Greetings, and welcome to Transcat, Inc. First Quarter 2023 Financial Results Conference Call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Tom Barbato at Transcat, Inc. Please go ahead, sir. Thank you operator, and good morning everyone. We appreciate your time and your interest in Transcat. With me here on the call today is our President and CEO, Lee Rudow, and our Chief Operating Officer, Mark Doheny. We will begin the call with some prepared remarks and then we'll open up the call for questions. Our earnings release crossed the wire after market closed yesterday and can be found on our website, transcat.com in the investor relations section, along with the earnings presentation slides that we will be referencing this morning. If you would please refer to slide number two. As you are aware, we make forward-looking statements during the formal presentation and Q&A portion of this teleconference. These statements apply to future events, which are subject to risks and uncertainties, as well as other factors that could cause the actual results to differ materially from where we are today. These factors are outlined in the news release as well as in the documents filed by the company with the SEC. You can find those on our website where we regularly post information about the company as well as on the SEC's website at sec.gov. We undertake no obligation to publicly update or correct any of the forward-looking statements contained in this call, whether as a result of new information, future events or otherwise, except as required by law. Please review our forward-looking statements in conjunction with these precautionary factors. Additionally, during today's call, we will discuss certain non-GAAP measures, which we believe will be useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We've provided reconciliations of non-GAAP to comparable GAAP measures in the tables accompanying the earnings release. With that, I'll turn the call over to Lee. Thank you, Tom. Good morning, everyone. Thank you for joining us on the call today. Yesterday, we announced strong first- quarter financial results, reporting significant year-over-year gains, revenue, margin, and earnings across our entire business platform. We also announced exciting organizational changes that better position the company to execute our day-to-day operating objectives and at the same time, achieve our strategic long-term growth vision. I'll talk to both our results and our organizational changes, but first I'll start with our first quarter year-over-year financial highlights. Consolidated revenue was up 14% to $54.7 million as demand for our products and services remained strong. Consolidated gross margin expanded 100 basis points to 29.3% and was driven by margin expansion in both our service and distribution segments. Service revenue grew 23%. Organic service revenue grew 9%. Service gross margin increased 20 basis points to 32%. Adjusted EBITDA, which is a very important metric for Transcat given our level of acquisitive growth, grew 20% to $7.3 million. The 23% growth in our service business represented the 53rd straight quarter of year-over-year growth. Demand for our services continues to be strong, and we continue to capture market share from third-party service providers, OEMs, and in-house calibration labs. The next acquisition is proving to be a significant differentiator and a great addition to our unique value proposition that is resonating very well throughout our target markets. The NEXA platform enables Transcat to cross-sell what we are now calling single- source solutions. Examples include computerized maintenance management systems to optimize calibration asset and data flow, reliability, validation, and various compliance services that are critical to the calibration ecosystem. We believe the single source solution platform that I'm referring to creates a competitive edge for Transcat as we execute our service growth strategy. On the service gross margin front, margin gains were primarily a function of organic volume growth and strong acquisition performance, offset somewhat by start-up costs at recently won client-based labs. We are also benefiting from the opening of our new technician training center in Houston this past November. The concept of establishing our own training school has been in the works for years. The hardworking and dedicated technical leadership team brought this important differentiator to fruition. Moving on to distribution. Revenue grew 3% to $20.8 million despite extended vendor lead times and supply chain shortages that delayed the conversion of open customer orders. Demand, however, continues to be strong as back orders were up 17% from the beginning of the quarter. Year-over-year distribution margin increased 150 basis points or 25%. The margin expansion was primarily driven by a favorable mix and a continued growth of our rental business, which is within the distribution platform. Overall, we're pretty pleased with the fiscal 2023 first quarter results. The strong performance is a great way to start our new fiscal year. Turning to acquisitions, in the first quarter, we closed the Cincinnati-based Alliance Calibration acquisition, which we anticipate will be a great bolt-on to our Dayton operation. Integration is underway, and we expect the acquired team, which is very talented, to work closely with Transcat to drive the anticipated synergies and capture market share in this important region. Entering the second quarter, our acquisition pipeline remains robust and our balance sheet remains strong with a leverage ratio just over 1.8x. Now let's move on to the organizational changes that we announced in yesterday's press release. There are two role changes. Both enhance our organizational structure at what we believe is a unique time of opportunity for Transcat. In fiscal 2022, we surpassed $200 million in annual revenue. This is an important milestone, growth milestone for the company. What is more important is our strong belief that we're just getting started. To that point, Mark Doheny, our current CFO, will be assuming the role of Chief Operating Officer, and Tom Barbato, our current Senior VP of Finance, will be promoted to Chief Financial Officer. This is a great time to appoint Mark in the COO role to oversee the day-to-day operations of the business. Mark is a talented executive with large company experience, and in two years with Transcat, he's demonstrated the acumen, instincts, and drive that we believe is a perfect operational fit for the anticipated growth of the company. Moving Mark to the COO position will allow me to spend more time with large customers, M&A opportunities, recruiting and developing talent, and perhaps more important than anything else, leveraging our unique value proposition, which now includes the NEXA Asset Management Systems across a range of targeted end markets for Transcat. The move with Mark was made possible by our ability to recruit Tom Barbato to the organization a little over six months ago. Tom is an experienced public company operational CFO and has already made significant contributions to our financial leadership team and the entire organization for that matter. His roll up your sleeves and get things done attitude is a great approach and a perfect fit for Transcat's culture. Congratulations to both guys, as we position Transcat to achieve the long-term growth objectives that we've set for ourselves. With that, I'll turn things over to Mark Doheny for some comments on his new role, and then we'll turn it over to Tom Barbato for a deeper look into our first quarter financial results. Thanks, Lee. While I have really enjoyed my first two years at Transcat in the CFO role, I couldn't be more excited about the opportunity to lead our day-to-day operations across the company. In fact, with Tom on board since January, I've been able to spend more and more time with the various operational teams recently. It really is a talented and dedicated team and one that I would put up against any in the industry. We have been experiencing accelerated organic and acquisitive growth recently, and as Lee mentioned, we believe this is only the beginning. In my new role, I look forward to ensuring this growth continues over the long term, and we do it profitably with focus on needle-moving key initiatives such as automation, process improvement in our network of labs, and achieving synergies from our acquired companies. With regard to acquisitions, as Lee also mentioned, we closed on Cincinnati-based Alliance Calibration at the beginning of June, and it is clear there is excitement on both sides. One relevant item to share is that the prior owner of Alliance told us it is very apparent that Transcat has done this before, as the communication and integration activities have gone amazingly well. I mention this as it is a testament to the maturity level of Transcat's acquisition and integration program. We identify quality companies to acquire, and then we integrate them in a very timely and disciplined fashion following a playbook that has been developed and refined for years. We also closely track their financial performance versus our original evaluation model assumptions to ensure we are meeting or exceeding sales and earnings projections and overall rates of return approved by our board of directors. In fact, for two years post-acquisition, we update our board every quarter on not only the acquired company's financial performance, but also on synergies achieved as well as how the overall integration is progressing. This is difficult work, but we have some of our most talented individuals leading these efforts, and this gives us confidence that we can continue to successfully execute on our acquisition strategy going forward. With that, I'll turn it over to Tom to go through our first quarter financial results in a little more detail. Thanks, Mark. I'll start on slide four of the earnings deck posted on our website, which provides detail regarding our revenue on a consolidated basis and by segment for the first quarter. First quarter consolidated revenue of $54.7 million was up 14% as we continue to see strong demand for both our services and products. Looking at it by segment, service revenue growth was very strong at 23%, with approximately 9% of the growth coming organically and the other 14% from acquisition. We continue to see robust demand across our highly regulated end markets. The NEXA business continues to perform very well, and the Tangent acquisition, which closed in fiscal Q4 2022, maintained a strong start. Turning to distribution, revenue of $20.8 million was up 3% despite global supply chain conditions remaining very challenged and some vendor lead times continuing to be extended. We continue to see good demand levels, which is reflected in our backlog being up 17% from the end of the prior fiscal quarter to a record high of $9 million. Turning to slide five, our consolidated gross profit for the first quarter of $16 million was up 19% from the prior year, and our gross margin expanded 100 basis points to 29.3%. Q4 service gross margin was 32% and expanded 20 basis points from the prior year. Distribution segment gross margins of 25% were up 140 basis points from prior year and was driven by strength at our high- margin rentals business and a favorable sales mix. Turning to slide six. Q1 net income of $3.1 million decreased 16% from prior year, and our diluted earnings per share came in at $0.40. Both net income and earnings per share were negatively impacted by increased acquisition accounting costs as well as higher tax rate compared to the prior year. As a reminder, in the prior fiscal year first quarter, we had a significant impact from a favorable discrete tax benefit due to tax accounting associated with share-based awards and stock option activity, which resulted in negative tax expense for the quarter. In the current fiscal quarter, we saw a similar type of benefit, but not to the magnitude of the prior year. The tax rate for the current quarter was approximately 10.9%, compared to -5.6% in the prior year. The increase in tax rate had a unfavorable impact of $0.08 per diluted earnings per share. We continue to expect the full- year fiscal 2023 tax rate to be in the range of 22%-24%. Acquisitions will continue to be an important part of our go- forward strategy. With this in mind, in our Q4 2022 earnings call, we introduced an adjusted diluted earnings per share metric, which normalizes for the impact of upfront and ongoing acquisition-related costs. First quarter adjusted diluted earnings per share was $0.54, which represents a 2% decrease compared to Q1 of the prior fiscal year. Keep in mind that the adjusted diluted earnings per share was also impacted by the $0.08 per share due to the year-over-year decrease in the discrete tax benefit that I spoke to earlier. A reconciliation of our Q1 2023 adjusted diluted earnings per share to diluted earnings per share and net income can be found in the supplemental section of this presentation. Turning to slide seven, where we show our adjusted EBITDA and adjusted EBITDA margin. We use adjusted EBITDA, which is a non-GAAP measure, to gauge the performance of our segments because we believe it is one of the best measures of our operating performance and ability to generate cash. First quarter consolidated adjusted EBITDA of $7.3 million was up 20% from the same quarter in the prior fiscal year. We saw strong growth in both our service and distribution segments during the first quarter. As always, a reconciliation of adjusted EBITDA to operating income and net income can be found in the supplemental section of this presentation. Moving to slide eight, cash flow from operations reflects the impact of increased inventory as a result of opportunistic buys we have made to counter the effects of extended lead times and price increases. Capital expenditures were $2.4 million in the quarter and continued to be centered around service segment capabilities, including automation, rental pool assets, and investments to support future growth. Turning to slide nine in the balance sheet. At quarter end, we had a total net debt of $51.3 million, with a leverage ratio of 1.83x. We had $36.3 million available from our credit facility at the end of the quarter, and as previously announced, we acquired Alliance Calibration for $4.7 million at the beginning of June, which was largely funded from the revolving credit facility. Lastly, we expect to file our 10-Q on or around August eighth. With that, I'll turn it back to Lee. Okay, thank you, Tom. As I alluded to earlier, we're well-positioned for profitable growth, and we believe our value proposition has never been stronger. Of course, driving execution will be the key. While there's a bit of uncertainty in the current economic climate, the Transcat business model is positioned to perform well. Our service revenue is anchored by recurring revenue streams in highly regulated markets, and we maintain a demonstrated track record of sustained growth through various economic cycles. We are confident and expect this will continue. Strong organic growth remains at the heart of our strategy. We expect organic growth to be in the high single-digit range for the balance of the fiscal 2023 year. We will continue to identify and pursue acquisition opportunities that expand our addressable markets, geographical footprint, and capabilities. Acquisitions remain an important part, an important component of our growth strategy and increase the trajectory of our business. We have a strong balance sheet to support the conversion of our active M&A pipeline, and we will continue to drive continuous process improvement and automation to generate sustainable service margin improvements into the future. With that operator, we can open the line for questions. Thank you very much. Ladies and gentlemen, we will be conducting a question- and- answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. To ask a question, ladies and gentlemen, please press star one now. We have a first question from the lineup, Greg Palm with Craig-Hallum Capital Group. Please go ahead. Yeah, thanks. Congrats to both Mark and Tom, and congrats on the good quarter here. Lee, I'm curious, just what are some of the near-term priorities given this change? You laid out some of that, but you know, in terms of the day-to-day, but wanted to give you the chance to dive into some of this a little bit deeper, if you can. Well, you know, Greg, you know, I specifically mentioned the words unique time of opportunity for Transcat. I think that is absolutely the case. When I think about that and what it means, you know, in reference to your question, I think the M&A pipeline is active, and there's a, you know, you know, with NEXA on board, our value proposition as strong as it is, I would just think we have to execute super well. We've done well in the past, and there's really an opportunity to kind of take it to the next level. Having Mark take on the COO role, it's definitely gonna give me the time and opportunity to get out into field and to make sure that, you know, what makes us unique is understood by every employee that we have, every salesperson, you know, it's conveying our value prop, every customer that needs to hear it. I'm kind of looking forward to that. It's more of my roots by nature. I like getting out into the field and this is really just the best opportunity to do that from, you know, from a time perspective. That's really what it's all about. Okay. Makes sense. In terms of the service margins, if I heard you right. Well, I guess even before that, maybe update us on CBLs, but I think if I heard you right, it sounded like there were some start-up costs associated with the opening of a CBL or multiple, I guess I missed exactly what it was, but maybe go into that a little bit deeper, and then can you quantify what that impact was specifically? Right. In the first quarter, you know, coming out of the what we'll call an intense COVID period where things are just subsiding a bit, we were able to get back on track with what we would call a more normalized, you know, pipeline for client-based labs and an actual wins forecast. We had several sizable wins in the first quarter, and we actually just started those jobs midway through the quarter. If you recall in our past, just in 2019, just before COVID, whenever we have two or three new CBLs in a quarter or even for that matter in a year, four or five, perhaps, there's always a natural drag at the beginning. You gotta send a lot of people. The upstarts are kinda complex and take some time. Remember, CBLs, client-based labs, have a high lifetime value. They're very sticky, very profitable, and they're absolutely part of our growth strategy. In the short term, whenever you land, let's say two or three or four in a quarter, you are gonna have a short-term drag on margin. It usually takes about a quarter or two, depending on how large it is or the complexity of each individual client-based lab, but it's a couple quarters before you kinda get out of that initial phase and into a more normalized profitability. We definitely experienced some of that. The impact in the first quarter, I'm not gonna put an exact number on it. We've got some general ideas, and it definitely impacted the quarter, yet, you know, we still were able to increase margin, which is the good news. We'll benefit, you know, down the road from the CBLs from a margin perspective. Can you say whether those were new or existing customers? Is it fair to assume based on your pipeline that, you know, you'll likely open up new sites as we progress throughout the year? I will say with complete clarity that every CBL that's been new was completely new to us, all new logos, which is really good news. 'Cause we always have the opportunity to expand our current customer base, and we will do that. The first quarter wins were all new. Got it. More to come throughout the year or not necessarily? Yeah. I mean, you know, the pipeline certainly supports that possibility. Okay. Good. All right. I'll leave it there. Thanks, and good luck going forward. All right, Greg. Take care. Thank you. We have next question from the line of Scott Buck with H.C. Wainwright. Please go ahead. Hi. Good morning, guys. Thank you for taking my questions. Just a little more on the CBLs. Lee, could you tell us how many active CBLs you guys have now? You know, I guess, what is the average revenue of a CBL once it's up and running, and how many more opportunities are out there like this? We probably have in the low 20s now in terms of number of CBLs. From a size perspective, they can run anywhere from $500,000 on the low end, you know, $400,000 or $500,000 to a couple of million today in our current platform. The pipeline for CBLs beyond what we've already won in the first quarter is, I would call, healthy. Okay. Appreciate that color. I saw a nice shout-out on the rental business and the release in the commentary here. Are you seeing folks opt for rentals over purchases based on, you know, inflationary pressures on pricing or what's driving the strength in rentals? Yeah, Scott, this is Tom Barbato. I think, you know, the supply chain issues that we're struggling with, our customers are struggling with as well. You know, rentals is a good, you know, option for them to get the product, when they need it to support their activities. I think that's probably having as much of an impact as anything right now. Okay. Appreciate that, Tom. Last one for me, maybe just a reminder on where your comfort level is around leverage, given, you know, kind of the M&A conversations that we've heard on the call so far. Typically I think, you know, our banking covenants call for around 3x, but, you know, we've always been comfortable. We've always been a little underleveraged, but we've had it up to 2.5x, 2.6x, and we're kind of comfortable in that range. You know, we'll probably get comfortable at 3x, but our more normalized comfort level's around 2.5x-ish. Okay, perfect. Well, I appreciate the time, guys. Thank you so much. Take care. Thank you. We have next question from the line of Gerry Sweeney with ROTH Capital. Please go ahead. Yeah, good morning. Thanks for taking my call. Just I had a question on organic growth, and maybe you could give a little bit more detail or nuance. Obviously, very solid organic growth. I always thought the NEXA acquisition, on the asset management side is a differentiator. CBLs, you know, makes sense bringing them in-house, but maybe just describe what's driving some of this growth. Sounds as though you're taking share. Are you hitting just, you know, size and scale on a national basis, driving additional clients towards you versus competitors? Just wanna understand more what's going on on that front. I think the number one contributor to organic growth is the strength of our value proposition. That doesn't happen overnight. I mean, we have worked literally a decade on this. You know, it started with our orientation towards life sciences at a time when others weren't doing it, and it was kind of a unique approach to the market. It's understanding the high cost of failure and how to communicate how we mitigate that, and how we add value to that process from a compliance perspective. Then it kind of evolves into, you know, formulating our sales team so that they can properly, you know, convey those benefits. That takes time, and that takes years. You know, when you get to an environment that we're in now, we've got size, we've got scope, all these investments that we've made in terms of assets and people, you know, are all out in the market, creating that differentiated service solution. Now we're calling it a single- source solution. A big part of the single- source solution, Gerry, is NEXA. We go to the customer that we used to offer calibration services to, and now we offer everything that's adjacent to calibration services in addition. We can go to a client that used to spend $1 million with maybe one of our competitors or in-house and say, "Hey, we can show you how to get your cost down to $800,000," save them 20%. You'll do this discrete step and that discrete step, and this will yield the results that you're looking for. We can express that, I think, like no other, and we have this value proposition that supports it. That's gonna be the driver for strong organic growth. I mean, not every single quarter necessarily, but over time, that's a winning value proposition. It's taken us a long time to get there. We've had gradual improvements along the way, but that's the driver. It's gonna be the value proposition well communicated. Of course, you have to execute it. Sure. Just talking about NEXA, is there another quote- unquote NEXA out there that could, you know, increase your value proposition even more? Is this an area that you're thinking about looking at as you're as you continue to go forward? Great. It's actually a great question. You know, acquiring NEXA showed us and proved to us that we can do well in expanded adjacent markets to our core calibration. What it also did, and probably even more important, is it shows us that this is an area that can be expanded. The growth on the core calibration business is X, and the growth on the NEXA, you know, consulting single source solutions is Y. We're trying to get our arms around exactly what the growth potential is, but it is real and it is significant, and it is additive and incremental to what we used to do. We're kind of putting that all together. Remember, it's only been, you know, 9, 10 months. It hasn't been a year for NEXA. You know, their business has doubled. That's a good indication for us that, you know, we're heading, you know, down the right path. You know, this may sound a little bit off topic, but I think it's important to the discussion. How many discrete customers do you have? Because I look at that as almost a channel that you can leverage with additional sort of ancillary businesses or services. On the service side, it's probably in the range of $35,000 -$40,000. Okay. There's a big channel that you can sort of mine for additional, if you bring in additional adjacent services. There is, correct. That's how we see it. Got it. I appreciate it. Congrats on a great quarter, and, thanks for taking my call. Oh, you're very welcome. Take care, Gerry. Thank you. Anyone who wishes to ask a question at this time, press star and one on your touchtone phone now. If you have a question, you may press star one to ask. Thank you. Ladies and gentlemen, we have reached the end of the question and answer session, and I'd like to turn the call back to Lee Rudow for closing remarks. Over to you, sir. Okay. Thank you all for joining us on the call today. We certainly appreciate your continued interest in Transcat. Transcat will be presenting at the up and coming Oppenheimer conference. That's on August 10th. Feel free to sign up for a one-on-one with us, the management team, or you can just log in, to our presentation. Otherwise, we'll check back with everybody after our next quarter results. Take care. Thank you for joining us. Thank you very much, sir. Ladies and gentlemen, this concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.