TransAct Technologies Reports Fourth Quarter 2009 Results
GlobeNewswire
2010-03-09
HAMDEN, Conn., March 9, 2010 (GLOBE NEWSWIRE) -- TransAct Technologies
Incorporated (Nasdaq:TACT), a global leader in market-specific printers
for transaction-based industries, today announced financial results for
the three months and the full year ended December 31, 2009. Summary
results for these periods are as follows:
Three months ended Year ended
December 31, December 31,
-------------------------- --------------------------
% %
(in $000s, except EPS) 2009 2008 change 2009 2008 change
-------- ------- ------- -------- -------- ------
Net sales $13,926 $14,277 (2.5%) $58,346 $62,207 (6.2%)
Operating income 281 608 (53.8%) 3,296 1,861(1) 77.1%
Net income 186 636 (70.8%) 2,140 1,444(2) 48.2%
Diluted earnings per share $0.02 $0.07 (71.4%) $0.23 $0.15(3) 53.3%
(1) Operating income includes $3,029,000 of legal fees related to the settled lawsuit
with FutureLogic, Inc. (the "FL Legal Fees") in the full year ended December 31, 2008.
(2) Net income includes $1,954,000 of FL Legal Fees, net of tax, in the full year ended
December 31, 2008.
(3) Diluted earnings per share includes the negative impact of $0.21 from the FL Legal
Fees in the full year ended December 31, 2008.
"I am pleased with how our Company performed in 2009, especially given
the continued weak overall economy which impacted our results in the
fourth quarter," said Bart C. Shuldman, Chairman, President and Chief
Executive Officer of TransAct Technologies. "By the end of 2009, we
completed the transition of a majority of our manufacturing to China
and we began to see improving gross margin on products sold during the
fourth quarter. Our move into the international gaming and casino
market, our relationship with McDonald's and our focus in the banking
market drove revenue at TransAct during 2009 as we navigated through
one of the most difficult economic times ever. Further, we continued to
improve our balance sheet leading the Company to its strongest
financial position ever as we entered 2010."
Mr. Shuldman continued, "For the fourth quarter of 2009, our
international gaming and casino sales continued to drive our results
and increased 77% compared to the fourth quarter of 2008. This increase
helped to offset a 56% decline in our domestic casino and gaming
printer sales compared to the fourth quarter of 2008, as the weakness
we experienced throughout 2009 in our North American replacement slot
machine sales continued into the fourth quarter. Our banking and
point-of-sale ("POS") sales declined 7% on a quarter-over-quarter
basis, as a significant increase in our banking printer sales could not
fully overcome lower POS printer sales due to the impact of the
recession on the POS market. Lottery sales, which can vary
significantly from quarter-to-quarter, rose by 21% due to an increase
in orders from our lottery customer in the fourth quarter of 2009
compared to the fourth quarter of 2008. TransAct Services Group
revenues increased by 6% compared to the fourth quarter of 2008,
primarily due to higher sales of replacement parts as well as increased
service revenue resulting from new service contracts, primarily in the
banking market. Finally, our balance sheet remains strong, with $10
million in cash and no debt outstanding at December 31, 2009."
Fourth Quarter 2009 Results
Revenue for the fourth quarter of 2009 was $13.9 million, a decrease of
2% compared to $14.3 million in the prior-year period. Gross margin for
the fourth quarter of 2009 was 31.0%, compared to 33.7% in the
prior-year quarter as the Company worked to use a substantial portion
of its existing, higher cost domestic inventory and also sold more
lower margin products. Operating expenses were $4.0 million, a decrease
of $0.2 million from the prior-year period driven largely by reduced
selling and marketing expenses. The Company recorded net income in the
fourth quarter of 2009 of approximately $0.2 million, or $0.02 per
diluted share, compared to net income of approximately $0.6 million, or
$0.07 per diluted share, in the prior-year period.
Commenting on the financial results, Steven A. DeMartino, Executive
Vice President and Chief Financial Officer of TransAct Technologies
said, "During the fourth quarter of 2009, we completed the transition
of a substantial portion of our production to our lower-cost contract
manufacturer in China. Despite the completion of this move, which we
expect to reduce our product costs beginning in 2010, our gross margin
for the fourth quarter of 2009 was impacted by an unfavorable product
mix, as we sold a higher percentage of lower margin products than in
the prior-year quarter. We expect our gross margin in 2010 to steadily
improve as we realize the full benefit from the completed move of our
production to China and expect a more favorable product mix throughout
the year."
Full Year 2009 Results
Revenue for the year ended December 31, 2009 was $58.3 million, a
decrease of 6% compared to $62.2 million in the prior year. Gross
margin for the year ended December 31, 2009 was 32.3%, compared to
33.7% in the prior year. Operating expenses were $15.5 million, a
decrease of $3.6 million from the prior year driven largely by the
absence of $3.0 million of legal fees incurred in 2008 in connection
with the now-settled litigation with FutureLogic, Inc., as well as a
reduction in overall operating expenses from cost reduction actions
taken during 2009. The Company recorded net income of approximately
$2.1 million, or $0.23 per diluted share, for the year ended December
31, 2009, compared to net income of approximately $1.4 million, or
$0.15 per diluted share, for 2008. Severance costs reduced net income
and earnings per share in 2009 by $0.2 million and $0.01, respectively,
while legal fees associated with the FutureLogic, Inc. litigation
reduced net income and diluted earnings per share in 2008 by $2.0
million and $0.21, respectively.
2010 Outlook
TransAct expects both revenue and gross margin improvement in 2010
compared to 2009 based on the current backlog of orders and forecasts
of order flow provided by some of the Company's customers. The Company
expects most of its sales growth for 2010 to come from the
international casino and gaming markets, as well as some improvement in
the replacement cycle in the domestic casino market. Due to the timing
of orders, the Company expects results in the first quarter of 2010 to
be the lowest of the year. Finally, TransAct also expects to see solid
free cash flow (cash provided by operations less capital expenditures)
again in 2010.
Liquidity and Capital Resources
As of December 31, 2009, TransAct had approximately $10.0 million in
cash and cash equivalents, and no debt obligations outstanding under
its $20 million revolving credit facility. During the fourth quarter of
2009, the Company did not repurchase any shares under its stock
repurchase program. As of December 31, 2009, the Company had
repurchased a total of 1,164,100 shares for approximately $8.5 million
under its current authorization. TransAct's $15 million repurchase
program allows the Company to repurchase up to $6.5 million in
additional shares through March 2010.
Investor Conference Call / Webcast Details
TransAct will review detailed fourth quarter 2009 results during a
conference call today at 5:00 PM EST. The conference call-in number is
888-452-4007. A replay of the call will be available from 8:00 PM EST
on Tuesday, March 9 through midnight EDT on Tuesday, March 16 by
telephone at 888-203-1112; passcode 2143777. 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 printers for
transaction-based industries. These industries include casino, gaming,
lottery, banking, kiosk and point-of-sale. 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
are designed from the ground up based on market specific requirements
and are sold under the Ithaca(R) and Epic product brands. TransAct
distributes its printers through OEMs, value-added resellers, selected
distributors, and direct to end-users. TransAct has over two million
printers installed around the world. TransAct is committed to
world-class printer service, spare parts and accessories required by a
growing worldwide installed base of printers. Beyond printers, TransAct
is a leader in providing printing supplies to the full transaction
printer market. 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, gaming and government markets. Through its webstore,
http://www.transactsupplies.com, and a direct selling team, TransAct
addresses the growing on-line demand for these products. TransAct is
headquartered in Hamden, CT. For more information on TransAct, 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 a sole source contract manufacturer for the assembly of a large
portion of the Company's products in China; dependence on ability to
obtain competitive pricing and other terms from our contract
manufacturer and other suppliers; 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; and risks associated with potential
future acquisitions. 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.
TRANSACT TECHNOLOGIES INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months
ended Year ended
(In thousands, except
per share amounts) December 31, December 31,
----------------- -----------------
2009 2008 2009 2008
-------- ------- -------- -------
Net sales $13,926 $14,277 $58,346 $62,207
Cost of sales 9,604 9,460 39,517 41,257
-------- ------- -------- -------
Gross profit 4,322 4,817 18,829 20,950
-------- ------- -------- -------
Operating expenses:
Engineering, design and
product development 745 823 2,788 2,942
Selling and marketing 1,534 1,681 5,821 6,078
General and
administrative 1,762 1,705 6,924 7,040
Legal fees associated
with lawsuit -- -- -- 3,029
-------- ------- -------- -------
4,041 4,209 15,533 19,089
-------- ------- -------- -------
Operating income 281 608 3,296 1,861
-------- ------- -------- -------
Other income (expense):
Interest, net (2) (5) (50) (11)
Other, net (5) 272 (33) 368
-------- ------- -------- -------
(7) 267 (83) 357
-------- ------- -------- -------
Income before income
taxes 274 875 3,213 2,218
Income taxes 88 239 1,073 774
-------- ------- -------- -------
Net income $186 $636 $2,140 $1,444
======== ======= ======== =======
Net income per common
share:
Basic $0.02 $0.07 $0.23 $0.16
Diluted $0.02 $0.07 $0.23 $0.15
Shares used in per share
calculation:
Basic 9,320 9,305 9,289 9,308
Diluted 9,486 9,424 9,377 9,489
SUPPLEMENTAL INFORMATION -- SALES BY SALES UNIT:
Three months
ended Year ended
December 31, December 31,
2009 2008 2009 2008
-------- ------- -------- -------
Banking and point-of-sale $2,915 $3,136 $16,695 $11,866
Casino and gaming 4,484 5,341 17,526 22,299
Lottery 3,150 2,607 9,551 15,731
TransAct Services Group 3,377 3,193 14,574 12,311
-------- ------- -------- -------
Total net sales $13,926 $14,277 $58,346 $62,207
======== ======= ======== =======
TRANSACT TECHNOLOGIES INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December December
31, 31,
(In thousands) 2009 2008
-------- --------
Assets:
Current assets:
Cash and cash
equivalents $10,017 $2,000
Receivables, net 8,996 8,734
Inventories 5,952 9,919
Refundable income taxes 270 35
Deferred tax assets 2,240 2,054
Other current assets 521 352
-------- --------
Total current assets 27,996 23,094
-------- --------
Fixed assets, net 4,551 5,563
Goodwill 1,469 1,469
Deferred tax assets 669 1,759
Intangibles and other
assets, net 214 349
-------- --------
6,903 9,140
-------- --------
Total assets $34,899 $32,234
======== ========
Liabilities and
Shareholders' Equity:
Current liabilities:
Accounts payable $5,052 $4,863
Accrued liabilities 1,890 2,847
Deferred revenue 580 333
-------- --------
Total current
liabilities 7,522 8,043
-------- --------
Deferred revenue, net of
current portion 501 259
Deferred rent, net of
current portion 385 473
Other liabilities 137 177
-------- --------
1,023 909
-------- --------
Total liabilities 8,545 8,952
-------- --------
Shareholders' equity:
Common stock 105 105
Additional paid-in
capital 21,820 20,890
Retained earnings 13,033 10,893
Accumulated other
comprehensive loss, net
of tax (66) (68)
Treasury stock, at cost (8,538) (8,538)
-------- --------
Total shareholders'
equity 26,354 23,282
-------- --------
Total liabilities and
shareholders' equity $34,899 $32,234
======== ========
CONTACT: TransAct Technologies Incorporated
Steven DeMartino, EVP and Chief Financial Officer
203-859-6810
ICR Inc.
William Schmitt
203-682-8200
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