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TransAct Technologies Incorporated (TACT)

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TransAct Technologies Incorporated (TACT)

Q1 2017 Earnings Conference Call

May 3, 2017 04:30 PM ET

Executives

Jim Leahy - IR

Bart Shuldman - Chairman and CEO

Steve DeMartino - President and CFO

Analysts

Kara Anderson - B. Riley

Mitchell Sacks - Grand Slam Asset Management

Phil Bernard - Eilers & Krejcik

Presentation

Operator

Good day, ladies and gentlemen and welcome to the TransAct Technologies first quarter 2017 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session and instructions will follow at that time. [Operator Instructions]. As a reminder, this conference call is being recorded.

I would now like to turn the call over to Mr. Jim Leahy, Investor Relations. Sir, you may begin.

Jim Leahy

Thank you, operator. Good afternoon and welcome to TransAct Technologies 2017 first quarter conference call. Joining us today from the company are Chairman and CEO, Bart Shuldman and President and CFO, Steve DeMartino. Today's call will include a discussion of the company's key operating strategies, progress against these initiatives and details on the first quarter financial results. We will then open the call to participants for questions.

As a reminder, this conference call contains statements about future events and expectations, which are forward-looking in nature. Statements on this call may be deemed as forward-looking and actual results may differ materially. For a full list of risks inherent to the business and the company, please refer to the company's SEC filings, including its reports on Form 10-K and 10-Q. TransAct undertakes no obligations to revise or update any forward-looking statements to reflect events or circumstances that occur after the call.

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

At this time, I would like to turn the call over to Bart Shuldman. Bart?

Bart Shuldman

Thank you, Jim and welcome everyone joining us on this afternoon's conference call and webcast. Earlier this afternoon, we reported 2017 first quarter net sales of $14 million, operating income of $1.4 million and EBITDA of $1.7 million. Steve will review the first quarter financials in more detail in a few minutes, but I'd like to begin by providing some high level comments about the results and our business.

We believe TransAct is off to a good start in 2017 as we laid the foundation for full year growth and continue to enhance the profitability of our business, thanks to the ongoing shift in our sales mix towards higher margin software driven technology solutions. We also made progress on two fronts in our restaurant solutions market during the quarter, which we believe positioned TransAct to take full advantage of what we see as a large and growing market opportunity.

First, we made several strategic fine tuning adjustments with planned marketing campaign in our restaurant solutions market that we detailed back in March. The adjustments pushed our spending for these initiatives into the second and third quarters from the first and second quarters and we believe it better positions the program to have a meaningful benefit to our sales efforts. We call this type of move inaudible. We just recently initiated the extensive direct marketing campaign for AccuDate terminals, which is aimed at raising industry awareness for these solutions and elevating TransAct as the clear market leader.

The start to the campaign was changed by about six weeks to better align it with the restaurant and food service industries’ largest worldwide convention, the National Restaurant Show, NRA, in May of 2017 which will begin in a couple of weeks. We believe by more closely tying together the marketing campaign and trade show, which attracts all leading restaurant and foodservice operators will benefit from a strong showing in NRA and from increased market awareness for AccuDate terminals.

In addition, we are continuing our work to build out our direct sales team, a process we believe will take several more months. Second, we added the software capabilities of our flagship AccuDate XL through our recently signed Jolt partnership. As we have noted, Jolt is a very attractive cloud based software platform that allows restaurants and businesses of all sizes to leverage the power to the cloud as they manage all of their day to day operations.

Thanks to this exciting partnership, which is additive to the existing relationship with Crunchtime Information Systems, we are allowing operators to utilize Jolt’s software directly on the AccuDate XL. The AccuDate XL with Jolt, the kitchen staff where the headquarters of a restaurant company can now easily manage their menu items for date code, nutritional and Gran N Go labels and by upgrading for the full Jolt suite, management can leverage the power of Jolt to monitor employee attendance, verify test compliance and even perform critical safety tasks like food temperature monitoring.

Since the Jolt announcement, we have seen a number of our current and potential customers take a brief step back as they reevaluate their purchasing decisions and more fully weigh on just what our AccuDate XL can do as a key hub in their operations. We believe this is a good sign for our AccuDate XL sales and yet another reason why we are investing in our strategic initiatives.

Overall, our entire AccuDate product line, including the AccuDate 9700 PRO and XL represents a full range of solutions that can be customized directly to a customer's needs. No other company has the breath and range of products for the back of the house and restaurant as we do. Our customers can easily handle the task the AccuDate terminals were first designed to do, create grab and go and food rotation labels, while now offering kids and staffs more powerful tool that can save restaurant and food service operators’ money, enhance operations and help drive business growth.

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