Release Details
TransAct Technologies Reports Second Quarter Revenue of $15.8 Million and Diluted EPS of $0.14
Gross Margin Improves to 40.9%; Operating Income Rises 132% and
Adjusted EBITDA Increases 18% to
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Summary of 2013 Q2 Results |
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(In millions, except per share and percentage data) |
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Three Months Ended |
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| 2013 | 2012 | |||||||
| Net sales | $ | 15.8 | $ | 15.9 | ||||
| Gross profit | $ | 6.5 | $ | 5.8 | ||||
| Gross margin | 40.9% | 36.9% | ||||||
| Operating income | $ | 1.8 | $ | 0.8 | ||||
| Net income | $ | 1.2 | $ | 0.5 | ||||
| Diluted earnings per share | $ | 0.14 | $ | 0.06 | ||||
| Adjusted EBITDA(1) | $ | 2.2 | $ | 1.9 | ||||
| Adjusted operating income(2) | $ | 1.7 | $ | 1.3 | ||||
| Adjusted net income(2) | $ | 1.1 | $ | 0.9 | ||||
| Adjusted diluted earnings per share(2) | $ | 0.13 | $ | 0.09 | ||||
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(1) |
Adjusted EBITDA is defined as net income before net interest expense, income taxes, depreciation, amortization and stock-based compensation and adjusted for the impact of acquisition related expenses, restructuring expenses and certain legal fees as described later in this release. A reconciliation of Adjusted EBITDA to net income, the most comparable Generally Accepted Accounting Principles ("GAAP") financial measure, can be found attached to this release. |
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(2) |
Reconciliations of GAAP earnings financial metrics to corresponding non-GAAP financial measures can be found attached to this release. |
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"Our transition to new markets and opportunities that leverage the Company's expertise in creating new, value-added solutions for transaction-based businesses has enabled TransAct to successfully launch three new products since the beginning of 2012. Each of these products has advanced features and functionality and generates higher average selling prices and gross margins than our existing products for these markets. Building on our expertise in the casino industry, we are now proving the value of our Epicentral® casino system, which is live at four casinos with three additional casinos scheduled to come online by the end of 2013. In its initial installations, Epicentral® is proving to be a strong marketing tool that rewards guests in new ways and helps casino operators grow revenue at their facilities. We expect the number of Epicentral® installations to grow over the balance of 2013 and throughout 2014, which will drive higher overall revenue and higher-margin annual recurring maintenance revenue.
"In the 2013 second quarter, we generated solid revenue growth from the sale of the Ithaca® 9700 food safety terminal, which accounted for over 50% of the total revenue in our food safety, point-of-sale and banking unit. With a total addressable market of approximately 700,000 terminals in restaurants, hospitals, convenience stores, corporate foodservice operations and schools, the global food safety market represents a large and untapped opportunity for TransAct. There is already strong market interest in the Ithaca® 9700 with a growing number of product trials, and as this innovative solution continues to prove its value, we expect to continue to transition trials to sales.
"Our line of Printrex color printers for the global oil and gas
exploration industry is another recent product offering with a high
level of customer interest. Leveraging our large installed base of black
and white printers, we are in the early stages of a multi-year
replacement cycle for the Printrex 920 and Printrex 980 full color
solutions which we expect will be another source of recurring revenue
growth going forward. Finally, our
Summary of 2013 Second Quarter Operating Results
TransAct generated 2013 second quarter net sales of
Reflecting the shift toward higher margin products, gross margin
improved 400 basis points to 40.9% from 36.9% in the second quarter of
2012, resulting in gross profit of
Operating income for the 2013 second quarter was
Solid Balance Sheet and Liquidity Position
As of
2013 Second 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 has provided adjusted non-GAAP financial measures because the Company believes that these amounts are helpful to investors and others to more accurately assess the ongoing nature of TransAct's core operations. The adjusted non-GAAP measures exclude the effect in the applicable periods presented of non-GAAP adjustments contained in the tables included with this release. These items have been excluded from adjusted non-GAAP financial measures as 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 the financial information prepared in accordance with GAAP.
Adjusted operating income is defined as operating income adjusted for the impact of acquisition related expenses, business consolidation and restructuring expenses and legal fees related to the lawsuit with Avery Dennison Corporation.
Adjusted net income is defined as net income adjusted for the tax-effected impact of acquisition related expenses, business consolidation and restructuring expenses and legal fees related to the lawsuit with Avery Dennison Corporation.
Adjusted diluted earnings per share is defined as Adjusted Net Income divided by diluted shares outstanding.
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 are 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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| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
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| Three Months Ended | Six Months Ended | |||||||||||||||
| (In thousands, except per share amounts) |
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| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Net sales | $ | 15,788 | $ | 15,853 | $ | 30,845 | $ | 33,412 | ||||||||
| Cost of sales | 9,336 | 10,011 | 17,960 | 20,792 | ||||||||||||
| Gross profit | 6,452 | 5,842 | 12,885 | 12,620 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Engineering, design and product development | 995 | 952 | 2,007 | 2,165 | ||||||||||||
| Selling and marketing | 1,857 | 1,674 | 3,643 | 3,275 | ||||||||||||
| General and administrative | 1,736 | 1,903 | 3,770 | 3,903 | ||||||||||||
| Legal fees associated with lawsuit | 57 | 471 | 256 | 471 | ||||||||||||
| Business consolidation and restructuring | - | 63 | - | 117 | ||||||||||||
| 4,645 | 5,063 | 9,676 | 9,931 | |||||||||||||
| Operating income | 1,807 | 779 | 3,209 | 2,689 | ||||||||||||
| Interest and other income (expense): | ||||||||||||||||
| Interest, net | - | 2 | (1 | ) | 4 | |||||||||||
| Other, net | (4 | ) | 13 | 33 | (11 | ) | ||||||||||
| (4 | ) | 15 | 32 | (7 | ) | |||||||||||
| Income before income taxes | 1,803 | 794 | 3,241 | 2,682 | ||||||||||||
| Income tax provision | 588 | 286 | 866 | 966 | ||||||||||||
| Net income | $ | 1,215 | $ | 508 | 2,375 | $ | 1,716 | |||||||||
| Net income per common share: | ||||||||||||||||
| Basic | $ | 0.14 | $ | 0.06 | $ | 0.27 | $ | 0.19 | ||||||||
| Diluted | $ | 0.14 | $ | 0.06 | $ | 0.27 | $ | 0.18 | ||||||||
| Shares used in per share calculation: | ||||||||||||||||
| Basic | 8,728 | 9,084 | 8,722 | 9,256 | ||||||||||||
| Diluted | 8,802 | 9,189 | 8,803 | 9,357 | ||||||||||||
| SUPPLEMENTAL INFORMATION — SALES BY SALES UNIT: | |||||||||||||
| Three months ended | Six months ended | ||||||||||||
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| 2013 | 2012 | 2013 | 2012 | ||||||||||
| Food safety, point-of-sale and banking | $ | 3,453 | $ | 2,676 | $ | 5,437 | $ | 5,012 | |||||
| Casino and gaming | 7,322 | 7,112 | 14,062 | 16,523 | |||||||||
| Lottery | 499 | 1,728 | 1,864 | 2,758 | |||||||||
| Printrex | 1,050 | 1,174 | 2,375 | 2,413 | |||||||||
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3,464 | 3,163 | 7,107 | 6,706 | |||||||||
| Total net sales | $ | 15,788 | $ | 15,853 | $ | 30,845 | $ | 33,412 | |||||
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| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
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| (In thousands) | 2013 | 2012 | ||||||
| Assets: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 8,828 | $ | 7,537 | ||||
| Accounts receivable, net | 11,640 | 15,927 | ||||||
| Inventories | 12,787 | 10,321 | ||||||
| Deferred tax assets | 1,443 | 1,443 | ||||||
| Other current assets | 666 | 471 | ||||||
| Total current assets | 35,364 | 35,699 | ||||||
| Fixed assets, net | 3,105 | 3,302 | ||||||
| Goodwill | 2,621 | 2,621 | ||||||
| Deferred tax assets | 1,113 | 1,172 | ||||||
| Intangible assets, net | 2,113 | 2,328 | ||||||
| Other assets | 79 | 106 | ||||||
| 9,031 | 9,529 | |||||||
| Total assets | $ | 44,395 | $ | 45,228 | ||||
| Liabilities and Shareholders' Equity: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 5,603 | $ | 6,422 | ||||
| Accrued liabilities | 2,391 | 2,927 | ||||||
| Income taxes payable | 121 | 629 | ||||||
| Accrued contingent consideration | 230 | 136 | ||||||
| Deferred revenue | 197 | 93 | ||||||
| Total current liabilities | 8,542 | 10,207 | ||||||
| Deferred revenue, net of current portion | 166 | 168 | ||||||
| Deferred rent, net of current portion | 278 | 308 | ||||||
| Accrued acquisition consideration, net of current portion | 530 | 824 | ||||||
| Other liabilities | 383 | 352 | ||||||
| 1,357 | 1,652 | |||||||
| Total liabilities | 9,899 | 11,859 | ||||||
| Shareholders' equity: | ||||||||
| Common stock | 110 | 109 | ||||||
| Additional paid-in capital | 26,732 | 25,940 | ||||||
| Retained earnings | 25,956 | 24,708 | ||||||
| Accumulated other comprehensive loss, net of tax | (82 | ) | (55 | ) | ||||
| Treasury stock, at cost | (18,220 | ) | (17,333 | ) | ||||
| Total shareholders' equity | 34,496 | 33,369 | ||||||
| Total liabilities and shareholders' equity | $ | 44,395 | $ | 45,228 | ||||
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RECONCILIATION OF GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING |
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NON-GAAP FINANCIAL MEASURES |
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(Unaudited) |
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(In thousands, 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 | $ | 4,645 | $ | 143 | $ | 4,788 | ||||||
| % of net sales | 29.4 | % | 30.3 | % | ||||||||
| Operating income | 1,807 | (143 | ) | 1,664 | ||||||||
| % of net sales | 11.4 | % | 10.5 | % | ||||||||
| Income before income taxes | 1,803 | (143 | ) | 1,660 | ||||||||
| Income tax provision | 588 | (48 | ) | 540 | ||||||||
| Net income | 1,215 | (95 | ) | 1,120 | ||||||||
| Diluted net income per share | $ | 0.14 |
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) | $ | 0.13 | ||||||
| (1) |
Adjustments include (i) |
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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 | $ | 5,063 | $ | (534 | ) | $ | 4,529 | |||||
| % of net sales | 31.9 | % | 28.6 | % | ||||||||
| Operating income | 779 | 534 | 1,313 | |||||||||
| % of net sales | 4.9 | % | 8.3 | % | ||||||||
| Income before income taxes | 794 | 534 | 1,328 | |||||||||
| Income tax provision | 286 | 192 | 478 | |||||||||
| Net income | 508 | 342 | 850 | |||||||||
| Diluted net income per share | $ | 0.06 | $ | 0.04 | $ | 0.09 | ||||||
| (2) |
Adjustments include (i) |
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RECONCILIATION OF GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING |
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NON-GAAP FINANCIAL MEASURES |
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(Unaudited) |
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(In thousands, except percentages and per share amounts) |
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Six months ended |
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Adjusted |
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Reported |
Adjustments(3) |
Non-GAAP |
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| Operating expenses | $ | 9,676 | $ | (56 | ) | $ | 9,620 | |||||
| % of net sales | 31.4 | % | 31.2 | % | ||||||||
| Operating income | 3,209 | 56 | 3,265 | |||||||||
| % of net sales | 10.4 | % | 10.6 | % | ||||||||
| Income before income taxes | 3,241 | 56 | 3,297 | |||||||||
| Income tax provision | 866 | 19 | 885 | |||||||||
| Net income | 2,375 | 37 | 2,412 | |||||||||
| Diluted net income per share | $ | 0.27 | $ | 0.00 | $ | 0.27 | ||||||
| (3) |
Adjustments include (i) |
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Six months ended |
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Adjusted |
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Reported |
Adjustments (4) |
Non-GAAP |
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| Operating expenses | $ | 9,931 | $ | (588 | ) | $ | 9,343 | |||||
| % of net sales | 29.7 | % | 28.0 | % | ||||||||
| Operating income | 2,689 | 588 | 3,277 | |||||||||
| % of net sales | 8.0 | % | 9.8 | % | ||||||||
| Income before income taxes | 2,682 | 588 | 3,270 | |||||||||
| Income tax provision | 966 | 212 | 1,178 | |||||||||
| Net income | 1,716 | 376 | 2,092 | |||||||||
| Diluted net income per share | $ | 0.18 | $ | 0.04 | $ | 0.22 | ||||||
| (4) |
Adjustments include (i) |
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RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA |
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NON-GAAP FINANCIAL MEASURES |
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(Unaudited) |
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| Three Months Ended | ||||||||
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| 2013 | 2012 | |||||||
| Net income | $ | 1,215 | $ | 508 | ||||
| Interest (income) expense, net | - | (2 | ) | |||||
| Income tax provision | 588 | 286 | ||||||
| Depreciation and amortization | 432 | 438 | ||||||
| EBITDA | 2,235 | 1,230 | ||||||
| Share-based compensation expense | 142 | 127 | ||||||
| Legal fees associated with lawsuit | 57 | 471 | ||||||
| Business consolidation and restructuring | - | 63 | ||||||
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Adjustment to accrued contingent consideration |
(200 |
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- |
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| Adjusted EBITDA | 2,234 | 1,891 | ||||||
Investors:
President and Chief Financial Officer
or
JCIR
212-835-8500 or tact@jcir.com
Source:
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