Release Details
TransAct Technologies Reports 2016 Fourth Quarter and Full Year Results
2016 Fourth Quarter Revenue of
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Summary of 2016 Q4 and Full Year Results |
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(In millions, except per share and percentage data) |
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Three Months Ended |
Twelve Months Ended |
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| 2016 | 2015 | 2016 | 2015 | |||||||||
| Net sales | $ | 13.6 | $ | 12.1 | $ | 57.2 | $ | 59.7 | ||||
| Gross profit | $ | 6.0 | $ | 5.0 | $ | 23.8 | $ | 25.0 | ||||
| Gross margin | 44.2% | 41.5% | 41.6% | 41.9% | ||||||||
| Operating income | $ | 1.9 | $ | 0.5 | $ | 5.2 | $ | 4.5 | ||||
| Net income | $ | 1.4 | $ | 0.5 | $ | 3.6 | $ | 3.1 | ||||
| Net income per diluted share | $ | 0.18 | $ | 0.07 | $ | 0.47 | $ | 0.39 | ||||
| Non-GAAP(1): | ||||||||||||
| Adjusted operating income | $ | 1.9 | $ | 0.5 | $ | 5.2 | $ | 6.2 | ||||
| EBITDA | $ | 2.3 | $ | 0.8 | $ | 6.5 | $ | 5.9 | ||||
| Adjusted EBITDA | $ | 2.4 | $ | 0.9 | $ | 7.1 | $ | 8.1 | ||||
| Adjusted net income | $ | 1.4 | $ | 0.5 | $ | 3.6 | $ | 4.2 | ||||
| Adjusted net income per diluted share | $ | 0.18 | $ | 0.07 | $ | 0.47 | $ | 0.54 | ||||
| (1) | A reconciliation of each non-GAAP financial measure to the most comparable Generally Accepted Accounting Principles ("GAAP") financial measure can be found attached to this release. See "Non-GAAP Financial Measures" below for a discussion of these metrics. | |
"Throughout 2016, we made significant progress in growing our restaurant solutions business, with total sales up 23% year over year. With ongoing investments in product engineering and software development in our AccuDate XL, TransAct now offers a full suite of solutions with feature sets that can address the expanding range of industry opportunities. Importantly, the momentum of customer wins for each of our AccuDate terminals clearly demonstrates that the marketplace is embracing the value and capabilities of this product.
"During 2017, TransAct intends to build on the strong foundation for our restaurant solutions business. Importantly, last week we announced a partnership with Jolt to bring their cloud-based software platform to the AccuDate XL, dramatically expanding the potential market for our flagship product. With our current software partners, the AccuDate XL is becoming a technology hub that brings critical new solutions to restaurant and food service operators as they seek to manage their operations, menus, inventory, prep production and food safety, and grab ‘n go labeling in a more effective and productive manner. We now believe the total available market for our terminals is far larger than it was when we originally launched the AccuDate 9700, particularly as restaurants and other food service venues demonstrate increased interest in the full system solution utilizing the new AccuDate XL and associated software. With such a large market opportunity, we are committing more resources to, and investing in, our internal infrastructure dedicated to this business to build a world-class sales force and implement a highly targeted and proactive direct marketing campaign. We believe that ultimately this investment will allow us to introduce the technology to the market, leverage our software partner relationships, increase AccuDate terminal trials and transition those trials to rollouts and revenue. While these efforts require elevated investment beginning early in 2017 to build our infrastructure ahead of an expected revenue ramp later in the year, we believe this is the right time and strategy to allow us to penetrate and lead this important and growing market for TransAct.
"TransAct continues to be a leader in the global casino and gaming equipment market with solid market share for casino, gaming and lottery printers as well as for innovation. Our Epic Edge has features not offered by any other provider of casino printers, such as thermal printing at 300dpi, that drives higher acceptance with currency through bill acceptors, and the new Epicentral SE allows casino system software companies to use parts of our industry leading technology to drive promotions and bonuses already included in their software. We expect to benefit from this leadership position in the year ahead, particularly as we begin shipments of our new Epic Edge casino ticket printer and continue to gain traction with our Epicentral bonusing solution."
Review of Balance Sheet and Capital Return Initiatives
As of
Summary of 2016 Fourth Quarter Operating Results
TransAct generated 2016 fourth quarter net sales of
Gross margin of 44.2% in the 2016 fourth quarter compared to gross
margin of 41.5% in the prior year period, reflecting a favorable mix of
higher-margin restaurant solutions terminal sales in the overall revenue
base. Total operating expenses for the 2016 fourth quarter decreased
TransAct recorded operating income of
2016 Fourth Quarter Conference Call and Webcast
TransAct is hosting a conference call and webcast today,
Interested parties may also access the conference call live on the
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 management views as TransAct's core operations. The Company believes that the non-GAAP financial measures of EBITDA, adjusted EBITDA, adjusted operating income, adjusted net income and adjusted net income per diluted share 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. These non-GAAP measures exclude the effect in the applicable periods presented of certain items that are contained in the tables included with this release. These non-recurring items, which include the impact of legal fees incurred during the first half of 2015 related to the now-settled lawsuit with Avery Dennison Corporation, have been excluded from non-GAAP financial measures because management does not believe that they are representative of underlying trends in the Company's performance. Their exclusion provides investors and others with additional information to more readily assess the Company's operating results. 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 and the impact of legal fees related to the lawsuit with Avery Dennison Corporation in 2015. The Company adjusts EBITDA for share-based compensation as the Company considers share-based compensation to be a non-cash expense similar to depreciation and amortization, and believes that it provides investors with an additional measure of the Company's liquidity. 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 and liquidity because this measure is: (i) widely used by investors to measure a company's operating performance without regard to items excluded from the calculation of such measure; (ii) a financial measurement that is used by lenders and other parties to evaluate creditworthiness and liquidity; and (iii) used by the Company's management for various purposes including strategic planning and forecasting, assessing financial performance and liquidity, and paying incentive compensation.
Adjusted operating income is defined as operating income adjusted for special items that are not normal to our business or recurring in nature (the impact of legal fees related to the lawsuit with Avery Dennison Corporation incurred in 2015). The Company adjusts for these legal fees because the Avery Dennison lawsuit does not relate to the Company's core business and because it believes that eliminating the legal fees helps investors understand, assess and develop expectations for the Company's core business. A reconciliation of adjusted operating income to operating income, the most comparable GAAP financial measure, can be found attached to this release.
Adjusted net income is defined as net income adjusted for the tax-effected impact of special items that are not normal to our business or recurring in nature (legal fees related to the lawsuit with Avery Dennison Corporation incurred in 2015). A reconciliation of adjusted net income to net income, the most comparable GAAP financial measure, can be found attached to this release.
Adjusted net income per diluted share is defined as adjusted net income divided by diluted shares outstanding. A reconciliation of adjusted net income per diluted share to net income per diluted share, the most comparable GAAP financial measure, can be found attached to this release.
Adjusted operating income, adjusted net income and adjusted net income 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 that are not normal to our business or recurring in nature (legal fees related to the lawsuit with Avery Dennison Corporation) 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 its continuing business as it adjusts for special, nonrecurring items that are not reflective of the normal results of the business. These measures may be useful to an investor in evaluating the underlying operating performance of the Company's business.
About
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
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| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
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| Three Months Ended | Twelve Months Ended | |||||||||||||||
| (In thousands, except per share amounts) |
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| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net sales | $ | 13,603 | $ | 12,116 | $ | 57,235 | $ | 59,676 | ||||||||
| Cost of sales | 7,587 | 7,082 | 33,436 | 34,698 | ||||||||||||
| Gross profit | 6,016 | 5,034 | 23,799 | 24,978 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Engineering, design and product development | 967 | 1,105 | 4,425 | 3,599 | ||||||||||||
| Selling and marketing | 1,447 | 1,746 | 6,907 | 7,806 | ||||||||||||
| General and administrative | 1,678 | 1,702 | 7,267 | 7,367 | ||||||||||||
| Legal fees and settlement expenses associated with lawsuit |
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1,738 |
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| 4,092 | 4,553 | 18,599 | 20,510 | |||||||||||||
| Operating income | 1,924 | 481 | 5,200 | 4,468 | ||||||||||||
| Interest and other income (expense): | ||||||||||||||||
| Interest, net | (8 | ) | (5 | ) | (26 | ) | (28 | ) | ||||||||
| Other, net | (17 | ) | 3 | (4 | ) | 2 | ||||||||||
| (25 | ) | (2 | ) | (30 | ) | (26 | ) | |||||||||
| Income before income taxes | 1,899 | 479 | 5,170 | 4,442 | ||||||||||||
| Income tax provision (benefit) | 543 | (53 | ) | 1,553 | 1,350 | |||||||||||
| Net income | $ | 1,356 | $ | 532 | $ | 3,617 | 3,092 | |||||||||
| Net income per common share: | ||||||||||||||||
| Basic | $ | 0.18 | $ | 0.07 | $ | 0.48 | $ | 0.40 | ||||||||
| Diluted | $ | 0.18 | $ | 0.07 | $ | 0.47 | $ | 0.39 | ||||||||
| Shares used in per share calculation: | ||||||||||||||||
| Basic | 7,423 | 7,818 | 7,610 | 7,818 | ||||||||||||
| Diluted | 7,454 | 7,931 | 7,655 | 7,854 | ||||||||||||
| SUPPLEMENTAL INFORMATION - SALES BY SALES UNIT: | ||||||||||||||||
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(In thousands) |
Three Months Ended | Twelve Months Ended | ||||||||||||||
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2016 |
2015 |
2016 |
2015 |
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| Restaurant solutions | $ | 1,656 | $ | 1,230 | $ | 5,162 | $ | 4,191 | ||||||||
| POS automation and banking | 2,111 | 2,769 | 10,518 | 8,838 | ||||||||||||
| Casino and gaming | 4,802 | 4,518 | 21,006 | 21,755 | ||||||||||||
| Lottery | 2,602 | 701 | 9,913 | 9,468 | ||||||||||||
| Printrex | 142 | 229 | 540 | 1,381 | ||||||||||||
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2,290 | 2,669 | 10,096 | 14,043 | ||||||||||||
| Total net sales | $ | 13,603 | $ | 12,116 | $ | 57,235 | $ | 59,676 | ||||||||
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| CONSOLIDATED BALANCE SHEETS | ||||||||
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| (In thousands) | 2016 | 2015 | ||||||
| Assets: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 2,503 | $ | 4,473 | ||||
| Accounts receivable, net | 10,585 | 7,174 | ||||||
| Inventories | 9,707 | 11,296 | ||||||
| Other current assets | 372 | 437 | ||||||
| Total current assets | 23,167 | 23,380 | ||||||
| Fixed assets, net | 2,241 | 2,507 | ||||||
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2,621 | 2,621 | ||||||
| Deferred tax assets | 3,432 | 3,145 | ||||||
| Intangible assets, net | 545 | 888 | ||||||
| Other assets | 36 | 28 | ||||||
| 8,875 | 9,189 | |||||||
| Total assets | $ | 32,042 | $ | 32,569 | ||||
| Liabilities and Shareholders' Equity: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 4,894 | $ | 2,642 | ||||
| Accrued liabilities | 2,394 | 2,838 | ||||||
| Income taxes payable | 19 | 245 | ||||||
| Deferred revenue | 117 | 604 | ||||||
| Total current liabilities | 7,424 | 6,329 | ||||||
| Deferred revenue, net of current portion | 67 | 77 | ||||||
| Deferred rent, net of current portion | 178 | 189 | ||||||
| Other liabilities | 264 | 246 | ||||||
| 509 | 512 | |||||||
| Total liabilities | 7,933 | 6,841 | ||||||
| Shareholders' equity: | ||||||||
| Common stock | 112 | 112 | ||||||
| Additional paid-in capital | 29,701 | 28,921 | ||||||
| Retained earnings | 24,157 | 22,956 | ||||||
| Accumulated other comprehensive loss, net of tax | (109 | ) | (80 | ) | ||||
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(29,752 | ) | (26,181 | ) | ||||
| Total shareholders' equity | 24,109 | 25,728 | ||||||
| Total liabilities and shareholders' equity | $ | 32,042 | $ | 32,569 | ||||
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RECONCILIATION OF NON-GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING |
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GAAP FINANCIAL MEASURES |
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| (Unaudited, thousands of dollars, except percentages and per share amounts) | ||||||||||||
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Three months ended |
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Adjusted |
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Reported |
Adjustments(1) |
Non-GAAP |
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| Operating expenses | $ | 4,092 | $ |
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$ | 4,092 | |||||
| % of net sales | 30.1 | % | 30.1 | % | ||||||||
| Operating income | 1,924 | - | 1,924 | |||||||||
| % of net sales | 14.1 | % | 14.1 | % | ||||||||
| Income before income taxes | 1,899 | - | 1,899 | |||||||||
| Income tax provision | 543 | - | 543 | |||||||||
| Net income | 1,356 | - | 1,356 | |||||||||
| Net income per diluted share | $ | 0.18 | $ | - | $ | 0.18 | ||||||
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(1) No adjustments. |
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Three months ended |
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Adjusted |
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Reported |
Adjustments (2) |
Non-GAAP |
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| Operating expenses | $ | 4,553 | $ |
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$ | 4,553 | ||||||
| % of net sales | 37.6 | % | 37.6 | % | ||||||||
| Operating income | 481 | - | 481 | |||||||||
| % of net sales | 4.0 | % | 4.0 | % | ||||||||
| Income before income taxes | 479 | - | 479 | |||||||||
| Income tax provision (benefit) | (53 | ) | - | (53 | ) | |||||||
| Net income | 532 | - | 532 | |||||||||
| Net income per diluted share | $ | 0.07 | $ | - | $ | 0.07 | ||||||
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(2) No adjustments. |
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RECONCILIATION OF NON-GAAP EARNINGS FINANCIAL MEASURES TO
CORRESPONDING
GAAP FINANCIAL MEASURES |
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| (Unaudited, thousands of dollars, except percentages and per share amounts) | ||||||||||||
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Twelve Months Ended |
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Adjusted |
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Reported |
Adjustments(3) |
Non-GAAP |
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| Operating expenses | $ | 18,599 | $ | - | $ | 18,599 | ||||||
| % of net sales | 32.5 | % | 32.5 | % | ||||||||
| Operating income | 5,200 | - | 5,200 | |||||||||
| % of net sales | 9.1 | % | 9.1 | % | ||||||||
| Income before income taxes | 5,170 | - | 5,170 | |||||||||
| Income tax provision | 1,553 | - | 1,553 | |||||||||
| Net income | 3,617 | - | 3,617 | |||||||||
| Net income per diluted share | $ | 0.47 | $ | - | $ | 0.47 | ||||||
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(3) No adjustments. |
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Twelve Months Ended |
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Adjusted |
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Reported |
Adjustments (4) |
Non-GAAP |
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| Operating expenses | $ | 20,510 | $ | (1,738 | ) | $ | 18,772 | |||||
| % of net sales | 34.4 | % | 31.5 | % | ||||||||
| Operating income | 4,468 | 1,738 | 6,206 | |||||||||
| % of net sales | 7.5 | % | 10.4 | % | ||||||||
| Income before income taxes | 4,442 | 1,738 | 6,180 | |||||||||
| Income tax provision | 1,350 | 608 | 1,958 | |||||||||
| Net income | 3,092 | 1,130 | 4,222 | |||||||||
| Net income per diluted share | $ | 0.39 | $ | 0.15 | $ | 0.54 | ||||||
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(4) |
Adjustments include |
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RECONCILIATION OF EBITDA AND ADJUSTED EBITDA
TO CORRESPONDING GAAP FINANCIAL MEASURES |
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| (Unaudited) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| (In thousands) |
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2016 |
2015 |
2016 |
2015 |
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| Net income | $ | 1,356 | $ | 532 | $ | 3,617 | $ | 3,092 | ||||||||
| Interest expense, net | 8 | 5 | 26 | 28 | ||||||||||||
| Income tax provision (benefit) | 543 | (53 | ) | 1,553 | 1,350 | |||||||||||
| Depreciation and amortization | 369 | 349 | 1,331 | 1,426 | ||||||||||||
| EBITDA | 2,276 | 833 | 6,527 | 5,896 | ||||||||||||
| Share-based compensation expense | 138 | 111 | 611 | 488 | ||||||||||||
| Legal fees and settlement expenses associated with lawsuit |
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1,738 |
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| Adjusted EBITDA | $ | 2,414 | $ | 944 | $ | 7,138 | $ | 8,122 | ||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20170308005973/en/
Investors:
President and Chief Financial Officer
or
JCIR
212-835-8500 or tact@jcir.com
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