Transcat, Inc.

The views expressed below are those of Anchor Capital Advisors, LLC (“Anchor”) as of the date written and are subject to change at any time. They are based on our proprietary research of the stated company and the following is a summary of the primary factors that support our beliefs and rationale for investing in the company. Please see additional disclosures at the end of this publication.

TRNS: NASDAQ

Transcat, Inc. is a provider of accredited calibration and laboratory instrument services and a distributor of professional grade test, measurement, and control instruments.[1] The company was founded in 1964, and is headquartered in Rochester, NY.[2]

Investment thesis

As the confirmation through our research shows, Transcact has had a history of strong revenue growth, has recurring revenue, seems somewhat resilient in recessions, and has a strong balance sheet. Finally, we believe management is aligned based on their ownership levels discussed further below.

Confirmation through research

Since 2005, the company has had 8% reported growth thanks to organic growth and acquisitions.[3] The company had 48% of its business in servicing instruments, which is highly recurring.[4]We believe the company is somewhat recession resilient, as revenue was positive in both 2008 and 2009.[5] The company has a strong balance sheet in our view, as it is only levered 1.8x net debt/EBITDA. [6] Finally, management and insiders own 7.4% of the company.

Variant Perception

We believe that the market is not assigning a fair value to the business considering the company’s history of growth, recession resilience, strong management alignment, and strong balance sheet.