Transcat Bolsters Its High Margin Rental Business Via Acquisition Of Axiom For $38M

Transcat Inc TRNS has acquired all of the capital stock of privately-held Axiom Test Equipment, Inc, effective August 8, 2023.

The company paid the $38 million purchase price through a combination of $28 million in company stock and $10 million in cash.

Axiom is a rental provider of Electronic Test Equipment to customers across the U.S. The company has 26 employees and is headquartered just outside of San Diego, California.

Axiom has an in-house ISO 17025 lab, which is primarily utilized for internal calibrations and equipment repair services. The existing staff and leadership team, led by current Axiom President Josh Shilts, will remain in place.

"Axiom is a well-established, fast-growing player in the Test Equipment rental market. They have demonstrated the ability to grow consistently, while expanding profitability, both attributes that align closely to Transcat's historic performance," said President and CEO Lee Rudow.

"Once Axiom is integrated into our existing Distribution business, we expect the near-term combined gross margins to be in the 28% to 30% range and would expect the margins to improve over time from there as the rental business continues to grow faster than the traditional distribution business."

Transcat held $2.14 million in cash and equivalents as of June 24, 2023. The company had $37.5 million available for borrowing under its secured revolving credit facility.

Price Action: TRNS shares are trading higher by 2.68% at $92.99 on the last check Tuesday.