TransAct Technologies Reports Preliminary Fourth Quarter and Full Year 2023 Financial Results
TransAct Technologies Incorporated (Nasdaq: TACT) reported a 26% decrease in net sales for the fourth quarter of 2023, with varying sales performance in different sectors. The company highlighted positive growth in Food Service Technology sales but a decline in Casino and Gaming sales. The CEO expressed confidence in the company's transition and the potential for growth in 2024. Financially, there was a decrease in net income and EBITDA for the fourth quarter, although full-year results showed improved net sales, gross profit, and operating income compared to 2022.
Positive
Positive points include the growth in Food Service Technology sales by 54% year-over-year and a 25% increase in full-year net sales compared to 2022. The company's focus on enterprise-level sales with the new BOHA! Terminal 2 received positive customer feedback, leading to the addition of twelve new logos in the fourth quarter.
The strategic engagement of a long-term advisor to determine the company's best strategy reflects a proactive approach to business development. The outlook for 2024 anticipates total net sales between $53 million and $58 million, with a breakeven adjusted EBITDA.
The company's use of non-GAAP financial measures like EBITDA and adjusted EBITDA provides investors with insights into the company's core operations. These measures help evaluate operating performance by excluding items that do not reflect ongoing operations, allowing for a clearer assessment of the business's financial health.
Negative
Negative aspects include a 62% decrease in Casino and Gaming sales for the fourth quarter of 2023. Operating loss was reported for the same period, with a net loss of $(62) thousand. EBITDA and adjusted EBITDA also decreased compared to the fourth quarter of 2022.
The uncertainty regarding the occurrence or amount of adjustments necessary for a quantitative reconciliation of non-GAAP adjusted EBITDA to GAAP financial measures may pose challenges for investors seeking a clear understanding of the company's financial performance.
The $1.5 million severance charge related to the former CEO's resignation impacted adjusted net income for the full year 2023, potentially affecting investor perception of the company's financial stability.
The reported decline in quarterly net sales by 26% year-over-year for TransAct Technologies is a significant indicator of the company's performance in a competitive market. This contraction can be attributed to various factors, including market saturation, increased competition, or a potential decline in demand for the company's products. However, the 54% increase in Food Service Technology (FST) sales suggests a strategic pivot or a successful product launch that could potentially offset declines in other segments, such as Casino and Gaming, which saw a 62% decrease. The diversification of revenue streams is crucial in mitigating risks associated with market volatility.
Investors should consider the implications of the company's operating loss in the fourth quarter, juxtaposed with a full-year operating income, reflecting a potential variability in quarterly performance. The increase in gross margin year-over-year from 45.8% to 48.0% for the quarter and a more pronounced full-year gross margin increase from 42.0% to 52.9%, indicate improving efficiency or a shift towards higher-margin products. The engagement of a strategic advisor to determine the company's long-term strategy could signal a transformative phase, possibly involving restructuring, divestment, or acquisition opportunities.
TransAct's financials reveal a complex picture, with a significant year-over-year sales drop in the fourth quarter yet an overall annual increase in net sales. The discrepancy between quarterly and annual performance highlights the need for a detailed analysis of the underlying causes, such as cyclical trends or one-off events. The increase in FST recurring revenue by 33% for the quarter and 28% for the full year suggests a growing customer base and a successful subscription-based model, which is a positive sign for future revenue stability and predictability.
However, the forecast for 2024 indicates expected total net sales to be lower than the full year 2023, with adjusted EBITDA projected to be approximately breakeven. This outlook may raise concerns about the company's growth trajectory and profitability potential. Investors should also note the use of non-GAAP financial measures, such as EBITDA and adjusted EBITDA, which exclude certain expenses and provide a different view of financial health compared to GAAP measures. It is essential to understand these adjustments to fully evaluate the company's operational performance.
From a legal perspective, the disclosure of non-GAAP financial measures such as EBITDA and adjusted EBITDA requires careful consideration. While these measures can offer valuable insights into a company's operational performance, they must be presented alongside the most comparable GAAP measures, with reconciliations provided. TransAct's use of non-GAAP measures is in line with regulatory requirements, as they furnish reconciliations to GAAP net income (loss). However, investors and analysts should be aware of the adjustments made and the reasons behind them, such as the exclusion of share-based compensation and severance charges, to fully understand the company's financial position.
Additionally, the engagement of a strategic advisor indicates that the company is exploring significant changes that could have legal implications, such as mergers, acquisitions, or corporate restructuring. Shareholders and potential investors should monitor these developments closely, as they can have material effects on the company's future operations and stock performance.
03/12/2024 - 04:05 PM
2023 Fourth Quarter Net Sales of $13.3 Million 26% on a Year-Over-Year Basis
Quarterly Food Service Technology (“FST”) Sales of $4.7 Million 54% on a Year-Over-Year Basis
Quarterly Casino and Gaming Sales of $4.2 Million 62% on a Year-Over-Year Basis
HAMDEN, Conn. --(BUSINESS WIRE)--
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 fourth quarter and full year ended December 31, 2023.
“This was a year of change here at TransAct, and I believe that the organization has emerged from this transition stronger, more efficient, and operationally more effective,” said John Dillon, Chief Executive Officer of TransAct. “On the FST side, we believe that we now have the right team in the right places selling to enterprise-level organizations with our new BOHA! Terminal 2, which has seen a solid reception from customers and prospects so far. We added twelve new logos to our BOHA! platform in the fourth quarter and sold 1,235 terminals, and believe that we have the opportunity to build momentum throughout the course of 2024.”
Fourth Quarter 2023 Financial Highlights
Net Sales : Net sales for the fourth quarter of 2023 were $13.3 million 26% compared to $18.0 million
FST Recurring Revenue : FST recurring revenue for the fourth quarter of 2023 was $3.2 million 33% compared to $2.4 million
Gross Profit : Gross profit for the fourth quarter of 2023 was $6.4 million 48.0% , compared to gross profit of $8.2 million 45.8% gross margin.
Operating income (loss): Operating loss for the fourth quarter of 2023 was $(0.5) million $0.5 million
Net income (loss): Net loss for the fourth quarter of 2023 was $(62) thousand $(0.01) $260 thousand $0.03
EBITDA: EBITDA was $0.3 million $1.0 million
Adjusted EBITDA : Adjusted EBITDA was $0.6 million $1.3 million
Full Year 2023 Financial Highlights
Net Sales : Net sales for the full year 2023 were $72.6 million 25% compared to $58.1 million
FST Recurring Revenue : FST recurring revenue for the full year 2023 was $11.1 million 28% compared to $8.7 million
Gross Profit : Gross profit for the full year 2023 was $38.4 million 52.9% , compared to gross profit of $24.4 million 42.0% gross margin.
Operating income (loss): Operating income for the full year 2023 was $5.7 million $(7.7) million
Net income (loss): Net income for the full year 2023 was $4.7 million $0.47 $(5.9) million $(0.60)
Adjusted net income (loss): Adjusted net income for the full year 2023 was $5.9 million $0.59 $(5.9) million $(0.60)
EBITDA: EBITDA was $7.6 million $(6.4) million
Adjusted EBITDA : Adjusted EBITDA was $10.0 million $(5.2) million
Recent Development
The Company announced that it engaged a strategic advisor to assist in determining the best long-term strategy for its business.
2024 Financial Outlook
Total Net Sales : The Company currently expects full year 2024 total net sales of between $53 million $58 million
Total Adjusted EBITDA : The Company currently expects full year 2024 total adjusted EBITDA to be approximately breakeven.
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 Fourth Quarter and Full Year Conference Call and Webcast
TransAct is hosting a conference call and webcast today, March 12, 2024, beginning at 4:30 p.m. ET to discuss the Company’s preliminary fourth quarter and full year 2023 results and other matters. Both the call and the webcast are open to the general public. The conference call number is 877-704-4453 and the conference ID number is 13744766 (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
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, (2) the $1.5 million
Adjusted net income (loss) is defined as net income (loss) adjusted for (1) the $1.5 million
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 3.9 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.
©2024 TRANSACT Technologies Incorporated. All rights reserved. TransAct®, BOHA!™, AccuDate™, Epic Edge®, EPICENTRAL® and Ithaca® are trademarks 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 months and full year ended December 31, 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 months and audit for the full year ended December 31, 2023. During the course of the preparation of the Company’s consolidated financial statements and related notes as of and for the three months and full year ended December 31, 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 within the meaning of the U.S. federal securities laws, including the Private Securities Litigation Reform Act of 1995. 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", "could", "expect", "intend", "estimate", "anticipate", "believe", "project”, "plan”, "predict”, "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 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 and Middle East conflicts, 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 grow our business in the food service technology market; risks associated with the pursuit of strategic initiatives and business growth; 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; our dependence on third parties for sales outside the United States ; 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.
- Financial tables follow-
TRANSACT TECHNOLOGIES INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Preliminary and Unaudited)
Three months ended
Year ended
December 31,
December 31,
2023
2022
2023
2022
(In thousands, except per share data)
Net sales
$13,265
$17,958
$72,631
$58,139
Cost of sales
6,894
9,739
34,231
33,727
Gross profit
6,371
8,219
38,400
24,412
Operating expenses:
Engineering, design and product development
2,159
2,130
9,442
8,570
Selling and marketing
2,096
2,602
9,934
11,326
General and administrative
2,638
2,993
13,318
12,193
6,893
7,725
32,694
32,089
Operating (loss) income
(522
)
494
5,706
(7,677
)
Interest and other income (expense):
Interest, net
(48
)
(63
)
(255
)
(208
)
Other, net
474
151
452
(16
)
426
88
197
(224
)
(Loss) income before income taxes
(96
)
582
5,903
(7,901
)
Income tax benefit (expense)
34
(322
)
(1,155
)
1,965
Net (loss) income
$(62
)
$260
$4,748
$(5,936
)
Net (loss) income per common share:
Basic
$(0.01
)
$0.03
$0.48
$(0.60
)
Diluted
$(0.01
)
$0.03
$0.47
$(0.60
)
Shares used in per share calculation:
Basic
9,958
9,912
9,951
9,905
Diluted
9,958
9,921
10,021
9,905
SUPPLEMENTAL INFORMATION – SALES BY MARKET:
(Preliminary and Unaudited)
Three months ended
Year ended
December 31,
December 31,
2023
2022
2023
2022
(In thousands)
Food service technology
$4,714
$3,054
$16,308
$12,364
POS automation
1,577
2,959
6,922
10,659
Casino and gaming
4,190
10,999
41,192
30,029
TransAct Services Group
2,784
946
8,209
5,087
Total net sales
$13,265
$17,958
$72,631
$58,139
TRANSACT TECHNOLOGIES INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Preliminary and Unaudited)
December 31,
December 31,
2023
2022
(In thousands)
Assets:
Current assets:
Cash and cash equivalents
$12,321
$7,946
Accounts receivable, net
9,824
13,927
Employee retention credit receivable
-
1,500
Inventories
17,759
12,028
Other current assets
1,095
724
Total current assets
40,999
36,125
Fixed assets, net
2,421
2,781
Right-of-use assets, net
1,602
2,488
Goodwill
2,621
2,621
Deferred tax assets
6,304
7,327
Intangible assets, net
88
242
Other assets
163
248
13,199
15,707
Total assets
$54,198
$51,832
Liabilities and Shareholders’ Equity:
Current liabilities:
Revolving loan payable
$2,250
$2,250
Accounts payable
4,431
7,395
Accrued liabilities
4,947
4,077
Lease liabilities
929
875
Deferred revenue
1,079
1,329
Total current liabilities
13,636
15,926
Deferred revenue, net of current portion
209
143
Lease liabilities, net of current portion
720
1,683
Other liabilities
219
218
1,148
2,044
Total liabilities
14,784
17,970
Shareholders’ equity:
Common stock
140
139
Additional paid-in capital
57,055
56,282
Retained earnings
14,378
9,630
Accumulated other comprehensive loss, net of tax
(49
)
(79
)
Treasury stock, at cost
(32,110
)
(32,110
)
Total shareholders’ equity
39,414
33,862
Total liabilities and shareholders’ equity
$54,198
$51,832
TRANSACT TECHNOLOGIES INCORPORATED
RECONCILIATION OF GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Preliminary and Unaudited, thousands of dollars, except percentages and per share amounts)
Three months ended
December 31, 2023
Reported
Adjustments(1)
Adjusted
Non-GAAP
Operating expenses
$6,893
$-
$6,893
% of net sales
52.0
%
52.0
%
Operating loss
(522
)
-
(522
)
% of net sales
(3.9
)%
(3.9
)%
Interest and other income
426
-
426
Loss before income taxes
(96
)
-
(96
)
Income tax benefit
34
-
34
Net loss
(62
)
-
(62
)
Net loss per common share:
Basic
$(0.01
)
$-
$(0.01
)
Diluted
$(0.01
)
$-
$(0.01
)
(1) No adjustments.
Three months ended
December 31, 2022
Reported
Adjustments(2)
Adjusted
Non-GAAP
Operating expenses
$7,725
$-
$7,725
% of net sales
43.0
%
43.0
%
Operating income
494
-
494
% of net sales
2.8
%
2.8
%
Interest and other income
88
-
88
Income before income taxes
582
-
582
Income tax (expense)
(322
)
-
(322
)
Net income
260
-
260
Net income per common share:
Basic
$0.03
$-
$0.03
Diluted
$0.03
$-
$0.03
(2) No adjustments.
TRANSACT TECHNOLOGIES INCORPORATED
RECONCILIATION OF GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Preliminary and Unaudited, thousands of dollars, except percentages and per share amounts)
Year ended
December 31, 2023
Reported
Adjustments(3)
Adjusted
Non-GAAP
Operating expenses
$32,694
$(1,461
)
$31,233
% of net sales
45.0
%
43.0
%
Operating income
5,706
1,461
7,167
% of net sales
7.9
%
9.9
%
Interest and other income
197
-
197
Income before income taxes
5,903
1,461
7,364
Income tax (expense)
(1,155
)
(303
)
(1,458
)
Net income
4,748
1,158
5,906
Net income per common share:
Basic
$0.48
$0.12
$0.60
Diluted
$0.47
$0.12
$0.59
(3) Adjustment includes a severance charge of $1,461
Year ended
December 31, 2022
Reported
Adjustments(4)
Adjusted
Non-GAAP
Operating expenses
$32,089
$-
$32,089
% of net sales
55.2
%
55.2
%
Operating loss
(7,677
)
-
(7,677
)
% of net sales
(13.2
)%
(13.2
)%
Interest and other expense
(224
)
-
(224
)
Loss before income taxes
(7,901
)
-
(7,901
)
Income tax benefit
1,965
-
1,965
Net loss
(5,936
)
-
(5,936
)
Net loss per common share:
Basic
$(0.60
)
$-
$(0.60
)
Diluted
$(0.60
)
$-
$(0.60
)
(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
Year ended
December 31,
December 31,
2023
2022
2023
2022
(In thousands)
Net (loss) income
$(62
)
$260
$4,748
$(5,936
)
Interest expense, net
48
63
255
208
Income tax (benefit) expense
(34
)
322
1,155
(1,965
)
Depreciation and amortization
386
348
1,489
1,332
EBITDA
338
993
7,647
(6,361
)
Share-based compensation expense
249
287
860
1,155
Severance charge related to resignation of the Company’s former Chief Executive Officer
-
-
1,461 -
Adjusted EBITDA
$587
$1,280
$9,968
$(5,206
)
View source version on businesswire.com: https://www.businesswire.com/news/home/20240312093818/en/
Investor:
Ryan.Gardella@icrinc.com
Source: TransAct Technologies Incorporated
What was the percentage change in net sales for the fourth quarter of 2023 compared to 2022?
Net sales decreased by 26% for the fourth quarter of 2023 compared to 2022.
How did Food Service Technology sales perform in the fourth quarter of 2023?
Food Service Technology sales increased by 54% year-over-year in the fourth quarter of 2023.
What was the net income for the fourth quarter of 2023?
The net loss for the fourth quarter of 2023 was $(62) thousand.
What is the outlook for total net sales in 2024?
The company expects full year 2024 total net sales to be between $53 million and $58 million.
Why did the company engage a strategic advisor?
The company engaged a strategic advisor to determine the best long-term strategy for its business.
What are EBITDA and adjusted EBITDA used for?
EBITDA and adjusted EBITDA provide insights into the company's core operations by excluding items that do not reflect ongoing operations.
What impact did the $1.5 million severance charge have on net income for the full year 2023?
The severance charge related to the former CEO's resignation affected adjusted net income for the full year 2023.
Where can interested parties access the conference call and webcast?
Interested parties can access the conference call live on the Internet at www.transact-tech.com under 'Investor Relations' followed by 'Events & Presentations'.
