Nov 6, 2018
TransAct Technologies Reports 2018 Third Quarter Results
2018 Third Quarter Net Sales Rise 2.0% to
Record Quarterly Gross Margin of 50.5% and Record Operating Margin of
“During the 2018 third quarter, we generated 62% year-over-year growth
in our casino and gaming sales as we further expanded our global market
share, which continues to benefit from our decision last year to build
out a European direct sales team to better address our customers
throughout that region. Our record quarterly gross margin of 50.5% in
the 2018 third quarter reflects the growing proportion of higher-margin
solutions in our overall sales mix, which drove our operating margin to
an all-time high of 20.3% and record quarterly earnings per share to
“TransAct’s restaurant solutions opportunity continues to evolve and grow as greater emphasis is placed by operators on their need for value-added software solutions that help them digitize and automate their range of disparate back-of-the-house processes to operate more efficiently, profitably and on a value-added basis. Our early-to-market position, understanding of the industry’s needs, nimbleness, and ability to self-fund investments in the right people and technology development resources continues to open significant new opportunities for us as we build sales momentum and further position TransAct as the market leader.
“Our flagship terminal solution, the AccuDate XL2e, offers operators new breakthroughs in functionality and has been met with widespread positive industry response. We believe that the AccuDate XL2e and our growing restaurant software solutions portfolio is set to become the de-facto standard for back-of-the-house automation. Our software and hardware development teams have made continued advancements and are building a host of critical new capabilities intended to establish TransAct’s ecosystem solution as an invaluable tool for restaurant and foodservice operators of all sizes. We expect these enhancements will both support hardware sales growth and drive recurring software revenue that we estimate could be two to three times higher on an annual basis than the value of the original hardware sale.
“At the same time, our near record quarterly casino and gaming sales reflect TransAct’s continued success in leveraging our industry-leading technology to further grow our domestic and international market share. The 62% year-over-year increase and 50% year-to-date rise in casino and gaming sales are clear indications that the value we provide customers has never been higher. Our recent introduction of the Epic Edge printer, which brings next-level print resolution to gaming floors worldwide, highlights again our commitment to lead this market through consistent innovation and unmatched reliability.
“While there is still much work to do in the coming quarters, we are making consistent and meaningful progress and our hardware and software solutions are gaining the attention of customers across the large and highly complex restaurant and foodservice industry. From day one, we have leveraged our printer technology to enter new markets and grow share across a number of industries thereby establishing a long-term track record of success in delivering best-in-class solutions. Today, our teams are working on a number of large projects that have the potential to significantly transform TransAct as we create a business model built around upfront hardware sales and significant recurring software sales as well as maintenance, support and consumable label sales. We have seen an evolution of this business model as our customers continue to request more and more software solutions to help them mitigate increasing wages and food costs while also focusing on the critical aspects of food safety.”
Review of Balance Sheet and Capital Return Initiatives
Summary of 2018 Third Quarter Operating Results
TransAct generated 2018 third quarter net sales of
The Company recorded gross margin of 50.5% in the 2018 third quarter
compared to gross margin of 48.4% in the 2017 third quarter. Gross
margin in the 2018 third quarter reflects record casino and gaming sales
in the period as well as lower sales of lower margin lottery printers.
Gross profit in the 2018 third quarter was
Total operating expenses in the 2018 third quarter decreased 3% to
TransAct generated operating income of
2018 Third 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 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. 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) 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, assessing financial performance and paying incentive compensation.
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; our dependence on
contract manufacturers for the assembly of a large portion of our
- Financial tables follow -