TransAct Technologies Reports Preliminary Second Quarter 2022 Financial Results

Rhea-AI Summary

TransAct Technologies reported a 35% increase in net sales for Q2 2022, reaching $12.6 million compared to $9.3 million in Q2 2021. FST recurring revenue also rose by 5% to $2.2 million. Despite these gains, the company's operating loss widened to $(3.0) million, up from $(2.7) million last year. Gross profit improved to $5.4 million with a gross margin of 43% compared to 36.8% previously. Paid terminals increased by 38% year-over-year, with projections for strong production and sales in the latter half of 2022.

Positive

• Net sales increased 35% year-over-year to $12.6 million.
• Gross profit rose to $5.4 million with a gross margin of 43%.
• Paid terminals grew by 38% to 10,941.

Negative

• Operating loss increased to $(3.0) million from $(2.7) million.
• Net loss grew to $(2.4) million compared to $(2.0) million in Q2 2021.
• EBITDA loss widened to $(2.8) million from $(2.4) million.

2022 Second Quarter Net Sales of $12.6 Million, up 35% on a Year-Over-Year Basis

FST Recurring Revenue of $2.2 Million, up 5% on a Year-Over-Year Basis

FST Paid Terminals Up 38% from June 30, 2021

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 preliminary operating results for the quarter ended June 30, 2022.

“The second quarter marked a return to more normalized Food Service Technology (“FST”) results, particularly in the hardware and label sales categories. Importantly, we now feel that our FST sales team is completely built out, which we believe will pay dividends in the back half of the year and beyond. After attending three important trade shows over the last several months and with our new sales leaders, we are adding quality leads and trials and building a robust pipeline,” said Bart C. Shuldman, CEO of TransAct.

Mr. Shuldman continued, “I am also particularly proud of our engineering, operations, and purchasing teams, who were tasked with finding more parts, re-designing product, and assembling as many printers as they possibly could, which they absolutely did. We began ramping up our production of POS and casino printers in May 2022, shipped many printers in June 2022 and expect near record levels of production and sales of these products in the second half of 2022, barring an unforeseen parts issue. Finally, we are also seeing excellent early results from our previously announced cost cutting initiatives, which combined with leverage from the increased production and projected revenues, we anticipate will result in the Company moving towards breakeven adjusted EBITDA as we progress through the second half of the year.”

Second Quarter 2022 Financial Highlights

• Net Sales: Net sales for the second quarter of 2022 were $12.6 million, up 35% compared to $9.3 million for the second quarter of 2021.
• FST Recurring Revenue: FST recurring revenue for the second quarter of 2022 was $2.2 million, up 5% compared to $2.1 million for the second quarter of 2021.
• Gross Profit: Gross profit for the second quarter of 2022 was $5.4 million, resulting in gross margin of 43.0%, compared to gross profit of $3.4 million for the second quarter of 2021, which resulted in a 36.8% gross margin.
• Operating loss: Operating loss for the second quarter of 2022 was $(3.0) million, compared to operating loss of $(2.7) million for the second quarter of 2021.
• Net loss: Net loss for the second quarter of 2022 was $(2.4) million, or $(0.24) net loss per diluted share, based on 9.9 million weighted average common shares outstanding. Net loss for the comparable 2021 period was $(2.0) million, or $(0.23) net loss per diluted share, based on 9.0 million weighted average common shares outstanding.
• EBITDA loss: EBITDA loss was $(2.8) million for the second quarter of 2022, compared to an EBITDA loss of $(2.4) million for the second quarter of 2021.
• Adjusted EBITDA loss: Adjusted EBITDA loss was $(2.5) million for the second quarter of 2022, compared to adjusted EBITDA loss of $(2.0) million for the second quarter of 2021.
• Paid Terminals: Paid terminals in the market were 10,941 on June 30, 2022, compared to 7,942 on June 30, 2021, an increase of 38%.

2022 Second Quarter Conference Call and Webcast

TransAct is hosting a conference call and webcast today, August 17, 2022, beginning at 4:30 p.m. ET to discuss the Company’s preliminary second quarter 2022 results and other matters. Both the call and the webcast are open to the general public. The conference call number is 201-389-0920 and the conference ID number is 13732413 (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.

Change in Accounting Principle

Effective April 1, 2022, TransAct changed its method of inventory valuation from standard costing which approximates first-in first-out “FIFO” to the average costing methodology. The Company believes this method is preferable because it reflects a better measurement estimate of inventory cost as the Company does not perform intensive manufacturing of our finished products which are therefore better measured under average cost. In addition, the Company’s business is projected to include an increasing sales volume of software going forward, which better aligns with average costing. Comparative financial statements of prior periods have been adjusted to apply the new method retrospectively.

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. 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 loss before net interest expense, income taxes, depreciation, and amortization. A reconciliation of EBITDA to net loss, the most comparable GAAP financial measure, can be found attached to this release.

Adjusted EBITDA is defined as net loss 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 loss, 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 3.6 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.

TransAct®, BOHA!™, AccuDate™, Epic, EPICENTRAL™ and Ithaca® are trademarks of TransAct Technologies Incorporated. ©2022 TRANSACT Technologies Incorporated. All rights reserved.

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 six months ended June 30, 2022. 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 six months ended June 30, 2022. During the course of the preparation of the Company’s condensed consolidated financial statements and related notes as of and for the three and six months ended June 30, 2022, 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 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", "project”, "plan”, "design" or "continue", or the negative thereof, or other similar words. All forward-looking statements involve risks and uncertainties, including, but not limited to, the adverse effects of the COVID-19 pandemic on our business, operations, financial condition, results of operations and capital resources, including difficulties or delays in manufacturing or delivery of inventory or other supply chain disruptions, shutdowns and/or operational restrictions imposed on our customers, an inability of our customers to make payments on time or at all, diversion of management attention, necessary modifications to our business practices and operations, cost cutting measures we have made and may continue to make, 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 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; 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; the effect of the United Kingdom’s withdrawal from the European Union; and other risk factors detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, 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. 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, except as required by applicable law.

– Financial tables follow –

TRANSACT TECHNOLOGIES INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Preliminary and Unaudited)
		Three months ended								Six months ended
		June 30,								June 30,
		2022				2021 As adjusted				2022 As adjusted				2021 As adjusted
		(In thousands, except per share data)
Net sales		$	12,623			$	9,325			$	22,325			$	17,626
Cost of sales			7,189				5,893				14,325				10,855
Gross profit			5,434				3,432				8,000				6,771
Operating expenses:
Engineering, design, and product development			2,172				1,804				4,455				3,607
Selling and marketing			3,293				1,767				5,976				3,210
General and administrative			2,923				2,509				6,127				5,118
			8,388				6,080				16,558				11,935
Operating loss			(2,954	)			(2,648	)			(8,558	)			(5,164	)
Interest and other expense:
Interest, net			(28	)			(29	)			(92	)			(42	)
Other, net			(264	)			(17	)			(299	)			(100	)
			(292	)			(46	)			(391	)			(142	)
Loss before income taxes			(3,246	)			(2,694	)			(8,949	)			(5,306	)
Income tax benefit			870				664				2,225				1,187
Net loss		$	(2,376	)		$	(2,030	)		$	(6,724	)		$	(4,119	)
Net loss per common share:
Basic		$	(0.24	)		$	(0.23	)		$	(0.68	)		$	(0.46	)
Diluted		$	(0.24	)		$	(0.23	)		$	(0.68	)		$	(0.46	)
Shares used in per share calculation:
Basic			9,910				8,976				9,898				8,962
Diluted			9,910				8,976				9,898				8,962

SUPPLEMENTAL INFORMATION – SALES BY MARKET: (Preliminary and Unaudited)
	Three months ended					Six months ended
	June 30,					June 30,
	2022		2021			2022		2021
	(In thousands)
Food service technology	$	3,432	$	3,074		$	5,562	$	5,821
POS automation		1,172		1,256			2,472		2,420
Casino and gaming		6,525		3,467			11,287		6,332
Printrex		-		112			-		271
TransAct Services Group		1,494		1,416			3,004		2,782
Total net sales	$	12,623	$	9,325		$	22,325	$	17,626

TRANSACT TECHNOLOGIES INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Preliminary and Unaudited)
		June 30,				December 31,
		2022				2021 As adjusted
		(In thousands)
Assets:
Current assets:
Cash and cash equivalents		$	3,893			$	19,457
Accounts receivable, net			11,991				7,593
Receivable from employee retention credit			1,500				1,500
Inventories			10,907				7,711
Prepaid income taxes			188				137
Other current assets			794				738
Total current assets			29,273				37,136
Fixed assets, net			2,838				2,684
Right-of-use asset			2,937				2,553
Goodwill			2,621				2,621
Deferred tax assets			7,325				5,143
Intangible assets, net			319				397
Other assets			230				400
			16,270				13,798
Total assets		$	45,543			$	50,934
Liabilities and Shareholders’ Equity:
Current liabilities:
Accounts payable		$	5,017			$	4,308
Accrued liabilities			3,649				3,894
Lease liability			789				789
Deferred revenue			887				805
Total current liabilities			10,342				9,796
Deferred revenue, net of current portion			169				186
Lease liability, net of current portion			2,170				1,781
Other liabilities			190				187
			2,529				2,154
Total liabilities			12,871				11,950
Shareholders’ equity:
Common stock			139				139
Additional paid-in capital			55,708				55,246
Retained earnings			8,842				15,566
Accumulated other comprehensive loss, net of tax			93				143
Treasury stock, at cost			(32,110	)			(32,110	)
Total shareholders’ equity			32,672				38,984
Total liabilities and shareholders’ equity		$	45,543			$	50,934

TRANSACT TECHNOLOGIES INCORPORATED RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED EBITDA NON-GAAP FINANCIAL MEASURES (Preliminary and Unaudited)
		Three months ended								Six months ended
		June 30,								June 30,
		2022				2021 As adjusted				2022 As adjusted				2021 As adjusted
		(In thousands)
Net loss		$	(2,376	)		$	(2,030	)		$	(6,724	)		$	(4,119	)
Interest expense, net			28				29				92				42
Income tax benefit			(870	)			(664	)			(2,225	)			(1,187	)
Depreciation and amortization			397				246				625				486
EBITDA			(2,821	)			(2,419	)			(8,232	)			(4,778	)
Share-based compensation expense			285				431				581				695
Adjusted EBITDA		$	(2,536	)		$	(1,988	)		$	(7,651	)		$	(4,083	)

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220817005581/en/

Investor Contact:

Bart Shuldman

Chief Executive Officer

TransAct Technologies Incorporated

Ryan Gardella

ICR, Inc.

Ryan.Gardella@icrinc.com

Source: TransAct Technologies Incorporated

FAQ

What were the net sales for TransAct Technologies in Q2 2022?

TransAct Technologies reported net sales of $12.6 million in Q2 2022.

How did FST recurring revenue perform in Q2 2022?

FST recurring revenue increased by 5% to $2.2 million in Q2 2022.

What was the operating loss for TransAct in Q2 2022?

The operating loss for Q2 2022 was $(3.0) million.

How many paid terminals did TransAct have by June 30, 2022?

TransAct had 10,941 paid terminals in the market by June 30, 2022.

What is the expected production outlook for TransAct in the second half of 2022?

TransAct expects near record levels of production and sales of printers in the second half of 2022.