350 added · 219 removed between the two most recent 10-Ks. The risks a company starts — or stops — disclosing are often the story.
Newly disclosed
Based on the results of our qualitative impairment testing performed during the fourth quarter of fiscal year 2025, we determined that it was more likely than not that the fair values exceeded the carrying values for each reporting unit and there were no impairments as of March 29, 2025.
For a discussion of the newly issued accounting pronouncements see “Recently Adopted Accounting Pronouncements” and "Recent Accounting Guidance Not Yet Adopted" under Note 1 to the Consolidated Financial Statements included in Item 8 of Part II of this report. 31 Table of Contents RESULTS OF OPERATIONS The following table sets forth, for fiscal years 2026 and 2025, the components of our Consolidated Statements of Income.
Year Ended March 28, March 29, Change 2026 2025 $ % Service Revenue $ 217,209 $ 181,428 $ 35,781 20 % Less: Acquired Revenue (30,934 ) (1,337 ) Less: Freight Billed to Customer (2,984 ) (2,112 ) Service Organic Revenue $ 183,291 $ 177,979 $ 5,312 3 % Adjusted EBITDA: In addition to reporting net income, a GAAP measure, we present Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, non-cash stock compensation expense, acquisition related transaction expenses, executive transition costs, and certain other expenses), which is a non-GAAP measure.
Fiscal Year Ended March 28, March 29, 2026 2025 Net Income $ 5,376 $ 14,515 + Interest Expense (Income), Net 4,579 (27 ) + Tax Provision 2,613 3,811 + Executive Transition Costs 1,706 - + Depreciation & Amortization 26,172 18,567 + Transaction Expense 744 1,278 + Gain on Acquisition/Divestiture-related items - (1,660 ) + Noncash Stock Compensation 7,549 3,248 Adjusted EBITDA $ 48,739 $ 39,732 During fiscal year 2026, Adjusted EBITDA was $48.7 million, an increase of $9.0 million or 22.7% compared to fiscal year 2025.
The increase in Adjusted EBITDA during fiscal year 2026 was primarily driven by increased revenue. 37 Table of Contents Adjusted Net Income and Adjusted Diluted Earnings Per Share: In addition to reporting Net Income and Diluted Earnings Per Share, GAAP measures, we present Adjusted net income (net income plus acquisition related amortization expense, acquisition related transaction expenses, acquisition related stock-based compensation, executive transition costs, and acquisition amortization of backlog, as applicable) and Adjusted diluted earnings per share (Adjusted net income divided by the average diluted shares outstanding during the period), which are non-GAAP measures.
Fiscal Year Ended March 28, March 29, 2026 2025 Net Income $ 5,376 $ 14,515 + Amortization of Intangible Assets 13,770 8,422 + Acquisition Amortization of Backlog - 28 + Executive Transition Costs 1,706 - + Acquisition Deal Costs 744 1,279 + Acquisition Stock Expense 952 244 + Income Tax Effect (5,251 ) (2,493 ) + Acquisition Earn-out/Contingent Consideration Adjustment - (836 ) Adjusted Net Income 17,297 21,159 Average Diluted Shares Outstanding 9,380 9,254 Diluted Earnings Per Share – GAAP $ 0.57 $ 1.57 + Amortization of Intangible Assets 1.47 0.91 + Acquisition Amortization of Backlog - 0.01 + Executive Transition Costs 0.18 0.14 + Acquisition Deal Costs 0.08 0.03 + Acquisition Stock Expense 0.10 (0.27 ) + Income Tax Effect (0.56 ) (0.09 ) Adjusted Diluted Earnings Per Share $ 1.84 $ 2.29 38 Table of Contents Operating Free Cash Flow In addition to reporting net cash provided by operating activities, a GAAP measure, we present Operating Free Cash Flow (net cash provided by operating activities less capital expenditures), which is a non-GAAP measure.
The significant working capital fluctuations were as follows: ● Receivables: Accounts receivable increased by a net amount of $9.2 million during fiscal year 2026, inclusive of $2.9 million of accounts receivable acquired as part of an acquisition completed during the year.
During fiscal year 2025, accrued compensation and other liabilities decreased by $1.3 million, inclusive of $1.2 million from assumed liabilities, contingent consideration and purchase price holdbacks from acquisition transactions. ● Income Taxes Receivable/Payable: In any given period, net working capital may be affected by the timing and amount of income tax payments.
Acquisition of Essco Calibration Laboratory, LLC — Fair Value of Customer Base & Contracts Intangible Asset — Refer to Note 9 of the financial statements Critical Audit Matter Description The Company completed the acquisition of Essco Calibration Laboratory, LLC (“Essco”) on August 5, 2025.
Based on the results of the Company's impairment assessments in fiscal 2026 and fiscal 2025, the Company was able to conclude that it was more likely than not that the fair values of the reporting units exceeded the carrying values. 56 Table of Contents A summary of changes in the Company’s goodwill is as follows (amounts in thousands): Goodwill Distribution Service Total Book Value as of March 30, 2024 38,216 67,369 105,585 Additions 21,783 49,896 71,679 Currency Translation Adjustment - ( 336 ) ( 336 ) Book Value as of March 29, 2025 59,999 116,929 176,928 Additions - 41,364 41,364 Measurement Period Adjustments - ( 287 ) ( 287 ) Currency Translation Adjustment - 180 180 Book Value as of March 28, 2026 $ 59,999 $ 158,186 $ 218,185 As of March 28, 2026, no accumulated impairment loss has been recognized for the Company's goodwill.
During fiscal year 2026, accrued compensation and other liabilities increased by $6.2 million, inclusive of $3.3 million from assumed liabilities and purchase price holdbacks from acquisition transactions.
We used initial borrowings under the Credit Facility to repay amounts due under the Replaced Facility, including the remaining amounts under the 2018 Term Loan, and for the acquisition of Essco.
No longer disclosed
For example, the acquisition of NEXA (recently rebranded to Transcat Solutions), a service segment business focused on the technical, consulting and staffing solutions market, expanded the scope of services we offer beyond our traditional calibration services and required more time for us to fully integrate into our operating plan.
For example, the United States has recently instituted or proposed changes in trade policies that include the negotiation or termination of trade agreements, the imposition of higher tariffs on imports into the United States, economic sanctions on individuals, corporations or countries, and other government regulations affecting trade between the United States and other countries.
For example, the additional reporting requirements relating to tracking greenhouse gas emissions and other climate-related disclosure from various U.S. states and foreign jurisdictions could significantly increase our accounting, consulting and legal expenses.
For example, we sell our products and services to customers in several industries that may experience rapid technological changes, new product introductions, and evolving industry standards, including highly regulated industries.
For example, in the Transcat Solutions business, our revenue has been negatively impacted in part by delayed starts for customer projects, which has prevented us from fully utilizing all of our technical service providers.
Determinations of significant write-offs of goodwill or intangible assets because of an impairment test or any accelerated amortization of other intangible assets could have a material negative impact on our results of operations and financial condition. 15 Table of Contents Tariffs imposed or threatened by the United States and other countries, as well as changing trade relations, regional and international conflicts, and political conditions could have a material adverse effect on our business and results of operations.
Successfully integrating acquisitions involves many challenges, including: ● The difficulty of integrating acquired operations and personnel with our existing operations; ● Implementing or remediating controls, procedures, and policies at the acquired company; ● Integrating the acquired company’s accounting, enterprise resource management and other administrative systems; ● In the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political, and regulatory risks associated with specific countries; ● Currency and regulatory risks associated with operations in foreign countries; ● The difficulty of developing, marketing and forecasting demand for new products and services; ● Assessing the technology infrastructure and cyber and data security risk profile of the acquired company and integrating its systems into our IT systems, networks and services; ● Diverting management’s attention while evaluating, negotiating and integrating acquisitions; ● Our exposure to unforeseen liabilities of acquired companies; and ● The potential loss of key employees of an acquired operation.
In addition, an acquisition could adversely impact cash flows and/or operating results, and dilute shareholder interests for many reasons, including: ● Charges to our income to reflect the impairment of acquired intangible assets, including goodwill; ● Contingent consideration payments; ● Agreements to provide indemnification for certain potential liabilities; ● Interest costs and debt service requirements for any debt incurred in connection with an acquisition or new business venture; and ● Any issuance of securities in connection with an acquisition or new business venture that dilutes or lessens the rights of our current shareholders.
In addition, to successfully complete targeted acquisitions, we may issue additional equity securities that could dilute our shareholders’ ownership, or we may incur additional debt, which would increase our leverage and our risk of default under our existing credit facility.
Certain of the acquisition agreements by which we have acquired companies or may, in the future, acquire companies generally require the former owners to indemnify us against certain liabilities related to the operation of the company before we acquired it.
The potential consequences of a material cybersecurity incident include reputational damage, compromised employee, customer, or third-party information, litigation with third parties, regulatory actions, and increased cybersecurity protection and remediation costs, which in turn could adversely affect our business and results of operations.
If our CalTrak ®, Application Plus or other management information systems fail to adequately perform these functions, experience an interruption in their operation or a security breach, our business and results of operations could be adversely affected.