trns-20260627

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________

FORM 10-Q

(Mark one)

☑ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended: June 27, 2026

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to________

Commission File Number: 000-03905

TRANSCAT, INC.

(Exact name of registrant as specified in its charter)

Ohio

16-0874418

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

35 Vantage Point Drive, Rochester, New York 14624

(Address of principal executive offices) (Zip Code)

(585) 352-7777

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.50 par value	TRNS	Nasdaq Global Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☑			Accelerated filer ☐
Non-accelerated filer ☐			Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes No ☑

The number of shares of common stock, par value $0.50 per share, of the registrant outstanding as of July 31, 2026 was 9,359,813.

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		Page(s)
PART I.	FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (Unaudited):

	Condensed Consolidated Statements of Income for the Three Months Ended June 27, 2026 and June 28, 2025	1

	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended June 27, 2026 and June 28, 2025	2

	Condensed Consolidated Balance Sheets as of June 27, 2026 and March 28, 2026	3

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 27, 2026 and June 28, 2025	4

	Condensed Consolidated Statements of Changes in Shareholders' Equity for the Three Months Ended June 27, 2026 and June 28, 2025	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	26

Item 4.	Controls and Procedures	27

PART II.	OTHER INFORMATION

Item 6.	Exhibits	28

SIGNATURES		29

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PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

TRANSCAT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Amounts in Thousands, Except Per Share Amounts)


	Three Months Ended
	June 27, 2026		June 28, 2025

Service Revenue	$	62,559	$	49,144
Distribution Revenue	30,386		27,280
Total Revenue	92,945		76,424

Cost of Service Revenue	41,381		32,935
Cost of Distribution Revenue	20,830		17,668
Total Cost of Revenue	62,211		50,603

Gross Profit	30,734		25,821

Selling, Marketing and Warehouse Expenses	11,374		9,515
General and Administrative Expenses	15,641		10,968
Total Operating Expenses	27,015		20,483

Operating Income	3,719		5,338

Interest Expense	1,518		451
Interest Income	(3)		(11)
Other Expense	19		333
Total Interest and Other Expense, net	1,534		773

Income Before Provision for Income Taxes	2,185		4,565
Provision for Income Taxes	854		1,304

Net Income	$	1,331	$	3,261

Basic Earnings Per Share	$	0.14	$	0.35
Basic Average Shares Outstanding	9,353		9,317

Diluted Earnings Per Share	$	0.14	$	0.35
Diluted Average Shares Outstanding	9,473		9,389

See accompanying notes to condensed consolidated financial statements.

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TRANSCAT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in Thousands)


	Three Months Ended
	June 27, 2026		June 28, 2025
Net Income	$	1,331	$	3,261

Other Comprehensive Income:
Currency Translation Adjustment	(339)		1,008
Other, net of tax effects of $2 and $— for the first quarter ended June 27, 2026 and June 28, 2025, respectively	4		-
Total Other Comprehensive (Loss)/Income	(335)		1,008

Comprehensive Income	$	996	$	4,269

See accompanying notes to condensed consolidated financial statements.

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TRANSCAT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Amounts in Thousands, Except Share and Per Share Amounts)


	June 27, 2026		March 28, 2026
ASSETS
Current Assets:
Cash and Cash Equivalents	$	6,709	$	4,942
Accounts Receivable, less allowance for credit losses of $936 and $851 as of June 27, 2026 and March 28, 2026, respectively	66,748		65,170
Other Receivables	727		672
Inventory	14,777		13,705
Prepaid Expenses and Other Current Assets	6,773		7,973
Total Current Assets	95,734		92,462
Property and Equipment, net	58,368		57,801
Goodwill	226,808		218,185
Intangible Assets, net	78,194		77,706
Right to Use Assets	31,801		32,365
Other Assets	1,723		1,968
Total Assets	$	492,628	$	480,487

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable	$	20,302	$	17,931
Accrued Compensation and Other Current Liabilities	18,115		21,697
Total Current Liabilities	38,417		39,628
Long-Term Debt	110,385		99,885
Deferred Tax Liabilities, net	11,361		10,167
Lease Liabilities	28,391		29,000
Other Liabilities	1,175		1,188
Total Liabilities	189,729		179,868

Commitments and Contingencies (Note 6)

Shareholders' Equity:
Common Stock, par value $0.50 per share, 30,000,000 shares authorized; 9,359,263 and 9,333,953 shares issued and outstanding as of June 27, 2026 and March 28, 2026, respectively	4,680		4,670
Capital in Excess of Par Value	200,629		199,115
Accumulated Other Comprehensive Loss	(1,258)		(923)
Retained Earnings	98,848		97,757
Total Shareholders' Equity	302,899		300,619
Total Liabilities and Shareholders' Equity	$	492,628	$	480,487

See accompanying notes to condensed consolidated financial statements.

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TRANSCAT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in Thousands)


	Three Months Ended
	June 27, 2026		June 28, 2025
Cash Flows from Operating Activities:
Net Income	$	1,331	$	3,261
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Net Loss on Disposal of Property and Equipment	45		54
Noncash Lease Expense	1,599		915
Deferred Income Taxes	2		24
Depreciation and Amortization	6,959		5,605
Amortization of Deferred Financing Costs	38		-
Provision for Accounts Receivable and Inventory Reserves	115		118
Stock-Based Compensation Expense	1,978		1,130
Changes in Assets and Liabilities, net of acquisitions:
Accounts Receivable and Other Receivables	(1,264)		(1,214)
Inventory	407		(745)
Prepaid Expenses and Other Current Assets	1,537		1,737
Accounts Payable	1,790		(3,300)
Accrued Compensation and Other Current Liabilities	(4,152)		(3,423)
Lease Liabilities	(1,567)		(915)
Income Taxes Payable	-		376
Net Cash Provided by Operating Activities	8,817		3,623

Cash Flows from Investing Activities:
Purchase of Property and Equipment	(3,982)		(4,598)
Business Acquisitions, net of cash acquired	(12,808)		-
Net Cash Used in Investing Activities	(16,790)		(4,598)

Cash Flows from Financing Activities:
Proceeds From Revolving Credit Facility, net of lender fees	20,835		31,690
Repayment of Revolving Credit Facility	(10,335)		(29,399)
Repayments of Term Loan	—		(602)
Issuance of Common Stock, net of direct costs	1,161		257
Repayment of Financing Leases	(84)		-
Repurchase of Common Stock	(1,855)		-
Net Cash Provided by Financing Activities	9,722		1,946

Effect of Exchange Rate Changes on Cash and Cash Equivalents	18		(627)

Net Increase in Cash and Cash Equivalents	1,767		344
Cash and Cash Equivalents at Beginning of Period	4,942		1,517
Cash and Cash Equivalents at End of Period	$	6,709	$	1,861

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TRANSCAT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(Unaudited)

(Dollars in Thousands)


	Three Months Ended
	June 27, 2026		June 28, 2025
Supplemental Disclosure of Cash Flow Activity:
Cash paid during the period for:
Interest, net	$	1,219	$	457
Income Taxes, net	$	(70)	$	(180)
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Purchases of Property and Equipment in Accounts Payable	$	332	$	-
Operating Lease Assets Obtained in Exchange for Operating Lease Liabilities	$	25	$	6,594
Balance Sheet Reclassification of Inventory to Property and Equipment	$	42	$	234
Balance Sheet Reclassification of Property and Equipment, net to Inventory	$	457	$	210

See accompanying notes to condensed consolidated financial statements.

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TRANSCAT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Amounts in Thousands, Except Par Value Amounts)

(Unaudited)


	Common Stock Issued $0.50 Par Value			Capital In Excess of Par Value		Accumulated Other Comprehensive (Loss)		Retained Earnings		Total
	Shares	Amount
Balance as of March 28, 2026	9,334	$	4,670	$	199,115	$	(923)	$	97,757	$	300,619
Issuance of Common Stock	52	21		1,140		-		-		1,161
Repurchase of Common Stock	(27)	(11)		(1,604)		-		(240)		(1,855)
Stock-Based Compensation	-	-		1,978		-		-		1,978
Other Comprehensive Loss	-	-		-		(335)		-		(335)
Net Income	-	-		-		-		1,331		1,331
Balance as of June 27, 2026	9,359	$	4,680	$	200,629	$	(1,258)	$	98,848	$	302,899


	Common Stock Issued $0.50 Par Value			Capital In Excess of Par Value		Accumulated Other Comprehensive (Loss)		Retained Earnings		Total
	Shares	Amount
Balance as of March 29, 2025	9,315	$	4,658	$	191,167	$	(1,469)	$	92,524	$	286,880
Issuance of Common Stock	3	1		214		-		-		215
Repurchase of Common Stock	-	-		37		-		5		42
Stock-Based Compensation	-	-		1,130		-		-		1,130
Other Comprehensive Income	-	-		-		1,008		-		1,008
Net Income	-	-		-		-		3,261		3,261
Balance as of June 28, 2025	9,318	$	4,659	$	192,548	$	(461)	$	95,790	$	292,536

See accompanying notes to condensed consolidated financial statements.

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TRANSCAT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1– GENERAL

Description of Business: Transcat, Inc. (“Transcat,” “we,” “us,” “our” or the “Company”) is a leading provider of accredited calibration services, cost control and optimization services, and distribution and rental of value-added professional grade handheld test, measurement and control instrumentation. The Company is focused on providing services and products to highly regulated industries, particularly the life sciences industry, which includes pharmaceutical, biotechnology, medical device and other FDA-regulated businesses. Additional industries served include industrial manufacturing; energy and utilities, including oil and gas; chemical manufacturing; FAA-regulated businesses, including aerospace and defense and other industries that require accuracy in their processes, confirmation of the capabilities of their equipment, and for which the risk of failure is very costly.

Basis of Presentation: Transcat’s unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, the Condensed Consolidated Financial Statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of the Company’s management, all adjustments considered necessary for a fair presentation (consisting of normal recurring adjustments) have been included. The results for the interim periods are not necessarily indicative of what the results will be for the fiscal year. The accompanying Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements as of and for the fiscal year ended March 28, 2026 (“fiscal year 2026”) contained in the Company’s Annual Report on Form 10-K for fiscal year 2026 filed with the SEC.

Use of Estimates: The preparation of Transcat’s Condensed Consolidated Financial Statements in accordance with GAAP requires that the Company 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, revenue recognition, estimated lives of intangible assets, fair value of the Company's reporting units, income taxes, 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, accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of the Condensed Consolidated Financial Statements may change as new events occur, as more experience is acquired, as additional information is obtained and as the operating environment changes. 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 the Condensed Consolidated Financial Statements.

Cash and Cash Equivalents: Cash equivalents consist of highly liquid investments with an original maturity, when purchased, of three months or less and are stated at cost, which approximates fair value.

Accounts Receivable: Accounts receivable represents amounts due from customers in the ordinary course of business. These amounts are recorded net of the allowance for credit losses in the Condensed Consolidated Balance Sheets. The Company has elected the practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset when it develops the estimate of expected credit losses. The allowance for credit losses is based upon the expected collectability of accounts receivable. The Company applies a specific formula to its 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.

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A summary of changes in the Company’s allowance for credit losses is as follows (amounts in thousands):


	Three Months Ended
	June 27, 2026		June 28, 2025

Allowance for Credit Losses, Beginning Balance	$	(851)	$	(659)
Additions from Acquisitions	$	(50)	$	-
Provision for Credit Losses	$	(94)	$	(132)
Write-offs, net of Recoveries	$	57	$	157
Effect of Foreign Exchange on Allowance for Credit losses	2		(8)
Allowance for Credit Losses, Ending Balance	$	(936)	$	(642)

Inventory: Inventory consists of finished goods purchased for resale and is valued at the lower of average cost or net realizable value. In the normal course of business, certain inventory items are transferred to property and equipment to be rented to customers. Costs are determined using the average cost method of inventory valuation. 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 and current demand, to specific categories of inventory. The Company evaluates the valuation of inventory on a quarterly basis.

Goodwill and Intangible Assets: Goodwill represents the excess of the purchase price over the fair values of the underlying net assets of an acquired business. Goodwill is allocated to the Company's two reporting units: Service and Distribution. The Company tests goodwill for impairment for each reporting unit on an annual basis as of the first day of the fourth quarter of each fiscal year, or more frequently if conditions indicate that such impairment could exist. As of June 27, 2026, no accumulated impairment loss has been recognized for the Company's goodwill.

A summary of changes in the Company’s goodwill is as follows (amounts in thousands):


	Goodwill
	Distribution		Service		Total
Net Book Value as of March 28, 2026	$	59,999	$	158,186	$	218,185
Additions	2,696		6,289		8,985
Currency Translation Adjustment	(54)		(308)		(362)
Net Book Value as of June 27, 2026	$	62,641	$	164,167	$	226,808

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

The gross carrying amount and accumulated amortization of Transcat's acquired identifiable intangible assets as of June 27, 2026 were as follows (in thousands):


	Gross Carrying Amount		Accumulated Amortization		Total
Customer Base	$	122,781	$	(49,878)	$	72,902
Covenant not to Compete	3,605		(3,349)		257
Tradenames/Trademarks	6,740		(1,725)		5,015
Other	905		(885)		20
Intangible Assets, net	$	134,031	$	(55,837)	$	78,194

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The gross carrying amount and accumulated amortization of Transcat's acquired identifiable intangible assets as of March 28, 2026 were as follows (in thousands):


	Gross Carrying Amount		Accumulated Amortization		Total
Customer Base	$	118,844	$	(46,859)	$	71,985
Covenant not to Compete	3,611		(3,258)		353
Tradenames/Trademarks	6,740		(1,396)		5,344
Other	905		(881)		24
Intangible Assets, net	$	130,100	$	(52,394)	$	77,706

Amortization expense relating to intangible assets is expected to be (amounts in thousands):


Fiscal Year	Amount
Nine months remaining in 2027	$	9,955
2028	11,861
2029	10,464
2030	9,175
2031	7,873
Thereafter	28,866
Total	$	78,194

Amortization expense relating to intangible assets was $3.5 million and $2.8 million in the three months ended June 27, 2026 and June 28, 2025, respectively, and is recorded in Selling, Marketing and Warehouse Expenses in the Company's Condensed Consolidated Statements of Income.

Other Liabilities: A summary of other current and non-current liabilities is as follows (amounts in thousands):


	(Unaudited)		(Audited)
	June 27, 2026		March 28, 2026
Current Liabilities:
Accrued Payroll and Employee Benefits	$	5,049	$	5,938
Accrued Incentives	3,878		5,534
Current Portion of Lease Liabilities - Operating	4,402		4,107
Current Portion of Lease Liabilities - Financing	71		270
Accrued Acquisition Holdbacks	2,247		2,247
Accrued Sales Tax	549		609
Other Current Liabilities	1,919		2,992
Accrued Compensation and Other Current Liabilities	$	18,115	$	21,697

Non-Current Liabilities:
Postretirement Benefit Obligation	$	1,175	$	1,188
Other Liabilities	$	1,175	$	1,188

Revenue Recognition: The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. The Company generates revenue from distribution product sales, equipment rental arrangements, and service offerings.

For rental and certain service arrangements that extend across reporting periods, the Company records unbilled revenue or deferred revenue, as applicable, to reflect revenue recognized in advance of or subsequent to billing. Deferred revenue,

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unbilled revenue, and deferred contract costs recorded on the Company’s Condensed Consolidated Balance Sheets as of June 27, 2026 and March 28, 2026 were immaterial. Revenue recognized during the three months ended June 27, 2026 from performance obligations satisfied in prior periods was immaterial.

The application of ASC 606 requires management to exercise judgment in identifying performance obligations, determining whether such obligations are satisfied at a point in time or over time, and estimating transaction prices. These judgments primarily relate to product shipment terms, service completion criteria, and the determination of the appropriate pattern of revenue recognition for rental and managed service arrangements.

Estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period was $6.7 million and $7.3 million as of June 27, 2026 and March 28, 2026, respectively. These are expected to be recognized revenue in one year or less. As of June 27, 2026, the Company had a de minimis amount of unsatisfied performance obligations for contracts with an original expected duration of greater than one year. Accordingly, the Company has elected to not disclose information about remaining performance obligations.

See Note 4 for disaggregated revenue information related to the Company's segments and geographical data.

The following table presents a summary of the Company's net sales by revenue recognition method as a percentage of total net sales:


	% of Total Net Sales
	Three Months Ended
	June 27, 2026		June 28, 2025
Point-in-Time	82.9	%	85.1	%
Over Time - Output Method	17.1	%	14.9	%
Total	100.0	%	100.0	%

Stock-Based Compensation: The Company measures the cost of services received in exchange for all equity awards granted, including stock options and restricted stock units, based on the fair value of the award as of the grant date. The Company records 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. Excess tax benefits for share-based award activity are reflected in the Condensed Consolidated Statements 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. The Company did not capitalize any stock-based compensation costs as part of an asset. The Company estimates forfeiture rates based on its historical experience. During the first three months of fiscal year 2027 and fiscal year 2026, the Company recorded non-cash stock-based compensation cost of $2.0 million and $1.1 million, respectively, in the Condensed Consolidated Statements of Income.

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, unvested restricted stock units using the treasury stock method and contingent consideration classified as equity 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.

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For the first three months of fiscal year 2027 and fiscal year 2026, the net additional common stock equivalents had no effect on the calculation of diluted earnings per share. The average shares outstanding used to compute basic and diluted earnings per share are as follows (amounts in thousands):


	Three Months Ended
	June 27, 2026	June 28, 2025
Average Shares Outstanding – Basic	9,353	9,317
Effect of Dilutive Common Stock Equivalents	120	72
Average Shares Outstanding – Diluted	9,473	9,389
Anti-dilutive Common Stock Securities	81	79

Recently Adopted Accounting Pronouncements:

In July 2025, the FASB issued Accounting Standards Update ("ASU") 2025-05, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”. The ASU introduces a practical expedient for the application of the current expected credit loss model to current accounts receivable and contract assets. ASU 2025-05 is effective for interim and annual reporting periods beginning in fiscal 2027. The Company has elected the practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset when it develops the estimate of expected credit losses. The adoption of the ASU did not have a material impact on the Company’s financial statement disclosures.

Recent Accounting Guidance Not Yet Adopted:

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 Company is assessing the impact the ASU will have on its financial statement disclosures.

NOTE 2– LONG-TERM DEBT

In April 2026, the Company borrowed $13.0 million under the Credit Facility for the acquisitions of SCM Metrology and Laboratories S.A. and SCM Metrologia Honduras, S.A. (together, "SCM"). In June 2026, the Company repaid $2.5 million. As of June 27, 2026, $150.0 million was available for borrowing, subject to covenant restrictions, under the Credit Facility, of which $110.4 million was outstanding.

Interest and Other Costs: The Company’s weighted average interest rate for the revolving credit facility for the first quarter of fiscal year 2027 was 5.2%.

Covenants: The Company was in compliance with all financial covenants and requirements during and as of the three months ended June 27, 2026.

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NOTE 3– STOCK-BASED COMPENSATION

Restricted Stock Units:

The following table summarizes the non-vested restricted stock units outstanding as of June 27, 2026 (in thousands, except per unit data):


	Number Of RSUs	Weighted Average Grant Date Fair Value
Outstanding as of March 28, 2026	201,715	$	81.34
Granted	64,390	$	77.35
Vested	-	$	-
Forfeited	3,901	$	87.34
Outstanding as of June 27, 2026	262,204	$	80.27

Total expense relating to restricted stock units, based on grant date fair value and the achievement criteria, was $2.0 million and $0.9 million in the first quarter of fiscal year 2027 and fiscal year 2026, respectively. As of June 27, 2026, unearned compensation, to be recognized over the grants’ respective service periods, totaled $14.2 million based on estimated achievement levels as of June 27, 2026. If the maximum performance levels were achieved, the unearned compensation could be as much as $16.3 million.

Stock Options: There were no stock option grants for the first three months of fiscal year 2027. The following weighted-average assumptions were used to value options granted during the first three months of fiscal year 2026:


	Three Months Ended
	June 28, 2025

Risk-Free Interest Rate	3.84	%
Volatility Factor	46.85	%
Expected Term (in Years)	4.00
Annual Dividend Rate	0.00	%

The expense related to all stock option awards was $0.1 million in the first three months of fiscal year 2027 and $0.2 million in the first three months of fiscal year 2026.

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The following table summarizes the Company’s options as of and for the first three months ended June 27, 2026 (in thousands, except price per option data and years):


	Number Of Options	Weighted Average Exercise Price Per Option		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding as of March 28, 2026	177	$	72.42
Granted	-	$	—
Exercised	(15)	$	64.87
Forfeited	-	$	-
Outstanding as of June 27, 2026	162	$	68.74	4	$	3,651
Exercisable as of June 27, 2026	118	$	66.10	4	$	3,169

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 the third quarter of fiscal year 2027 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 June 27, 2026. The amount of aggregate intrinsic value will change based on the fair market value of the Company’s common stock.

Total unrecognized compensation cost related to non-vested stock options as of June 27, 2026 was $0.6 million, which is expected to be recognized over a period of [three years]. The aggregate intrinsic value of stock options exercised during the first three months of fiscal year 2027 was $0.4 million. Cash received from the exercise of options in the first three months of fiscal year 2027 was $1.0 million. There were no options exercised in the first three months of fiscal year 2026.

NOTE 4– SEGMENT INFORMATION

Transcat has two reportable segments: Service and Distribution. Through its Service segment, the Company offers calibration, repair, inspection, analytical qualifications, preventative maintenance, consulting and other related services. Through its Distribution segment, the Company sells and rents national and proprietary brand instruments to customers globally. There are no intersegment revenues.

The CODM does not review assets or other balance sheet information in evaluating the results of the Company's segments, and therefore, such information is not presented.


Three Months Ended June 27, 2026:
	Distribution		Service		Total
Revenue	$	30,386	$	62,559	$	92,945
Less Significant Segment Expenses
Cost of Revenue	20,830		41,381
Selling, Marketing & Warehouse Expenses	3,775		7,599
General and Administrative Expenses	4,342		11,299
Operating Income	$	1,439	$	2,280	$	3,719
Reconciliation of Segment Operating Income to Income Before Taxes
Interest Expense					1,518
Interest Income					(3)
Other Expense					19
Income Before Provision For Income Taxes					$	2,185

Capital Expenditures	$	2,388	$	1,926
Depreciation and Amortization	$	1,908	$	5,006

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Three Months Ended June 28, 2025:
	Distribution		Service		Total
Revenue	$	27,280	$	49,144	$	76,424
Less Significant Segment Expenses
Cost of Revenue	17,668		32,935
Selling, Marketing & Warehouse Expenses	3,649		5,866
General and Administrative Expenses	3,191		7,777
Operating Income	$	2,772	$	2,566	$	5,338
Reconciliation of Segment Operating Income to Income Before Taxes
Interest Expense					451
Interest Income					(11)
Other Expense					333
Income Before Provision For Income Taxes					$	4,565

Capital Expenditures	$	2,113	$	2,485
Depreciation and Amortization	$	1,842	$	3,763

The following tables present geographic data for the first three months of fiscal year 2027 and fiscal year 2026 (dollars in thousands):


	Three Months Ended
	June 27, 2026		June 28, 2025
Revenue (1):
United States (2)	$	87,091	$	70,945
Canada	4,385		4,429
Other International	1,469		1,050
Total	$	92,945	$	76,424


	June 27, 2026		March 28, 2026
Property and Equipment:
United States (2)	$	52,374	$	51,891
Canada	4,701		4,830
Other International	1,293		1,080
Total	$	58,368	$	57,801

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

(2)United States includes Puerto Rico.

NOTE 5– BUSINESS ACQUISITIONS

SCM: Effective April 9, 2026, the Company acquired 100% of the equity associated with SCM, a privately-held calibration services provider, based in Costa Rica to advance the Company's strategy to grow alongside customers in high-growth, highly regulated markets. The acquisition price of approximately $12.8 million was paid in cash and is subject to customary adjustments and holdback provisions. The purchase price was primarily financed by a draw on the Credit Facility.

The Company has preliminarily estimated fair values for the assets purchased and liabilities assumed as of the date of the acquisition. These amounts are considered preliminary as the Company is completing the analysis needed to settle working capital and the valuations required to allocate the purchase price. The primary assets acquired include goodwill of

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$9.0 million and Customer Base and Contracts of $4.0 million, which will not be deductible for income tax purposes. Customer Base and Contracts will be amortized over 14 years. Goodwill and intangible assets related to the SCM acquisition have been allocated to both of the Company's segments: 70% to Service and 30% to Distribution.

Essco: Effective August 5, 2025, the Company acquired 100% of the membership units of Essco Calibration Laboratory, LLC (“Essco”), a privately-held calibration services corporation located in the Boston Metro area that is ISO 17025 certified. This transaction aligned with a key component of the Company’s acquisition strategy of targeting businesses that expand the Company’s geographic reach and the depth and breadth of the Company’s service capabilities.

The Essco 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 related to the Essco acquisition have been allocated to the Service segment. Intangible assets related to the Essco acquisition are being amortized for financial reporting purposes on an accelerated basis over the estimated useful lives of up to 15 years and are deductible for tax purposes. Amortization of goodwill related to the Essco acquisition is deductible for income tax purposes.

The Essco Customer Base & Contracts intangible asset was calculated using the MPEEM (Multi-Period Excess Earnings Method) under the Income approach and adjusting for the cash flow benefit of tax amortization of purchased intangibles. The fair value was determined to be $34.0 million and was assigned a useful life of 15 years. The Essco Trademarks and Tradenames intangible asset was calculated using the Relief-From-Royalty Method, which is a variant of the income approach and the market approach, and adjusting for the cash flow benefit of tax amortization of purchased intangibles. The fair value was determined to be $2.7 million and was assigned a useful life of seven years. The weighted average useful life of acquired intangible assets acquired is 14 years.

The total purchase price for Essco is $85.4 million. As of June 27, 2026, $2.8 million remains unpaid and is reflected in accrued compensation and other current liabilities in the Condensed Consolidated Balance Sheets.

The Company estimated fair values for the assets purchased and liabilities assumed as of the date of the acquisition. The following is a summary of the final purchase price allocation, in the aggregate, to the fair value of Essco's assets and liabilities acquired on August 5, 2025 (in thousands):


Goodwill		$	41,161
Intangible Asset – Customer Base & Contracts		34,000
Intangible Asset – Trademarks and Tradenames		2,700
		77,861

Plus:	Cash and Cash Equivalents	272
	Accounts Receivable, Net	2,928
	Property and Equipment, Net	4,679
	Right To Use Assets	4,049
	Prepaid Expenses and Other Current Assets	189
	Other Assets	16
Less:	Current Liabilities	(735)
	Lease Liabilities	(3,865)
Total Purchase Price		$	85,394

Certain of the Company’s acquisition agreements include provisions for contingent consideration and other holdback amounts. The Company accrues for contingent consideration and holdback provisions based on the estimated fair value at the date of acquisition and at subsequent remeasurement dates, as applicable. As of June 27, 2026, no contingent consideration and $4.5 million of other holdback amounts were unpaid and are reflected in current liabilities on the Condensed Consolidated Balance Sheets.

During the first three months of fiscal years 2027 and 2026, acquisition costs were $0.6 million and less than $0.1 million, respectively, and were recorded as incurred as general and administrative expenses in the Condensed Consolidated Statements of Income.

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NOTE 6– COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Company may have pending claims and legal proceedings. The Company maintains accrued expense balances for the estimated amounts of legal costs expected to be billed related to any significant matter. In the opinion of management, based on information available at this time, there are no current claims and proceedings that would have a material adverse effect on the consolidated financial statements. However, the outcomes of such legal claims and proceedings are subject to inherent uncertainties and there exists the possibility that the ultimate resolution of any matter could have a material adverse impact on the Company's financial position and results of operations in the period in which any such effect is recorded.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements. This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations, estimates, beliefs, assumptions and predictions of future events and are identified by words such as “anticipate,” “believes,” “continue,” “estimates,” “expects,” “focus,” “intend,” “potential,” “outlook,” “seek,” “strategy,” “target,” “could,” “can,” “may,” “will,” “would,” and other similar words. Forward-looking statements are not statements of historical fact and thus are subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or those expressed in such forward-looking statements. You should evaluate forward-looking statements in light of important risk factors and uncertainties that may affect our operating and financial results and our ability to achieve our financial objectives. These factors include, but are not limited to, general economic conditions applicable to our business, inflationary impacts and changes in interest rates, the highly competitive nature of the industries in which we compete and in the nature of our two business segments, the concentration of Service segment customers in the life science and other FDA-regulated businesses as well as the industrial manufacturing, aerospace, defense, energy and utilities industries, the significant competition we face in our Distribution segment, any impairment of our goodwill or intangible assets, tariffs and changing trade relations, regional and international conflicts and political conditions, negative publicity and other reputational harm, our ability to successfully complete and integrate business acquisitions, potential unexpected liabilities associated with companies we acquire, cybersecurity risks, the risk of significant disruptions in our information technology systems, our ability to recruit, train and retain quality employees, skilled technicians and senior management, fluctuations in our operating results, our ability to achieve or maintain adequate utilization and pricing rates for our technical service providers, the prices we are able to charge for our services in our Service segment, our ability to adapt our technology, reliance on our enterprise resource planning system, technology updates, supply chain delays, disruptions or product shortages, the risks related to current and future indebtedness, foreign currency rate fluctuations, risks related to protecting our intellectual property, geopolitical events, adverse weather events or other catastrophes, natural disasters or widespread public health crises, involvement in legal proceedings, the volatility of our stock price, the relatively low trading volume of our common stock, the material weaknesses in our internal control over financial reporting, changes in tax rates, changes in accounting standards, legal requirements and listing standards, and legal and regulatory risks related to our international operations. These risk factors and uncertainties are more fully described by us under the heading “Risk Factors” in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended March 28, 2026. You should not place undue reliance on our forward-looking statements, which speak only as of the date they are made. Except as required by law, we undertake no obligation to update, correct or publicly announce any revisions to any of the forward-looking statements contained in this report, whether as a result of new information, future events or otherwise.

CRITICAL ACCOUNTING ESTIMATES

There have been no material changes to our critical accounting policies and estimates from the information provided in our Annual Report on Form 10-K for the fiscal year ended March 28, 2026.

RESULTS OF OPERATIONS

Executive Summary

During our first quarter of fiscal year 2027, we had consolidated revenue of $92.9 million. This represented an increase of $16.5 million or 21.6% versus the first quarter of fiscal year 2026. This increase was primarily due to acquisitions, service organic revenue growth (a non-GAAP measure) and a $3.1 million increase in distribution revenue. Acquired revenue, which represents revenue generated from acquisitions for twelve months subsequent to the acquisition date, was $6.9 million. Service organic revenue increased by 12.8% versus the first quarter of fiscal year 2026. See "Non-GAAP Financial Measures" below for a description and reconciliation of the non-GAAP measure. See Note 5 – “Business Acquisitions” to our unaudited consolidated financial statements in this report for more information about the impact of our acquisitions.

Our first quarter of fiscal year 2027 gross profit was $30.7 million. This was an increase of $4.9 million or 19.0% versus the first quarter of fiscal year 2026. Consolidated gross margin was 33.1%, a decrease of 0.7% versus the first quarter of fiscal year 2026. This decrease in gross profit percentage was primarily due to lower margins from the Distribution segment when compared to the prior year period.

Total operating expenses were $27.0 million in the first quarter of fiscal year 2027, an increase of $6.5 million or 31.9% when compared to the prior fiscal year first quarter. Included in operating expenses during the first quarter of fiscal year 2027 were more than $2.5 million of incremental operating expenses related to the SCM and Essco acquisitions, including

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customer base amortization, depreciation and acquisition-related costs, increased stock-based compensation and executive transition costs. As a percentage of total revenue, operating expenses were 29.1% in the first quarter of fiscal year 2027, up 2.3% from 26.8% in the first quarter of fiscal year 2026. Operating income was $3.7 million, a decrease of $1.6 million, or 30.3% and operating margin decreased from 7.0% in the first quarter of fiscal year 2026 to 4.0% in the first quarter of fiscal year 2027.

Net income was $1.3 million in the first quarter of fiscal year 2027 versus net income of $3.3 million in the first quarter of fiscal year 2026. The decrease was primarily due to a $6.5 million increase in operating expenses, including an increase in amortization of acquisition-related intangible assets, stock-based compensation, executive transition costs and interest expense. The increase in expenses was partially offset by a $4.9 million increase in gross profit.

The following table presents, for the first quarter of fiscal year 2027 and fiscal year 2026, the components of our Condensed Consolidated Statements of Income:


	(Unaudited)
	Three Months Ended
	June 27,		June 28,
	2026		2025
As a Percentage of Total Revenue:
Service Revenue	67.3	%	64.3	%
Distribution Revenue	32.7	%	35.7	%
Total Revenue	100.0	%	100.0	%

Gross Profit Percentage:
Service Gross Profit	33.9	%	33.0	%
Distribution Gross Profit	31.4	%	35.2	%
Total Gross Profit	33.1	%	33.8	%

Selling, Marketing and Warehouse Expenses	12.2	%	12.5	%
General and Administrative Expenses	16.8	%	14.4	%
Total Operating Expenses	29.1	%	26.8	%

Operating Income	4.0	%	7.0	%

Interest and Other Expense, net	1.7	%	1.0	%

Income Before Provision for Income Taxes	2.4	%	6.0	%
Provision for Income Taxes	0.9	%	1.7	%

Net Income	1.4	%	4.3	%

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THREE MONTHS ENDED JUNE 27, 2026 COMPARED TO THREE MONTHS ENDED JUNE 28, 2025 (dollars in thousands):

Revenue:


	Three Months Ended				Change
	June 27, 2026		June 28, 2025		$		%
Revenue:
Service	$	62,559	$	49,144	$	13,415	27.3	%
Distribution	30,386		$	27,280	$	3,106	11.4	%
Total	$	92,945	$	76,424	$	16,521	21.6	%

Total revenue was $92.9 million, an increase of $16.5 million, or 21.6%, in our fiscal year 2027 first quarter compared to the prior fiscal year first quarter.

Service revenue, which accounted for 67.3% and 64.3% of our total revenue in the first quarter of fiscal years 2027 and 2026, respectively, increased $13.4 million or 27.3% from the first quarter of fiscal year 2027 to the first quarter of fiscal year 2026. This year-over-year increase included $6.9 million of incremental service revenue from the acquisitions of Essco and SCM. Service organic revenue increased 12.8% over the prior year period primarily due to growth in client-based labs and calibration services for biomedical customers.

Our fiscal years 2027 and 2026 Service revenue growth, in relation to prior fiscal year quarter comparisons, was as follows:


	FY 2027		FY 2026
	Q1		Q4		Q3		Q2		Q1
Service Revenue Growth	27.3	%	18.4	%	29.1	%	19.9	%	12.3	%

Within any fiscal year, while we add new customers, we also have customers from the prior fiscal year whose service orders may not repeat for any number of factors. Among those factors are variations in the timing of periodic calibrations and other services, customer capital expenditures and customer outsourcing decisions. Because the timing of Service segment orders can vary on a quarter-to-quarter basis, we believe trailing twelve-month information provides a better indication of the progress of this segment.

The following table presents the trailing twelve-month Service segment revenue for the first quarter of fiscal year 2027 and each quarter in fiscal year 2026 as well as the trailing twelve-month revenue growth as a comparison to that of the prior fiscal year period:


	FY 2027			FY 2026
	Q1			Q4			Q3			Q2			Q1
Trailing Twelve-Month:
Service Revenue	$	230,624		$	217,209		$	207,565		$	195,548		$	186,794
Service Revenue Growth	23.5		%	19.7		%	17.8		%	11.0		%	7.7		%

Our strategy has been to focus our investments in the core electrical, temperature, pressure, physical/dimensional and radio frequency/microwave calibration disciplines. We expect to subcontract approximately 13% to 15% of our Service revenue to third-party vendors for calibration beyond our chosen scope of capabilities. We continually evaluate our outsourcing needs and make capital investments, as deemed necessary, to add more in-house capabilities and reduce the need for third-party vendors. Capability expansion through business acquisitions is another way that we seek to reduce the need for

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outsourcing. The following table presents the source of our Service revenue, and the percentage of Service revenue derived from each source for the first quarter of fiscal year 2027 and for each quarter during fiscal year 2026:


	FY 2027		FY 2026
	Q1		Q4		Q3		Q2		Q1
Percent of Service Revenue:
In-House	83.6	%	84.4	%	84.5	%	85.8	%	85.6	%
Outsourced	15.0	%	14.2	%	14.0	%	12.9	%	13.2	%
Freight Billed to Customers	1.4	%	1.4	%	1.5	%	1.3	%	1.2	%
	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%

Our Distribution revenue accounted for 32.7% of our total revenue in the first quarter of fiscal year 2027 and 35.7% of our total revenue in the first quarter of fiscal year 2026. During the first quarter of fiscal year 2027, Distribution segment revenue was $30.4 million which was an increase of $3.1 million or 11.4%. This increase was primarily due to continued strength in rentals and product sales.

The following table presents the quarterly historical trend of Distribution revenue in fiscal years 2027 and 2026 compared to the prior year fiscal quarter:


	FY 2027		FY 2026
	Q1		Q4		Q3		Q2		Q1
Distribution Revenue Growth	11.4	%	10.5	%	19.8	%	24.0	%	19.0	%

The Distribution segment revenue increase for the first quarter of fiscal year 2027 versus the first quarter of fiscal year 2026 was primarily due to higher revenue from our non-rental products.

Distribution revenue includes orders for instruments that we routinely stock in our inventory, customized products, and other products ordered less frequently, which we do not stock. Product backorders are the total dollar value of orders received for which revenue has not yet been recognized. Pending product shipments are primarily backorders, but also include products that are requested to be calibrated in our service centers prior to shipment, orders required by the customer to be shipped complete or at a future date, and other orders awaiting final credit or management review prior to shipment. Management uses pending product shipments and backorders as measures of our future business performance and financial performance within the distribution segment.

The following table presents our total pending product shipments and the percentage of total pending product shipments that were backorders at the end of the first quarter of fiscal year 2027 and each quarter of fiscal year 2026:


	FY 2027			FY 2026
	Q1			Q4		Q3		Q2		Q1
Total Pending Product Shipments	$	6,678		$	7,251	$	6,346	$	7,510	$	4,182
% of Pending Product
Shipments that were Backorders	84.1		%