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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): August 9, 2023

 

 

TransAct Technologies Incorporated

(Exact name of registrant as specified in its charter)

 

Delaware 0-21121 06-1456680
(State or other jurisdiction of incorporation) (Commission file number) (I.R.S. employer identification no.)

 

One Hamden Center  
2319 Whitney Ave, Suite 3B, Hamden, CT 06518
(Address of principal executive offices) (Zip Code)

 

Registrant's telephone number, including area code: (203) 859-6800

 

(Former Name or Former Address, if Changed Since Last Report): Not applicable

 

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))

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered
Common stock, par value $.01 per share TACT NASDAQ Global Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging Growth Company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

   
 

 

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 August 9, 2023, TransAct Technologies Incorporated issued a press release announcing its financial results for the quarter ending June 30, 2023.  A copy of the press release is furnished as Exhibit 99.1 to this report.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits:

 

Exhibit   Description
99.1   Press Release dated August 9, 2023 of TransAct Technologies Incorporated
104   Cover page from this Current Report on Form 8-K, formatted in Inline XBRL

 

   
 

 

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.

 

   
  TRANSACT TECHNOLOGIES INCORPORATED
     
  By: /s/ William J. DeFrances
    William J. DeFrances
    Vice President & Chief Accounting Officer

 

Date: August 9, 2023

 

 

 

 

 

 

 

Exhibit 99.1

 

 

 

TransAct Technologies Reports Preliminary Second Quarter 2023 Financial Results

 

2023 Second Quarter Net Sales of $19.9 Million, up 58% on a Year-Over-Year Basis

 

Casino and Gaming Sales of $12.2 Million, up 87% on a Year-Over-Year Basis

 

FST Sales of $3.9 Million, up 14% on a Year-Over-Year Basis

 

Hamden, CT – August 9, 2023 – TransAct Technologies Incorporated (Nasdaq: TACT) (“TransAct” or the “Company”), a global leader in software-driven technology and printing solutions for high-growth markets, today reported preliminary results for the second quarter ended June 30, 2023.

 

“Our team continues to capitalize on opportunities in our core markets as they present themselves, and while the competitive environment in casino and gaming has started to normalize as predicted, we believe that we will see a sustainable, net market share gain in the long run,” said John Dillon, Chief Executive Officer of TransAct. “We have also been hard at work with our now restructured food service technology (“FST”) sales team, and are beginning to actively market and demonstrate our new BOHA! Terminal 2 to existing and potential customers. While these are multi-stage sales opportunities with lengthy cycle times, we are encouraged by our early results and pre-orders, and believe a solid foundation has been laid for future growth.”

 

Second Quarter 2023 Financial Highlights

 

Net Sales: Net sales for the second quarter of 2023 were $19.9 million, up 58% compared to $12.6 million for the second quarter of 2022.

 

FST Recurring Revenue: FST recurring revenue for the second quarter of 2023 was $2.5 million, up 14% compared to $2.2 million for the second quarter of 2022.

 

Gross Profit: Gross profit for the second quarter of 2023 was $10.9 million, resulting in gross margin of 54.5%, compared to gross profit of $5.4 million for the second quarter of 2022, which delivered a 43.0% gross margin.

 

Operating income (loss): Operating income for the second quarter of 2023 was $1.2 million, compared to operating loss of $(3.0) million for the second quarter of 2022.

 

Net income (loss): Net income for the second quarter of 2023 was $765 thousand, or $0.08 net income per diluted share, based on 10.0 million weighted average common shares outstanding. Net loss for the comparable 2022 period was $(2.4) million, or $(0.24) net loss per diluted share, based on 9.9 million weighted average common shares outstanding.

 

Adjusted net income (loss): Adjusted net income for the second quarter of 2023 was $2.2 million, or $0.22 net income per diluted share. Adjusted net loss for the comparable 2022 period was $(2.4) million, or $(0.24) net loss per diluted share.

 

EBITDA: EBITDA was $1.6 million for the second quarter of 2023, compared to EBITDA loss of $(2.8) million for the second quarter of 2022.

 

Adjusted EBITDA: Adjusted EBITDA was $3.2 million for the second quarter of 2023, compared to adjusted EBITDA loss of $(2.5) million for the second quarter of 2022.

 

   
 

 

2023 Financial Outlook

 

Total Net Sales: The Company currently expects total net sales of between $71.5-73.5 million.

 

Total Adjusted EBITDA: The Company currently expects total adjusted EBITDA of between $8.0 -$8.5 million.

 

Our outlook for non-GAAP adjusted EBITDA is presented only on a non-GAAP basis because not all of the information necessary for a quantitative reconciliation of this forward-looking non-GAAP financial measure to the most directly comparable GAAP financial measure is available without unreasonable effort, primarily due to uncertainties relating to the occurrence or amount of these adjustments that may arise in the future. If one or more of the currently unavailable items is applicable, some items could be material, individually or in the aggregate, to GAAP reported results.

 

2023 Second Quarter Conference Call and Webcast

TransAct is hosting a conference call and webcast today, August 9, 2023, beginning at 4:30 p.m. ET to discuss the Company’s preliminary second quarter 2023 results and other matters. Both the call and the webcast are open to the general public. The conference call number is 888-886-7786 and the conference ID number is 45546995 (domestic or international). Please call ten minutes prior to the presentation to ensure that you are connected.

 

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. 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. The Company believes that these non-GAAP financial measures provide relevant and useful information to an investor 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 items that do not reflect the Company’s ongoing operations and are 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 and assessing financial performance. Adjusted net income (loss) and adjusted net income (loss) 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 (for example, the $1.5 million severance charge related to the resignation of the Company’s former CEO) 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 the Company’s continuing business, as these measures adjust for the special items that are not reflective of the normal results of the business. The presentation of this 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 (loss) before net interest expense, income taxes, depreciation, and amortization. A reconciliation of EBITDA to net income (loss), the most comparable GAAP financial measure, can be found attached to this release.

 

Adjusted EBITDA is defined as net income (loss) before net interest expense, income taxes, depreciation and amortization and is adjusted for (1) share-based compensation and (2) the $1.5 million severance charge related to the resignation of the Company’s former CEO. 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. The Company also adjustes for the severance charge related to the resignation of the Company’s former CEO because the Company believes this charge does not reflect the ordinary earnings of the Company’s operations. A reconciliation of adjusted EBITDA to net income (loss), the most comparable GAAP financial measure, can be found attached to this release.

 

Adjusted net income (loss) is defined as net income (loss) adjusted for the $1.5 million severance charge related to the resignation of the Company’s former CEO. A reconciliation of adjusted net income (loss) to net income (loss), the most comparable GAAP financial measure, can be found attached to this release.

 

Adjusted net income (loss) per diluted share is defined as adjusted net income (loss) divided by diluted shares outstanding. A reconciliation of adjusted net income (loss) per diluted share to net income (loss) per diluted share, the most comparable GAAP financial measure, can be found attached to this release.

 

About TransAct Technologies Incorporated

TransAct Technologies Incorporated is a global leader in developing and selling software-driven technology and printing solutions for high-growth markets including food service, casino and gaming, and POS automation. The Company’s solutions are designed from the ground up based on customer requirements and are sold under the BOHA!™, AccuDate™, EPICENTRAL®, Epic and Ithaca® brands. TransAct has sold over 3.7 million printers, terminals and other hardware devices around the world and is committed to providing world-class service, spare parts, and accessories to support its installed product base. Through the TransAct Services Group, the Company also provides customers with a complete range of supplies and consumable items both online at http://www.transactsupplies.com and through its direct sales team. TransAct is headquartered in Hamden, CT. For more information, please visit http://www.transact-tech.com or call (203) 859-6800.

 

©2023 TRANSACT Technologies Incorporated. All rights reserved. TransAct®, BOHA!™, AccuDate, Epic Edge®, EPICENTRAL®, Ithaca® areTrademarks of TransAct Technologies Incorporated.

 

Cautionary Statement Regarding Preliminary Financial Information

The Company has prepared the preliminary financial information set forth below on a materially consistent basis with its historical financial information and in good faith based upon its internal reporting as of and for the three and six months ended June 30, 2023. This financial information is preliminary and is thus inherently uncertain and subject to change as the Company finalizes its financial results and related review for the three and six months ended June 30, 2023. During the course of the preparation of the Company’s condensed consolidated financial statements and related notes as of and for the three and six months ended June 30, 2023, the Company may identify items that could cause its final reported results to be materially different from the preliminary financial information set forth above. As a result, there can be no assurance that the Company’s final results for this period will not differ from the preliminary financial information.

 

   
 

 

This preliminary financial information should not be viewed as a substitute for full financial statements prepared in accordance with GAAP. In addition, this preliminary financial information is not necessarily indicative of the results to be achieved for any future period.

 

Forward-Looking Statements

Certain statements included in this press release may be forward-looking statements. Forward-looking statements are any statements other than statements of historical fact. Forward-looking statements represent current views about possible future events and are often identified by the use of forward-looking terminology, such as "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "project”, "plan”, "design" or "continue", or the negative thereof, or other similar words. Forward-looking statements are subject to certain risks, uncertainties and assumptions. In the event that one or more of such risks or uncertainties materialize, or one or more underlying assumptions prove incorrect, actual results may differ materially from those expressed or implied by the forward-looking statements. Important factors and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include, but are not limited to, the following: the adverse effects of current economic conditions, whether due to the COVID-19 pandemic or otherwise, on our business, operations, financial condition, results of operations and capital resources, difficulties or delays in manufacturing or delivery of inventory or other supply chain disruptions, inflation and the Russia/Ukraine conflict, an inability of our customers to make payments on time or at all, diversion of management attention, a possible future reduction in the value of goodwill or other intangible assets, inadequate manufacturing capacity or a shortfall or excess of inventory as a result of difficulty in predicting manufacturing requirements due to volatile economic conditions, price increases or decreased availability of component parts or raw materials, exchange rate fluctuations, volatility of and decreases in trading prices of our common stock and the availability of needed financing on acceptable terms or at all; our ability to successfully develop new products that garner customer acceptance and generate sales, both domestically and internationally, in the face of substantial competition; our reliance on an unrelated third party to develop, maintain and host certain web-based food service application software and develop and maintain selected components of our downloadable software applications pursuant to a non-exclusive license agreement, and the risk that interruptions in our relationship with that third party could materially impair our ability to provide services to our food service technology customers on a timely basis or at all and could require substantial expenditures to find or develop alternative software products; our ability to successfully transition our business into the food service technology market; risks associated with potential future acquisitions; general economic conditions; our dependence on contract manufacturers for the assembly of a large portion of our products in Asia; our dependence on significant suppliers; our ability to recruit and retain quality employees as the Company grows; our dependence on third parties for sales outside the United States; our dependence on technology licenses from third parties; marketplace acceptance of new products; risks associated with foreign operations; the availability of third-party components at reasonable prices; price wars, supply chain disruptions or other significant pricing pressures affecting the Company’s products in the United States or abroad; increased product costs or reduced customer demand for our products due to changes in U.S. policy that may result in trade wars or tariffs; our ability to protect intellectual property; and other risk factors detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and other reports filed with the Securities and Exchange Commission. Actual results may differ materially from those discussed in, or implied by, the forward-looking statements. We caution readers not to place undue reliance on forward-looking statements, which speak only as of the date of this release. We undertake no obligation to publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events or other factors, except where we are expressly required to do so by applicable law.

# # #

 

 

Investor Contact:

Ryan Gardella

ICR, Inc.

Ryan.Gardella@icrinc.com

 

- Financial tables follow-

 

   
 

 

TRANSACT TECHNOLOGIES INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Preliminary and Unaudited)

 

   Three months ended   Six months ended 
   June 30,   June 30, 
   2023   2022   2023   2022 
   (In thousands, except per share data) 
                 
Net sales  $19,906   $12,623   $42,176   $22,325 
Cost of sales   9,048    7,189    19,063    14,325 
Gross profit   10,858    5,434    23,113    8,000 
                     
Operating expenses:                    
Engineering, design and product development   2,505    2,172    4,774    4,455 
Selling and marketing   2,684    3,293    5,441    5,976 
General and administrative   4,445    2,923    7,861    6,127 
    9,634    8,388    18,076    16,558 
Operating income (loss)   1,224    (2,954)   5,037    (8,558)
                     
Interest and other income (expense):                    
Interest, net   (68)   (28)   (134)   (92)
Other, net   -    (264)   21    (299)
    (68)   (292)   (113)   (391)
                     
Income (loss) before income taxes   1,156    (3,246)   4,924    (8,949)
Income tax (expense) benefit   (391)   870    (1,020)   2,225 
Net income (loss)  $765   $(2,376)  $3,904   $(6,724)
                     
Net income (loss) per common share:                    
Basic  $0.08   $(0.24)  $0.39   $(0.68)
Diluted  $0.08   $(0.24)  $0.39   $(0.68)
                     
Shares used in per share calculation:                    
Basic   9,956    9,910    9,943    9,898 
Diluted   10,017    9,910    10,016    9,898 

 

   
 

 

SUPPLEMENTAL INFORMATION – SALES BY MARKET:

(Preliminary and Unaudited)

 

   Three months ended   Six months ended 
   June 30,   June 30, 
   2023   2022   2023   2022 
   (In thousands) 
                 
Food service technology  $3,895   $3,432   $7,353   $5,562 
POS automation   1,904    1,172    3,701    2,472 
Casino and gaming   12,172    6,525    27,983    11,287 
TransAct Services Group   1,935    1,494    3,139    3,004 
Total net sales  $19,906   $12,623   $42,176   $22,325 

 

   
 

 

TRANSACT TECHNOLOGIES INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Preliminary and Unaudited)

 

   June 30,   December 31, 
   2023   2022 
   (In thousands) 
Assets:        
Current assets:        
Cash and cash equivalents  $10,756   $7,946 
Accounts receivable, net   14,441    13,927 
Employee retention credit receivable   -    1,500 
Inventories   15,408    12,028 
Other current assets   707    724 
Total current assets   41,312    36,125 
           
Fixed assets, net   2,838    2,781 
Right-of-use asset, net   2,053    2,488 
Goodwill   2,621    2,621 
Deferred tax assets   6,565    7,327 
Intangible assets, net   165    242 
Other assets   333    248 
    14,575    15,707 
Total assets  $55,887   $51,832 
           
Liabilities and Shareholders’ Equity:          
Current liabilities:          
Current portion of revolving loan payable  $2,250   $2,250 
Accounts payable   6,321    7,395 
Accrued liabilities   5,511    4,077 
Lease liability   904    875 
Deferred revenue   1,222    1,329 
Total current liabilities   16,208    15,926 
           
Deferred revenue, net of current portion   152    143 
Lease liability, net of current portion   1,210    1,683 
Other liabilities   227    218 
    1,589    2,044 
Total liabilities   17,797    17,970 
           
Shareholders’ equity:          
Common stock   140    139 
Additional paid-in capital   56,594    56,282 
Retained earnings   13,534    9,630 
Accumulated other comprehensive loss, net of tax   (68)   (79)
Treasury stock, at cost   (32,110)   (32,110)
Total shareholders’ equity   38,090    33,862 
Total liabilities and shareholders’ equity  $55,887   $51,832 

 

   
 

 

TRANSACT TECHNOLOGIES INCORPORATED

RECONCILIATION OF GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING

NON-GAAP FINANCIAL MEASURES

(Preliminary and Unaudited, in thousands of dollars, except percentages and per share data)

 

   Three months ended
June 30, 2023
 
   Reported   Adjustments(1)   Adjusted
Non-GAAP
 
Operating expenses  $9,634   $(1,461)  $8,173 
% of net sales   48.4%        41.1%
                
Operating income   1,224    1,461    2,685 
% of net sales   6.1%        13.5%
                
Interest and other expense   (68)   -    (68)
Income before income taxes   1,156    1,461    2,617 
Income tax expense   (391)   (70)   (461)
Net income   765    1,391    2,156 
Net income per common share:               
Basic  $0.08   $0.14   $0.22 
Diluted  $0.08   $0.14   $0.22 

 

(1)Adjustment includes a severance charge of $1,461 incurred in April 2023 related to the resignation of the Company’s former CEO.

 

   Three months ended
June 30, 2022
 
   Reported   Adjustments(2)   Adjusted
Non-GAAP
 
Operating expenses  $8,388   $          -   $8,388 
% of net sales   66.5%        66.5%
                
Operating loss   (2,954)   -    (2,954)
% of net sales   (23.4)%        (23.4)%
                
Interest and other expense   (292)   -    (292)
Loss before income taxes   (3,246)   -    (3,246)
Income tax benefit   870    -    870 
Net loss   (2,376)   -    (2,376)
Net loss per common share:               
Basic  $(0.24)  $-   $(0.24)
Diluted  $(0.24)  $-   $(0.24)

 

(2)No adjustments.

 

   
 

 

TRANSACT TECHNOLOGIES INCORPORATED

RECONCILIATION OF GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING

NON-GAAP FINANCIAL MEASURES

(Preliminary and Unaudited, in thousands of dollars, except percentages and per share data)

 

   Six months ended
June 30, 2023
 
   Reported   Adjustments(3)   Adjusted
Non-GAAP
 
Operating expenses  $18,076   $(1,461)  $16,615 
% of net sales   42.9%        39.4%
                
Operating income   5,037    1,461    6,498 
% of net sales   11.9%        15.4%
                
Interest and other expense   (113)   -    (113)
Income before income taxes   4,924    1,461    6,385 
Income tax expense   (1,020)   (70)   (1,090)
Net income   3,904    1,391    5,295 
Net income per common share:               
Basic  $0.39   $0.14   $0.53 
Diluted  $0.39   $0.14   $0.53 

 

(3)Adjustment includes a severance charge of $1,461 incurred in April 2023 related to the resignation of the Company’s former CEO.

 

   Six months ended
June 30, 2022
 
   Reported   Adjustments(4)   Adjusted
Non-GAAP
 
Operating expenses  $16,558   $-   $16,558 
% of net sales   74.2%        74.2%
                
Operating loss   (8,558)   -    (8,558)
% of net sales   (38.3)%        (38.3)%
                
Interest and other expense   (391)   -    (391)
Loss before income taxes   (8,949)   -    (8,949)
Income tax benefit   2,225    -    2,225 
Net loss   (6,724)   -    (6,724)
Net loss per common share:               
Basic  $(0.68)  $-   $(0.68)
Diluted  $(0.68)  $-   $(0.68)

 

(4)No adjustments.

 

   
 

 

TRANSACT TECHNOLOGIES INCORPORATED

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA

NON-GAAP FINANCIAL MEASURES

(Preliminary and Unaudited)

 

   Three months ended   Six months ended 
   June 30,   June 30, 
   2023   2022   2023   2022 
   (In thousands) 
                 
Net income (loss)  $765   $(2,376)  $3,904   $(6,724)
                     
Interest expense, net   68    28    134    92 
Income tax expense (benefit)   391    (870)   1,020    (2,225)
Depreciation and amortization   370    397    722    625 
                     
EBITDA   1,594    (2,821)   5,780    (8,232)
                     
Share-based compensation expense   120    285    398    581 

Severance charge related to resignation of the

Company’s’ former CEO

   1,461    -    1,461    - 
                     
Adjusted EBITDA  $3,175   $(2,536)  $7,639   $(7,651)