(TRANSACT LOGO)
TRANSACT TECHNOLOGIES REPORTS
SECOND QUARTER 2006 RESULTS
-- Company Achieves Second Consecutive Quarter of Record Sales --
Wallingford, CT, August 2, 2006 -- TransAct Technologies Incorporated (Nasdaq:
TACT), a leading producer of market specific printers for transaction-based
industries worldwide, today announced financial results for the three months
ended June 30, 2006.
Revenues for the second quarter of 2006 were $16.9 million, a 37% increase
compared to $12.3 million in the same period a year ago. The Company earned net
income for the second quarter of 2006 of $0.9 million compared to $0.3 million
in the same period of 2005. Earnings per share for the three months ended June
30, 2006 were $0.09 per diluted share compared to $0.03 per diluted share in the
same period a year ago.
Revenues for the six months ended June 30, 2006 were $33.3 million, compared to
$24.4 million in the same period a year ago. The Company earned net income for
the first half of 2006 of $1.9 million compared to $0.4 million in the
comparable year ago period. Earnings per share for the first half of 2006 were
$0.19 per diluted share compared to $0.04 per diluted share in the same period a
year ago.
Bart C. Shuldman, Chairman, President and Chief Executive Officer of TransAct
Technologies, said, "TransAct achieved record revenue in the second quarter,
driven by strong sales growth across all three of our sales units. Our success
in the first half of 2006 is further proof that the investments we made in the
business last year are translating into results this year for both revenue and
market share growth."
Mr. Shuldman continued, "Our net income in the second quarter would have been
even stronger if not for the negative impact of approximately $70,000 resulting
from currency exchange losses, more specifically the weakening U.S. dollar
versus the British pound, and from $220,000 in expenses associated with a
potential acquisition that we considered, but did not complete. The potential
acquisition was presented to us and it appeared to be a significant opportunity
that would have materially changed the size and scope of TransAct. We spent a
lot of time working on this acquisition in the second quarter and were
disappointed when the company to be acquired pulled out of the deal. We will
continue, as we always have, to evaluate M&A opportunities. However, we want to
make sure our investors know that our acquisition strategy is to identify
possible partners that compliment our core business and that increase the size
and scope of our Company. We view our acquisition strategy as opportunistic and
not just for growth's sake."
GAMING AND LOTTERY
Revenue from the Gaming and Lottery market for the second quarter of 2006 was
$9.1 million, up 52% compared to $6.0 million in the same period of 2005.
Revenue growth was driven by strong lottery printer sales to GTECH and by solid
results in gaming printer sales, especially to the international markets.
Although the domestic casino market remains challenging, the Company continues
to gain market share through its sales relationship with JCM American
Corporation.
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POS AND BANKING
Revenue from the POS and Banking market was $4.4 million in the second quarter
of 2006, an increase of 41% compared to $3.2 million in the second quarter of
2005. This growth was largely attributable to increased sales of TransAct's line
of thermal and inkjet POS printers, including TransAct's BANKjet(R) 1500
printers used in bank teller stations.
TRANSACT SERVICES GROUP
Revenue from the TransAct Services Group, which includes spare parts,
refurbished printers, consumables and services, was $3.3 million in the second
quarter of 2006 compared to $3.2 million in the year ago period. Revenue growth
in the second quarter was driven by increased sales in almost all aspects of
this sales unit including refurbished printers, consumables and service
products.
OPERATIONS AND FINANCE
Steven A. DeMartino, Executive Vice President and Chief Financial Officer of
TransAct Technologies, commented, "We continued to execute well against our
business strategy, which resulted in year-over-year sales growth of 37%.
Operating margin for the second quarter of 2006 improved to 8.1% from 3.1% in
the second quarter of 2005, largely the result of the operating leverage we
experienced on higher sales. We also further strengthened our balance sheet,
ending the quarter with $5.7 million of cash and no debt. We did not buy back
any shares in the quarter under our stock repurchase program."
LOOKING FORWARD
Mr. Shuldman commented, "TransAct is off to a solid start in the first half of
2006 with all three of our sales units growing. During the first six months of
2006, we experienced significant growth in our Gaming and Lottery market driven
by strong sales to GTECH and solid gains in our worldwide gaming market. Also
contributing to our success in the first half of this year were strong sales in
our POS and banking market, which are the result of our best-in-class product
offerings and our expanded sales team. And finally, we started production of two
new printers during the quarter, our new Ithaca(R)8000, a liner-less label
printer for the POS and other markets that we call the Print-It, Stick-It(TM)
printer, and our new Epic 430(TM) for the international off-premise gaming
market."
Mr. Shuldman concluded, "Overall, we remain excited about the long-term
prospects for our business. We see great potential in the international gaming
market and expect to continue to gain market share in the domestic gaming market
through our relationship with JCM. The TransAct Services Group will continue to
deliver growth led by our three fully operational service centers and an
expanded sales team focused solely on this part of the business. And in our POS
and Banking market we expect to see continued demand for our innovative
products. Consistent with broader market trends, TransAct will no longer issue
quarterly revenue and EPS guidance. We believe that in this volatile environment
issuing such estimates is not consistent with the way we manage the business.
Management has provided the market with yearly revenue guidance for 2006, and we
are maintaining our guidance for 2006 annual revenue of $65 to $67 million."
INVESTOR CONFERENCE CALL / WEBCAST DETAILS
TransAct will review detailed second quarter 2006 results and forward looking
guidance during a conference call today at 5:00PM EDT. The conference call-in
number is 201-689-8471. A replay of the call will be available from 8:00PM EDT
on Wednesday, August 2 through midnight EDT on Wednesday, August 9 by telephone
at 201-612-7415. The account number to access the replay is 3055 and the
password is 208297. Investors can also access the conference call via a live
webcast on the Company's Web site 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 Technologies Incorporated (Nasdaq:TACT) is the leader in developing and
manufacturing market-specific printers for transaction-based industries. These
industries include gaming, lottery, banking and hospitality. Each individual
market has distinct, critical requirements for printing and the transaction
isn't complete until the receipt and/or ticket is produced. TransAct printers
are designed from the ground up based on market specific requirements and are
sold under the Ithaca(R) and Epic product brands. TransAct distributes its
products through OEMs, value-added resellers, selected distributors, and direct
to end-users. TransAct has over two million printers installed around the world.
TransAct also has a strong focus on the after-market side of the business, with
a high commitment to printer service, supplies and spare parts. TransAct is
headquartered in Wallingford, CT. For more information on TransAct, visit
www.transact-tech.com or call 203.859.6800.
CONTACTS:
Steven DeMartino, Chief Financial Officer, 203-859-6810
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; price wars or other significant pricing pressures affecting
the Company's products in the United States or abroad; risks associated with
potential future acquisitions; 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)
<Table>
<Caption>
Three months ended Six months ended
(In thousands, except per share amounts) June 30, June 30,
---------------------- ----------------------
2006 2005 2006 2005
-------- -------- -------- --------
Net sales $ 16,905 $ 12,346 $ 33,339 $ 24,382
Cost of sales 11,159 8,092 21,906 16,451
-------- -------- -------- --------
Gross profit 5,746 4,254 11,433 7,931
-------- -------- -------- --------
Operating expenses:
Engineering, design and product
development 769 739 1,530 1,470
Selling and marketing 1,711 1,547 3,291 2,896
General and administrative 1,890 1,590 3,600 2,954
-------- -------- -------- --------
4,370 3,876 8,421 7,320
-------- -------- -------- --------
Operating income 1,376 378 3,012 611
-------- -------- -------- --------
Other income (expense):
Interest, net 23 20 37 40
Other, net (71) 16 (82) 15
-------- -------- -------- --------
(48) 36 (45) 55
-------- -------- -------- --------
Income before income taxes 1,328 414 2,967 666
Income tax provision 471 147 1,053 236
-------- -------- -------- --------
Net income $ 857 $ 267 $ 1,914 $ 430
======== ======== ======== ========
Net income per common share:
Basic $ 0.09 $ 0.03 $ 0.20 $ 0.04
Diluted $ 0.09 $ 0.03 $ 0.19 $ 0.04
Shares used in per share calculation:
Basic 9,581 9,970 9,570 9,990
Diluted 9,927 10,246 9,898 10,379
</Table>
SUPPLEMENTAL INFORMATION -- SALES BY SALES UNIT:
<Table>
<Caption>
Three months ended Six months ended
(In thousands, except per share amounts) June 30, June 30,
---------------------- ----------------------
2006 2005 2006 2005
-------- -------- -------- --------
Point of sale and banking $ 4,448 $ 3,155 $ 9,112 $ 7,109
Gaming and lottery 9,144 6,027 17,788 11,498
TransAct services group 3,313 3,164 6,439 5,775
-------- -------- -------- --------
Total net sales $ 16,905 $ 12,346 $ 33,339 $ 24,382
======== ======== ======== ========
</Table>
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TRANSACT TECHNOLOGIES INCORPORATED
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
JUNE 30, December 31,
(In thousands) 2006 2005
-------- ------------
ASSETS:
Current assets:
Cash and cash equivalents $ 5,721 $ 4,579
Receivables, net 10,012 8,359
Inventories 8,276 6,036
Refundable income taxes 150 295
Deferred tax assets 2,735 2,735
Other current assets 355 258
-------- ------------
Total current assets 27,249 22,262
-------- ------------
Fixed assets, net 5,561 4,510
Goodwill, net 1,469 1,469
Deferred tax assets 557 557
Intangibles and other assets 559 534
-------- ------------
8,146 7,070
-------- ------------
Total assets $ 35,395 $ 29,332
======== ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 5,349 $ 2,859
Accrued liabilities 4,606 3,198
Accrued restructuring 420 420
Deferred revenue 402 410
-------- ------------
Total current liabilities 10,777 6,887
-------- ------------
Accrued restructuring 380 587
Deferred revenue 316 270
Other liabilities 338 331
-------- ------------
1,034 1,188
-------- ------------
Total liabilities 11,811 8,075
-------- ------------
Shareholders' equity:
Common stock 104 102
Additional paid-in capital 18,548 17,497
Retained earnings 9,403 7,489
Accumulated other comprehensive income 94 36
Treasury stock (4,565) (3,867)
-------- ------------
Total shareholders' equity 23,584 21,257
-------- ------------
$ 35,395 $ 29,332
======== ============
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