Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Transact Technologies Inc (TACT, Financial) reported strong progress in the Food Service Technology (FST) sector, with 1,355 units sold in the third quarter, marking a 90% increase from the previous year.
- FST hardware sales increased by 30% year over year, indicating robust demand for their products.
- The company added 12 new BOHA clients in the quarter, representing a potential for about 2,400 units over time, showcasing a strong pipeline for future growth.
- Transact Technologies Inc (TACT) has successfully implemented cost reduction initiatives, achieving $5 million in annualized savings, which has helped reduce operating expenses by 22% year over year.
- The company maintains a solid liquidity position with over $11 million in cash and minimal borrowings, ensuring financial stability.
Negative Points
- Total sales for the third quarter were $10.9 million, down 37% compared to the prior year period, indicating a significant decline in overall revenue.
- Recurring FST revenue decreased by 8% year over year, highlighting challenges in maintaining consistent revenue streams.
- Casino and gaming sales dropped by 50% year over year, primarily due to one major OEM customer working through high inventory levels.
- The company revised its revenue outlook to a range of $43 million to $45 million due to unexpected demand lag in the casino and gaming sector.
- Transact Technologies Inc (TACT) reported a net loss of $551,000 for the third quarter, compared to net income in the same period last year, reflecting financial challenges.
Q & A Highlights
Q: Can you elaborate on the situation with the one OEM in the casino and gaming sector that is still in oversupply?
A: John Dillon, CEO: The OEM has an oversupply in one geographical market, and we are working with them to reconfigure their existing inventory for other markets where there is no oversupply. This involves making slight changes to the inventory, such as adding or removing accessories or updating firmware, to suit different markets. We are optimistic about resolving this issue.
Q: How is the competitive environment in the casino and gaming sector?
A: John Dillon, CEO: Our main competitor is back in the market after the pandemic. We compete well head-to-head, especially in new casino placements. Both companies have strongholds, but we are working hard to maintain and expand our market share. The competitive environment is stable, but gaining additional business within existing customers takes time.
Q: Regarding FST, how is the average client size trending, and what is the initial order attachment rate for new clients?
A: John Dillon, CEO: We focus on clients that can buy a minimum of 50 to 100 units. Initial orders might be small as clients test the product, but we aim to expand within those clients over time. The average potential for new clients added last quarter is around 200 units, indicating a healthy client size.
Q: Are there specific end markets where your FST clients are concentrated?
A: John Dillon, CEO: We serve various sub-verticals within the food service industry, including quick service restaurants (QSRs), convenience stores, sushi in grocery stores, restaurants, and food service management companies. Each market has unique needs, and we are learning to tailor our offerings to maximize ROI for clients.
Q: When do you expect the gaming and casino market to return to normal patterns?
A: Steve DeMartino, CFO: The pandemic and subsequent supply chain issues led to overbuying by OEMs. We expect normalization in 2025 as the market adjusts to a new normal. Current headwinds are expected to subside, and we anticipate a return to regular buying patterns.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
