Reports 2017 Second Quarter Revenue of $13.6
Million and $0.12 GAAP Diluted EPS
TransAct Technologies Incorporated (Nasdaq: TACT) (“TransAct” or
the “Company”), a global leader in software-driven technology and
printing solutions for high-growth markets, today reported
operating results for the second quarter ended June 30, 2017, as
summarized below:
Summary of 2017 Q2 Results
(In millions, except per share and
percentage data)
Three Months EndedJune
30,
2017 2016 Net sales
$ 13.6 $ 14.8 Gross profit $ 6.4 $ 6.0 Gross margin 47.3 % 40.4 %
Operating income $ 1.3 $ 1.1 Net income $ 0.9 $ 0.8 Net income per
diluted share $ 0.12 $ 0.10
Non-GAAP(1):
EBITDA $ 1.6 $ 1.4 Adjusted EBITDA $ 1.7 $ 1.6 (1) A
reconciliation of each non-GAAP financial measure to the most
comparable Generally Accepted Accounting Principles (“GAAP”)
financial measure can be found included with this release. See
“Non-GAAP Financial Measures” below for a discussion of these
metrics.
Bart Shuldman, Chairman and Chief Executive Officer of TransAct,
commented, “Our increased emphasis on sales of purpose-built
technology-enabled solutions led to a solid 2017 second quarter
with gross margin expanding 690 basis points year over year to
47.3%, leading to a 15% increase in net income, a 20% rise in
diluted EPS and an 11% EBITDA increase, despite a year-over-year
decline in revenue. In addition to the solid financial results, we
also made significant progress in the second quarter in further
positioning our restaurant solutions business for near- and
long-term success, including a near-doubling in sales of our
AccuDate terminals over the first quarter of 2017.
“TransAct strategically entered the restaurant solutions
marketplace with the AccuDate 9700, allowing the Company to
leverage our core technology strengths and solutions to address a
large new market opportunity. Since that time we have worked
closely with customers of all sizes and varying levels of menu
complexity to continuously evolve the capabilities of our product
portfolio to ensure that we anticipate and address their needs. As
restaurant and food service operators increasingly understand and
appreciate the value of our AccuDate solutions to improve
back-of-house operations, we have seen a notable preference for our
integrated product solutions that help them efficiently and
profitably manage their operations. To address this customer
preference, we launched our AccuDate XL and recently completed the
integration of our terminal with industry-leading software
providers CrunchTime and Jolt, resulting in a significant increase
in interest for the AccuDate XL. Accordingly, TransAct made the
strategic decision to implement a number of major internal sales
initiatives that have positioned the Company to benefit from the
XL’s long-term market opportunity.
“First, we rolled out an ongoing direct marketing campaign to
elevate awareness in the AccuDate XL and drive interest in the
product, strategically timed to begin ahead of the National
Restaurant Association Show in late May. Second, we are making good
progress towards building out an internal direct sales team focused
on driving demand for this technology-driven solution. These new
team members are working nationwide to expose the powerful AccuDate
XL and its software ecosystem to restaurant and foodservice
operators of all sizes and are actively developing a growing base
of sales opportunities. Third, we recently launched a full lineup
of TransAct labels designed specifically for our AccuDate terminals
which make the Company a convenient, one-stop provider for most
AccuDate labeling needs while also providing TransAct with a new,
attractive recurring revenue business. Finally, we are adding to
this recurring revenue opportunity around the AccuDate XL by
offering a full complement of services and technical support to the
many customers in our growing pipeline.
“During the second quarter, the increased interest in the
AccuDate XL was reflected in the nearly 94% quarterly sequential
growth in restaurant solutions net sales, our first AccuDate label
and service contract sale through TransAct Services Group, and our
growing backlog of trial activity. Following the shift of our
go-to-market strategy for the restaurant solutions business to an
internal team in the second quarter, we are better positioned today
to successfully execute on the long-term sales potential for the
AccuDate XL.
“Looking at the rest of our markets, our casino and gaming
printers continue to gain share in the improving domestic gaming
environment while the outlook for new Epicentral sales over the
balance of 2017 is positive. Our lottery market, in particular our
sales of spare parts, is benefiting from the ongoing,
industry-driven shift towards longer and/or extended contracts
which is keeping our global installed base of lottery printers in
the field longer. This is expected to continue to create a
recurring revenue market for TransAct as the more than 500,000
printers we have sold into the lottery market will need to be
maintained.
“We are also beginning to see increased signs of activity in the
domestic oil and gas market as Printrex oil and gas printer sales
grew 16% on a year over year basis in the 2017 second quarter and
Printrex consumable sales through TransAct Services Group grew 51%
over the prior year.”
Mr. Shuldman concluded, “TransAct remains well positioned to
grow our business over the second half of 2017, particularly as our
AccuDate XL continues to gain traction in the marketplace. We are
excited by customer response to the CrunchTime and Jolt offerings
on the AccuDate XL and believe that our decision to invest in a
direct marketing initiative and internal sales force will generate
an attractive return going forward. The entire TransAct team is
focused on building shareholder value and we look forward to
delivering on this promise as the year progresses.”
Review of Balance Sheet and Capital Return
Initiatives
As of June 30, 2017, TransAct had approximately $4.9 million of
cash and cash equivalents and no debt. During the 2017 second
quarter, the Company paid an increased dividend to shareholders of
$0.09 per share and did not repurchase any shares of its common
stock, resulting in a total return of capital of $663 thousand for
the quarter. TransAct has $1.4 million remaining under its existing
$5.0 million share repurchase authorization.
Steve DeMartino, President and Chief Financial Officer of
TransAct, added, “TransAct continues to leverage our healthy
balance sheet to invest in our restaurant solutions business,
positioning us to take advantage of what is believed to be a very
meaningful market opportunity, while simultaneously returning
capital to shareholders through our increased quarterly dividend of
$0.09 per share. While our marketing and sales investment
initiatives will result in higher expenses in the second half of
2017, we expect these investments will generate solid returns as we
anticipate benefiting from increased sales and further margin
improvement going forward.”
Summary of 2017 Second Quarter Operating Results
TransAct generated 2017 second quarter net sales of $13.6
million compared with 2016 second quarter net sales of $14.8
million. Restaurant solutions net sales declined to $1.0 million
for the 2017 second quarter from $1.7 million for the 2016 second
quarter, driven almost entirely by lower sales to the Company’s
distributor related to the Company’s focus on a direct sales model
and on the new AccuDate XL terminal. POS automation and banking net
sales declined $1.2 million year over year to $2.0 million in the
2017 second quarter reflecting lower sales of the Company’s Ithaca
9000 printer to McDonald’s versus a record quarter in the prior
year period. Casino and gaming net sales in the 2017 second quarter
were $4.0 million compared to $5.2 million in the prior year
period, as a 26% increase in domestic casino sales was more than
offset by a decline in sales to international customers. Lottery
printer net sales in the 2017 second quarter were $2.8 million
compared with $2.2 million in the 2016 second quarter. Printrex net
sales were $282 thousand in the 2017 second quarter compared to
$176 thousand in the 2016 second quarter, while the Company’s
TransAct Services Group generated net sales of $3.5 million in the
2017 second quarter compared to $2.4 million in the 2016 second
quarter.
Gross margin of 47.3% in the 2017 second quarter compared to
gross margin of 40.4% in the 2016 second quarter, reflecting a more
favorable sales mix including a significant increase in
higher-margin lottery printer spare parts sales. Higher gross
margins in the 2017 second quarter more than offset the 8% decline
in net sales, resulting in a 7% increase in gross profit to $6.4
million.
Total operating expenses for the 2017 second quarter were $5.1
million compared to $4.9 million in the 2016 second quarter. The
increase in operating expenses reflects the Company’s ongoing
efforts to build out a dedicated internal sales force and initiate
a direct marketing program for the restaurant solutions market.
TransAct generated operating income of $1.3 million for the 2017
second quarter compared to $1.1 million for the 2016 second
quarter. Net income in the 2017 second quarter was $867 thousand,
or $0.12 per diluted share, compared to net income of $753
thousand, or $0.10 per diluted share, in the prior year period.
2017 Second Quarter Conference Call and Webcast
TransAct is hosting a conference call and webcast today, August
3, 2017, beginning at 4:30 p.m. ET. Both the call and the
webcast are open to the general public. The conference call number
is 678-825-8259 and the conference ID number is 54675270 (domestic
or international). Please call five minutes prior to the
presentation to ensure that you are connected.
Interested parties may also access the conference call live on
the Internet at www.transact-tech.com (select “Investor Relations”
followed by “Events & Presentations”). Approximately two hours
after the call has concluded, an archived version of the webcast
will be available for replay at the same location.
Non-GAAP Financial Measures
TransAct is providing certain non-GAAP financial measures
because the Company believes that these amounts are helpful to
investors and others in assessing the ongoing nature of what the
Company’s management views as TransAct's core operations. The
Company believes that the non-GAAP financial measures of EBITDA and
adjusted EBITDA provide relevant and useful information, which is
widely used by analysts, investors and competitors in the Company’s
markets, as well as by the Company’s management in assessing the
Company’s performance. The Company uses the non-GAAP financial
measures internally to focus management on the results of the
Company's core business. The presentation of this additional
non-GAAP information is not considered superior to or a substitute
for, and should be read in conjunction with, the financial
information prepared in accordance with GAAP.
EBITDA is defined as net income before net interest expense,
income taxes, depreciation and amortization. A reconciliation of
EBITDA to net income, the most comparable GAAP financial measure,
can be found attached to this release.
Adjusted EBITDA is defined as net income before net interest
expense, income taxes, depreciation, and amortization and is
adjusted for share-based compensation. The Company adjusts EBITDA
for share-based compensation because the Company considers
share-based compensation to be a non-cash expense similar to
depreciation and amortization. A reconciliation of adjusted EBITDA
to net income, the most comparable GAAP financial measure, can be
found attached to this release.
EBITDA and adjusted EBITDA provide the Company with an
understanding of one aspect of earnings before the impact of
investing and financing charges and income taxes. EBITDA and
adjusted EBITDA may be useful to an investor in evaluating the
Company’s operating performance because these measures are: (i)
widely used by investors to measure a company’s operating
performance without regard to non-recurring items excluded from the
calculation of such measure; (ii) financial measurements that are
used by lenders and other parties to evaluate creditworthiness; and
(iii) used by the Company’s management for various purposes
including strategic planning and forecasting, assessing financial
performance, and paying incentive compensation.
About TransAct Technologies Incorporated
TransAct Technologies Incorporated is a global leader in
developing software-driven technology and printing solutions for
high-growth markets including restaurant solutions, POS automation,
casino and gaming, lottery, mobile and oil and gas. The Company’s
solutions are designed from the ground up based on customer
requirements and are sold under the AccuDate™, EPICENTRAL®, Epic®,
Ithaca®, RESPONDER and Printrex® brands. TransAct has over 3.0
million printers and terminals installed around the world and is
committed to providing world-class service, spare parts and
accessories to support its installed product base. Through the
TransAct Services Group, the Company also provides customers with a
complete range of supplies and consumable items both online at
http://www.transactsupplies.com and through its direct sales team.
TransAct is headquartered in Hamden, CT. For more information,
please visit http://www.transact-tech.com or call (203)
859-6800.
Forward-Looking Statements
Certain statements in this press release include forward-looking
statements. Forward-looking statements generally can be identified
by the use of forward-looking terminology, such as "may", "will",
"expect", "intend", "estimate", "anticipate", "believe" or
"continue" or the negative thereof or other similar words. All
forward-looking statements involve risks and uncertainties,
including, but not limited to, customer acceptance and market share
gains, both domestically and internationally, in the face of
substantial competition from competitors that have broader lines of
products and greater financial resources; our competitors
introducing new products into the marketplace; our ability to
successfully develop new products; our dependence on significant
customers; our dependence on significant vendors; dependence on
contract manufacturers for the assembly of a large portion of our
products in Asia; our ability to protect intellectual property; our
ability to recruit and retain quality employees as the Company
grows; our dependence on third parties for sales outside the United
States, including Australia, New Zealand, Europe, Latin America and
Asia; the economic and political conditions in the United States,
Australia, New Zealand, Europe, Latin America and Asia; marketplace
acceptance of new products; risks associated with foreign
operations; the availability of third-party components at
reasonable prices; price wars or other significant pricing
pressures affecting the Company's products in the United States or
abroad; risks associated with potential future acquisitions;
our new line of food safety and oil and gas products driving
increased adoption by customers; and other risk factors detailed
from time to time in TransAct's reports filed with the Securities
and Exchange Commission. Actual results may differ materially from
those discussed in, or implied by, the forward-looking statements.
The forward-looking statements speak only as of the date of this
release and the Company assumes no duty to update them to reflect
new, changing or unanticipated events or circumstances.
- Financial tables follow -
TRANSACT TECHNOLOGIES INCORPORATED CONSOLIDATED
STATEMENTS OF INCOME (Unaudited) Three
Months Ended Six Months Ended (In thousands,
except per share amounts)
June 30, June 30,
2017 2016
2017 2016 Net sales
$
13,596 $ 14,801
$ 27,593 $ 29,158 Cost of
sales
7,166 8,818
15,070 17,290 Gross profit
6,430 5,983
12,523
11,868 Operating expenses: Engineering, design
and product development
1,020 1,089
2,013 2,325
Selling and marketing
2,034 1,859
3,706 3,652 General
and administrative
2,070 1,935
4,082 3,852
5,124
4,883
9,801 9,829
Operating income
1,306 1,100
2,722 2,039
Interest and other income (expense): Interest, net
(8
) (7 )
(16 ) (11 ) Other, net
(2
) 15
(8 ) 16
(10 ) 8
(24
) 5 Income before income taxes
1,296 1,108
2,698 2,044 Income tax provision
429 355
888
666 Net income
$ 867 $ 753
$ 1,810 $ 1,378 Net income per
common share: Basic
$ 0.12 $ 0.10
$
0.24 $ 0.18 Diluted
$ 0.12 $ 0.10
$
0.24 $ 0.18 Shares used in per share calculation:
Basic
7,408 7,689
7,402 7,761 Diluted
7,514
7,743
7,469 7,813
SUPPLEMENTAL INFORMATION
– SALES BY SALES UNIT:
Three months ended Six months ended
June 30, June 30, 2017 2016
2017
2016 Restaurant solutions
$ 1,021 $ 1,715
$ 1,548 $ 2,537 POS automation and banking
2,048 3,203
4,506 5,518 Casino and gaming
3,985 5,154
9,102 10,592 Lottery
2,787 2,150
5,768 5,085 Printrex
282 176
460 331 TransAct
Services Group
3,473 2,403
6,209
5,095 Total net sales
$ 13,596 $ 14,801
$
27,593 $ 29,158
TRANSACT TECHNOLOGIES
INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) June 30, December
31, (In thousands)
2017 2016
Assets: Current assets:
Cash and cash equivalents
$ 4,877 $ 2,503 Accounts
receivable, net
7,404 10,585 Inventories, net
9,521
9,707 Other current assets
884 372
Total current assets
22,686
23,167 Fixed assets, net
2,262 2,241 Goodwill
2,621 2,621 Deferred tax assets
3,484 3,432
Intangible assets, net
386 545 Other assets
35
36
8,788 8,875
Total assets
$ 31,474 $ 32,042
Liabilities and Shareholders’ Equity: Current
liabilities: Accounts payable
$ 3,421 $ 4,894 Accrued
liabilities
2,380 2,394 Income taxes payable
- 19
Deferred revenue
215 117 Total
current liabilities
6,016 7,424
Deferred revenue, net of current portion
74 67
Deferred rent, net of current portion
190 178 Other
liabilities
254 264
518 509 Total liabilities
6,534 7,933 Shareholders’
equity: Common stock
112 112 Additional paid-in capital
29,996 29,701 Retained earnings
24,686 24,157
Accumulated other comprehensive loss, net of tax
(102
) (109 ) Treasury stock, at cost
(29,752
) (29,752 ) Total shareholders’ equity
24,940 24,109 Total liabilities and
shareholders’ equity
$ 31,474 $ 32,042
TRANSACT TECHNOLOGIES INCORPORATED
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA
NON-GAAP FINANCIAL MEASURES (Unaudited)
Three Months Ended Six Months Ended (In
thousands)
June 30, June 30, 2017 2016
2017 2016 Net income
$ 867 $ 753
$ 1,810 $ 1,378 Interest (income) expense, net
8 7
16 11 Income tax provision
429 355
888 666 Depreciation and amortization
289
318
602 643 EBITDA
1,593
1,433
3,316 2,698 Share-based compensation expense
150 161
296 305
Adjusted EBITDA
$ 1,743 $ 1,594
3,612 $
3,003
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version on businesswire.com: http://www.businesswire.com/news/home/20170803006075/en/
Investor:TransAct Technologies IncorporatedSteve
DeMartinoPresident and Chief Financial
Officer203-859-6810orJCIRRichard Land, Joseph Jaffoni, Jim
Leahy212-835-8500 or tact@jcir.com
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