[TRANSACT TECHNOLOGIES INCORPORATED LOGO]
TRANSACT TECHNOLOGIES REPORTS
FIRST QUARTER 2005 RESULTS
Wallingford, CT, May 4, 2005 - TransAct Technologies Incorporated (Nasdaq:
TACT), a leading producer of transaction-based printers for customers worldwide,
today announced financial results for the three months ended March 31, 2005.
Revenues for the first quarter of 2005 were $12.0 million, compared to $15.1
million in the same period a year ago. The Company achieved net income for the
first quarter of 2005 of $0.2 million compared to net income of $1.3 million in
the same period of 2004. Earnings per share for the three months ended March 31,
2005 were $0.02 per diluted share compared to $0.12 per diluted share a year
ago.
Bart C. Shuldman, Chairman, President and Chief Executive Officer of TransAct
Technologies, said, "First quarter results were clearly impacted by the
significant decline in slot machine sales into the domestic casino market. This
slowdown has overshadowed the general strength and performance we are
experiencing in our other markets and the important progress we are making with
the growth initiatives we set in motion earlier this year."
Mr. Shuldman continued, "Our strategy of increasing our investment into the
growth elements of our business during this slowdown is beginning to show signs
of taking hold. Helping to offset some of the weakness in the domestic casino
market was the more than tripling of our international gaming sales - a direct
result of the investment in the expansion of our sales team and worldwide
distribution network. We remain optimistic that our international gaming sales
will continue to increase, especially given the two recent international deals
we announced in April. In addition, POS sales, excluding banking, grew by more
than 50% over the same quarter of 2004. This growth was well beyond the overall
growth rate of the POS market, and was driven largely by the additions we made
to our sales team. In fact, we experienced increased sales across most of our
POS products. We are optimistic that the year-over-year growth rate in sales of
POS products we achieved in the first quarter will continue into the second
quarter. Finally, sales from our new TransAct Services Group grew by over 6% in
the first quarter of 2005 compared to the first quarter of 2004. We believe that
the growth of the TransAct Services Group will accelerate throughout the
remainder of 2005 as the additional sales staff and our new service center in
Las Vegas ramp up and gain momentum."
POS and Banking market revenues were $3.9 million in the first quarter of 2005
compared to $5.0 million in the first quarter of 2004. The sales decline was
strictly due to a decline in the project- oriented banking portion of this
business unit. Gaming and Lottery market revenues for the first quarter of 2005
were $5.5 million compared to $7.6 million in the same period of 2004. Gaming
and Lottery revenues declined in the first quarter, as the growth in both
international gaming printer sales and lottery market sales were not enough to
overcome the significant downturn in domestic casino slot machine sales that
began in December 2004. Revenues from the TransAct Services Group, which
includes spare parts, consumables and services, increased 6% to $2.6 million in
the first quarter of 2005 from $2.5 million in the year-ago period, reflecting
the Company's growing installed base of printers and increased focus on the
after-market business.
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Steven A. DeMartino, Executive Vice President and Chief Financial Officer
of TransAct Technologies, commented, "We made strategic investments in our
business as we used our solid balance sheet to position Transact for future
growth. With our new business unit structure and the additional sales and
service facilities recently opened, we are now putting the systems in place to
enable us to streamline and more cost effectively manage the increased
complexity of our business as it grows, and to deliver value to our shareholders
in the long-term. Even with these investments, we still ended the quarter with
$7.6 million in cash and cash equivalents and no debt. In addition, on March 29,
2005, we announced that our Board of Directors approved a stock repurchase
program. We are authorized to repurchase up to $10 million of the Company's
outstanding shares of common stock from time to time in the open market over the
next 3 years, depending on market conditions, share price and other factors."
LOOKING FORWARD
Mr. Shuldman said, "We expect the significant downturn in domestic casino
slot machine sales to continue at least through our second quarter. However, we
are pleased with the results of our growth initiatives and remain optimistic
about the momentum we have achieved in the POS portion of our POS and Banking
unit and sales into the international casino slot machine market, and from our
Services Group. We are also encouraged about the future of our project-oriented
banking business as we are now working on an increasing number of banking
opportunities. Once the domestic casino market rebounds, we expect revenues in
our Gaming business to increase, and we believe we will gain market share as our
organizational changes and initiatives take effect. We are now better positioned
than ever to grow our market share in this portion of the business, as IGT
recently received approval from the Nevada Gaming Control Board for our Epic
950(TM) printer, and we expect to have IGT notification for additional approvals
from other jurisdictions by the end of June 2005."
Mr. Shuldman concluded, "In the second quarter of 2005, we anticipate revenues
will be between $13 million and $14 million, and we expect net income for the
second quarter of 2005 will be in the range of $0.03 to $0.05 per diluted share.
As we experience the full-quarter effect from the strategic decisions we have
made, including the addition of sales and marketing staff and expenses
associated with the opening and expansion of our service centers, we expect to
incur higher operating expenses in the second quarter than in the first quarter
of 2005. However, some increased expenses, such as employment and recruiting
fees related to the new hires should not recur beyond the second quarter."
INVESTOR CONFERENCE CALL / WEBCAST DETAILS
TransAct will review detailed first quarter 2005 results and forward looking
guidance during a conference call today at 5:00PM EDT. The conference call-in
number is 913-981-5520. A replay of the call will be available from 8:00PM EDT
on Wednesday, May 4 through midnight EDT on Wednesday, May 11 by telephone at
719-457-0820. The password for the replay is 8804483. Investors can also 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.
ABOUT TRANSACT TECHNOLOGIES INCORPORATED
TransAct (Nasdaq: TACT) designs, develops, manufactures and markets
transaction-based printers under the ithaca(R) name. 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
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and the South Pacific. For further information, visit TransAct's web site
located at www.transact-tech.com.
FOR TRANSACT TECHNOLOGIES:
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:
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", "project" 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; 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 and Latin
America; 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.
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TRANSACT TECHNOLOGIES INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three months ended
(In thousands, except per share amounts) March 31,
---------------------
2005 2004
-------- --------
Net sales $ 12,036 $ 15,075
Cost of sales 8,359 9,657
-------- --------
Gross profit 3,677 5,418
-------- --------
Operating expenses:
Engineering, design and product
development 731 614
Selling and marketing 1,349 1,362
General and administrative 1,364 1,332
-------- --------
3,444 3,308
-------- --------
Operating income 233 2,110
-------- --------
Other income (expense):
Interest, net 20 (10)
Other, net (1) (3)
-------- --------
19 (13)
-------- --------
Income before income taxes 252 2,097
Income tax provision 89 755
-------- --------
Net income $ 163 $ 1,342
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Net income available to common
shareholders $ 163 $ 1,165
Net income per common share:
Basic $ 0.02 $ 0.13
Diluted $ 0.02 $ 0.12
Shares used in per share calculation:
Basic 10,010 8,966
Diluted 10,452 9,800
SUPPLEMENTAL INFORMATION - SALES BY BUSINESS UNIT:
Three months ended
March 31,
---------------------
2005 2004
-------- --------
Point of sale and banking $ 3,954 $ 5,006
Gaming and lottery 5,471 7,608
TransAct services group 2,611 2,461
-------- --------
Total net sales $ 12,036 $ 15,075
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TRANSACT TECHNOLOGIES INCORPORATED
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31, December 31,
(In thousands) 2005 2004
--------- ------------
ASSETS:
Current assets:
Cash and cash equivalents $ 7,596 $ 8,628
Receivables, net 9,145 8,910
Inventories 8,038 8,074
Refundable income taxes 510 510
Deferred tax assets 2,565 2,370
Other current assets 554 586
--------- ----------
Total current assets 28,408 29,078
--------- ----------
Fixed assets, net 3,666 3,177
Goodwill, net 1,469 1,469
Deferred tax assets 274 274
Other assets 91 101
--------- ----------
5,500 5,021
--------- ----------
Total assets $ 33,908 $ 34,099
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LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 2,999 $ 3,804
Accrued liabilities 3,559 3,812
Accrued restructuring 420 420
Deferred revenue 931 717
--------- ----------
Total current liabilities 7,909 8,753
--------- ----------
Accrued restructuring 925 1,034
Accrued product warranty 140 153
Deferred revenue 427 444
--------- ----------
1,492 1,631
--------- ----------
Total liabilities 9,401 10,384
--------- ----------
Shareholders' equity:
Common stock 102 100
Additional paid-in capital 18,922 17,401
Retained earnings 7,275 7,112
Unamortized restricted stock compensation (1,958) (1,067)
Accumulated other comprehensive income 166 169
--------- ----------
Total shareholders' equity 24,507 23,715
--------- ----------
$ 33,908 $ 34,099
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