Earnings call transcript Q1 2023

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Operator

Greetings and welcome to the TransAct Technologies First Quarter 2023 earnings conference call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Ryan Gardella, Investor Relations. Thank you, sir.

You may begin.

Ryan Gardella

Carl. you, Thank welcome and Technologies XXXX first-quarter Good to call. earnings afternoon, TransAct results be close. our will I announced discussing market Today, after the in issued press release

us and John DeMartino. is the and CFO, Steve Joining Dillon; from company President CEO,

call call the on our to questions. strategies, first-quarter participants Today's key results. We'll details and progress include for the these discussion company's will then operating the financial initiatives, on of open the

statements on about forward-looking As call future and a call reminder, as are Statements this expectations results materially. deemed in be contains nature. actual may this conference may that and events forward-looking, differ

For to after on revise the to any forward-looking company, SEC the a occur undertakes XX-K of reflect full the including or update events filings list TransAct risks to Forms the business company's obligation or to that refer inherent call. statements and and circumstances reports or its XX-Q. please no

of the can to well meaning Today's G. the calculated in When call on within financial GAAP comparable in measures and and reconciliation release press today's the found non-GAAP as website. financial measures webcast presented include accordance Regulation SEC most non-GAAP directly all with financial be of may required, as the measures

I'd like the And with to John. turn that, over call to

John Dillon

at again, is know Dillon, And And don't This Executive for is joining call for it's this earnings who to good us name those you me, is afternoon TransAct. of Ryan. John Thanks, John Chief as today. you, and of all and thanks my my Dillon. first

can up LinkedIn, I've for a like something Hyperion the about decade, a been Oracle, know a time, CEO me tech and about the like. for in places here, you And long so the becoming on been Solutions, I've individual Board the Before Salesforce, but company. I look

experience So the I job. to and amount bring guidance like fair feel a of can I

doing think only the opportunity better. some about we have and that some I well my some I been share of highlight here a to things with of to I've impressions and for we're where but want month, first do you So

TransAct is First Shuldman ability has Europe, dedication would know COVID-related be company for unprecedented of and and all, TransAct. inflation, and to Bart that without nearly years strengths of three number navigate remiss a stating thank war the business virus, as some his would we're I goodness our mean, not also challenges, the through of great and a in didn't I of for if his size, company recession. logistic potential to his I feel we confident not big. of I it remarkably be as that today. and which the because all leadership And lockdowns challenges, well-positioned fundamental

I shout get for to a wanted Bart us for thank he's So out to everything where me, done are. to we you just

of that of us competencies have trust I to competitive first, capability delivering around a in So differentiate printing demonstrate that that share our in competition have we example, past And product the processes quarters, and from moats we me number of core our some say think printing products for businesses. leverage the I and effectively build our mean, around believe us I are let with capable industry customers. manufacturing others builds logistic it winning few allowed we're world. and and and frankly, when cannot standard the to, markets can

win opportunities with you long customer if strengths I we that lead to can intend in I and penetrate essence, and and believe markets with first do smart, winning strategy. should into, where advantage down and you're this we can your is suit, go an lean And that. these double a we usually, on

Terminal the launch and X, And only the product. need in increasing. FDA-approved foodservice frankly the technology only of BOHA! BOHA! day, only the with It's the are industry of and challenges differentiated. believe wastage, continue second, are with the improves every labor, for the the there's the product in food platform solutions challenge and is labeling I day. recent house And dealing where think well-designed cost to I spillage, Companies a operational our back strength every grow of

I that platform. we these see ability customers TransAct's changes to to in terminals And and positioning service be adoption of to gain think will in adjustments believe I wins how frankly, that end, the also real. believe, the market prospects widespread positive serve. our BOHA! our And that product the product can sales we strategies and that in is food I result establishments

quickly new should we changes, food things terminals In already I aren't I've go-to-market improve for move FST, where And believe the this believe we but moves to had sell. opportunity to we all most relative prioritize the have a traction And iterative things technology, early to massive I've strategy. can all the sales that the believe GTM, to time to technology, These an have as treat some I will the strategy, immediately, and important safety that this indicator I impact the I'm can implemented a CEO, increase BOHA!. short process. we in that relative go-to-market making we food of and enact is been and number that success service since objective. motion

learned our know, market and have business, grow customer of TransAct say, collaboration of and as a any leverage relationships we've continue the high business customers, trust opportunity And and them. and customers very our years innovation and would probably built, degree with ahead to importantly, that I'd any want through want and are intimacy to service on and the of we to of to us lifeblood third, our The our perhaps you products. most rely have all

evolve approach. I that's and things key that we can a differentiation. a on these improve think to be long-term that continue So believe and to are going to frankly I things success customer-centric our with focus our And

from from with quality them service the the getting with people institutional I'm the impressed of led in of Many across knowledge them I'm and members TransAct. success by we certainly Board, of finally, and is Steve on bench knew that very are already And the my know to I tenured of team. the dedicated Bill. but TransAct and and organization. accounting many finance good, strength to speak here the company very at The have

I Tracy, individuals. growing design a made taking to confident And led organization, delighted the to Our Revenue right cover get and the now enterprise. TransAct fundamentally do we work can The sales and and by a casino, these need class-leading and led done. very who Officer that we here, what solid gaming Chief I'm I'm by FST foundation technology believe cover is is we who's towards I've recently into Brent. and to steps our both team, got to with teams

markets, key off for two a more So I've I'll detailed got hand to walk gaming do through before analysis. some FST I'm them some from and conversation casino and some highlights. Then Q&A. Steve to about we'll it guidance. brief our vertical going Then,

quarter about AccuDate million logos sold FST, predominantly relative to our of So food increase led by to well the $X.X for in number an service was higher shipments technology, new XXXX. to revenue as up terminals FST as XX% the total of

to our the new sales changes quarterly focus of encouraged as the XXX element remains we're making, terminal new As intend to FST previously we important I by run are business. our in mentioned, I we And mentioned, to the strategy the terminals the already while added on enhance most that rate. metric. quarter, growth

from will QX the of we around efforts. changes ended in year-over-year We will already some marketplace quarter year it iterative, XX,XXX increase. the That's expect from and XXXX. a XX% good take over as detail with but That's the not year all yield good, The XX,XXX terminals time. be. I the I mentioned. we're doing to it's the provide should from as as what in It's And more quarters what coming

over Next, and gaming year the up revenues was on XX% nearly $XX.X saw the which quarterly sequentially, XXX% market, our we past. and previous all-time in almost of million, casino high high record year

printers is pick this domestic the So share. revenue to international as quarter for I market casino gains know. as industry-leading far history, digit as continue bookings across highest triple Strength gaming up and sales, both percent and the in

As was and is been able where stellar products parts the design not. the teams and and a we provide production product beneficiary inability to competition remain mentioned to secure of have to last the quarter, market, competitor's our

that environment financial feel in competitive obviously is result, a is really good mean, We the see normalized it this While our believe likelihood thus wouldn't we there future. that to us. that a update ranges. outlook more I we a may surprise prudent

in between million $XX.X XXXX, for million $X.X $XX.X and and and adjusted fiscal EBITDA. million So between revenue in $X.X now we're expecting year

may market strength in continue. current the we believe to assume the while the us, market in results for the opportunity demonstrate first-quarter is correct dynamics market approach and the casino the gaming that our So of not

of So the assuming sales we're the year. and moderation a casino half currently gaming in the in back

will while as appreciable Additionally, the changes it impact see sales to our several term. are take not assuming through FST, to making so are we flow into some this the in in go-to-market improved call, on time, I've times numbers, sales results we and near mentioned strategy

results. will assume will gaming through From slightly sales, lower and current a pressure there be which casino a our profitability standpoint, margin from levels flow we to downward due

going to while we now, given really not back move to most these the where a believe in into main are marketplace market making the competitor the we're quarter, in ones how probably that project been the no they've So is second our we're seeing absent. we ability currently assumptions, a competitor prudent mostly have

result to CEO our to of as create The the the community result result as myself, completely here whole. shareholders a what community are all to transparency and and be a In for use aligned. all have me, part, with wanted the stakeholders. this from And shareholder TransAct, you'd value my opportunity and to should Trust communicate you and TransAct's for expect business I of the objective will me. leader financial will deserves Finally, a stakeholders. is as achieved most in success I important you objectives as as to through financial success

encourage we're And feedback, them. us questions. get like to I'm answer, have to out I welcome and would I do reach that. very I'll sincere let about with doing ways don't better can or how an sincerely and us I of If any our you holder equity good improve. criticism, see comments, know

trust on You me can that.

over to sort Officer. those with Chief DeMartino, I'd that, today, So Steve our the of Financial and turn call formal like are to comments my here

Steve DeMartino

John. everyone, Thanks, us. for Thanks, joining

Let's our detail. results take 'XX look first-quarter in more at a

period. leading $XX.X up million XXX% net compared the quarter year-ago first for were million, or food in the $X.X for strength stronger hardware and quarter compared were revenue service both the quarterly $X.X to sales $X.X first way. to Total to prior across million, in terminals FST the software the Sales board market year from These our units new sales were the AccuDate million sold gains up XX% technology driven period. logos including and with XXXX record-high by BOHA!

new XXX added first at the year-ago We versus period. at end pay quarter XX,XXX terminals, of terminals ending the the XX,XXX

subscriptions sales $X.X well recurring million software the prior Our as as in which million, to FST year consumable period. and were label compared up the XX% 'XX include sales first-quarter $X.X service for

first RPU the $XXX was quarter $XXX, from Our down XX% but quarter the 'XX, sequentially for the of first to quarter. up $XXX in in of compared 'XX fourth

downward an on the offset FST result increase was of reminder, any as sales. by recurring currently not are pressure a which in additional installed a recurring revenue, the RPU terminals which generating in base, As slightly

fertile other last news these us sell of ground BOHA! installed in that we mentioned I as However, growing population marketplace, have applications good to to customers. cross software the a BOHA! terminals is the giving quarter,

record and of of sequentially first casino XX% the sales from quarter $XX.X 'XX. 'XX, quarterly fourth million, up the reached from high quarter XXX% up and Our a gaming of

with year. board sales business We sales gaming continue in year to the across the up XXX% and see our over XXX% strength casino international domestic up

as continue earlier, to to these competitor's hold supply for trends the we can by product, customers will John While assume with excellent be year. these results a driven entire to their spoke inability

the of evidence in believe half the affect have we main which yet it's the likely to we our year, Though results. competitor that market see reenter materialize, would back will that our

new our the once sticky, market competitive a we run believe rate gain resulting will certain be normalize. new go-forward a share However, of also dynamics amount in

POS period. 'XX, impacted automation Ithaca we $X.X from were in for to sales supply XX% first to of was QX from increase million, higher instituted year a up a sales 'XX $X.X the result compared million response the XXXX prior a largely mid 'XX This COVID price in quarter shortages. in

significantly down QSR in completed were sequentially customer expected, major As our largest initiative sales XXXX. as a

lower As a expect sales to we to to result, XXXX. compared POS continue throughout be 'XX

Moving Services on or to TransAct TSG. Group

recover largely over This of remainder our to 'XX. which do year down we decrease quarter, first during to due year the XX% was sales to lottery for the For spare expect $X.X parts TSG lower million. of somewhat were legacy printers, sales

income the Moving down statement.

Our higher The in instituted of was XX.X% from improved gain two casino margin first-quarter prior margin sales to of effects compared 'XX quarter. rounds we significant sales volume, mix printer XX% and gaming gross the year as XXXX. higher-margin and during resulted from price increases the

expect downward as move forward, to the begin casino Looking impact we change we anticipated year be through to and margin modest gross the pressure market. gaming of we as in experience in competitive dynamics under the remainder from the the

the quarter increased Our up our Breaking operating were relatively normalized first as from travel, and down a the in quarter marketing, still X% first expenses $X.X $X.X expenses also of were this and trade million, flat, X% shows 'XX. to the bit, the of for levels first $X.X quarter COVID-impacted quarter return first-quarter million at $X.X Selling increasing for the flat and compared more to first R&D we engineering for million marketing million. 'XX. to to expenses

Lastly, the second of the compared We additional expenses in X% implemented increase $X.X our employees, or sales the million our of and staff, for XX.X% related prior-year hiring office period. generated to the largely G&A net we income that new back across-the-board quarter. This ERP first was million $X.X to operating $X.X increase depreciation all first last in system loss attributable quarter 'XX million salary operating of an of in quarter to to increased year. the for of

net $X.X million to share $X.X of of million recorded net compared or $X.XX we $X.XX in income of the year-ago a or line, loss bottom loss diluted share the per On diluted a per period.

million to loss an adjusted adjusted to first $X.X year. last Our for million EBITDA $X.X EBITDA quarter improved the quarter for compared the of

guidance from approach would 'XX that which this and previous year, casino million, first the half we've to of $X.X John outlook normalization expectation considering the negatively both of the expected which impact our and to margin to is our the million most believe the million. in million to guidance back market the updated up to of EBITDA quarter sales $X.X for gross $X.X As our gaming stated, our adjusted compared prudent $X.X 'XX. of is We

Lastly, to facility $X.XX with under I'd like with revolving on million of cash $X.X outstanding the borrowings hand and position. $XX We million quarter our our Lending. finished mention million credit of cash Sienna

positive we execute of Sienna available framework for to needs. and immediate the facility position cash current funding Within expect current cash any our XXXX current to well flow our hand believe guidance, be growth roadmap on and without our the borrowings us additional under

And to can open we with the think up I questions. operator, call that,

Operator

Sutton, George Instructions] [Operator Craig-Hallum.

George Sutton

much way is of with where Are an there a Can We update keep kind the And call. us year of any on about John, backlog? a lines book-to-bill if results curious the give the I'm just of we and, adding off were casino characterize welcome could working business to printer Great to talk basis? following we context. you to trying there? demand. of from to last you are up this

John Dillon

I can think I that. answer

we're But I I think I specifics, pretty Steve I'd speak ask like to. of some in good to think think shape. to the

Steve DeMartino

Sure.

We for very casino printers. gaming healthy have a backlog sales and

for On for the were the orders the we the to we're good. first had to inventory scheduled actually quarter. able -- we that actually time, side, were We all ship actually able first

from words, QX in to pushout QX. we So had of other no orders

was We're able to scheduled. deliver everything that

quarter. inventory building So but second still back a in that position. we're we're have in good a We now low the position,

George Sutton

from mentioned customers. I to had were those were of second you. pushbacks And that? improvements changes version? Can we understand the version made and BOHA!. with there potential And, Got about Have address certain you that the BOHA!, talk pushbacks second John, you

John Dillon

think pretty we like to X I have the all is, got Z, Terminal that This does and yes. make. answer the of and Y a number would of to relationship want been we've that sort of wanted clients We've a is good listening new with that enhancements a them. X and terminal

is, faster. better. is supply is get power built. two printer screen it The ways. is you The The The can screen

can tablet together, built of better terminal. it's a around just all with you a you and around and vessel all the way And can but detached, this put walk kind it screen it are You with in. its that get of

can is is sort I It's performant. things those faster. it's a underlying look of of at combined. more of would close bunch It's I've the thing that standardized whole The And brighter. the you mean, screen sort And it. all the we common see taken unifying that other design we've a terminals one the have our underneath product, in for that core casino we gaming and chipset underpinning other that so other use only of that industry. or use our underlying even that we're across sort and we terminals products

reason coding, like. can labeling want the these is print can fundamentally, requirements. well. labor, people and do and really can we the they grab-and-go things can And so save comply that that with They they FDA really, and labels So really, date do they

in I we we're it on other the but rounds So a not by some at with. We're some going of conference And show couple it. really we've the the much tradeshows organization, made giving changes to to people. encouraged May we're NRA got going terminal, really training -- the coming the And nailed to up think wasn't we've candidly, making sales so be I'm that XX. it

back-of-the-house And probably those we not going that that afford And a leading is to think system. it's the requirement of almost the reality a implement need. is like are component things can't automation client labeling the to

any to pretty want you it can itself much terminal software the run. However, run

of together, stuff it's So house. given you the in of the a the all place, and connected pretty Internet, in to have it's one to it's that piece good all equipment back put secure, that it's

George Sutton

there's in to talk opportunities? this those referred two store coming that's on large a for year? half customer convenience there you've of Great. any a One that the the franchisor question me. Can large last past and about back in you updates Are

John Dillon

would kind again. I of good. They that doing back and for that's sort reasons say They and do the that of they're other large on specifically. Not and what with nothing franchisee, to no as purchasing had tuned. like stay store equipment news, large took track. the there's a is convenience break And for us, we're

George Sutton

you Thank much. right. All very

Operator

Jeff Martin, Roth MKM.

Jeff Martin

mentioned emphasized jumped BOHA!, that John Thanks. some are but afternoon, of strategy, of know And specifically low-hanging give momentum with training, characteristics some framework changes kind in in immediate Steve. fruit and to John maybe that you this expect to is enhanced strategy? go an you on a Good start go-to-market the not there other I there? us with results when type situation, of you build

John Dillon

outcome the classic, predict How right. go-to-market the get a What to hard of any is trained? kind but we salespeople kind Well, funnel we lead let's certainty, have? with do have? What do of is they are this strategy

we do in How marketing? putting industry account-based reach doing best is conversion What's across the I what clients? practices board. rate? the we And Are basically believe we're of the sort

some doing got We've the sales training selective reorganization more We're in targeting. force. some planned. made We've also

businesses, there's of about awful estimate maybe we think it, you of could Terminal we an X. If that lot a million, BOHA! sell couple

from then focus them X,XXX. them three the We've organization. But that have take have been a some always to them one. And almost five have stores, of there's of some of trying to call anybody. willing we're And sales some people stores,

is still where owns are it, if we're kind think doing we that down we feet. back are that the focus Restaurants ability. have, than who can that. very general their get create and It's things stores. resources we I the some of do to on it, franchisor getting then somebody have of success double know about that interesting the believe very, the on a intended different you So in we

what on this triage. of is ton is a territory From a stuff it So up. of probably about doing and focusing lot hour. go standpoint, talk career could kind of it half science. rocket I None I've sort an we're of done a of for

of gen where number retooling the Chief a And and of short, individuals who's spending we've competitive organization, as sales you to veteran if with have a them, organization, we're Revenue But working her an win, I'm sales Officer. now of in sort company, Tracy plans of time you up and we unfair retargeting, on focusing for the had as better building, and lead we and have lead will, on heading know, lot conversion. a the incentive advantage

that most guess short, going I'd past. we're to done, I results than In say already with to getting and all refreshed of together, we're going putting the yield I been it's out but better which is in we've a come go-to-market -- I program, think refreshed think a

Jeff Martin

to the to great. initial it Terminal. are relative my that different Okay, BOHA! the BOHA! to get about Is close the some BOHA! initial terminal to from Terminal sense the the and is And Terminal? the X is to sense chains of Trying that other reasons the open upgrades kept around this purchasing going question starting customers your essentially for groups? X version and a restaurant to restaurant door larger

John Dillon

this has do. Well, the with with labeling as started of terminals sophisticated. we process labeling software out Great mean, for lot well. just basic I a printer. there Yes. very things There's in the Today, is look, been a an can We question. iterative

about but of one's kind features, the way, I think to talk The hate cool. this Terminal, I and BOHA! by

You can have two in different rolls there. of paper

an down more DPI the information to quarter do have a on lot of way up inches. heck and small paper. or a put XXX so inch can of printing, a inch all to X We piece You a an can you

client back people and on and say, yes no. anything they there So think mean, request would the But I organizations, what way answer like for sort we've on writing large think house. earlier mayonnaise the I with change of and putting here's packages this that. deficient for salad got things and versions. I is pencils, of potato grease to the notes, the in stuff them was especially operate is, a of the the sticky don't I

relatively long going a the it's sales office. a back do for asking it's because client them be a to from lumpy, lift so the to cycle, bit I think a sales shift large we're and of And especially in and standpoint,

sales And to customers a been I the don't relative say to market, sure not so a of calls prior one we question of are things touch lot have they asked that this base track a the is now -- haven't implementing they about because make one but the that say anecdotes want is enough with we when want is the that no, yet, okay, people make the go of things the situation expressed in to I we where we clients sure hear was that of now. time. -- we was to And and interest, they that nurture who when warm ready, kind that keep them, go, are them the

franchisees, approve go-to-market in the themselves then system out a to across then like board, for buy cases, other especially labeling they situations, in where franchisor the might they strategy we you an And waits a for something new franchise rolls grab-and-go, new that for but can the that some can FDA some a And franchises and piece imagine the provide. themselves technology, of implement basically headquarters the that technology. approved the need

while, it things: terminal is positive I gotten and tremendously the it customer demonstrating We've combination targeting. of better for we've approach, a the a really been sales better bottom and works all of better better terminal, well. kind line it's demoing of under feedback. So nurturing, kind those works nondisclosure think And

Jeff Martin

Great. Thank you.

Operator

Sacks, Grand [Operator Slam. Instructions] Mitchell

Mitchell Sacks

sort historical. Great to question with has The do quarter of Hi, obviously. guys.

them of terminal and you've those some the newer the what opportunity got recurring space. of So back hopefully restaurant out revenue? to store are doing go them many upgrade Can out sense is you customers across and convenience number how a obviously some give us to the and there get to XXXXs there to to units more

John Dillon

And Well, BOHA! all opportunity XXXXs. the reasons. for a for to upgrade a that's X Terminal do than more two, eventually an of need couple appears can replaced. a lot be it great One, the

course, replacement forward and of which, revenue. So we of kind look business to generates

tens there. XXXXs won't going of because out Steve lot the a he's But have all. tell with of me afraid We answer to you -- it's exact share I'm

Steve DeMartino

It's the thousands. tens in of

John Dillon

thousands, It's tens of in than the XXX,XXX. more

Mitchell Sacks

to doing safe them now biggest are now? pushback you versus, try the that, it you to assume guys if it to upgrade? so, you're when Is get like customers what's to Okay. doing on those say, approaching not And

John Dillon

these getting answer from. to we're want the to of we're frankly, product clients you not wants. build are really yes, customer We're the is part pushback. first the ones that the Well, do any good that feedback them. What of the is, particular approaching And some question a getting

I terminal is ready. beginning just process, clients pretty now, We we're think good pushback mean, for frankly The haven't we that had then is just I sales clients. both and the only replacement do new XXXX workhorse. the and the a the

time and or adequately, performing hundred. if of couple get it's a going X,XXX eventually, so at not And we're business to to terminals out a go rip might out the but they feel compelled

we XXXX six three think Terminal trajectory of be every replacement of growth sudden throughout a X as matter so opposed is the to happen more going of of a months. sort evenly BOHA! to the to And is to going in replaced all the

Mitchell Sacks

lot. a Thanks

Operator

at further to questions like I no closing comments. this turn the floor Dillon, to John Executive There back over for would Officer, are time. Chief

John Dillon

you. or Well, again, ideas in of we for I'm and lot you'd think thanks if request love sincere very all not I today. feedback, stuff, there's of a you some we're from that be suggestions But If like those calls. joining to ought stuff of the open to I'm my doing comments, kind for input.

And it. more to I the I with share and that. and of more more get original I And and to I comfortable the back think extent the more intend is deserve. transparent, happy more data the progress, statement And intend I'm can company and information, to and my about our speak I as be that's that investors something that to freely do to the

say I thank goodbye and will And you. with that,

Operator

This concludes today's teleconference.

may your for this lines at disconnect you You time. Thank your participation.

TransAct Technologies (TACT) 9 May 232023 Q1 Earnings call transcript