(TRANSACT TECHNOLOGIES INCORPORATED LOGO)
TRANSACT TECHNOLOGIES REPORTS
SECOND QUARTER 2005 RESULTS
Wallingford, CT, August 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 June 30, 2005.
Revenues for the second quarter of 2005 were $12.3 million, compared to $14.7
million in the same period a year ago. The Company earned net income for the
second quarter of 2005 of $0.3 million compared to net income of $1.5 million in
the same period of 2004. Earnings per share for the three months ended June 30,
2005 were $0.03 per diluted share compared to $0.14 per diluted share in the
same period a year ago.
Revenues for the six months ended June 30, 2005 were $24.4 million, compared to
$29.8 million in the same period a year ago. The Company earned net income for
the first half of 2005 of $0.4 million compared to net income of $2.8 million in
the comparable year-ago period. Earnings per share for the first half of 2005
were $0.04 per diluted share compared to $0.25 per diluted share in the same
period a year ago.
Gaming and Lottery
Gaming and Lottery revenue for the second quarter of 2005 was $6.0 million
compared to $7.6 million in the same period of 2004. Despite the continued
weakness in the domestic gaming market, overall gaming revenue, excluding
lottery, was down only 8% versus the second quarter of 2004 and up 53% over the
first quarter of 2005. These results were due to TransAct's increasing worldwide
gaming market share from growing acceptance of the newly launched Epic 950(TM)
casino printer and growth of over 300% in international gaming sales compared to
the same quarter of last year. Lottery revenue, excluding gaming sales, was down
approximately $1.0 million compared to the same quarter of last year due to the
timing of orders from our lottery customer, GTECH. Lottery revenues are expected
to increase in the latter part of the second half of 2005.
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POS and Banking
POS and Banking revenue was $3.2 million in the second quarter of 2005 compared
to $4.6 million in the second quarter of 2004. POS revenue, excluding banking,
increased 12% compared to the second quarter of 2004, largely due to increasing
sales of the new line of thermal printers and increasing sales in the
international markets. This was the second quarter in a row of increasing
year-over-year revenue growth in the POS market. Banking revenue, excluding POS,
declined significantly compared to the same quarter of 2004, as the business is
project oriented and the Company benefited from shipments of banking printers to
two large financial institutions in 2004 that did not recur in 2005. However,
TransAct announced in late June of this year that a top-tier financial services
company selected the Company's BANKjet(R) 1500 printers for use at up to 6,000
of their bank teller stations. The Company shipped a small number of these units
in the second quarter of 2005 with the remainder of units expected to ship in
the third quarter of 2005.
TransAct Services Group
Revenue from the TransAct Services Group, which includes spare parts,
consumables and services, was $3.2 million in the second quarter of 2005, a 27%
increase from $2.5 million in the year-ago period and a 21% increase over the
first quarter of 2005. This growth reflects the Company's growing installed base
of printers and continued increased focus on the after-market business.
Operations and Finance
Steven A. DeMartino, Executive Vice President and Chief Financial Officer of
TransAct Technologies, commented, "Our management team continued its focus on
controlling our costs while also implementing our strategic initiative to drive
future revenue growth. Gross margin improved to 34.5% from 30.6% in the first
quarter of 2005 due to favorable product mix, as well as continued product cost
improvements. Operating expenses were in line with our expectations as the
strategic investments we made to our sales, marketing and engineering functions
are substantially complete."
Mr. DeMartino continued, "As part of our stock repurchase program authorized by
our Board of Directors in March , 2005, during the second quarter we
repurchased 122,000 shares of our common stock for $984,000 at an average price
per share of $8.07."
Looking Forward
Mr. Shuldman said, "The first half of the year was impacted by the significant
decline in the domestic gaming market and project-oriented banking business.
Even with this decline, we continued to focus on our growth initiatives, which
included the introduction of four new products for the POS market, the expansion
of international sales across all of our business units and expanding sales in
our TransAct Services Group. While we are not expecting a recovery in the
domestic gaming market at least through the third quarter, we are projecting
revenue in the second half of 2005 to be higher than it was in the first half of
the year. And once the domestic gaming market recovers, we have positioned
TransAct for additional market share growth."
Mr. Shuldman concluded, "In the third quarter of 2005, we anticipate revenues
will be between $14.5 million and $15.5 million, and we expect net income for
the third quarter of 2005 will be in the range of $0.06 to $0.08 per diluted
share."
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Investor Conference Call / Webcast Details
TransAct will review detailed second quarter 2005 results and forward looking
guidance during a conference call today at 5:00PM EDT. The conference call-in
number is 201-689-8261. A replay of the call will be available from 8:00PM EDT
on Thursday, August 4 through midnight EDT on Thursday, August 11 by telephone
at (201) 612-7415. The account number to access the replay is 3055 and the
password is 157835. 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) brand 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 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; the absence of price wars or other significant pricing
pressures affecting the Company's products in the United States or abroad; and
the outcome of lawsuits between TransAct and FutureLogic, Inc. 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 Six months ended
(In thousands, except per share amounts) June 30, June 30,
---------------------- -----------------------
2005 2004 2005 2004
-------- -------- -------- --------
Net sales $ 12,346 $ 14,694 $ 24,382 $ 29,769
Cost of sales 8,092 9,077 16,451 18,734
-------- -------- -------- --------
Gross profit 4,254 5,617 7,931 11,035
-------- -------- -------- --------
Operating expenses:
Engineering, design and product
development 739 548 1,470 1,162
Selling and marketing 1,547 1,218 2,896 2,580
General and administrative 1,590 1,563 2,954 2,895
-------- -------- -------- --------
3,876 3,329 7,320 6,637
-------- -------- -------- --------
Operating income 378 2,288 611 4,398
-------- -------- -------- --------
Other income (expense):
Interest, net 20 (2) 40 (12)
Other, net 16 2 15 (1)
-------- -------- -------- --------
36 -- 55 (13)
-------- -------- -------- --------
Income before income taxes 414 2,288 666 4,385
Income tax provision 147 823 236 1,578
-------- -------- -------- --------
Net income $ 267 $ 1,465 $ 430 $ 2,807
======== ======== ======== ========
Net income available to common
shareholders $ 267 $ 1,421 $ 430 $ 2,578
Net income per common share:
Basic $ 0.03 $ 0.15 $ 0.04 $ 0.28
Diluted $ 0.03 $ 0.14 $ 0.04 $ 0.25
Shares used in per share calculation:
Basic 9,970 9,620 9,990 9,292
Diluted 10,246 10,447 10,379 10,133
SUPPLEMENTAL INFORMATION - SALES BY BUSINESS UNIT:
Three months ended Six months ended
June 30, June 30,
2005 2004 2005 2004
-------- -------- -------- --------
Point of sale and banking $ 3,155 $ 4,623 $ 7,109 $ 9,629
Gaming and lottery 6,027 7,574 11,498 15,182
TransAct services group 3,164 2,497 5,775 4,958
-------- -------- -------- --------
Total net sales $ 12,346 $ 14,694 $ 24,382 $ 29,769
======== ======== ======== ========
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TRANSACT TECHNOLOGIES INCORPORATED
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
JUNE 30, December 31,
(In thousands) 2005 2004
-------- --------
ASSETS:
Current assets:
Cash and cash equivalents $ 4,741 $ 8,628
Receivables, net 9,666 8,910
Inventories 7,916 8,074
Refundable income taxes 510 510
Deferred tax assets 2,419 2,370
Other current assets 427 586
-------- --------
Total current assets 25,679 29,078
-------- --------
Fixed assets, net 3,881 3,177
Goodwill, net 1,469 1,469
Deferred tax assets 334 274
Other assets 558 101
-------- --------
6,242 5,021
-------- --------
Total assets $ 31,921 $ 34,099
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 2,427 $ 3,804
Accrued liabilities 3,523 3,812
Accrued restructuring 420 420
Deferred revenue 357 717
-------- --------
Total current liabilities 6,727 8,753
-------- --------
Accrued restructuring 811 1,034
Accrued product warranty 128 153
Deferred revenue 352 444
-------- --------
1,291 1,631
-------- --------
Total liabilities 8,018 10,384
-------- --------
Shareholders' equity:
Common stock 102 100
Additional paid-in capital 19,207 17,401
Retained earnings 7,542 7,112
Unamortized restricted stock compensation (2,090) (1,067)
Accumulated other comprehensive income 126 169
Treasury stock, at cost (984) --
-------- --------
Total shareholders' equity 23,903 23,715
-------- --------
$ 31,921 $ 34,099
======== ========
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