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TransAct Technologies Reports 2017 Second Quarter Results
Summary of 2017 Q2 Results
(In millions, except per share and percentage data)
Three Months Ended
June 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
ContactsInvestor:
TransAct Technologies Incorporated
Steve DeMartino
President and Chief Financial Officer
203-859-6810
or
JCIR
Richard Land, Joseph Jaffoni, Jim Leahy
212-835-8500 or [email protected]
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Reports 2017 Second Quarter Revenue of $13.6 Million and $0.12 GAAP
Diluted EPS
HAMDEN, Conn.–(BUSINESS WIRE)–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 Ended |
||||||||
| 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 | |||||
Contacts
Investor:
TransAct Technologies Incorporated
Steve
DeMartino
President and Chief Financial Officer
203-859-6810
or
JCIR
Richard
Land, Joseph Jaffoni, Jim Leahy
212-835-8500 or [email protected]
