taxes Receivable/Payable:

In any given period, net working capital may be affected by the timing and amount of income tax payments.

During fiscal year 2025 , income taxes payable decreased $2.9 million.

During fiscal year 2024 , income taxes payable increased by $2.9 million.

During fiscal year 2026, income taxes receivable, included in Prepaid expenses and other current assets on the Company's Consolidated Balance Sheets, increased $0.7 million.

During fiscal year 2025, income taxes payable decreased by $2.9 million.

The year-over-year difference is due to timing of income tax payments.

Investing Activities:

During fiscal year 2025 , we invested $13.2 million in capital expenditures that was used primarily for customer-driven expansion of Service segment capabilities and capacity and our rental business.

During fiscal year 2026, we invested $15.3 million in capital expenditures that was used primarily for customer-driven expansion of Service segment capabilities and capacity as well as our rental business.

During fiscal year 2025, we invested $13.2 million in capital expenditures that was used primarily for customer-driven expansion of Service segment capabilities and our rental business.

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During fiscal year 2025, we used $87.4 million for business acquisitions.

During each of fiscal year 2025 and fiscal year 2024, no contingent consideration was paid related to a business acquisition.

$0.4 million and $0.8 million of holdback amounts were paid during fiscal year 2025 and fiscal year 2024, respectively.

During each of fiscal year 2026 and fiscal year 2025, no contingent consideration was paid related to business acquisitions.

During fiscal year 2025, we sold $15.5 million of marketable securities to partially fund acquisitions.

During fiscal year 2024, we purchased $15.5 million of marketable securities with the proceeds from the Offering.

Financing Activities :

During fiscal year 2025 , $30.9 million in cash was generated from the proceeds from our revolving credit facility and $1.9 million from the issuance of common stock from stock option exercises and the Employee Stock Purchase Plan.

During fiscal year 2026, $68.6 million in cash was generated from the net proceeds of our revolving credit facility and $0.8 million from the issuance of common stock.

In addition, we used $1.8 million for scheduled repayments of our term loan and $0.4 million for the “net” awarding of certain share awards to cover employee tax-withholding obligations for share award and stock option activity in fiscal year 2026, which is shown as a repurchase of shares of our common stock on our Consolidated Statements of Cash Flows.

During fiscal year 2024, $77.2 million in cash was generated from the issuance of common stock, net of direct costs, inclusive of $75.2 million from the Offering.

In addition, we used $42.7 million to repay our revolving credit facility, $2.2 million for scheduled repayments of our term loan and $4.9 million for the “net” awarding of certain share awards to cover employee tax-withholding obligations for share award and stock option activity in fiscal year 2024, which is shown as a repurchase of shares of our common stock on our Consolidated Statements of Cash Flows.

Acquisitions continued to play a key role in Service revenue, including most recently Martin Calibration which we are swiftly integrating into our operations.

Service organic growth was in the high single-digit range for the fourth quarter of fiscal year 2025 and the full fiscal year, when normalized for the 53rd week and excluding Transcat Solutions, driven by consistent demand in the Calibration business.

Revenue growth in both segments combined with continued productivity gains from increased automation and process improvements drove EBITDA growth for the fourth quarter of fiscal year 2025 and the full fiscal year.

The macroeconomic backdrop, including tariffs, has become more uncertain since the beginning of the year.

However, we believe our business model is resilient in any market environment due to the highly regulated markets we serve, particularly life science, aerospace, and defense, as our services are mandated.

The stringent regulatory standards for manufacturers imposed by entities including the FDA, FAA and Department of Defense to ensure product safety and environmental protection drive the organic growth for our high-value calibration services.

During fiscal year 2025, $30.9 million in cash was generated from the net proceeds of our revolving credit facility and $1.9 million from the issuance of common stock.

In addition, we used $2.3 million for scheduled repayments of our term loan and $3.6 million for the “net” awarding of certain share awards to cover employee tax-withholding obligations for share award and stock option activity in fiscal year 2025, which is shown as a repurchase of shares of our common stock on our Consolidated Statements of Cash Flows.

Consistent with prior years, acquisitions continued to play a key role in Service revenue, including most recently SCM Metrology and Laboratories, which closed just after the end of our fiscal year.

Service organic revenue (a non-GAAP measure) growth was in the high single-digit range for the third and fourth quarters of fiscal year 2026, driven by consistent demand in the Calibration business.

Revenue growth in both segments combined with continued organization-wide productivity gains drove EBITDA growth for the fourth quarter of fiscal year 2026 and the full fiscal year.

The stringent regulatory standards for manufacturers imposed by entities including the FDA, FAA and Department of Defense to ensure product safety and environmental protection are a key driver of organic growth for our high-value calibration services.

Our dedicated team has a proven track record of delivering profitable revenue growth over the past decade and a half.

We believe our proven team, in combination with the industry mandated service model, diversified portfolio with a Fortune 500 client base, and strong balance sheet will continue to differentiate us during fiscal year 2027 and beyond.

Looking ahead, while macroeconomic impacts on our business such as changes in product costs and customer demand for services are uncertain, we anticipate a return to high single-digit organic Service revenue growth once the environment normalizes.

Looking ahead, while macroeconomic impacts on our business such as changes in product costs and customer demand for services are uncertain, we anticipate continued high single-digit Service organic revenue growth in Fiscal year 2027, assuming the broader economic environment remains stable.

Automation of our calibration processes and focus on productivity remain key enablers of margin expansion.

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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 5. Market for Registrant’s Common Equity