Transact Technologies reports 2014 4Q revenue: USD 12.3 M

Summary of 2014 Q4 and Full Year Results: 

Net sales for the three months ending on December 31, 2014 represent US$ 12.3 million, compared to US$ 12.5 million a year ago. For the full year, net sales were US$ 53.1 million, compared to US$ 60.1 million for 2013.

Gross profit for the last quarter of 2014 was US$ 4.9 million, while in the same period of 2013 the companyhad a gross profit of US$ 5 million. For the full year, gross profit was US$ 21.7 million in 2014 and US$ 25.1 million in 2013. 

Bart Shuldman, Chairman and Chief Executive Officer of TransAct, commented, “Fourth quarter results reflect the continued weakness in overall replacement unit sales for the casino and gaming industry on a global basis. However, TransAct’s business transformation towards new, higher-value products that address large and significantly untapped market opportunities is complete and our focus in fiscal 2015 is on sales execution. Reflecting this focus, we recently strengthened our sales and marketing efforts with the appointment of Andrew Newmark as EVP of Global Sales & Marketing, with direct oversight of the company’s sales and marketing efforts across all of our products and services. Andrew’s appointment adds to our already considerable pool of talent and more favorably positions TransAct in 2015 to leverage our powerful brand and product lineup to accelerate our growth across multiple industries worldwide.

“To address the ongoing challenges of the domestic casino market and the related impact to our operating results, late in fiscal 2014 we underwent a significant reduction in our overall cost structure, achieving our goal of removing approximately US$ 1 million of expenses on an annualized basis. More importantly, we believe this cost reduction does not impair the Company’s ability to maintain and even grow our strong worldwide market share of printer sales for the casino and gaming industry and we also remain committed to continue investing in the rollout of our newest products which offer high growth opportunities for TransAct.

“Our Ithaca line of food safety terminals remains an attractive high-growth opportunity for TransAct as we recently secured new business with a number of well-known global restaurant and food service operators. We expect these new customer wins and the ongoing acceptance of our Ithaca 9700 terminal to accelerate market adoption of this product line this year leading to revenue growth in 2015.

“Our Epicentral promotional and bonusing print system continues to gain awareness among global casino operators as performance data from casinos where it is now enabled clearly demonstrates the strong returns operators can generate from installing the system. Accordingly, we expect sales of Epicentral to increase year over year reflecting new domestic and international installations that are expected to come on line over the course of 2015.

“Despite the significant decline in oil prices and the resulting slowdown in oil and gas drilling, the continued success of our Printrex 980 office printer is expected to drive higher profit contributions from our Printrex product line in 2015, particularly as we benefit from growth in our recurring, high margin Printrex-related consumables business. Finally, later in 2015, we expect to generate initial contributions from our Responder MP2 all-in-one mobile printing solution as we enter the large machine-to-machine (M2M) vertical market. Customer reactions to the Responder MP2, our first printer on the M2M market, have been very encouraging.”

Shuldman concluded, “TransAct has completed a significant re-positioning that leveraged our core competencies and resulted in the development of new products that address diversified high-growth market opportunities. We entered 2015 firmly committed to sales execution and expect that the value proposition of our newest products will drive new market penetration throughout this year, which in turn will benefit our financial performance. We are excited about our 2015 prospects and look forward to benefiting from the hard work undertaken across the organization over the last few years which has established a foundation for sustainable, long-term profitable growth.”

Balance sheet and capital return review

As of December 31, 2014, TransAct had approximately US$ 3.1 million of cash and cash equivalents ano zero debt. During the fourth quarter of 2014, the company returned approximately US$ 2.5 million of capital to shareholders through a dividend of $0.08 per share and the repurchase of approximately 326,000 shares of its common stock at an average price of approximately $5.55 per share. After buying back approximately 435,000 shares in fiscal 2014, the company now has approximately US$ 4.9 million remaining under its current share repurchase authorization. In the fiscal year of 2014, the company returned approximately US$ 5.2 million of capital to shareholders.

Steve DeMartino, President and Chief Financial Officer of TransAct, commented, “We believe our 2015 operating results will reflect our initiatives to diversify our revenue sources while increasing margins through growing sales of our value-add products that address largely untapped market opportunities. With a lower overall cost structure heading into 2015 and our expectation that investment in product development will decline on a year over year basis, we have the financial flexibility to support our new product and new market commercialization efforts while simultaneously continuing our strong return of capital initiatives.”

Summary of 2014 fourth quarter operating results

TransAct generated 2014 fourth quarter net sales of US$ 12.3 million compared with net sales of US$ 12.5 million in the 2013 fourth quarter. Casino and gaming revenue in the 2014 fourth quarter of US$ 5 million was in line with the 2014 third quarter and compares to US$ 5.7 million in the 2013 fourth quarter, reflecting lower sales of casino printers to original equipment manufacturers and lower domestic Epicentral revenue. The 2013 fourth quarter also benefited from a replacement program of large slot machine undertaken by a multinational casino operator. Food safety, point-of-sale (POS) and banking revenue of US$ 2.2 million was essentially flat on a year over year basis. Sales of the Ithaca 9700 food safety terminal more than doubled over the prior-year period to US$ 0.8 million while revenue from point-of-sale printers declined US$ 0.3 million to US$ 1.2 million as lower sales of legacy POS thermal printers were partially offset by the benefit from the continued rollout of printers for a new checkout application at McDonalds. Lottery printer sales for the 2014 fourth increased US$ 0.1 million to US$ 1.6 million. Printrex revenues were US$ 0.9 million in the 2014 fourth quarter, essentially flat with the prior-year period. The company’s TransAct Services Group recorded net sales of US$ 2.6 million as 19% year-over-year growth included a $0.1 million increase in Printrex-related consumables as well as a US$ 0.4 million increase in spare parts and service revenue.

The company's gross margin of 39.9% in the fourth quarter of 2014 is consistent with the prior-year gross margin and gross profit was US$ 4.9 million compared to US$ 5 million in the same quarter one year ago.

The company recorded an operating loss of US$ 1.2 million for the fourth quarter in 2014 compared to an operating income of US$ 1.5 million in the fourth quarter of the previous year. Excluding the impact from the employee termination expenses, legal fees related to the Avery Dennison lawsuit and an adjustment to accrued contingent consideration, TransAct generated adjusted operating income of US$ 0.4 million, or 3.6% of net sales, in the fourth quarter of 2014 compared with adjusted operating income of US$ 0.9 million, or 7.0% of net sales, in the year-ago period. Net loss for thefourth quarter of 2014 was US$ 0.7 million compared to a net income of US$ 1.1 million in the prior-year period. Adjusted net income was US$ 0.4 million, compared to US$ 0.7 million, forthe fourth quarter of 2013 .