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Start Time: 16:30
End Time: 17:19
TransAct Technologies Incorporated (TACT)
Q3 2018 Earnings Conference Call
November 06, 2018, 16:30 PM ET
Bart Shuldman - Chairman and CEO
Steven DeMartino - President, CFO, Treasurer and Secretary
Jim Leahy - IR, JCIR
Marc Wiesenberger - B. Riley FBR
Jeff Bernstein - Cowen
Previous Statements by TACT
» TransAct Technologies Incorporated (TACT) Bart Shuldman on Q2 2018 Results - Earnings Call Transcript
» TransAct Technologies' (TACT) CEO Bart Shuldman on Q1 2018 Results - Earnings Call Transcript
» TransAct Technologies' (TACT) CEO Bart Shuldman on Q4 2017 Results - Earnings Call Transcript
» TransAct Technologies' (TACT) CEO Bart Shuldman on Q3 2017 Results - Earnings Call Transcript
I would now like to turn the conference over to your host, Mr. Jim Leahy of JCIR. Please go ahead.
Thank you, Sheryl. Good afternoon, and welcome to TransAct Technologies 2018 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'll 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 to 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 would like to turn the call over to Bart Shuldman. Bart?
Thank you, Jim, and welcome to everybody joining us on this afternoon's conference call and webcast. We’re delighted to speak with you today about our 2018 third quarter in which we set several records.
We generated net sales of 15.8 million, operating income of 3.2 million and adjusted EBITDA of 3.6 million and delivered quarterly records for gross margin which was 50.5%, operating margin which was 20.3% and diluted EPS which was $0.33 per share.
Steve will review the results in more detail in a few moments, but I’d like to begin by providing some high-level comments about our business and where we’re taking it. Overall, TransAct’s strong third quarter is a clear indication that our ongoing efforts to transform our business continues to drive improved results.
TransAct today is successfully leveraging the healthy cash flow generated by sales of our industry leading casino and gaming printers and software solutions to self-fund the development and evolution of our restaurant solutions products ahead of what we believe is significant long-term and highly profitable market opportunity.
For a number of years now, the company’s success has been tied to the casino and gaming market in which we sell the world-class Epic products. Our Epic 950 is the cornerstone for casino floors worldwide delivering unmatched reliability and stability.
At the same time, our Epic roll-fed printers are a critical component for many of the world’s gaming needs and our EPICENTRAL promotional and bonusing system continues to gain the attention of operators looking to differentiate themselves in what has become a competitive industry.
I’d also like to point out that our decision to take control of our sales in the European casino and gaming market has proven to be a homerun. Steve will go through our great results in the gaming and casino market with our business, but I’d like to spend my time talking about the very large software and hardware opportunity for TransAct and our shareholders in what we call restaurant solutions market.
We entered what we originally called the food safety market back in 2012 when we first began to sell our AccuDate 9700 to McDonald’s and their franchisees. Back then, everything we sold centered on a food safety terminal that provided our customers with the ability to label food, used by [ph] labels and also label grab-n-go sandwiches and the like with sell-by dates and nutritional labels.
At that time, we did our research to determine a total available market for such a terminal and determined this was a wonderful opportunity for TransAct to grow our revenues and profits. Wow, have things changed. What we once thought was going to be a big opportunity for hardware sales for TransAct has what we believe is a much larger, much bigger opportunity.
What we once thought would be an opportunity for hardware sales has expanded beyond hardware into an even larger opportunity for recurring software revenue, recurring label sales and recurring maintenance and support agreements. Put simply, TransAct’s total available market in the restaurant solutions market has exploded.
Now, before I get into more details, I have to ask our shareholders to be patient. Things in this restaurant solutions space are moving very rapidly and we have some more work to complete which may adversely impact our results in the short run. Every TransAct team member not needed for our casino and gaming market is now working to complete our restaurant solutions market, including our sales and marketing and engineering and programming personnel.