Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Feb. 28, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Current Fiscal Year End Date | --12-31 | |
Document Transition Report | false | |
Entity Registrant Name | TRANSACT TECHNOLOGIES INC | |
Entity Incorporation, State or Country Code | DE | |
Entity File Number | 000-21121 | |
Entity Tax Identification Number | 06-1456680 | |
Entity Address, Address Line One | 2319 Whitney Avenue, Suite 3B | |
Entity Address, City or Town | Hamden | |
Entity Address, State or Province | CT | |
Entity Address, Postal Zip Code | 06518 | |
City Area Code | 203 | |
Local Phone Number | 859-6800 | |
Entity Filer Category | Accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 7,534,133 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001017303 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 615 | $ 4,203 |
Accounts receivable, net | 6,261 | 6,418 |
Note receivable | 100 | 1,017 |
Inventories, net | 12,586 | 12,099 |
Prepaid income taxes | 124 | 180 |
Other current assets | 1,300 | 998 |
Total current assets | 20,986 | 24,915 |
Fixed assets, net | 2,414 | 2,244 |
Accounts Receivable, before Allowance for Credit Loss, Noncurrent | 1,530 | 0 |
Right-of-use asset, net of accumulated amortization of $211 and $0 | 4,159 | 2,855 |
Goodwill | 2,621 | 2,621 |
Deferred tax assets | 3,086 | 2,565 |
Intangible assets, net | 754 | 817 |
Other assets | 237 | 44 |
Total noncurrent assets | 14,801 | 11,146 |
Total assets | 35,787 | 36,061 |
Current liabilities: | ||
Accounts payable | 1,737 | 2,960 |
Accrued liabilities | 2,419 | 3,041 |
Short-term Bank Loans and Notes Payable | 794 | 0 |
Lease liability | 880 | 945 |
Deferred revenue | 643 | 700 |
Total current liabilities | 6,473 | 7,646 |
Deferred revenue, net of current portion | 183 | 219 |
Lease liability | 3,456 | 2,104 |
Other liabilities | 170 | 166 |
Total noncurrent liabilities | 3,809 | 2,489 |
Total liabilities | 10,282 | 10,135 |
Shareholders' equity: | ||
Common stock, $0.01 par value, 20,000,000 shares authorized; 11,500,502 and 11,463,141 shares issued, respectively; 7,455,660 and 7,418,299 shares outstanding, respectively | 116 | 115 |
Additional paid-in capital | 33,103 | 32,604 |
Retained earnings | 24,356 | 25,348 |
Accumulated other comprehensive loss, net of tax | 40 | (31) |
Treasury stock, 4,044,842 shares, at cost | (32,110) | (32,110) |
Total shareholders' equity | 25,505 | 25,926 |
Total liabilities and shareholders' equity | $ 35,787 | $ 36,061 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Assets: | ||
Fixed assets, accumulated depreciation | $ 19,160 | $ 19,010 |
Intangible assets, accumulated amortization | $ 3,833 | $ 3,771 |
Shareholders' equity: | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 11,583,527 | 11,515,090 |
Common stock, shares outstanding (in shares) | 7,538,685 | 7,470,248 |
Treasury stock (in shares) | 4,044,842 | 4,044,842 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME [Abstract] | ||
Net sales | $ 10,247 | $ 11,550 |
Cost of sales | 5,329 | 5,464 |
Gross profit | 4,918 | 6,086 |
Operating expenses: | ||
Engineering, design and product development | 1,385 | 1,165 |
Selling and marketing | 2,208 | 1,854 |
General and administrative | 2,620 | 2,290 |
Operating expenses | 6,213 | 5,309 |
Operating income | (1,295) | 777 |
Interest and other income (expense): | ||
Interest, net | 3 | (6) |
Other, net | (165) | 90 |
Interest and other income (expense) | (162) | 84 |
Income before income taxes | (1,457) | 861 |
Income tax (benefit) provision | (465) | 115 |
Net income | $ (992) | $ 746 |
Net income per common share: | ||
Basic (in dollars per share) | $ (0.13) | $ 0.10 |
Diluted (in dollars per share) | $ (0.13) | $ 0.10 |
Shares used in per-share calculation: | ||
Basic (in shares) | 7,507 | 7,461 |
Diluted (in shares) | 7,507 | 7,619 |
Dividends declared and paid per common share (in dollars per share) | $ 0 | $ 0 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract] | ||
Net income | $ (992) | $ 746 |
Foreign currency translation adjustment, net of tax | 71 | 9 |
Comprehensive income | $ (921) | $ 755 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net income | $ (992) | $ 746 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Share-based compensation expense | 187 | 173 |
Depreciation and amortization | 238 | 252 |
Deferred income tax (benefit) provision | (518) | (35) |
Foreign currency transaction losses | 194 | (66) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 106 | 1,210 |
Inventories | (573) | (1,484) |
Prepaid income taxes | 51 | 147 |
Other current and long term assets | (266) | (437) |
Accounts payable | (1,243) | (1,254) |
Accrued liabilities and other liabilities | (755) | (806) |
Net cash provided by operating activities | (3,571) | (1,554) |
Cash flows from investing activities: | ||
Capital expenditures | (328) | (298) |
Additions to capitalized software | 0 | (4) |
Issuance of note receivable | (600) | 0 |
Net cash used in investing activities | (928) | (302) |
Cash flows from financing activities: | ||
Revolving credit line borrowings | 1,000 | 0 |
Revolving credit line payments | (206) | 0 |
Payment of dividends on common stock | 0 | (668) |
Proceeds from stock option exercises | 353 | 0 |
Payments of Loan Costs | (201) | 0 |
Withholding taxes paid on stock issuances | (41) | (199) |
Net cash used in financing activities | 905 | (867) |
Effect of exchange rate changes on cash and cash equivalents | 6 | (24) |
(Decrease) increase in cash and cash equivalents | (3,588) | (2,747) |
Cash and cash equivalents, beginning of period | 4,203 | 4,691 |
Cash and cash equivalents, end of period | 615 | 1,944 |
Supplemental schedule of non-cash investing activities: | ||
Non-cash capital expenditure items | $ 38 | $ 59 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive Income [Member] | Total |
Beginning balance at Dec. 31, 2018 | $ 115 | $ 32,129 | $ 27,515 | $ (82) | $ 27,567 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Share-based compensation expense | 173 | |||||
Issuance of shares from exercise of stock options | 0 | 0 | ||||
Relinquishment of stock options and deferred stock units to pay withholding taxes | (199) | |||||
Net income | 746 | 746 | ||||
Dividends declared and paid on common stock | (668) | |||||
Foreign currency translation adjustment, net of tax | 9 | 9 | ||||
Ending balance at Mar. 31, 2019 | 32,103 | 27,593 | $ (32,110) | (73) | $ 27,628 | |
Supplemental share information | ||||||
Issuance of shares from stock awards (in shares) | 56,998 | |||||
Relinquishment of stock awards to pay withholding taxes (in shares) | 19,637 | |||||
Dividends declared and paid per common share (in dollars per share) | $ 0 | |||||
Beginning balance at Dec. 31, 2019 | 115 | 32,604 | 25,348 | (31) | $ 25,926 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Share-based compensation expense | 187 | |||||
Issuance of shares from exercise of stock options | 353 | 1 | ||||
Relinquishment of stock options and deferred stock units to pay withholding taxes | (41) | |||||
Net income | (992) | (992) | ||||
Dividends declared and paid on common stock | 0 | |||||
Foreign currency translation adjustment, net of tax | 71 | 71 | ||||
Ending balance at Mar. 31, 2020 | $ 116 | $ 33,103 | $ 24,356 | $ (32,110) | $ 40 | $ 25,505 |
Supplemental share information | ||||||
Issuance of shares from stock awards (in shares) | 82,525 | |||||
Relinquishment of stock awards to pay withholding taxes (in shares) | 14,088 | |||||
Dividends declared and paid per common share (in dollars per share) | $ 0 |
Basis of presentation
Basis of presentation | 3 Months Ended |
Mar. 31, 2020 | |
Basis of presentation [Abstract] | |
Basis of presentation | 1. Basis of presentation The accompanying unaudited financial statements of TransAct Technologies Incorporated (“TransAct”, the “Company”, “we”, “us”, or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP to be included in full year financial statements. In the opinion of management, all adjustments considered necessary for a fair statement of the results for the periods presented have been included and are of a normal recurring nature. The December 31, 2019 Condensed Consolidated Balance Sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. These interim financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2019 included in our Annual Report on Form 10-K for the full year ended December 31, 2019. The financial position and results of operations of our U.K. subsidiary are measured using local currency as the functional currency. Assets and liabilities of such subsidiary have been translated at the end of period exchange rates, and related revenues and expenses have been translated at the exchange rate as of the date the transaction was recognized, with the resulting translation gain or loss recorded in “Accumulated other comprehensive income (loss), net of tax”, in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Changes in Shareholders’ Equity. Transaction gains and losses are included in “Other, net” in the Condensed Consolidated Statements of Operations. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the full year. COVID-19 The unprecedented and rapid spread of a novel strain of coronavirus, commonly known as COVID-19, and the measures implemented to mitigate its spread have caused widespread business, government and school closures that have particularly affected the food service and casinos and gaming industries. Such disruptions have also negatively impacted our business. As a result of the COVID-19 pandemic and the protective measures instituted to contain its spread, we have experienced decreased customer demand, lower than anticipated sales in the second half of March 2020 and supply chain disruptions, including delayed product shipments from our two contract manufacturers located in China and Thailand. We are monitoring indicators of demand recovery, including our sales pipeline, customer orders and product shipments to ascertain an estimate of the full-year impact; however, the length and severity of the reduction in demand due to the pandemic is uncertain. We assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to us and the unknown future impacts COVID-19 as of March 31, 2020 and through the date of this report. The accounting matters assessed included, but were not limited to, our allowance for doubtful accounts, inventory obsolescence, stock based compensation, the value of our goodwill and other long-lived assets, financial assets, valuation allowances for tax assets and revenue recognition. While there was not a material impact to our consolidated financial statements as of and for the quarter ended March 31, 2020, resulting from our assessments, our future assessment of our current expectations at that time of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to our consolidated financial statements in future reporting periods. Our expense management and liquidity measures described below may be modified as we obtain additional clarity on the timing of customer demand recovery. Given the unpredictability of the future operations of our customers, as well as of any economic or business recovery, we have implemented certain measures to mitigate the impact of the pandemic on our financial position and operations. These measures include, but are not limited to, the following: Expense Management. With the reduction in net sales, we have implemented, and expect to continue to implement to the extent necessary or advisable cost saving initiatives including: • the temporary furlough of approximately 10% of our workforce prior to receiving PPP loan proceeds; • a 10% reduction in the salaries of all salaried, non-commissioned employees, including executive officers, • a reduction in sales commissions for all commissioned employees; • a 10% reduction of cash retainer fees for all non-employee director; and • the elimination of discretionary spending wherever possible. Balance Sheet, Cash Flow and Liquidity. In addition to the expense management actions noted above, we have taken the following actions to increase liquidity and strengthen our financial position: • PPP Loan - On May 1, 2020, the Company was granted a $2.2 million loan under the Paycheck Protection Program (the “PPP Loan”) administered by the United States Small Business Administration (“SBA”) established under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, which has enabled us to return our furloughed employees to full time employment. • New Credit Facility - We also secured a new revolving credit facility with Siena Lending Group LLC that provides a revolving credit line of up to $10 million, subject to a borrowing base; and • Reduced Capital Expenditures - We also have limited capital expenditures until market conditions improve. After reviewing whether conditions and/or events raise substantial doubt about our ability to meet future financial obligations over the next twelve months, including consideration of our recent actions in response to the pandemic and the assumptions discussed below, we have concluded our net cash provided by operations combined with our cash and cash equivalents and borrowing availability under our revolving credit facility and the PPP Loan and savings from the cost reduction actions described below will provide sufficient liquidity to fund our current obligations, capital spending, and working capital requirements. We expect to comply with our credit facility’s minimum EBITDA financial covenant over at least the next twelve months. Our conclusion regarding the ability of the Company to fund planned operations is based on assumptions which involve significant judgment and estimates of future revenues, capital spend and other operating costs. Our current assumptions are that casinos and restaurants will reopen, although in a limited capacity, during the second quarter of 2020 in our primary market areas but we anticipate that demand for our casino and gaming printers, as well as, POS printers and BOHA! products will remain low due to a decline in capital expenditures likely to result from months of ceased or reduced operations. If we experience a slower than expected recovery, we believe we can take additional financial and operational actions to mitigate the impact of lower sales than our current plans assume. These actions include additional expense reductions, capital raising activities including utilization of opportunities provided under the CARES Act. Valuation of Goodwill, Indefinite-Lived Intangible Assets and Long-Lived Assets We perform a fair value-based impairment test to the carrying value of goodwill and indefinite-lived intangible assets on an annual basis (as of December 31) and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. Our fourth quarter 2019 quantitative impairment tests of goodwill and indefinite-lived intangible assets indicated that there was no indication of impairment as the fair value exceeded our carrying value. During the three months ended March 31, 2020, our stock price declined to the lowest price since 2009. We determined that the significant decline in our market capitalization and broader economic downturn arising from the COVID-19 pandemic Therefore, we concluded that quantitative analyses were required to be performed due to the triggering event occurring during the quarter. We view our operations and manage our business as one operating unit . We utilized an implied market value method under the market approach to calculate the fair value of the Company as of March 31, 2020, which we determined was the best approximation of fair value in the current social and economic environment. Based on our interim impairment assessment as of March 31, 2020, we have determined that no goodwill or intangible asset impairment has occurred and the fair value of goodwill exceeded our carrying value. We may be subject to impairments in the future depending on how long the economic and social conditions resulting from COVID-19 exist and its future impact on the broader economy. |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2020 | |
Revenue [Abstract] | |
Revenue | 2. Revenue We account for revenue in accordance with ASC Topic 606: Revenue from Contracts with Customers. Disaggregation of revenue The following table disaggregates our revenue by market-type, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Sales and usage-based taxes are excluded from revenues. Three Months Ended Three Months Ended March 31, 2020 March 31, 2019 (In thousands) United States International Total United States International Total Food service technology $ 1,239 $ 132 $ 1,371 $ 1,117 $ 96 $ 1,213 POS automation and banking 1,554 4 1,558 1,259 18 1,277 Casino and gaming 2,558 2,373 4,931 3,424 2,059 5,483 Lottery – – – 697 – 697 Printrex 61 56 117 297 45 342 Transact Services Group 2,003 267 2,270 2,213 325 2,538 Total net sales $ 7,415 $ 2,832 $ 10,247 $ 9,007 $ 2,543 $ 11,550 Contract balances Our contract liabilities consist of customer pre-payments and deferred revenue. Customer prepayments are reported as “Accrued Liabilities” in current liabilities in the Condensed Consolidated Balance Sheets and represent customer payments made in advance of performance obligations in instances where credit has not been extended and are recognized as revenue when the performance obligation is complete. Deferred revenue is reported separately in current liabilities and non-current liabilities and consists of our extended warranty contracts, technical support for our food service technology terminals, EPICENTRAL™ maintenance contracts and testing service contracts and prepaid software subscriptions for our BOHA! software applications, and is recognized as revenue as (or when) we perform under the contract. We do not have any contract asset balances as of March 31, 2020 or December 31, 2019. For the first three months of 2020, we recognized revenue of $406 thousand related to our contract liabilities at December 31, 2019. Total contract liabilities consist of the following: March 31, 2020 December 31, 2019 (In thousands) Customer pre-payments $ 82 $ 232 Deferred revenue, current 643 700 Deferred revenue, non-current 183 219 Total contract liabilities $ 908 $ 1,151 Remaining performance obligations Remaining performance obligations represent the transaction price of firm orders for which a good or service has not been delivered to our customer. As of March 31, 2020, the aggregate amount of transaction prices allocated to remaining performance obligations was $4.4 million. The Company expects to recognize revenue on $4.2 million of its remaining performance obligations within the next 12 months, $0.1 million within the next 24 months and the balance of these remaining performance obligations within the next 36 months. |
Inventories, net
Inventories, net | 3 Months Ended |
Mar. 31, 2020 | |
Inventories, net [Abstract] | |
Inventories, net | 4. Inventories, net The components of inventories, net were: March 31, 2020 December 31, 2019 (In thousands) Raw materials and purchased component parts $ 9,071 $ 7,724 Work-in-process 7 – Finished goods 3,508 4,375 $ 12,586 $ 12,099 |
Accrued product warranty liabil
Accrued product warranty liability | 3 Months Ended |
Mar. 31, 2020 | |
Accrued product warranty liability [Abstract] | |
Accrued product warranty liability | 5. Accrued product warranty liability We generally provide warranties on our products for up to 24 months and record the estimated cost of such product warranties at the time the sale is recorded. Estimated warranty costs are based upon actual past experience of product repairs and the related estimated cost of labor and material to make the necessary repairs. The following table summarizes the activity recorded in the accrued product warranty liability during the three months ended March 31, 2020 and 2019: Three Months Ended March 31, 2020 2019 (In thousands) Balance, beginning of period $ 215 $ 273 Warranties issued 45 40 Warranty settlements (47 ) (60 ) Balance, end of period $ 213 $ 253 As of March 31, 2020, $171 thousand of the accrued product warranty liability was classified as current in "Accrued liabilities" in the Condensed Consolidated Balance Sheets and the remaining $42 thousand was classified as non-current in "Other liabilities". |
Earnings per share
Earnings per share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings per share [Abstract] | |
Earnings per share | 7. Earnings per share The following table sets forth the reconciliation of basic weighted average shares outstanding and diluted weighted average shares outstanding: Three Months Ended March 31, 2020 2019 (In thousands, except per share data) Net income (loss) $ (992 ) $ 746 Shares: Basic: Weighted average common shares outstanding 7,507 7,461 Add: Dilutive effect of outstanding options and restricted stock units as determined by the treasury stock method – 158 Diluted: Weighted average common and common equivalent shares outstanding 7,507 7,619 Net income (loss) per common share: Basic $ (0.13 ) $ 0.10 Diluted $ (0.13 ) $ 0.10 The computation of diluted earnings per share excludes the effect of the potential exercise of stock awards, including stock options and restricted stock units, when the average market price of the common stock is lower than the exercise price of the related stock award during the period, as the inclusion of these stock awards in the computation of diluted earnings would be anti-dilutive. For the three months ended March 31, 2020 and 2019, there were 708 thousand and 540 thousand, respectively, of potentially dilutive shares consisting of stock awards that were excluded from the calculation of earnings per diluted share. |
Shareholders' equity
Shareholders' equity | 3 Months Ended |
Mar. 31, 2020 | |
Shareholders' equity [Abstract] | |
Shareholders' equity | 8. Shareholders’ equity For the three months ended March 31, 2019, dividends declared and paid totaled $668 thousand, or $0.09 per share. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Leases | 9. Leases We account for leases in accordance with ASC Topic 842: Leases. We enter into lease agreements for the use of real estate space and certain other Our right of use asset and lease liability was higher on March 31, 2020 compared to December 31, 2019, million, respectively due to the extension of one of our leases. On February 28, 2020, we entered into an amendment to extend the lease on our facility in Ithaca, New York which resulted in recording an additional right of use asset and lease liability of $1.5 million. The lease, which was last amended on January 14, 2016, was scheduled to expire on May 31, 2021. The lease amendment provides for an extension of the lease for four additional years from June 1, 2021 to May 31, 2025. Operating lease expense for the three months ending March 31, 2020 and December 31, 2019 was $251 thousand and $237 thousand, respectively, and was included within Cost of sales, Engineering, design and product development expense, Selling and marketing expense, and General and administrative expense. Operating costs include short-term lease costs which were immaterial during the period. The following information represents supplemental disclosure for the statement of cash flows related to operating leases (in thousands): Three Months Ended March 31, 2020 2019 Operating cash outflows from leases $ 259 $ 257 The following summarizes additional information related to our leases as of March 31, 2020 and December 31, 2019: March 31, 2020 December 31, 2019 Weighted average remaining lease term (in years) 5.6 5.0 Weighted average discount rate 4.1 % 3.7 % March 31, 2020 December 31, 2019 2020 $ 780 $ 1,042 2021 967 711 2022 875 434 2023 709 268 2024 714 273 Thereafter 797 616 Total undiscounted lease payments 4,842 3,344 Less imputed interest 506 295 Total lease liabilities $ 4,336 $ 3,049 |
Income taxes
Income taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income taxes [Abstract] | |
Income taxes | 10. Income taxes We recorded an income tax benefit for the first quarter of 2020 of $465 thousand at an effective tax rate of 31.9%, compared to an income tax provision during the first quarter of 2019 of $115 thousand at an effective tax rate of 13.4%. The effective tax rate for the first quarter of 2020 was higher as it included the impact of our anticipated net operating loss (“NOL”) that we expect to incur during 2020 and to carry back to prior years, which was recorded discretely. The CARES Act was enacted on March 27, 2020 and permits NOLs incurred in 2018, 2019 and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. We expect to generate a NOL in 2020 which we will carry back to tax years that had a federal statutory tax rate of 34% compared to 21% in 2020. We are subject to U.S. federal income tax, as well as income tax in certain U.S. state and foreign jurisdictions. We have substantially concluded all U.S. federal, state and local income tax, and foreign tax regulatory examination matters through 2015. However, our federal tax returns for the years 2016 through 2018 remain open to examination. Various U.S. state and foreign tax jurisdiction tax years remain open to examination as well, but we believe that any additional assessment would be immaterial to the Condensed Consolidated Financial Statements. As of March 31, 2020, we had $107 thousand of total gross unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in any future periods. We expect that $27 thousand of the $107 thousand of unrecognized tax benefits will reverse in 2020 upon the expiration of the statute of limitations. We recognize interest and penalties related to uncertain tax positions in the income tax provision reported as "Deferred tax assets" in the Condensed Consolidated Balance Sheet. As of March 31, 2020, we had $21 thousand of accrued interest and penalties related to uncertain tax positions. The Company maintains a valuation allowance against certain deferred tax assets where realization is not certain. |
Basis of presentation (Policies
Basis of presentation (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Basis of presentation [Abstract] | |
Basis of accounting | The accompanying unaudited financial statements of TransAct Technologies Incorporated (“TransAct”, the “Company”, “we”, “us”, or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP to be included in full year financial statements. In the opinion of management, all adjustments considered necessary for a fair statement of the results for the periods presented have been included and are of a normal recurring nature. The December 31, 2019 Condensed Consolidated Balance Sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. These interim financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2019 included in our Annual Report on Form 10-K for the full year ended December 31, 2019. |
Foreign currency translation | The financial position and results of operations of our U.K. subsidiary are measured using local currency as the functional currency. Assets and liabilities of such subsidiary have been translated at the end of period exchange rates, and related revenues and expenses have been translated at the exchange rate as of the date the transaction was recognized, with the resulting translation gain or loss recorded in “Accumulated other comprehensive income (loss), net of tax”, in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Changes in Shareholders’ Equity. Transaction gains and losses are included in “Other, net” in the Condensed Consolidated Statements of Operations. |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue [Abstract] | |
Disaggregation of revenue | Disaggregation of revenue The following table disaggregates our revenue by market-type, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Sales and usage-based taxes are excluded from revenues. Three Months Ended Three Months Ended March 31, 2020 March 31, 2019 (In thousands) United States International Total United States International Total Food service technology $ 1,239 $ 132 $ 1,371 $ 1,117 $ 96 $ 1,213 POS automation and banking 1,554 4 1,558 1,259 18 1,277 Casino and gaming 2,558 2,373 4,931 3,424 2,059 5,483 Lottery – – – 697 – 697 Printrex 61 56 117 297 45 342 Transact Services Group 2,003 267 2,270 2,213 325 2,538 Total net sales $ 7,415 $ 2,832 $ 10,247 $ 9,007 $ 2,543 $ 11,550 |
Contract liabilities | Contract balances Our contract liabilities consist of customer pre-payments and deferred revenue. Customer prepayments are reported as “Accrued Liabilities” in current liabilities in the Condensed Consolidated Balance Sheets and represent customer payments made in advance of performance obligations in instances where credit has not been extended and are recognized as revenue when the performance obligation is complete. Deferred revenue is reported separately in current liabilities and non-current liabilities and consists of our extended warranty contracts, technical support for our food service technology terminals, EPICENTRAL™ maintenance contracts and testing service contracts and prepaid software subscriptions for our BOHA! software applications, and is recognized as revenue as (or when) we perform under the contract. We do not have any contract asset balances as of March 31, 2020 or December 31, 2019. For the first three months of 2020, we recognized revenue of $406 thousand related to our contract liabilities at December 31, 2019. Total contract liabilities consist of the following: March 31, 2020 December 31, 2019 (In thousands) Customer pre-payments $ 82 $ 232 Deferred revenue, current 643 700 Deferred revenue, non-current 183 219 Total contract liabilities $ 908 $ 1,151 |
Inventories, net (Tables)
Inventories, net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventories, net [Abstract] | |
Inventories, net | The components of inventories, net were: March 31, 2020 December 31, 2019 (In thousands) Raw materials and purchased component parts $ 9,071 $ 7,724 Work-in-process 7 – Finished goods 3,508 4,375 $ 12,586 $ 12,099 |
Accrued product warranty liab_2
Accrued product warranty liability (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accrued product warranty liability [Abstract] | |
Product warranty liability | The following table summarizes the activity recorded in the accrued product warranty liability during the three months ended March 31, 2020 and 2019: Three Months Ended March 31, 2020 2019 (In thousands) Balance, beginning of period $ 215 $ 273 Warranties issued 45 40 Warranty settlements (47 ) (60 ) Balance, end of period $ 213 $ 253 |
Earnings per share (Tables)
Earnings per share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings per share [Abstract] | |
Earnings per share | The following table sets forth the reconciliation of basic weighted average shares outstanding and diluted weighted average shares outstanding: Three Months Ended March 31, 2020 2019 (In thousands, except per share data) Net income (loss) $ (992 ) $ 746 Shares: Basic: Weighted average common shares outstanding 7,507 7,461 Add: Dilutive effect of outstanding options and restricted stock units as determined by the treasury stock method – 158 Diluted: Weighted average common and common equivalent shares outstanding 7,507 7,619 Net income (loss) per common share: Basic $ (0.13 ) $ 0.10 Diluted $ (0.13 ) $ 0.10 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Cash flows for operating leases | The following information represents supplemental disclosure for the statement of cash flows related to operating leases (in thousands): Three Months Ended March 31, 2020 2019 Operating cash outflows from leases $ 259 $ 257 |
Operating lease weighted average remaining lease term and discount rate | The following summarizes additional information related to our leases as of March 31, 2020 and December 31, 2019: March 31, 2020 December 31, 2019 Weighted average remaining lease term (in years) 5.6 5.0 Weighted average discount rate 4.1 % 3.7 % |
Maturity of operating lease liabilities | March 31, 2020 December 31, 2019 2020 $ 780 $ 1,042 2021 967 711 2022 875 434 2023 709 268 2024 714 273 Thereafter 797 616 Total undiscounted lease payments 4,842 3,344 Less imputed interest 506 295 Total lease liabilities $ 4,336 $ 3,049 |
Revenue, Disaggregation of Reve
Revenue, Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2020 | Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Sep. 30, 2018 | |
Disaggregation of revenue [Abstract] | |||||
Total net sales | $ 10,247 | $ 10,247 | $ 11,550 | $ 11,550 | $ 11,550 |
United States [Member] | |||||
Disaggregation of revenue [Abstract] | |||||
Total net sales | 7,415 | 7,415 | 9,007 | 9,007 | |
International [Member] | |||||
Disaggregation of revenue [Abstract] | |||||
Total net sales | 2,832 | 2,832 | 2,543 | 2,543 | |
Restaurant Solutions [Member] | |||||
Disaggregation of revenue [Abstract] | |||||
Total net sales | 1,371 | 1,371 | 1,213 | 1,213 | |
Restaurant Solutions [Member] | United States [Member] | |||||
Disaggregation of revenue [Abstract] | |||||
Total net sales | 1,239 | 1,239 | 1,117 | 1,117 | |
Restaurant Solutions [Member] | International [Member] | |||||
Disaggregation of revenue [Abstract] | |||||
Total net sales | 132 | 132 | 96 | 96 | |
POS Automation and Banking [Member] | |||||
Disaggregation of revenue [Abstract] | |||||
Total net sales | 1,558 | 1,558 | 1,277 | 1,277 | |
POS Automation and Banking [Member] | United States [Member] | |||||
Disaggregation of revenue [Abstract] | |||||
Total net sales | 1,554 | 1,554 | 1,259 | 1,259 | |
POS Automation and Banking [Member] | International [Member] | |||||
Disaggregation of revenue [Abstract] | |||||
Total net sales | 4 | 4 | 18 | 18 | |
Casino and Gaming [Member] | |||||
Disaggregation of revenue [Abstract] | |||||
Total net sales | 4,931 | 4,931 | 5,483 | 5,483 | |
Casino and Gaming [Member] | United States [Member] | |||||
Disaggregation of revenue [Abstract] | |||||
Total net sales | 2,558 | 2,558 | 3,424 | 3,424 | |
Casino and Gaming [Member] | International [Member] | |||||
Disaggregation of revenue [Abstract] | |||||
Total net sales | 2,373 | 2,373 | 2,059 | 2,059 | |
Lottery [Member] | |||||
Disaggregation of revenue [Abstract] | |||||
Total net sales | 0 | 0 | 697 | 697 | |
Lottery [Member] | United States [Member] | |||||
Disaggregation of revenue [Abstract] | |||||
Total net sales | 0 | 0 | 697 | 697 | |
Lottery [Member] | International [Member] | |||||
Disaggregation of revenue [Abstract] | |||||
Total net sales | 0 | 0 | 0 | 0 | |
Printrex [Member] | |||||
Disaggregation of revenue [Abstract] | |||||
Total net sales | 117 | 117 | 342 | 342 | |
Printrex [Member] | United States [Member] | |||||
Disaggregation of revenue [Abstract] | |||||
Total net sales | 61 | 61 | 297 | 297 | |
Printrex [Member] | International [Member] | |||||
Disaggregation of revenue [Abstract] | |||||
Total net sales | 56 | 56 | 45 | 45 | |
TransAct Services Group [Member] | |||||
Disaggregation of revenue [Abstract] | |||||
Total net sales | 2,270 | 2,270 | 2,538 | 2,538 | |
TransAct Services Group [Member] | United States [Member] | |||||
Disaggregation of revenue [Abstract] | |||||
Total net sales | 2,003 | 2,003 | 2,213 | 2,213 | |
TransAct Services Group [Member] | International [Member] | |||||
Disaggregation of revenue [Abstract] | |||||
Total net sales | $ 267 | $ 267 | $ 325 | $ 325 |
Revenue, Contract Balances (Det
Revenue, Contract Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Revenue [Abstract] | ||
Revenue recognized | $ 406 | |
Contract liabilities [Abstract] | ||
Customer pre-payments | 82 | $ 232 |
Deferred revenue, current | 643 | 700 |
Deferred revenue, non-current | 183 | 219 |
Total contract liabilities | $ 908 | $ 1,151 |
Revenue, Remaining Performance
Revenue, Remaining Performance Obligations (Details) $ in Millions | Mar. 31, 2020USD ($) |
Remaining performance obligations [Abstract] | |
Remaining performance obligations | $ 4.4 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-10-01 | |
Remaining performance obligations [Abstract] | |
Remaining performance obligations | $ 4.2 |
Expected timing of satisfaction, period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01 | |
Remaining performance obligations [Abstract] | |
Remaining performance obligations | $ 0.1 |
Expected timing of satisfaction, period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-10-01 | |
Remaining performance obligations [Abstract] | |
Remaining performance obligations | |
Expected timing of satisfaction, period | 12 months |
Inventories, net (Details)
Inventories, net (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Inventories, net [Abstract] | ||
Raw materials and purchased component parts | $ 9,071 | $ 7,724 |
Work-in-process | 7 | 0 |
Finished goods | 3,508 | 4,375 |
Inventories, net | $ 12,586 | $ 12,099 |
Accrued product warranty liab_3
Accrued product warranty liability (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Accrued product warranty liability [Roll Forward] | ||
Balance, beginning of period | $ 215 | $ 273 |
Warranties issued | 45 | 40 |
Warranty settlements | (47) | (60) |
Balance, end of period | 213 | $ 253 |
Accrued product warranty liability, current | 171 | |
Accrued product warranty liability, non-current | $ 42 | |
Maximum [Member] | ||
Warranty [Abstract] | ||
Product warranty period | 24 months |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Earnings per share [Abstract] | ||
Net income | $ (992) | $ 746 |
Shares [Abstract] | ||
Basic: Weighted average common shares outstanding (in shares) | 7,507 | 7,461 |
Add: Dilutive effect of outstanding options and restricted stock units as determined by the treasury stock method (in shares) | 0 | 158 |
Diluted: Weighted average common and common equivalent shares outstanding (in shares) | 7,507 | 7,619 |
Net income per common share [Abstract] | ||
Basic (in dollars per share) | $ (0.13) | $ 0.10 |
Diluted (in dollars per share) | $ (0.13) | $ 0.10 |
Stock Awards [Member] | ||
Earnings per share [Abstract] | ||
Anti-dilutive securities excluded from computation of earnings per dilutive share (in shares) | 708 | 540 |
Shareholders' equity (Details)
Shareholders' equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Dividends [Abstract] | |||||
Dividends declared and paid per common share (in dollars per share) | $ 0 | $ 0 | $ 0.09 | $ 0 | $ 0.09 |
Payment of dividend on common stock | $ 0 | $ 668 | |||
Dividends, date paid | Sep. 16, 2019 | ||||
Dividends, date of record | Aug. 20, 2019 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Leases [Abstract] | |||
Right-of-use asset | $ 4,159 | $ 2,855 | |
Lease liability | 3,456 | $ 2,104 | |
Leases [Abstract] | |||
Operating lease expense | 251 | $ 237 | |
Cash Flows Related to Operating Leases [Abstract] | |||
Operating cash flows from leases | $ 259 | $ 257 | |
Operating Lease Weighted Average Remaining Lease Term and Discount Rate [Abstract] | |||
Weighted average remaining lease term | 5 years 7 months 6 days | 5 years | |
Weighted average discount rate | 4.10% | 3.70% | |
Maturity of Operating Lease Liabilities [Abstract] | |||
2019 | $ 780 | $ 1,042 | |
2020 | 967 | 711 | |
2021 | 875 | 434 | |
2022 | 709 | 268 | |
2023 | 714 | 273 | |
Thereafter | 797 | 616 | |
Total undiscounted lease payments | 4,842 | 3,344 | |
Less imputed interest | 506 | 295 | |
Total lease liabilities | $ 4,336 | $ 3,049 | |
Minimum [Member] | |||
Leases [Abstract] | |||
Remaining lease terms | 1 year | ||
Maximum [Member] | |||
Leases [Abstract] | |||
Remaining lease terms | 7 years | ||
Extension period for leases | 5 years | ||
Termination period for leases | 1 year |
Income taxes (Details)
Income taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2017 | |
Income taxes [Abstract] | |||
Income tax provision | $ (465) | $ 115 | |
Effective tax rate | 31.90% | 13.40% | |
Unrecognized tax benefits that would favorably affect effective income tax rate if recognized | $ 107 | ||
Unrecognized tax benefits that will lapse upon expiration of statute of limitations | 27 | ||
Accrued interest and penalties related to uncertain tax positions | $ 21 | ||
U.S. corporate income tax rate | 34.00% | ||
Maximum [Member] | |||
Income taxes [Abstract] | |||
U.S. corporate income tax rate | 35.00% |