[TRANSACT TECHNOLOGIES INCORPORATED LOGO]
TRANSACT TECHNOLOGIES REPORTS
THIRD QUARTER 2004 RESULTS
Raises Full Year EPS Guidance
-----------------------------
o Third quarter 2004 net revenue increased to $15.5 million
o Gross margin improved to 38% from 32% in the prior year period
o Operating margin increased to 16% from 13% in the prior year period
o EPS increased 50% over the prior year period to $0.15 per diluted share
o Full year 2004 EPS guidance raised to $0.54 to $0.56 per diluted share
Wallingford, CT, October 28, 2004 - TransAct Technologies Incorporated (Nasdaq:
TACT), a leading producer of transaction-based printers for customers worldwide,
today announced financial results for the third quarter ended September 30,
2004.
Net revenue for the third quarter ended September 30, 2004 increased 3% to $15.5
million, from $15.0 million in the same period a year ago. Net income in the
third quarter of 2004 increased 43% to $1.6 million, or $0.15 per diluted share,
compared to $1.1 million, or $0.10 per diluted share, in the third quarter of
2003. The per share data in the third quarter of 2003 has been adjusted to
reflect the three-for-two stock split of the Company's common stock distributed
in April 2004.
Revenues for the nine months ended September 30, 2004 increased 21% to $45.3
million, compared to $37.4 million in the same period a year ago. The Company
achieved net income for the first nine months of 2004 of $4.4 million compared
to net income of $1.7 million in the comparable year ago period. Earnings per
share for the first nine months of 2004 were $0.41 per diluted share compared to
$0.15 per diluted share a year ago. The per share data in both periods reflect
the three-for-two stock split of the Company's common stock distributed in April
2004. The per share amounts for both the third quarter and the nine months ended
September 30, 2003 have been revised from previously reported per share amounts
as a result of the application of new accounting guidance requiring the
allocation of net income to both common and participating preferred stock for
purposes of computing earnings per common share.
Bart C. Shuldman, Chairman, President and Chief Executive Officer of TransAct
Technologies, said, "We achieved another great quarter led by continued revenue
growth and significantly improved profitability. Sales in our gaming and lottery
market were led by a 50% increase in thermal casino printer sales over the
previous year, as demand for our casino thermal printers continues to grow. I'm
pleased with the significant sales increase we experienced in our domestic
gaming market, and also excited by the both the momentum and growth in sales
from our international gaming market. And finally, as we previously disclosed,
sales in the lottery portion of our gaming and lottery market was impacted by
the expected order shift by GTECH from the second and third quarters of 2004
into the fourth quarter of 2004 and the first quarter of 2005."
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Mr. Shuldman continued, "I am encouraged that sales in the POS portion of the
POS and banking market increased in the quarter, led by sales of our new
iTherm(R) 280 thermal printer. Customers continue to adopt this printer due to
its technical and cost benefits. Overall sales in our POS and banking market
declined slightly compared to last year, primarily due to the expected
completion of almost all shipments of BANKjet(R) printers to two major financial
services companies to upgrade bank teller stations. And finally, I am also
pleased that we experienced growth in every part of our lucrative TransAct
Services Group; as services, spare parts and consumables all delivered growth
over the prior year."
Steven A. DeMartino, Executive Vice President and Chief Financial Officer of
TransAct Technologies, commented, "The operating leverage we have worked so hard
to achieve continues to lead to improved profitability. In the third quarter, we
achieved a 50% increase in earnings per share on revenues that were 3% higher
than the prior year. Importantly, our operating margin grew to 16%, reaching our
near-term goal of 16% to 18%. Finally, we further strengthened our balance
sheet, with our cash balance increasing to over $6 million at September 30,
2004. Reflecting our improved financial strength, in September we announced that
our common stock moved back onto the NASDAQ National Market from the NASDAQ
Small Cap Market. We believe this move will help increase TransAct's liquidity
for shareholders, and help introduce TransAct to an even broader base of
institutional and retail investors."
Looking Forward
Shuldman commented, "We continue to gain momentum in our business as evidenced
by our strong results. One of the primary reasons for our success has been our
continued innovation. For example, at the recent Global Gaming Expo (G2E), we
introduced our new Epic 950(TM) thermal gaming printer, which offers a host of
new features and benefits to deliver unprecedented advancements in casino
printing capabilities. The response from customers has been very positive. We
also announced this afternoon a new business structure to maximize growth
opportunities in our core markets. We are seeing more opportunities than ever
before and it made sense to now implement the new structure. With dedicated
sales teams in each market, our new structure will allow us to further
accelerate our growth as we address the many opportunities in front of us."
"Based on the momentum in our business, we are raising earnings per share
guidance for the full year 2004 to $0.54 to $0.56 per diluted share, up from our
previous guidance of $0.53 to $0.55 per diluted share, on revenues of
approximately $62 million to $63 million. Even though we are increasing our EPS
guidance for the year, we expect to incur higher operating expenses in the
fourth quarter of 2004 compared to the third quarter of 2004, due to an increase
in professional expenses as we complete our compliance effort related to Section
404 of Sarbanes-Oxley. In addition, our projection for the fourth quarter
includes recruiting expenses related to the anticipated hire of additional sales
staff. We expect to make these strategic hires in order to further accelerate
TransAct's revenue and profit growth given the vast sales opportunities across
all our markets."
Investor Conference Call / Webcast Details
TransAct will review detailed third quarter 2004 results and forward guidance on
Thursday, October 28 at 5PM EDT. The conference call-in number is 973-935-2100.
A replay will be available from 8PM EDT on October 28 through 12AM EDT, November
4. The replay number is 973-341-3080. The confirmation number is 5260180.
Investors can access the conference call via a live webcast on the Company's
website at www.transact-tech.com. A replay of the call will be archived on that
website for one week.
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About TransAct Technologies Incorporated
TransAct (Nasdaq: TACT) designs, develops, manufactures and markets
transaction-based printers under the ITHACA(R) and MAGNETEC(R) names. In
addition, the Company markets related consumables, spare parts and service. The
Company's printers are used worldwide to provide receipts, tickets, coupons,
register journals and other documents. TransAct focuses on two core markets:
point-of-sale (POS) and banking, and gaming and lottery. TransAct sells its
products to original equipment manufacturers, value-added resellers and selected
distributors, as well as directly to end-users. The Company's product
distribution spans across the Americas, Europe, the Middle East, Africa, the
Caribbean Islands and the South Pacific. For further information, visit
TransAct's web site located at www.transact-tech.com.
CONTACTS:
Steve DeMartino, Chief Financial Officer, 203-269-1198 Ext. 6059
or David Pasquale, 646-536-7006, or Denise Roche, 646-536-7008, both with
The Ruth Group
# # #
Forward-Looking Statements:
The Company's forward-looking statements in this press release are subject to a
number of risks and uncertainties. Risks and uncertainties include, 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 third parties
for sales outside the United States, including Australia and New Zealand;
economic and political conditions in the United States, Australia, New Zealand,
Europe and Latin America; marketplace acceptance of new products; risks
associated with foreign operations; availability of third-party components at
reasonable prices; and the absence of price wars or other significant pricing
pressures affecting the Company's products in the United States or abroad.
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.
- Tables Follow -
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TRANSACT TECHNOLOGIES INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended Nine months ended
(In thousands, except per share amounts) September 30, September 30,
-------------------- --------------------
2004 2003 2004 2003
-------- -------- -------- --------
Net sales $ 15,482 $ 15,048 $ 45,251 $ 37,438
Cost of sales 9,585 10,229 28,319 25,966
-------- -------- -------- --------
Gross profit 5,897 4,819 16,932 11,472
-------- -------- -------- --------
Operating expenses:
Engineering, design and product
development 643 550 1,805 1,657
Selling and marketing 1,254 1,194 3,834 3,502
General and administrative 1,528 1,098 4,423 3,316
-------- -------- -------- --------
3,425 2,842 10,062 8,475
-------- -------- -------- --------
Operating income 2,472 1,977 6,870 2,997
-------- -------- -------- --------
Other income (expense):
Interest, net 4 (61) (8) (183)
Write-off of deferred financing costs -- (103) -- (103)
Other, net 4 (32) 3 (58)
-------- -------- -------- --------
8 (196) (5) (344)
-------- -------- -------- --------
Income before income taxes 2,480 1,781 6,865 2,653
Income tax provision 855 641 2,433 924
-------- -------- -------- --------
Net income $ 1,625 $ 1,140 $ 4,432 $ 1,729
======== ======== ======== ========
Basic Earnings per Share
Net income $ 1,625 $ 1,140 $ 4,432 $ 1,729
Dividends and accretion on preferred stock -- (90) (111) (269)
Amount allocated to participating
preferred shareholders -- (74) (120) (105)
-------- -------- -------- --------
Income available to common shareholders $ 1,625 $ 976 $ 4,201 $ 1,355
======== ======== ======== ========
Shares used in per share calculation 9,853 8,745 9,479 8,621
Basic earnings per share - common $ 0.16 $ 0.11 $ 0.44 $ 0.16
Diluted Earnings per Share
Net income $ 1,625 $ 1,140 $ 4,432 $ 1,729
Dividends and accretion on preferred stock -- (90) (111) (269)
Amount allocated to participating
preferred shareholders -- (74) (120) (105)
-------- -------- -------- --------
Income available to common shareholders $ 1,625 $ 976 $ 4,201 $ 1,355
======== ======== ======== ========
Shares used in per share calculation 10,644 9,482 10,365 9,086
Diluted earnings per share - common $ 0.15 $ 0.10 $ 0.41 $ 0.15
SUPPLEMENTAL INFORMATION - SALES BY MARKET:
Three months ended Nine months ended
September 30, September 30,
-------------------- --------------------
2004 2003 2004 2003
-------- -------- -------- --------
Point of sale and banking $ 5,808 $ 6,053 $18,968 $15,192
Gaming and lottery 9,674 8,995 26,283 22,246
-------- -------- -------- --------
Total net sales $15,482 $15,048 $45,251 $37,438
======== ======== ======== ========
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TRANSACT TECHNOLOGIES INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
(In thousands) 2004 2003
------------- ------------
Assets:
Current assets:
Cash and cash equivalents $ 6,343 $ 498
Receivables, net 9,316 9,074
Inventories 8,545 8,061
Deferred tax assets 2,438 2,340
Other current assets 375 509
------------- ------------
Total current assets 27,017 20,482
------------- ------------
Fixed assets, net 3,239 3,607
Goodwill, net 1,469 1,469
Deferred tax assets - 684
Other assets 98 119
------------- ------------
4,806 5,879
------------- ------------
Total assets $ 31,823 $ 26,361
============= ============
Liabilities, Redeemable Convertible
Preferred Stock and Shareholders' Equity:
Current liabilities:
Current portion of term loan $ - $ 90
Accounts payable 3,680 3,288
Accrued liabilities 2,662 2,892
Accrued restructuring expenses 480 480
Accrued patent license fees 413 408
Deferred revenue 1,078 1,537
------------- ------------
Total current liabilities 8,313 8,695
------------- ------------
Long-term portion of term loan - 330
Long-term portion of accrued restructuring 1,312 1,645
Other long-term liabilities 725 1,442
------------- ------------
2,037 3,417
------------- ------------
Total liabilities 10,350 12,112
------------- ------------
Commitments and contingencies
Redeemable convertible preferred stock - 3,902
------------- ------------
Shareholders' equity:
Common stock 69 60
Additional paid-in capital 16,417 8,441
Retained earnings 6,086 1,769
Unamortized restricted stock compensation (1,206) (30)
Accumulated other comprehensive income 107 107
------------- ------------
Total shareholders' equity 21,473 10,347
------------- ------------
$ 31,823 $ 26,361
============= ============
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