NOTE 2 – LONG-TERM DEBT

On July 29, 2025, the Company entered into a Credit Agreement (the “Credit Agreement”) with a group of three lenders establishing a new five-year $150.0 million secured revolving credit facility (the “Credit Facility”). Borrowing options under the Credit Facility include: (i) a revolving loan option; (ii) a swingline loan option; and (iii) letters of credit, each of which is provided on a committed basis. The Credit Facility replaced the Company’s former $80.0 million credit facility (the “Replaced Facility”), which included a letter of credit subfacility of $10.0 million and the Company’s 2018 term loan, with an original principal amount of $15.0 million (the “2018 Term Loan”).

On July 7, 2021, the Company entered into the Replaced Facility with Manufacturers and Traders Trust Company (“M&T”), that amended and restated in its entirety the Company’s prior credit agreement with M&T.

The Replaced Facility provided for a revolving credit commitment (the “revolving credit facility”) of $80.0 million through June 2026, with a letter of credit subfacility of $10.0 million. The 2018 Term Loan was also provided for under the Replaced Facility.

The Replaced Facility allowed the Company to use up to $50.0 million under the revolving credit facility for acquisitions in any single fiscal year. The Replaced Facility restricted the Company's ability to complete acquisitions of businesses with a principal place of business located in the United Kingdom or the European Union to an aggregate purchase price of $40.0 million during the term of the Replaced Facility, if the acquisition is financed directly or indirectly with the revolving credit facility.

Under the Replaced Facility, the Company was permitted to make restricted payments up to $25.0 million in the aggregate over the term of the Replaced Facility and $10.0 million in any single fiscal year to repurchase shares and pay dividends.

As of June 28, 2025, $80.0 million was available for borrowing under the revolving credit facility, of which $33.2 million was outstanding. 

As of June 28, 2025, $1.2 million was outstanding on the 2018 Term Loan, which was included in current liabilities on the Condensed Consolidated Balance Sheets. The 2018 Term Loan required total amortizing repayments (principal plus interest) of $0.2 million per month through its maturity date in December 2025.

Interest and Other Costs: Effective July 1, 2023, interest on outstanding borrowings under the revolving credit facility accrued, at Transcat’s 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 accrued 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 the Company’s calculated leverage ratio. The Company’s interest rate for the revolving credit facility for the first quarter of fiscal year 2026 was 5.2%.  Interest on outstanding borrowings under the 2018 Term Loan accrued at a fixed rate of 3.90% over the term of the loan. 

Covenants: The Replaced Facility had certain covenants with which the Company was required to comply, including a fixed charge ratio covenant, which prohibited the Company's fixed charge ratio from being less than 1.15 to 1.00, and a leverage ratio covenant, which prohibited the Company's leverage ratio from exceeding 3.00 to 1.00. 

Other Terms: The Company pledged all of its U.S. tangible and intangible personal property, the equity interests of its U.S.-based subsidiaries, and a majority of the common stock of Transcat Canada Inc. as collateral security for the loans made under the revolving credit facility.