UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 2, 2012
(Exact name of registrant as specified in its charter)
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Delaware
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0-21121
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06-1456680
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(State or other jurisdiction of incorporation)
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(Commission file number)
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(I.R.S. employer identification no.)
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One Hamden Center
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2319 Whitney Ave, Suite 3B, Hamden, CT
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06518
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(Address of principal executive offices)
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(Zip Code)
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Registrant's telephone number, including area code: (203) 859-6800
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240-14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
The following information is being furnished pursuant to Item 2.02 “Results of Operations and Financial Condition” of Form 8-K. Such information, including the Exhibit attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
On November 5, 2012, TransAct Technologies Incorporated (“TransAct”) issued a press release announcing its financial results for the quarter ended September 30, 2012. Additionally, the Company also announced that its Board of Directors declared a quarterly dividend on its Common Stock in the amount of $.06 per share payable on or about December 12, 2012 to common shareholders of record at the close of business on November 21, 2012. A copy of the press release is furnished as Exhibit 99.1 to this report.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
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Exhibit
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Description
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99.1
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Press Release dated November 5, 2012 of TransAct Technologies Incorporated
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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TRANSACT TECHNOLOGIES INCORPORATED
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||||
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By:
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/s/ Steven A. DeMartino | |||
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Steven A. DeMartino
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||||
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President, Chief Financial Officer, Treasurer and Secretary
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||||
Date: November 5, 2012
Exhibit 99.1
TRANSACT TECHNOLOGIES REPORTS THIRD QUARTER 2012 RESULTS AND DECLARES FIRST QUARTERLY DIVIDEND
HAMDEN, CT – November 5, 2012 – TransAct Technologies Incorporated (NASDAQ: TACT), a global leader in market-specific solutions, including printers, terminals, software and other products for transaction-based and other industries, today announced financial results for the three and nine months ended September 30, 2012. Summary results for the period are as follows:
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Three months ended September 30,
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Nine months ended September 30,
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|||||||||||||||||||||||
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(in $000s, except EPS)
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2012
|
2011
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% change
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2012
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2011
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% change
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||||||||||||||||||
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Net Sales
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$
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15,358
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$
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14,111
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8.8
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%
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$
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48,770 |
$
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52,324 |
-6.8
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%
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||||||||||||
| As reported (GAAP): | ||||||||||||||||||||||||
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Operating income
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43
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1,125
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-96.2
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%
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2,732
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6,123 | -55.4 |
%
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||||||||||||||||
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Net income
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23
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839
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-97.3 |
%
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1,739 | 4,106 |
-57.6
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%
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||||||||||||||||
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Diluted earnings per share
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$
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0.00
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$
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0.09
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-100.0 |
%
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$
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0.19
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$
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0.43
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-55.8
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%
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||||||||||||
| Adjusted (non-GAAP) (1): | ||||||||||||||||||||||||
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Operating income
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1,079
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1,125
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-4.1
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%
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4,239
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6,123 | -30.8 |
%
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||||||||||||||||
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Net income
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686 |
839
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-18.2 |
%
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2,704 | 4,106 |
-34.1
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%
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||||||||||||||||
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Diluted earnings per share
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$
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0.08
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$
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0.09
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-11.1 |
%
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$
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0.29
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$
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0.43
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-32.6
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%
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||||||||||||
“During the third quarter 2012 we experienced revenue gains in the majority of our markets,” said Bart C. Shuldman, Chairman and Chief Executive Officer of TransAct Technologies. “Further, our confidence in our future as well as our strong cash flow generation led us for the first time in our company’s history to implement a quarterly dividend program. Looking ahead, we expect a much stronger fourth quarter of 2012 compared to the third quarter of 2012, aided by initial revenue contributions from our recently launched Food Safety and Nutritional Labeling Terminal, newly launched color oil and gas Printrex printers and consumables, and significant order flow for our lottery printers from GTECH.”
Mr. Shuldman continued, “For the third quarter of 2012, our worldwide casino and gaming sales increased 4% from the prior year period, led by solid international growth in Europe and Asia. Printrex printer sales for the third quarter of 2012 were $1.2 million, up from $0.5 million in the prior-year period, as the prior-year period included only approximately six weeks of sales from Printrex, which we acquired in August 2011. Lottery sales from GTECH were up 58% from the prior-year period to $2.5 million due to the timing of orders as we will ship most of our 2012 lottery printers in the second half of 2012. TransAct Services Group revenue increased 10% compared to the prior-year period, led by strong sales of our new paper testing services and sales of spare parts in the international markets. Banking and POS printer sales declined 35% compared to the prior-year period on expected lower POS sales due to the substantial completion of the McDonald’s U.S. rollout for its combined beverage, grill and POS system upgrade initiatives. Lastly, our balance sheet remains solid with $8.6 million in cash and no debt outstanding as of September 30, 2012.”
2012 Outlook
TransAct expects fourth quarter 2012 revenue of at least $19 million and diluted earnings per share, excluding the AVY Legal Fees, of at least $0.20 due largely to the initial revenue contributions from the new Printrex oil and gas color printers, Food Safety and Nutritional Labeling Terminals as well as a backlog of lottery printer orders from GTECH.
Quarterly Dividend Declared
In September 2012, the Company announced it had implemented a quarterly cash dividend policy. The Board of Directors of the Company has declared its first quarterly dividend payment of $0.06 per share, which will be payable on December 12, 2012 to shareholders of record at the close of business on November 21, 2012. On an annualized basis, the quarterly dividend announced today represents an annual yield of 3.2% based on the $7.60 per share closing price of the Company’s stock on November 2, 2012.
The Company anticipates paying a cash dividend in March, June, September and December of each year. However, future declarations of dividends are subject to Board of Director approval and may be adjusted as business needs or market conditions change.
Third Quarter 2012 Results
Revenue for the third quarter of 2012 was $15.4 million, an increase of 9% compared to $14.1 million in the prior-year period. Gross margin for the third quarter of 2012 was 37.0%, compared to 37.9% in the prior-year quarter due primarily to a less favorable sales mix. Operating expenses were $5.6 million, an increase of $1.4 million from the prior-year period, driven mainly by $1.0 million of legal fees and other expenses related to the lawsuit with Avery Dennison Corporation, as well as the full quarter effect of Printrex expenses. Excluding legal fees, operating expenses increased by $0.4 million, or 9%, compared to the prior-year period. The Company recorded breakeven GAAP net income and diluted earnings per share in the third quarter of 2012, compared to GAAP net income of $0.8 million, or $0.09 per diluted share, in the prior-year period. Excluding legal fees, the Company recorded adjusted net income in the third quarter of 2012 of $0.7 million, or $0.08 per diluted share.
Commenting on the financial results, Steven A. DeMartino, President and Chief Financial Officer of TransAct Technologies said, “During the third quarter 2012, we were pleased with our overall revenue growth, especially during these uncertain times. In addition, we successfully launched three new products which will start to add to our revenue in the fourth quarter of 2012 while also completing the final integration of Printrex into TransAct’s operations. With the integration completed, we expect to see cost savings of approximately $0.2 million per quarter beginning in the fourth quarter of 2012.”
Nine Month 2012 Results
Revenue for the nine months ended September 30, 2012 was $48.8 million, a decrease of 7% compared to $52.3 million in the prior-year period. Gross margin for the nine months ended September 30, 2012 was 37.5%, an increase of approximately 130 basis points from 36.2% in the prior-year period due primarily to a favorable sales mix. Operating expenses were $15.6 million, an increase of $2.7 million from the prior-year period, driven mainly by ongoing expenses related to Printrex operations and $1.5 million of legal fees and other expenses related to the lawsuit with Avery Dennison Corporation. The Company recorded GAAP net income of approximately $1.7 million, or $0.19 per diluted share, for the nine months ended September 30, 2012, compared to GAAP net income of approximately $4.1 million, or $0.43 per diluted share, for the prior-year period. Excluding legal fees, the Company recorded adjusted net income of approximately $2.7 million, or $0.29 per diluted share, for the nine months ended September 30, 2012.
Liquidity and Capital Resources
As of September 30, 2012, the Company had approximately $8.6 million in cash and cash equivalents, and no debt obligations outstanding under its $20 million revolving credit facility. During the third quarter of 2012, TransAct repurchased 54,283 shares for approximately $0.4 million (average price of $7.60 per share). Year-to-date through September 30, 2012, TransAct has repurchased approximately 671,000 shares, or 7% of the outstanding shares, for approximately $5.6 million. TransAct’s $15 million repurchase program allows the Company to repurchase up to $6.6 million in additional shares through May 2013.
Financial Presentation
The Company 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 three and nine months ended September 30, 2012 of legal fees and other expenses related to the lawsuit with Avery Dennison Corporation. This item has been excluded from adjusted non-GAAP financial measures as management does not believe that it is representative of underlying trends in the Company's performance. Its 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.
Investor Conference Call / Webcast Details
TransAct will review detailed third quarter 2012 results during a conference call today at 5:00 PM EST. The conference call-in number is 888-466-4462. A replay of the call will be available from 8:00 PM EST on Monday, November 5 through midnight EST on Monday, November 12 by telephone at 877-870-5176; passcode 5924064. Investors can also access the conference call via a live webcast on the Company's Web site at http://www.transact-tech.com. A replay of the call will be archived on that Web site for one week.
About TransAct Technologies Incorporated
TransAct Technologies Incorporated (NASDAQ: TACT) is a leader in developing and manufacturing market-specific solutions, including printers, terminals, software and other products for transaction-based and other industries. These industries include casino, gaming, lottery, banking, kiosk, point-of-sale, food safety, hospitality, oil and gas, and medical and mobile. Each individual market has distinct, critical requirements for printing and the transaction is not complete until the receipt and/or ticket is produced. TransAct printers and products are designed from the ground up based on market specific requirements and are sold under the Ithaca®, Epic, EPICENTRAL® and Printrex® product brands. TransAct distributes its printers through OEMs, value-added resellers, selected distributors, and direct to end-users. TransAct has over 2.4 million printers installed around the world. Beyond printers, TransAct is committed to providing world-class printer service, spare parts, accessories and printing supplies required by a growing worldwide installed base of printers. Through its TransAct Services Group, TransAct provides a complete range of supplies and consumables items used in the printing and scanning activities of customers in the hospitality, banking, retail, food safety, gaming, government and oil and gas exploration markets. Through its webstore, http://www.transactsupplies.com, and a direct selling team, TransAct addresses the on-line demand for these products. TransAct is headquartered in Hamden, CT. For more information, please visit http://www.transact-tech.com or call 203.859.6800.
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; introduction of new products into the marketplace by competitors; successful product development; dependence on significant customers; dependence on significant vendors; dependence on contract manufacturers for the assembly of a large portion of our products in China; the ability to protect intellectual property; the ability to recruit and retain quality employees as the Company grows; dependence on third parties for sales outside the United States, including Australia, New Zealand, Europe, Latin America and Asia; economic and political conditions in the United States, Australia, New Zealand, Europe, Latin America and Asia; marketplace acceptance of new products; risks associated with foreign operations; 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; risks associated with potential future acquisitions; the outcome of the lawsuit between TransAct and Avery Dennison Corporation; and other risk factors detailed from time to time in TransAct’s 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.
Contact:
TransAct Technologies Incorporated
Steven DeMartino, President and Chief Financial Officer
203-859-6810
ICR Inc.
William Schmitt
203-682-8200
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TRANSACT TECHNOLOGIES INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
||||||||||||||||
|
(In thousands, except per share data)
|
Three months ended
September 30,
|
|||||||||||||||
|
2012
|
2011
|
|||||||||||||||
|
GAAP
Basis
|
Adjustments
|
Pro Forma
Basis
|
GAAP
Basis
|
|||||||||||||
|
Net sales
|
$ | 15,358 | $ | - | $ | 15,358 | $ | 14,111 | ||||||||
|
Cost of sales
|
9,679 | - | 9,679 | 8,761 | ||||||||||||
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Gross profit
|
5,679 | - | 5,679 | 5,350 | ||||||||||||
|
Operating expenses:
|
||||||||||||||||
|
Engineering, design and product
development
|
1,087 | - | 1,087 | 848 | ||||||||||||
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Selling and marketing
|
1,571 | - | 1,571 | 1,458 | ||||||||||||
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General and administrative
|
1,919 | - | 1,919 | 1,919 | ||||||||||||
|
Legal fees associated with lawsuit
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1,036 | (1,036) | a | - | - | |||||||||||
|
Business consolidation and
restructuring
|
23 | - | 23 | - | ||||||||||||
| 5,636 | (1,036) | 4,600 | 4,225 | |||||||||||||
|
Operating income
|
43 | 1,036 | 1,079 | 1,125 | ||||||||||||
|
Interest and other income (expense):
|
||||||||||||||||
|
Interest, net
|
3 | - | 3 | 7 | ||||||||||||
|
Other, net
|
(10) | - | (10) | (17) | ||||||||||||
| (7) | - | (7) | (10) | |||||||||||||
|
Income before income taxes
|
36 | 1,036 | 1,072 | 1,115 | ||||||||||||
|
Income tax provision
|
13 | 373 | b | 386 | 276 | |||||||||||
|
Net income
|
$ | 23 | $ | 663 | $ | 686 | $ | 839 | ||||||||
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Net income per common share:
|
||||||||||||||||
|
Basic
|
$ | 0.00 | $ | 0.08 | $ | 0.09 | ||||||||||
|
Diluted
|
$ | 0.00 | $ | 0.08 | $ | 0.09 | ||||||||||
|
Shares used in per share calculation:
|
||||||||||||||||
|
Basic
|
8,822 | 8,822 | 9,471 | |||||||||||||
|
Diluted
|
8,911 | 8,911 | 9,661 | |||||||||||||
|
|
a
|
Legal and other expenses of $1,036 related to the lawsuit with Avery Dennison Corporation.
|
|
|
b
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The tax effect on the adjustments was calculated using an effective tax rate of 36.0%.
|
|
TRANSACT TECHNOLOGIES INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
||||||||||||||||
|
(In thousands, except per share data)
|
Nine months ended
September 30,
|
|||||||||||||||
|
2012
|
2011
|
|||||||||||||||
|
GAAP
Basis
|
Adjustments
|
Pro Forma
Basis
|
GAAP
Basis
|
|||||||||||||
|
Net sales
|
$ | 48,770 | $ | - | $ | 48,770 | $ | 52,324 | ||||||||
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Cost of sales
|
30,471 | - | 30,471 | 33,379 | ||||||||||||
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Gross profit
|
18,299 | - | 18,299 | 18,945 | ||||||||||||
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Operating expenses:
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||||||||||||||||
|
Engineering, design and product
development
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3,252 | - | 3,252 | 2,432 | ||||||||||||
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Selling and marketing
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4,846 | - | 4,846 | 4,630 | ||||||||||||
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General and administrative
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5,822 | 5,822 | 5,576 | |||||||||||||
|
Legal fees associated with lawsuit
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1,507 | (1,507) | c | - | - | |||||||||||
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Business consolidation andrestructuring
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140 | - | 140 | 184 | ||||||||||||
| 15,567 | (1,507) | 14,060 | 12,822 | |||||||||||||
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Operating income
|
2,732 | 1,507 | 4,239 | 6,123 | ||||||||||||
|
Interest and other income (expense):
|
||||||||||||||||
|
Interest, net
|
7 | - | 7 | 18 | ||||||||||||
|
Other, net
|
(21) | - | (21) | - | ||||||||||||
| (14) | - | (14) | 18 | |||||||||||||
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Income before income taxes
|
2,718 | 1,507 | 4,225 | 6,141 | ||||||||||||
|
Income tax provision
|
979 | 542 | d | 1,521 | 2,035 | |||||||||||
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Net income
|
$ | 1,739 | $ | 965 | $ | 2,704 | $ | 4,106 | ||||||||
|
Net income per common share:
|
||||||||||||||||
|
Basic
|
$ | 0.19 | $ | 0.30 | $ | 0.44 | ||||||||||
|
Diluted
|
$ | 0.19 | $ | 0.29 | $ | 0.43 | ||||||||||
|
Shares used in per share calculation:
|
||||||||||||||||
|
Basic
|
9,110 | 9,110 | 9,435 | |||||||||||||
|
Diluted
|
9,205 | 9,205 | 9,651 | |||||||||||||
|
|
c
|
Legal and other expenses of $1,507 related to the lawsuit with Avery Dennison Corporation.
|
|
|
d
|
The tax effect on the adjustments was calculated using an effective tax rate of 36.0%.
|
|
SUPPLEMENTAL INFORMATION – SALES BY SALES UNIT:
|
||||||||||||||||
|
Three months ended
|
Nine months ended
|
|||||||||||||||
|
September 30,
|
September 30,
|
|||||||||||||||
|
2012
|
2011
|
2012
|
2011
|
|||||||||||||
|
Banking and point-of-sale
|
$ | 1,829 | $ | 2,818 | $ | 6,841 | $ | 8,106 | ||||||||
|
Casino and gaming
|
6,100 | 5,861 | 22,623 | 18,762 | ||||||||||||
|
Lottery
|
2,454 | 1,551 | 5,212 | 14,066 | ||||||||||||
|
Printrex
|
1,209 | 464 | 3,622 | 464 | ||||||||||||
|
TransAct Services Group
|
3,766 | 3,417 | 10,472 | 10,926 | ||||||||||||
|
Total net sales
|
$ | 15,358 | $ | 14,111 | $ | 48,770 | $ | 52,324 | ||||||||
|
TRANSACT TECHNOLOGIES INCORPORATED
|
||||||||
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
||||||||
|
(Unaudited)
|
||||||||
|
September 30,
|
December 31,
|
|||||||
|
(In thousands)
|
2012
|
2011
|
||||||
|
Assets:
|
||||||||
|
Current assets:
|
|
|||||||
|
Cash and cash equivalents
|
$ | 8,577 | $ | 6,863 | ||||
|
Accounts receivable, net
|
9,814 | 9,583 | ||||||
|
Inventories
|
10,608 | 14,151 | ||||||
|
Prepaid income taxes
|
447 | 446 | ||||||
|
Deferred tax assets
|
1,636 | 1,636 | ||||||
|
Other current assets
|
750 | 375 | ||||||
|
Total current assets
|
31,832 | 33,054 | ||||||
|
Fixed assets, net
|
3,207 | 3,358 | ||||||
|
Goodwill
|
2,621 | 2,518 | ||||||
|
Deferred tax assets
|
882 | 890 | ||||||
|
Intangible assets, net
|
2,445 | 2,861 | ||||||
|
Other assets
|
114 | 59 | ||||||
| 9,269 | 9,686 | |||||||
|
Total assets
|
$ | 41,101 | $ | 42,740 | ||||
|
Liabilities and Shareholders’ Equity:
|
||||||||
|
Current liabilities:
|
||||||||
|
Accounts payable
|
$ | 3,928 | $ | 3,019 | ||||
|
Accrued liabilities
|
3,267 | 2,672 | ||||||
|
Deferred revenue
|
183 | 141 | ||||||
|
Total current liabilities
|
7,378 | 5,832 | ||||||
|
Deferred revenue, net of current portion
|
176 | 224 | ||||||
|
Deferred rent, net of current portion
|
322 | 357 | ||||||
|
Accrued contingent consideration
|
680 | 680 | ||||||
|
Other liabilities
|
317 | 334 | ||||||
| 1,495 | 1,595 | |||||||
|
Total liabilities
|
8,873 | 7,427 | ||||||
|
Shareholders’ equity:
|
||||||||
|
Common stock
|
109 | 108 | ||||||
|
Additional paid-in capital
|
25,780 | 25,058 | ||||||
|
Retained earnings
|
23,352 | 21,613 | ||||||
|
Accumulated other comprehensive loss, net of tax
|
(55) | (71) | ||||||
|
Treasury stock, at cost
|
(16,958) | (11,395) | ||||||
|
Total shareholders’ equity
|
32,228 | 35,313 | ||||||
|
Total liabilities and shareholders’ equity
|
$ | 41,101 | $ | 42,740 | ||||