TRANSCAT INC

Previous wording

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 “anticipates,” “believes,” “estimates,” “expects,” “potential,” “outlook,” “seek,” “strategy,” “target,” “could,” “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, the impact of widespread public health crises, 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 and industrial manufacturing industries, the significant competition we face in our Distribution segment, any impairment of our goodwill or intangible assets, tariffs and trade relations, our ability to successfully complete and integrate business acquisitions, 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, competition in the rental market, our ability to adapt our technology, reliance on our enterprise resource planning system, technology updates, supply chain delays or disruptions, the risks related to current and future indebtedness, foreign currency rate fluctuations, risks related to our intellectual property, geopolitical events, adverse weather events or other catastrophes or natural disasters, the volatility of our stock price, the relatively low trading volume of our common stock, 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 25, 2023. You should not place undue reliance on our forward-looking statements, which speak only as …

Excerpt shortened here; the source contains the full paragraph.

Current wording

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,” “estimates,” “expects,” “potential,” “outlook,” “seek,” “strategy,” “target,” “could,” “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 and industrial manufacturing industries, the significant competition we face in our Distribution segment, any impairment of our goodwill or intangible assets, tariffs and trade relations, our ability to successfully complete and integrate business acquisitions, 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, competition in the rental market, our ability to adapt our technology, reliance on our enterprise resource planning system, technology updates, supply chain delays or disruptions, the risks related to current and future indebtedness, foreign currency rate fluctuations, risks related to our intellectual property, geopolitical events, adverse weather events or other catastrophes, natural disasters or widespread public health crises, the volatility of our stock price, the relatively low trading volume of our common stock, 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 30, 2024. You should not place undue reliance on our forward-looking statements, which…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

During our third quarter of fiscal year 2024, we had consolidated revenue of $65.2 million. This represented an increase of $7.8 million or 13.5% versus the third quarter of fiscal year 2023. This increase was primarily due to recently completed acquisitions, strong demand in our Service segment’s highly-regulated end markets and increased rental sales, which includes incremental revenue from an acquisition completed in fiscal year 2024. See Note 5 – “Business Acquisitions” to our unaudited consolidated financial statements in this report for more information about the impact of our acquisitions.

Current wording

During our first quarter of fiscal year 2025, we had consolidated revenue of $66.7 million. This represented an increase of $6.1 million or 10.1% versus the first quarter of fiscal year 2024. This increase was primarily due to acquisitions, strong demand in our Service segment’s highly-regulated end markets and increased rental sales, which includes incremental revenue from acquisitions. See Note 5 – “Business Acquisitions” to our unaudited consolidated financial statements in this report for more information about the impact of our acquisitions.

Previous wording

Our third quarter of fiscal year 2024 gross profit was $20.9 million. This was an increase of $4.5 million or 27.7% versus the third quarter of fiscal year 2023. In addition, consolidated gross margin was 32.1%, an increase of 350 basis points versus the third quarter of fiscal year 2023. This increase was largely the result of operating leverage on our fixed costs, increased technician productivity and accretive gross margins from our rental business.

Current wording

Our first quarter of fiscal year 2025 gross profit was $22.7 million. This was an increase of $3.9 million or 21.1% versus the first quarter of fiscal year 2024. In addition, consolidated gross margin was 34.0%, an increase of 310 basis points versus the first quarter of fiscal year 2024. This increase was largely the result of operating leverage on our fixed costs, increased technician productivity and accretive gross margins from our rental business.

Previous wording

Total operating expenses were $16.6 million in the third quarter of fiscal year 2024, an increase of $3.4 million or 25.7% when compared to the prior year third quarter. Included in operating expenses during the third quarter of fiscal year 2024 were incremental operating expenses from the acquisitions of Axiom, SteriQual, TIC-MS, investments in technology and higher incentive-based employee costs due to higher sales. As a percentage of total revenue, operating expenses were 25.5% in the third quarter of fiscal year 2024, up 240 basis points from 23.1% in the third quarter of fiscal year 2023. Operating income was $4.3 million, an increase of $1.1 million, or 35.8% and operating margin increased from 5.5% to 6.6% in the third quarter of fiscal year 2024.

Current wording

Total operating expenses were $17.6 million in the first quarter of fiscal year 2025, an increase of $3.5 million or 24.8% when compared to the prior fiscal year first quarter. Included in operating expenses during the first quarter of fiscal year 2025 were incremental operating expenses from the acquisitions of Becnel, Axiom and SteriQual, investments in technology and higher incentive-based employee costs due to higher sales. As a percentage of total revenue, operating expenses were 26.3% in the first quarter of fiscal year 2025, up 310 basis points from 23.2% in the first quarter of fiscal year 2024. Operating income was $5.1 million, an increase of $0.5 million, or 9.9% and operating margin decreased from 7.7% to 7.6% in the first quarter of fiscal year 2025.

Previous wording

Net income was $3.3 million in the third quarter of fiscal year 2024 versus $1.6 million in the third quarter of fiscal year 2023. The increase was primarily due to higher operating income and lower interest expense associated with the repayment of our revolving credit facility, partially offset by higher provision for income taxes.

Current wording

Net income was $4.4 million in the first quarter of fiscal year 2025 versus $2.9 million in the first quarter of fiscal year 2024. The increase was primarily due to higher operating income and lower interest expense.

Previous wording

The following table presents, for the third quarter and for the first nine months of fiscal year 2024 and fiscal year 2023, the components of our Consolidated Statements of Income:

Current wording

The following table presents, for the first quarter of fiscal year 2025 and fiscal year 2024, the components of our Consolidated Statements of Income:

Previous wording

Third Quarter Ended December 23, 2023 COMPARED TOThird Quarter Ended December 24, 2022* (dollars in thousands):**** ***

Current wording

FIRST QUARTER ENDED June 29, 2024*** COMPARED TOFIRST QUARTER ENDED June 24, 2023 (dollars in thousands):** ***

Previous wording

Total revenue was $65.2 million, an increase of $7.8 million, or 13.5%, in our fiscal year 2024 third quarter compared to the prior fiscal year third quarter.

Current wording

Total revenue was $66.7 million, an increase of $6.1 million, or 10.1%, in our fiscal year 2025 first quarter compared to the prior fiscal year first quarter.

Previous wording

Service revenue, which accounted for 63.7% and 62.7% of our total revenue in the third quarter of fiscal years 2024 and 2023, respectively, increased $5.5 million or 15.4% from the third quarter of fiscal year 2023 to the third quarter of fiscal year 2024. This year-over-year increase included $2.2 million in revenue from the acquisitions of TIC-MS, SteriQual and Axiom, and also included organic revenue growth of 9.1% driven by strong end-market demand and continued market share gains.

Current wording

Service revenue, which accounted for 65.6% and 65.8% of our total revenue in the first quarter of fiscal years 2025 and 2024, respectively, increased $3.9 million or 9.8% from the first quarter of fiscal year 2024 to the first quarter of fiscal year 2025. This year-over-year increase included $1.3 million in revenue from the acquisitions of SteriQual and Becnel, and also included organic revenue growth of 6.4% driven by strong end-market demand and continued market share gains.

Previous wording

The following table presents the trailing twelve-month Service segment revenue for the first, second and third quarter of fiscal year 2024 and each quarter in fiscal year 2023 as well as the trailing twelve-month revenue growth as a comparison to that of the prior fiscal year period:

Current wording

The following table presents the trailing twelve-month Service segment revenue for the first quarter of fiscal year 2025 and each quarter in fiscal year 2024 as well as the trailing twelve-month revenue growth as a comparison to that of the prior fiscal year period:

Previous wording

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 outsourcing. The following table presents the source of our Service revenue and the percentage of Service revenue derived from each source for the first, second and third quarter of fiscal year 2024 and for each quarter during fiscal year 2023:

Current wording

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 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 2025 and for each quarter during fiscal year 2024:

Previous wording

Our Distribution sales accounted for 36.3% of our total revenue in the third quarter of fiscal year 2024 and 37.3% of our total revenue in the third quarter of fiscal year 2023. During the third quarter of fiscal year 2024, Distribution segment sales were $23.7 million which was an increase of 10.4% or $2.2 million . This increase was due to $2.9 million of incremental revenue from the acquisition of Axiom offset by slower demand for our non-rental products.

Current wording

Our Distribution sales accounted for 34.4% of our total revenue in the first quarter of fiscal year 2025 and 34.2% of our total revenue in the first quarter of fiscal year 2024. During the first quarter of fiscal year 2025, Distribution segment sales were $22.9 million which was an increase of 10.5% or $2.2 million. This increase was due to $4.4 million of incremental revenue from the acquisitions of Axiom and Becnel offset by slower demand for our non-rental products.

Previous wording

The Distribution segment sales increase for the third quarter of fiscal year 2024 versus the third quarter of fiscal year 2023 was due to sales from the acquisition of Axiom.

Current wording

The Distribution segment sales increase for the first quarter of fiscal year 2025 versus the first quarter of fiscal year 2024 was due to sales from the acquisitions of Axiom and Becnel.

Previous wording

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, second and third quarter of fiscal year 2024 and each quarter of fiscal year 2023:

Current wording

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 2025 and each quarter of fiscal year 2024:

Previous wording

Our total pending product shipments at the end of the third quarter of fiscal year 2024 were $4.7 million, a decrease of $4.9 million versus the end of the third quarter of fiscal year 2023 and a decrease of $3.5 million since March 25, 2023. The decrease in pending product shipments and backorders was a result of improved fulfillment of existing orders.

Current wording

Our total pending product shipments at the end of the first quarter of fiscal year 2025 were $4.7 million, a decrease of $2.4 million versus the end of the first quarter of fiscal year 2024 and a decrease of $0.4 million since March 30, 2024. The decrease in pending product shipments and backorders was a result of improved fulfillment of existing orders.

Previous wording

Total gross profit for the third quarter of fiscal year 2024 was $20.9 million, an increase of $4.5 million or 27.7% versus the third quarter of fiscal year 2023. Total gross margin was 32.1% in the third quarter of fiscal year 2024, up from 28.6% in the third quarter of fiscal year 2023, a 350 basis point increase.

Current wording

Total gross profit for the first quarter of fiscal year 2025 was $22.7 million, an increase of $3.9 million or 21.1% versus the first quarter of fiscal year 2024. Total gross margin was 34.0% in the first quarter of fiscal year 2025, up from 30.9% in the first quarter of fiscal year 2024, a 310 basis point increase.

Previous wording

Service gross profit in the third quarter of fiscal year 2024 increased $2.7 million, or 25.0%, from the third quarter of fiscal year 2023. Service gross margin was 32.5% in the third quarter of fiscal year 2024, a 250 basis point increase versus the third quarter of fiscal year 2023. This increase in gross margin was the result of increased revenue, which allows us to leverage our fixed-costs, and continued increases in technician productivity.

Current wording

Service gross profit in the first quarter of fiscal year 2025 increased $1.9 million, or 14.7%, from the first quarter of fiscal year 2024. Service gross margin was 34.0% in the first quarter of fiscal year 2025, a 150 basis point increase versus the 32.5% in the first quarter of fiscal year 2024. This increase in Service gross margin was the result of increased revenue, which allows us to leverage our fixed-costs, and increases in technician productivity and automation.

Previous wording

Distribution segment gross margin was 31.5% in the third quarter of fiscal year 2024 versus 26.2% in the third quarter of fiscal year 2023, a 530 basis point increase. The increase in segment gross margin was primarily due to increased margins from rental revenue, which now includes Axiom and a favorable mix of higher margin products sold.

Current wording

Distribution segment gross margin was 33.9% in the first quarter of fiscal year 2025 versus 27.7% in the first quarter of fiscal year 2024, a 620 basis point increase. The increase in Distribution gross margin was due to increased sales from higher-margin rental sales, which now includes the acquisitions of Axiom and Becnel.

Previous wording

Total operating expenses were $16.6 million in the third quarter of fiscal year 2024 versus $13.2 million during the third quarter of fiscal year 2023. The year-over-year increase in selling, marketing and warehouse expenses is due to increased expenses related to recent acquisitions 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.

Current wording

Total operating expenses were $17.6 million in the first quarter of fiscal year 2025 versus $14.1 million during the first quarter of fiscal year 2024. The year-over-year increase in selling, marketing and warehouse expenses is due to increased expenses related to recent acquisitions 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.

Previous wording

As a percentage of total revenue, operating expenses were 26.1% in the first nine months of fiscal year 2024 and 23.0% in the first nine months of fiscal year 2023, an increase of 310 basis points.

Current wording

As a percentage of total revenue, operating expenses were 26.3% in the first quarter of fiscal year 2025 and 23.2% in the first quarter of fiscal year 2024, an increase of 310 basis points.

Previous wording

Our effective tax rate for the third quarter of fiscal years 2024 and 2023 was 21.6% and 24.6%, respectively. The increase in the tax provision is due to higher operating income and lower interest expense associated with the repayment of our revolving credit facility. The decrease in effective tax rate is due to the mix of net income by country. Our quarterly 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 the third quarter of fiscal years 2024 and 2023 was less than $0.1 million.

Current wording

Our effective tax rate for the first quarter of fiscal years 2025 and 2024 was 15.7% and 21.6%, respectively. The tax provision is impacted by higher operating income and lower interest expense. The decrease in effective tax rate is due to the increase in our discrete items. Our quarterly 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 the first quarter of fiscal years 2025 and 2024 was $0.6 million and less than $0.1 million, respectively.

Previous wording

Net income for the third quarter of fiscal year 2024 increased from the third quarter of fiscal year 2023 primarily due to higher operating income and lower interest expense associated with the repayment of our revolving credit facility, partially offset by a higher provision for income taxes.

Current wording

Net income for the first quarter of fiscal year 2025 increased from the first quarter of fiscal year 2024 primarily due to higher operating income and lower interest expense.

Previous wording

Total Adjusted EBITDA, a non-GAAP measure, for the third quarter of fiscal year 2024 was $9.1 million, an increase of $2.5 million or 38.5% versus the third quarter of fiscal year 2023. See “Non-GAAP Financial Measures” below for a description of the non-GAAP measures we use and a reconciliation to the most directly comparable GAAP measures. As a percentage of revenue, Adjusted EBITDA increased to 14.0% for the third quarter of fiscal year 2024 from 11.5% for the third quarter of fiscal year 2023. The increase in Adjusted EBITDA during the third quarter of fiscal year 2024 was primarily driven by increases in operating income, depreciation and amortization expense and non-cash stock compensation.

Current wording

Total Adjusted EBITDA, a non-GAAP measure, for the first quarter of fiscal year 2025 was $10.2 million, an increase of $1.7 million or 20.4% versus the first quarter of fiscal year 2024. See “Non-GAAP Financial Measures” below for a description of the non-GAAP measures we use and a reconciliation to the most directly comparable GAAP measures. As a percentage of revenue, Adjusted EBITDA increased to 15.3% for the first quarter of fiscal year 2025 from 14.0% for the first quarter of fiscal year 2024. The increase in Adjusted EBITDA during the first quarter of fiscal year 2025 was primarily driven by increases in operating income, depreciation and amortization expense and acquisition transaction expenses.

Previous wording

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, non-cash loss on sale of building, and restructuring expense), 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. As such, our management uses Adjusted EBITDA as a measure of performance when evaluating our business segments and as a basis for planning and forecasting. Adjusted EBITDA is also commonly used by rating agencies, lenders and other parties to evaluate our credit worthiness.

Current wording

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, and other expense), 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. As such, our management uses Adjusted EBITDA as a measure of performance when evaluating our business segments and as a basis for planning and forecasting. Adjusted EBITDA is also commonly used by rating agencies, lenders and other parties to evaluate our credit worthiness.

Previous wording

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, acquisition amortization of backlog and restructuring expense; 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.

Current wording

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 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.

Previous wording

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 the first nine months of fiscal year 2024 ranged from 6.4% to 7.1%. Interest on outstanding borrowings under the 2018 Term Loan accrue at a fixed rate of 3.90% over the term of the loan.

Current wording

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 the first three months of fiscal year 2025 was 7.1%. Interest on outstanding borrowings under the 2018 Term Loan accrue at a fixed rate of 3.90% over the term of the loan.

Previous wording

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. We were in compliance with all loan covenants and requirements during the first nine months of fiscal year 2024. Our leverage ratio, as defined in the Credit Agreement, was 0.12 at December 23, 2023, compared with 1.60 at March 25, 2023.

Current wording

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. We were in compliance with all loan covenants and requirements during the first three months of fiscal year 2025. Our leverage ratio, as defined in the Credit Agreement, was 0.08 at June 29, 2024, compared with 0.10 at March 30, 2024.

Previous wording

As of December 23, 2023, $80.0 million was available for borrowing under the revolving credit facility. As of December, 23, 2023, there were no amounts outstanding under the revolving credit facility. After the closing of the Offering, we used approximately $50.0 million of the net proceeds to repay in full the amounts outstanding under the revolving credit facility. During the first nine months of fiscal year 2024 and 2023, we used $12.9 million and $4.0 million, respectively, drawn from the revolving credit facility for business acquisitions.

Current wording

As of June 29, 2024, $80.0 million was available for borrowing under the revolving credit facility. As of June 29, 2024, there were no amounts outstanding under the revolving credit facility. During the first quarter of fiscal year 2025 , we used $16.0 million, drawn from cash and cash equivalents on hand for a business acquisition. During the first quarter of fiscal year 2024, we used $2.9 million, drawn from the revolving credit facility for a business acquisition.

Previous wording

As of December 23, 2023, $4.7 million was outstanding on the 2018 Term Loan, of which $2.3 million was included in current liabilities on the Consolidated Balance Sheets with the remainder included in long-term debt. The 2018 Term Loan requires total repayments (principal plus interest) of $0.2 million per month through December 2025.

Current wording

As of June 29, 2024, $3.6 million was outstanding on the 2018 Term Loan, of which $2.4 million was included in current liabilities on the Consolidated 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.

Previous wording

Operating Activities: Net cash provided by operations was $26.9 million during the first nine months of fiscal year 2024 compared to $14.0 million of net cash provided by operating activities during the first nine months of fiscal year 2023. The year-over-year increase in cash provided by operations was primarily the result of changes in net working capital (defined as current assets less current liabilities). The significant working capital fluctuations were as follows:

Current wording

Operating Activities: Net cash provided by operating activities was $8.9 million during the first quarter of fiscal year 2025 compared to $7.5 million of net cash provided by operating activities during the first quarter of fiscal year 2024. The year-over-year increase in cash provided by operating activities was primarily the result of changes in net working capital (defined as current assets less current liabilities). The significant working capital fluctuations were as follows:

Previous wording

Investing Activities: During the first nine months of fiscal years 2024 and 2023, we invested $9.1 million and $7.1 million, respectively, in capital expenditures that was used primarily for customer-driven expansion of Service segment capabilities and our rental business.

Current wording

Investing Activities: During the first quarter of fiscal years 2025 and 2024, we invested $3.7 million and $2.8 million, respectively, in capital expenditures that was used primarily for customer-driven expansion of Service segment capabilities and our rental business.

Previous wording

During the first nine months of fiscal years 2024 and 2023, we used $12.9 million and $8.3 million, respectively, for business acquisitions.

Current wording

During the first quarter of fiscal years 2025 and 2024, we used $16.0 million and $2.9 million, respectively, for business acquisitions.

Previous wording

During the first nine months of fiscal year 2024, we paid $0.8 million of other holdback amounts relating to business acquisitions. During the first nine months of fiscal year 2023, no contingent consideration or other holdback amounts were paid related to business acquisitions.

Current wording

During the first quarter of fiscal year 2025, we paid $0.5 million of contingent consideration relating to business acquisitions. During the first quarter of fiscal year 2024, we paid $0.3 million of other holdbacks related to business acquisitions.

Previous wording

During the first nine months of fiscal year 2023, $2.3 million was borrowed from our revolving line of credit and $0.5 million in cash was generated from the issuance of common stock. In addition, we used $1.6 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 the quarter, which are shown as a repurchase of shares of our common stock.

Current wording

Financing Activities: During the first quarter of fiscal year 2025, $0.3 million in cash was generated from the issuance of common stock. In addition, we used $0.6 million for scheduled repayments of our term loan and $1.6 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 are shown as a repurchase of shares of our common stock.

Previous wording

Financing Activities: During the first nine months of fiscal year 2024, $75.7 million in cash was generated from the issuance of common stock, net of direct costs of the Offering. In addition, we used $42.7 million to repay our revolving line of credit, $1.7 million for scheduled repayments of our term loan and $2.2 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 are shown as a repurchase of shares of our common stock.

Current wording

During the first quarter of fiscal year 2024, $0.2 million in cash was generated from the issuance of common stock. In addition, we used $0.6 million for scheduled repayments of our term loan, $0.2 million to repay our revolving line of credit and $0.3 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 are shown as a repurchase of shares of our common stock.

Previous wording

We are proud of our dedicated team, which has consistently delivered exceptional results through various economic cycles as can be seen over the past decade and a half of profitable growth. During this fiscal year, we expect organic Service revenue growth in the high-single digit to low double-digit range and gross margin expansion. Automation of our calibration processes and overall process improvement will be key enablers to future margin expansion in the Service segment. We believe the Service segment has substantial runway ahead for growth, both organically and through acquisition. Our robust and diverse acquisition pipeline enables strategic, accretive acquisitions that drive synergistic growth opportunities and will be a key component of our future strategy. We believe our unique value proposition drives a sustainable competitive advantage in the highly regulated markets that we serve, particularly the Life Science, Aerospace, and Defense markets, along with a growing Rentals business. We have a long history of generating sustainable value for our shareholders and providing a dynamic, rewarding workplace for our team.

Current wording

We are proud of our dedicated team, which has consistently delivered exceptional results through various economic cycles as can be seen over the past decade and a half of profitable growth. We believe our unique value proposition drives a sustainable competitive advantage in the highly regulated markets that we serve, particularly the Life Science, Aerospace, and Defense markets, along with a growing Rentals business. We expect another year of organic Service revenue growth in the high single-digit to low double-digit range when normalized for the extra week in fiscal 2024 and gross margin expansion. Automation of our calibration processes and overall process improvement will continue to be key enablers of future margin expansion. We will continue to leverage our expertise and proven track record of successful acquisitions to drive synergistic growth opportunities with a sharp focus on integration. Our robust and diverse acquisition pipeline enables strategic, accretive acquisitions that will be a key component of our go-forward strategy.