Release Details
TransAct Technologies Reports Third Quarter Revenue of $16.8 Million and Diluted EPS of $0.17
- Gross Margin Improves 600 Basis Points to 43.0%; Adjusted Operating
Income Rises 87% to
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Summary of 2013 Q3 Results (In millions, except per share and percentage data) |
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Three Months Ended |
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| 2013 | 2012 | |||||||||
| Net sales | $ | 16.8 | $ | 15.4 | ||||||
| Gross profit | $ | 7.2 | $ | 5.7 | ||||||
| Gross margin | 43.0 | % | 37.0 | % | ||||||
| Operating income | $ | 1.9 | $ | 0.0 | ||||||
| Net income | $ | 1.5 | $ | 0.0 | ||||||
| Diluted earnings per share | $ | 0.17 | $ | 0.00 | ||||||
| Adjusted EBITDA(1) | $ | 2.6 | $ | 1.6 | ||||||
| Adjusted operating income(2) | $ | 2.1 | $ | 1.1 | ||||||
| Adjusted net income(2) | $ | 1.5 | $ | 0.7 | ||||||
| Adjusted diluted earnings per share(2) | $ | 0.18 | $ | 0.08 | ||||||
| (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 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. | |
| (2) | Reconciliations of GAAP earnings financial metrics to corresponding non-GAAP financial measures can be found attached to this release. | |
"For example, TransAct continues to extend its leadership position in the global casino industry as reflected by consistent market share increases for our Epic 950® thermal printer. Similarly, we are seeing accelerated growth in the number of casinos that recognize the value our Epicentral® promotional and couponing system delivers in growing their revenues. Epicentral continues to improve performance metrics at casinos where it is deployed, driving increased visitation, new enrollment in loyalty programs, and additional play which results in higher revenue and solid investment returns for our customers. Thus far in 2013 we have secured agreements with eight new casinos to deploy Epicentral, bringing us to nine casinos that have or will install the system on a total of over 12,000 electronic gaming machines. In addition, during the quarter, the leading worldwide distributor of gaming products, Suzo-Happ, selected TransAct to be their exclusive provider of gaming printer solutions. We expect market penetration of our Epic 950 printer and the Epicentral system to continue to grow over the balance of this year and throughout 2014 as we leverage our industry leading technology and solutions with Suzo-Happ's powerful distribution network.
"Our revenue and market diversification efforts are also generating success as the 2013 third quarter marked the second consecutive quarter in which sales of the Ithaca® 9700 food safety terminal comprised over 50% of revenue generated by our food safety, point-of-sale and banking unit. The Ithaca 9700 is garnering strong industry interest and acceptance from a wide range of restaurant and food service operators as reflected by sales to over 20 customers to date and the growing number of product trials currently underway. Our ability to work closely with restaurant and food service operators to provide them with customized menus, nutritional labels, food segmentation and other custom design solutions has positioned the Ithaca 9700 as the leading solution addressing a large, untapped global market opportunity. We expect the level of trials for, and customer acceptance of, the Ithaca 9700 to remain consistent over the next several quarters before accelerating in mid-2014 when we believe our over 120 trials will begin converting to sales at a faster pace.
"We are also making continued progress in demonstrating the value of our Printrex color printers for the global oil and gas exploration industry. The Printrex 920 color truck and off-shore logging printer is being tested and/or evaluated by over 20 operators and industry feedback and interest is growing; and the Printrex 980 color office printer continues to gain traction and is contributing to growth in recurring consumables revenue. We expect to continue the process of integrating these color printing solutions into our customers' systems into 2014 and as customer testing and evaluation continues, we expect to begin addressing the multi-year replacement market opportunity for our large installed base of black and white printers and to benefit from a related acceleration in high-margin recurring revenue growth in 2015."
Summary of 2013 Third Quarter Operating Results
TransAct generated 2013 third quarter net sales of
Reflecting the Company's strategic shift toward higher value products,
gross margin improved 600 basis points to 43.0% from 37.0% in the third
quarter of 2012. The higher quarterly revenue and gross margin resulted
in a 27% increase in gross profit to
Operating income for the 2013 third quarter was
Consistent Cash Generation Supports Growth Initiatives and Return of Capital to Shareholders
As of
2013 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 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 | Nine Months Ended | ||||||||||||||||
| (In thousands, except per share amounts) |
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| 2013 | 2012 | 2013 | 2012 | ||||||||||||||
| Net sales |
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| Cost of sales | 9,562 | 9,679 | 27,522 | 30,471 | |||||||||||||
| Gross profit | 7,206 | 5,679 | 20,091 | 18,299 | |||||||||||||
| Operating expenses: | |||||||||||||||||
| Engineering, design and product development | 1,041 | 1,087 | 3,048 | 3,252 | |||||||||||||
| Selling and marketing | 2,059 | 1,571 | 5,702 | 4,846 | |||||||||||||
| General and administrative | 2,049 | 1,919 | 5,819 | 5,822 | |||||||||||||
| Legal fees associated with lawsuit | 142 | 1,036 | 398 | 1,507 | |||||||||||||
| Business consolidation and restructuring | - | 23 | - | 140 | |||||||||||||
| 5,291 | 5,636 | 14,967 | 15,567 | ||||||||||||||
| Operating income | 1,915 | 43 | 5,124 | 2,732 | |||||||||||||
| Other income (expense): | |||||||||||||||||
| Interest, net | (8 | ) | 3 | (9 | ) | 7 | |||||||||||
| Other, net | (22 | ) | (10 | ) | 11 | (21 | ) | ||||||||||
| (30 | ) | (7 | ) | 2 | (14 | ) | |||||||||||
| Income before income taxes | 1,885 | 36 | 5,126 | 2,718 | |||||||||||||
| Income tax provision | 434 | 13 | 1,300 | 979 | |||||||||||||
| Net income |
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3,826 |
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| Net income per common share: | |||||||||||||||||
| Basic |
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| Diluted |
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| Shares used in per share calculation: | |||||||||||||||||
| Basic | 8,582 | 8,822 | 8,675 | 9,110 | |||||||||||||
| Diluted | 8,695 | 8,911 | 8,759 | 9,205 | |||||||||||||
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SUPPLEMENTAL INFORMATION — SALES BY SALES UNIT: |
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Three months ended | Nine months ended | ||||||||||
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| 2013 | 2012 | 2013 | 2012 | |||||||||
| Food safety, point-of-sale and banking |
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| Casino and gaming | 7,511 | 6,100 | 21,573 | 22,623 | ||||||||
| Lottery | 1,025 | 2,454 | 2,889 | 5,212 | ||||||||
| Printrex | 1,111 | 1,209 | 3,486 | 3,622 | ||||||||
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3,451 | 3,766 | 10,558 | 10,472 | ||||||||
| Total net sales |
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| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
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| (In thousands) | 2013 | 2012 | ||||||
| Assets: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents |
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| Accounts receivable, net | 15,561 | 15,927 | ||||||
| Inventories | 12,896 | 10,321 | ||||||
| Deferred tax assets | 1,443 | 1,443 | ||||||
| Other current assets | 534 | 471 | ||||||
| Total current assets | 33,189 | 35,699 | ||||||
| Fixed assets, net | 2,946 | 3,302 | ||||||
| Goodwill | 2,621 | 2,621 | ||||||
| Deferred tax assets | 1,104 | 1,172 | ||||||
| Intangible assets, net | 1,984 | 2,328 | ||||||
| Other assets | 67 | 106 | ||||||
| 8,722 | 9,529 | |||||||
| Total assets |
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| Liabilities and Shareholders' Equity: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable |
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| Accrued liabilities | 3,120 | 2,927 | ||||||
| Income taxes payable | 26 | 629 | ||||||
| Accrued contingent consideration | 230 | 136 | ||||||
| Deferred revenue | 155 | 93 | ||||||
| Total current liabilities | 9,378 | 10,207 | ||||||
| Deferred revenue, net of current portion | 170 | 168 | ||||||
| Deferred rent, net of current portion | 261 | 308 | ||||||
| Accrued contingent consideration, net of current portion | 530 | 824 | ||||||
| Other liabilities | 163 | 352 | ||||||
| 1,124 | 1,652 | |||||||
| Total liabilities | 10,502 | 11,859 | ||||||
| Shareholders' equity: | ||||||||
| Common stock | 110 | 109 | ||||||
| Additional paid-in capital | 27,096 | 25,940 | ||||||
| Retained earnings | 26,796 | 24,708 | ||||||
| Accumulated other comprehensive loss, net of tax | (66) | (55) | ||||||
| Treasury stock, at cost | (22,527) | (17,333) | ||||||
| Total shareholders' equity | 31,409 | 33,369 | ||||||
| Total liabilities and shareholders' equity |
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RECONCILIATION OF GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING NON-GAAP FINANCIAL MEASURES (Unaudited) |
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(In thousands, except percentages and per share amounts) |
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Three months ended
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Reported |
Adjustments(1) |
Adjusted
Non-GAAP |
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| Operating expenses |
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| % of net sales | 31.6 | % | 30.7 | % | ||||||||
| Operating income | 1,915 | 142 | 2,057 | |||||||||
| % of net sales | 11.4 | % | 12.3 | % | ||||||||
| Income before income taxes | 1,885 | 142 | 2,027 | |||||||||
| Income tax provision | 434 | 48 | 482 | |||||||||
| Net income | 1,451 | 94 | 1,545 | |||||||||
| Diluted net income per share |
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| (1) |
Adjustment includes |
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Three months ended
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Reported |
Adjustments (2) |
Adjusted
Non-GAAP |
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| Operating expenses |
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$(1,059 | ) |
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| % of net sales | 36.7 | % | 29.8 | % | ||||||||
| Operating income | 43 | 1,059 | 1,102 | |||||||||
| % of net sales | 0.3 | % | 7.2 | % | ||||||||
| Income before income taxes | 36 | 1,059 | 1,095 | |||||||||
| Income tax provision | 13 | 381 | 394 | |||||||||
| Net income | 23 | 678 | 701 | |||||||||
| Diluted net income per share |
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| (2) |
Adjustment includes (i) |
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RECONCILIATION OF GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING NON-GAAP FINANCIAL MEASURES (Unaudited, thousands of dollars, except percentages and per share amounts) |
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Nine months ended
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Reported |
Adjustments(3) |
Adjusted
Non-GAAP |
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| Operating expenses |
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$(198 | ) |
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| % of net sales | 31.4 | % | 31.0 | % | ||||||||
| Operating income | 5,124 | 198 | 5,322 | |||||||||
| % of net sales | 10.8 | % | 11.2 | % | ||||||||
| Income before income taxes | 5,126 | 198 | 5,324 | |||||||||
| Income tax provision | 1,300 | 66 | 1,366 | |||||||||
| Net income | 3,826 | 132 | 3,958 | |||||||||
| Diluted net income per share |
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| (3) |
Adjustment includes (i) |
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Nine months ended
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Reported |
Adjustments (4) |
Adjusted
Non-GAAP |
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| Operating expenses |
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$(1,647 | ) |
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| % of net sales | 31.9 | % | 28.5 | % | ||||||||
| Operating income | 2,732 | 1,647 | 4,379 | |||||||||
| % of net sales | 5.6 | % | 9.0 | % | ||||||||
| Income before income taxes | 2,718 | 1,647 | 4,365 | |||||||||
| Income tax provision | 979 | 593 | 1,572 | |||||||||
| Net income | 1,739 | 1,054 | 2,793 | |||||||||
| Diluted net income per share |
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| (4) |
Adjustment includes (i) |
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RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA NON-GAAP FINANCIAL MEASURES (Unaudited) |
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| Three Months Ended | |||||||
| (In thousands) |
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| 2013 | 2012 | ||||||
| Net income |
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| Interest (income) expense, net | 8 | (3 | ) | ||||
| Income tax provision | 434 | 13 | |||||
| Depreciation and amortization | 428 | 429 | |||||
| EBITDA | 2,321 | 462 | |||||
| Share-based compensation expense | 121 | 118 | |||||
| Legal fees associated with lawsuit | 142 | 1,036 | |||||
| Business consolidation and restructuring | - | 23 | |||||
| Adjusted EBITDA |
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Investors:
President and Chief Financial Officer
or
JCIR
212-835-8500
tact@jcir.com
Source:
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