2023 Third Quarter Net Sales of $17.2 Million,
down 4% on a Year-Over-Year Basis
Casino and Gaming Sales of $9.0 Million, up 17%
on a Year-Over-Year Basis
Food Service Technology (“FST”) Sales of $4.2
Million, up 13% on a Year-Over-Year Basis
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
preliminary results for the third quarter ended September 30,
2023.
“We are pleased with our operational progress in the quarter and
believe that we are well positioned to build momentum in FST as we
move into the end of the year,” said John Dillon, Chief Executive
Officer of TransAct. “The quarter also reflected the initial
effects of our cost cutting initiatives as we adjust our business
model and direct our efforts more efficiently. I strongly believe
that we are moving the business successfully towards an optimized
and sustainable growth model which I expect we will continue to
build upon during 2024.”
Third Quarter 2023 Financial Highlights
- Net Sales: Net sales for the third quarter of 2023 were
$17.2 million, down 4% compared to $17.9 million for the third
quarter of 2022.
- FST Recurring Revenue: FST recurring revenue for the
third quarter of 2023 was $3.1 million, up 22% compared to $2.6
million for the third quarter of 2022.
- Gross Profit: Gross profit for the third quarter of 2023
was $8.9 million, resulting in gross margin of 51.9%, compared to
gross profit of $8.2 million for the third quarter of 2022, which
delivered a 45.9% gross margin.
- Operating income: Operating income for the third quarter
of 2023 was $1.2 million, compared to $0.4 million for the third
quarter of 2022.
- Net income: Net income for the third quarter of 2023 was
$906 thousand, or $0.09 per diluted share, based on 10.1 million
weighted average common shares outstanding. Net income for the
comparable 2022 period was $528 thousand, or $0.05 per diluted
share, based on 9.9 million weighted average common shares
outstanding.
- EBITDA: EBITDA was $1.5 million for the third quarter of
2023, compared to $0.9 million for the third quarter of 2022.
- Adjusted EBITDA: Adjusted EBITDA was $1.7 million for
the third quarter of 2023, compared to $1.2 million for the third
quarter of 2022.
Recent Development
- The Company announced that it intends to engage an advisor in
the fourth quarter of 2023 to assist in determining the best
long-term strategy for its business and ensure the Company is
maximizing the value of its operations for all stockholders and
other stakeholders.
2023 Financial Outlook
- Total Net Sales: The Company currently expects full year
2023 total net sales of between $72.5 million and $73.5
million.
- Total Adjusted EBITDA: The Company currently expects
full year 2023 total adjusted EBITDA of between $9.5 million and
$10.0 million.
Our outlook for non-GAAP adjusted EBITDA is presented only on a
non-GAAP basis because not all of the information necessary for a
quantitative reconciliation of this forward-looking non-GAAP
financial measure to the most directly comparable GAAP financial
measure is available without unreasonable effort, primarily due to
uncertainties relating to the occurrence or amount of these
adjustments that may arise in the future. If one or more of the
currently unavailable items is applicable, some items could be
material, individually or in the aggregate, to GAAP reported
results.
2023 Third Quarter Conference Call and Webcast
TransAct is hosting a conference call and webcast today,
November 9, 2023, beginning at 4:30 p.m. ET to discuss the
Company’s preliminary third quarter 2023 results and other matters.
Both the call and the webcast are open to the general public. The
conference call number is 877-704-4453 and the conference ID number
is 13741862 (domestic or international). Please call ten 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 measures are helpful to
investors and others in assessing the ongoing nature of what the
Company’s management views as TransAct’s core operations. 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. The Company believes that these non-GAAP
financial measures provide relevant and useful information to an
investor 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 items that do not
reflect the Company’s ongoing operations and are excluded from the
calculation of such measure; (ii) used as financial measurements by
lenders and other parties to evaluate creditworthiness; and (iii)
used by the Company’s management for various purposes including
strategic planning and forecasting and assessing financial
performance. Adjusted net income (loss) and adjusted net income
(loss) per diluted share provide the Company with an understanding
of the results of the primary operations of the business by
excluding the effects of special items (for example, the $1.5
million severance charge related to the resignation of the
Company’s former Chief Executive Officer) that do not reflect the
ordinary earnings of the Company’s operations. The Company uses
these measures to evaluate period-over-period operating performance
because the Company believes this provides a more comparable
measure of the Company’s continuing business, as these measures
adjust for the special items that are not reflective of the normal
results of the business. The presentation of this 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 (loss) before net interest
expense, income taxes, depreciation, and amortization. A
reconciliation of EBITDA to net income (loss), the most comparable
GAAP financial measure, can be found attached to this release.
Adjusted EBITDA is defined as net income (loss) before net
interest expense, income taxes, depreciation and amortization and
is adjusted for (1) share-based compensation and (2) the $1.5
million severance charge related to the resignation of the
Company’s former Chief Executive Officer. 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. The Company also adjusts for the
severance charge related to the resignation of the Company’s former
Chief Executive Officer because the Company believes this charge
does not reflect the ordinary earnings of the Company’s operations.
A reconciliation of adjusted EBITDA to net income (loss), the most
comparable GAAP financial measure, can be found attached to this
release.
Adjusted net income (loss) is defined as net income (loss)
adjusted for the $1.5 million severance charge related to the
resignation of the Company’s former Chief Executive Officer. A
reconciliation of adjusted net income (loss) to net income (loss),
the most comparable GAAP financial measure, can be found attached
to this release.
Adjusted net income (loss) per diluted share is defined as
adjusted net income (loss) divided by diluted shares outstanding. A
reconciliation of adjusted net income (loss) per diluted share to
net income (loss) per diluted share, the most comparable GAAP
financial measure, can be found attached to this release.
About TransAct Technologies Incorporated
TransAct Technologies Incorporated is a global leader in
developing and selling software-driven technology and printing
solutions for high-growth markets including food service, casino
and gaming, and POS automation. The Company’s solutions are
designed from the ground up based on customer requirements and are
sold under the BOHA!™, AccuDate™, EPICENTRAL®, Epic and Ithaca®
brands. TransAct has sold over 3.7 million printers, terminals and
other hardware devices 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.
©2023 TRANSACT Technologies Incorporated. All rights reserved.
TransAct®, BOHA!™, AccuDate™, Epic Edge®, EPICENTRAL®, Ithaca® are
trademarks of TransAct Technologies Incorporated.
Cautionary Statement Regarding Preliminary Financial
Information
The Company has prepared the preliminary financial information
set forth below on a materially consistent basis with its
historical financial information and in good faith based upon its
internal reporting as of and for the three and nine months ended
September 30, 2023. This financial information is preliminary and
is thus inherently uncertain and subject to change as the Company
finalizes its financial results and related review for the three
and nine months ended September 30, 2023. During the course of the
preparation of the Company’s condensed consolidated financial
statements and related notes as of and for the three and nine
months ended September 30, 2023, the Company may identify items
that could cause its final reported results to be materially
different from the preliminary financial information set forth
above. As a result, there can be no assurance that the Company’s
final results for this period will not differ from the preliminary
financial information.
This preliminary financial information should not be viewed as a
substitute for full financial statements prepared in accordance
with GAAP. In addition, this preliminary financial information is
not necessarily indicative of the results to be achieved for any
future period.
Forward-Looking Statements
Certain statements included in this press release may be
forward-looking statements within the meaning of the U.S. federal
securities laws, including the Private Securities Litigation Reform
Act of 1995. Forward-looking statements are any statements other
than statements of historical fact. Forward-looking statements
represent current views about possible future events and are often
identified by the use of forward-looking terminology, such as
"may", "will", "expect", "intend", "estimate", "anticipate",
"believe", "project”, "plan”, "design" or "continue", or the
negative thereof, or other similar words. Forward-looking
statements are subject to certain risks, uncertainties and
assumptions. In the event that one or more of such risks or
uncertainties materialize, or one or more underlying assumptions
prove incorrect, actual results may differ materially from those
expressed or implied by the forward-looking statements. Important
factors and uncertainties that could cause actual results to differ
materially from those expressed or implied by the forward-looking
statements include, but are not limited to, the following: the
adverse effects of current economic conditions, whether due to the
COVID-19 pandemic or otherwise, on our business, operations,
financial condition, results of operations and capital resources,
difficulties or delays in manufacturing or delivery of inventory or
other supply chain disruptions, inflation, the conflicts in
Russia/Ukraine and the Middle East, an inability of our customers
to make payments on time or at all, diversion of management
attention, a possible future reduction in the value of goodwill or
other intangible assets, inadequate manufacturing capacity or a
shortfall or excess of inventory as a result of difficulty in
predicting manufacturing requirements due to volatile economic
conditions, price increases or decreased availability of component
parts or raw materials, exchange rate fluctuations, volatility of
and decreases in trading prices of our common stock and the
availability of needed financing on acceptable terms or at all; our
ability to successfully develop new products that garner customer
acceptance and generate sales, both domestically and
internationally, in the face of substantial competition; our
reliance on an unrelated third party to develop, maintain and host
certain web-based food service application software and develop and
maintain selected components of our downloadable software
applications pursuant to a non-exclusive license agreement, and the
risk that interruptions in our relationship with that third party
could materially impair our ability to provide services to our food
service technology customers on a timely basis or at all and could
require substantial expenditures to find or develop alternative
software products; our ability to successfully transition our
business into the food service technology market; risks associated
with potential future acquisitions; general economic conditions;
our dependence on contract manufacturers for the assembly of a
large portion of our products in Asia; our dependence on
significant suppliers; our ability to recruit and retain quality
employees as the Company grows; our dependence on third parties for
sales outside the United States; our dependence on technology
licenses from third parties; marketplace acceptance of our new
products; risks associated with foreign operations; the
availability of third-party components at reasonable prices; price
wars, supply chain disruptions or other significant pricing
pressures affecting the Company’s products in the United States or
abroad; increased product costs or reduced customer demand for our
products due to changes in U.S. policy that may result in trade
wars or tariffs; our ability to protect intellectual property; and
other risk factors detailed in the Company’s Annual Report on Form
10-K for the year ended December 31, 2022, and other reports filed
with the Securities and Exchange Commission. Actual results may
differ materially from those discussed in, or implied by, the
forward-looking statements. We caution readers not to place undue
reliance on forward-looking statements, which speak only as of the
date of this release. We undertake no obligation to publicly or
otherwise revise any forward-looking statements, whether as a
result of new information, future events or other factors, except
where we are expressly required to do so by applicable law.
- Financial tables follow-
TRANSACT TECHNOLOGIES
INCORPORATED
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Preliminary and
Unaudited)
Three months ended
Nine months ended
September 30,
September 30,
2023
2022
2023
2022
(In thousands, except per share
data)
Net sales
$17,190
$17,856
$59,366
$40,181
Cost of sales
8,274
9,663
27,337
23,988
Gross profit
8,916
8,193
32,029
16,193
Operating expenses:
Engineering, design and product
development
2,509
1,985
7,283
6,440
Selling and marketing
2,397
2,748
7,838
8,724
General and administrative
2,819
3,073
10,680
9,200
7,725
7,806
25,801
24,364
Operating income (loss)
1,191
387
6,228
(8,171
)
Interest and other (expense) income:
Interest, net
(73
)
(53
)
(207
)
(145
)
Other, net
(43
)
132
(22
)
(167
)
(116
)
79
(229
)
(312
)
Income (loss) before income taxes
1,075
466
5,999
(8,483
)
Income tax (expense) benefit
(169
)
62
(1,189
)
2,287
Net income (loss)
$906
$528
$4,810
$(6,196
)
Net income (loss) per common share:
Basic
$0.09
$0.05
$0.48
$(0.63
)
Diluted
$0.09
$0.05
$0.48
$(0.63
)
Shares used in per share calculation:
Basic
9,958
9,911
9,948
9,902
Diluted
10,052
9,911
10,023
9,902
SUPPLEMENTAL INFORMATION –
SALES BY MARKET:
(Preliminary and
Unaudited)
Three months ended
Nine months ended
September 30,
September 30,
2023
2022
2023
2022
(In thousands)
Food service technology
$4,241
$3,748
$11,594
$9,310
POS automation
1,644
5,228
5,345
7,700
Casino and gaming
9,019
7,743
37,002
19,030
TransAct Services Group
2,286
1,137
5,425
4,141
Total net sales
$17,190
$17,856
$59,366
$40,181
TRANSACT TECHNOLOGIES
INCORPORATED
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Preliminary and
Unaudited)
September 30,
December 31,
2023
2022
(In thousands)
Assets:
Current assets:
Cash and cash equivalents
$11,605
$7,946
Accounts receivable, net
12,184
13,927
Employee retention credit receivable
-
1,500
Inventories
17,559
12,028
Other current assets
1,306
724
Total current assets
42,654
36,125
Fixed assets, net
2,653
2,781
Right-of-use assets, net
1,824
2,488
Goodwill
2,621
2,621
Deferred tax assets
6,589
7,327
Intangible assets, net
126
242
Other assets
198
248
14,011
15,707
Total assets
$56,665
$51,832
Liabilities and Shareholders’
Equity:
Current liabilities:
Revolving loan payable
$2,250
$2,250
Accounts payable
6,239
7,395
Accrued liabilities
5,723
4,077
Lease liabilities
915
875
Deferred revenue
977
1,329
Total current liabilities
16,104
15,926
Deferred revenue, net of current
portion
201
143
Lease liabilities, net of current
portion
965
1,683
Other liabilities
221
218
1,387
2,044
Total liabilities
17,491
17,970
Shareholders’ equity:
Common stock
140
139
Additional paid-in capital
56,807
56,282
Retained earnings
14,440
9,630
Accumulated other comprehensive loss, net
of tax
(103)
(79)
Treasury stock, at cost
(32,110)
(32,110)
Total shareholders’ equity
39,174
33,862
Total liabilities and shareholders’
equity
$56,665
$51,832
TRANSACT TECHNOLOGIES
INCORPORATED
RECONCILIATION OF GAAP
EARNINGS FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL
MEASURES
(Preliminary and Unaudited,
thousands of dollars, except percentages and per share
amounts)
Three months ended September 30,
2023
Reported
Adjustments(1)
Adjusted Non-GAAP
Operating expenses
$7,725
$-
$7,725
% of net sales
44.9
%
44.9
%
Operating income
1,191
-
1,191
% of net sales
6.9
%
6.9
%
Interest and other expense
(116
)
-
(116
)
Income before income taxes
1,075
-
1,075
Income tax (expense)
(169
)
-
(169
)
Net income
906
-
906
Net income per common share:
Basic
$0.09
$-
$0.09
Diluted
$0.09
$-
$0.09
(1) No adjustments.
Three months ended September 30,
2022
Reported
Adjustments(2)
Adjusted Non-GAAP
Operating expenses
$7,806
$-
$7,806
% of net sales
43.7%
43.7%
Operating income
387
-
387
% of net sales
2.2%
2.2%
Interest and other income
79
-
79
Income before income taxes
466
-
466
Income tax benefit
62
-
62
Net income
528
-
528
Net income per common share:
Basic
$0.05
$-
$0.05
Diluted
$0.05
$-
$0.05
(2)
No adjustments.
TRANSACT TECHNOLOGIES
INCORPORATED
RECONCILIATION OF GAAP
EARNINGS FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL
MEASURES
(Preliminary and Unaudited,
thousands of dollars, except percentages and per share
amounts)
Nine months ended
September 30, 2023
Reported
Adjustments(3)
Adjusted Non-GAAP
Operating expenses
$25,801
$(1,461
)
$24,340
% of net sales
43.5
%
41.0
%
Operating income
6,228
1,461
7,689
% of net sales
10.5
%
13.0
%
Interest and other expense
(229
)
-
(229
)
Income before income taxes
5,999
1,461
7,460
Income tax (expense)
(1,189
)
(70
)
(1,259
)
Net income
4,810
1,391
6,201
Net income per common share:
Basic
$0.48
$0.14
$0.62
Diluted
$0.48
$0.14
$0.62
(3)
Adjustment includes a severance charge of
$1,461 incurred in April 2023 related to the resignation of the
Company’s former Chief Executive Officer.
Nine months ended September 30,
2022
Reported
Adjustments(4)
Adjusted Non-GAAP
Operating expenses
$24,364
$-
$24,364
% of net sales
60.6
%
60.6
%
Operating loss
(8,171
)
-
(8,171
)
% of net sales
(20.3
)%
(20.3
)%
Interest and other expense
(312
)
-
(312
)
Loss before income taxes
(8,483
)
-
(8,483
)
Income tax benefit
2,287
-
2,287
Net loss
(6,196
)
-
(6,196
)
Net loss per common share:
Basic
$(0.63
)
$-
$(0.63
)
Diluted
$(0.63
)
$-
$(0.63
)
(4)
No adjustments.
TRANSACT TECHNOLOGIES
INCORPORATED
RECONCILIATION OF NET INCOME
(LOSS) TO EBITDA AND ADJUSTED EBITDA
NON-GAAP FINANCIAL
MEASURES
(Preliminary and
Unaudited)
Three months ended
Nine months ended
September 30,
September 30,
2023
2022
2023
2022
(In thousands)
Net income (loss)
$906
$528
$4,810
$(6,196
)
Interest expense, net
73
53
207
145
Income tax expense (benefit)
169
(62
)
1,189
(2,287
)
Depreciation and amortization
381
359
1,103
984
EBITDA
1,529
878
7,309
(7,354
)
Share-based compensation expense
213
287
611
868
Severance charge related to resignation of
the Company’s’ former Chief Executive Officer
-
-
1,461
-
Adjusted EBITDA
$1,742
$1,165
$9,381
$(6,486
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231109708979/en/
Investors: Ryan Gardella ICR, Inc.
Ryan.Gardella@icrinc.com
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