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TransAct Technologies Incorporated (TACT)

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Start Time: 16:30

End Time: 17:19

TransAct Technologies Incorporated (TACT)

Q3 2017 Earnings Conference Call

November 01, 2017, 16:30 PM ET

Executives

Bart C. Shuldman - Chairman and CEO

Steven A. DeMartino - President, CFO, Treasurer and Secretary

Jim Leahy - IR, JCIR

Analysts

Kara Anderson - B. Riley & Co.

Todd Eilers - Eilers Research

Mitchell Sacks - Grand Slam Asset

Jeffrey Bernstein - Cowen

Presentation

Operator

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

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

Jim Leahy

Thank you, Kris. Good afternoon and welcome to TransAct Technologies 2017 Third 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 third 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 Web site.

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

Bart C. Shuldman

Thank you, Jim, and welcome to everyone joining us on this afternoon's conference call and webcast. Earlier this afternoon, we reported fabulous results for the 2017 third quarter including net sales of $15.5 million, operating income of $2.6 million and adjusted EBITDA of $3 million.

Steve will review our third quarter results in more detail in a few moments, but I’d like to begin by providing some high-level comments about our business and our strategy.

On our second quarter call, we detailed four key strategies TransAct was pursuing which were aimed at successfully monetizing our investment and what we saw as a significant long-term market opportunity for integrated technology offerings in restaurants and food service settings.

I’m excited to provide an update today in these initiatives by noting that we have assembled a team of sale professionals who are focused exclusively on the restaurant solutions market. In addition, we have implemented our direct marketing campaign aimed at driving awareness for AccuDate XL terminal which we officially launched at the National Restaurant Show in May of this year.

Also, we have moved forward with the strategy of creating recurring revenue with the sales of these terminals as we recently launched a lineup of TransAct branded labels for the AccuDate terminals.

These labels are extensively tested by our operations team to ensure a full functioning ecosystem between our terminals and labels which we know from our experience in other markets is crucial to providing a long-term reliable solution. We require our customers to exclusively use our TransAct labels if they want to warranty on the terminal.

And finally, continuing with our goal of developing long-term recurring revenues and providing our customers with the best customer service, TransAct now offers a full suite of software maintenance and product support warranty offerings.

Our successful execution in all four of these strategies as well as our focus over the last several years on diversifying our product offerings towards purposely built high-value software and technology-driven solutions is beginning to lead the strong improvements in our financial results.

We delivered exceptional profitability in 2017 third quarter with record quarterly gross margins and record quarterly earnings per share. Net sales of our restaurant solutions nearly doubled on a quarterly sequential basis and crucially interest in our restaurant solutions among some of the biggest and well known brands in the world is growing, which we expect will drive higher revenue related to sales of the AccuDate XL as we head into 2018.

We firmly believe that technology-based solutions and operational enhancements will be a major focus for investment and development across the restaurant industry over the coming years. And this is just not our opinion, but increasingly it is what we hear from a range of industry insiders who know the industry well.

There’s a growing consensus that the technology transformation taking place in the food supply and restaurant business is the biggest opportunity in the restaurant market today, because of the lack of technology.

I’m so proud of the TransAct team as we developed the technology and software and services and we are well positioned to succeed in this exciting, large, long-term opportunity.

I am also pleased with the relationships and partnerships we have established with leading software companies like CrunchTime Information Systems and Jolt as they bring real solutions to the restaurants in the back of the house. The restaurant market will be changed forever.

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