Transact reports second quarter 2011 results

"For the quarter, TransAct experienced a second consecutive quarter of significant growth in the lottery market, largely due to sales of our new thermal lottery printer for Gtech. We are also excited about the recent contract we signed for our new Epicentral software system, which will be going live shortly, as well as the announcement of our acquisition of Printrex, which we believe will be a key component in our growth strategy going forward," added Shuldman.

Shuldman continued: "For the second quarter of 2011, our overall lottery printer sales were up 103% from the prior-year quarter due to significant orders from GTECH for our new thermal lottery printer. Overall casino and gaming printer sales declined 6% from the prior-year period; domestic casino and gaming printer sales increased 14% in the quarter even as the domestic market continues to struggle, as we believe we gained market share during the quarter.”

“However, international casino and gaming printer sales declined 16% during the quarter, as higher sales into the Asia-Pacific market could not offset a decline of printer shipments related to video lottery terminal installations in Italy during 2010 that did not repeat in 2011. Banking and POS printer sales declined 29%, as we experienced lower POS sales primarily due to fulfilling a large order to a retail customer in the second quarter of 2010. TransAct Services Group revenue increased by 1% compared to the second quarter of 2010, primarily due to a 14% increase in sales of consumable products mostly offset by lower service revenue. Lastly, our balance sheet remains solid, with $10.9 million in cash and no debt outstanding as of June 30, 2011," Shuldman concluded.

Second quarter 2011 results

Revenue for the second quarter of 2011 was us$ 17.5 million, an increase of 7% compared to us$ 16.4 million in the prior-year period. Gross margin for the second quarter of 2011 was 38 %, compared to 37.4% in the prior-year quarter due to lower manufacturing overhead expenses on higher sales volume. Operating expenses were us$ 4.5 million, an increase of us$ 0.1 million from the prior-year period, driven largely by a restructuring charge of us$ 0.2 million related to the closing of the New Britain, CT service facility. Excluding this charge, operating expenses declined us$ 0.1 million from the prior-year period. The company recorded net income in the second quarter of 2011 of approximately us$ 1.4 million, compared to net income of approximately us$ 1.1 million in the prior-year period.

Commenting on the financial results, Steven A. DeMartino, President and CFO of TransAct Technologies said, "We are pleased with our quarterly financial results that were again driven by higher lottery printer sales. In addition, we were able to increase our gross margin in the quarter and raise our operating margin to 12.6%, once again demonstrating the leverage in our business model."

Six month 2011 results

Revenue for the six months ended June 30, 2011 was us$ 38.2 million, an increase of 25% compared to us$ 30.7 million in the prior-year period. Gross margin for the six months ended June 30, 2011 was 35.6%, a decrease of approximately 140 basis points from 37% in the prior-year period. Operating expenses for the first half of 2011, which included a restructuring charge of us$ 0.2 million related to the closing of the New Britain, CT service facility, were us$ 8.6 million, consistent with the prior-year period. Excluding the restructuring charge, operating expenses declined us$ 0.2 million from the prior-year period. The company recorded net income of approximately us$ 3.3 million for the six months ended June 30, 2011, compared to net income of approximately us$ 1.8 million for the prior-year period.

Subsequent event

On August 3, 2011, TransAct announced it entered into an agreement to acquire substantially all the assets of Printrex, a leading manufacturer of high-performance specialty printers primarily sold into the oil and gas exploration market, for us$ 4 million plus contingent consideration related to new products under development. The acquisition is expected to close in the third quarter of 2011, subject to customary closing conditions.

Liquidity and capital resources

As of June 30, 2011, TransAct had approximately us$ 10.9 million in cash and cash equivalents, and no debt obligations outstanding under its us$ 20 million revolving credit facility. During the second quarter of 2011, the company repurchased 108,763 shares for approximately us$ 1.3 million under its stock repurchase program. TransAct's us$ 10 million repurchase program allows the company to repurchase up to us$ 8 million in additional shares through May 2013.