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TransAct Technologies Incorporated (TACT)

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TransAct Technologies Incorporated (TACT)

Q1 2019 Earnings Conference Call

May 07, 2019 04:30 PM ET

Company Participants

Jim Leahy - Investor Relations, JCIR

Bart Shuldman - Chairman & Chief Executive Officer

Steve DeMartino - President & Chief Financial Officer

Conference Call Participants

Mitchell Sacks - Grand Slam Asset Management

Presentation

Operator

Good afternoon, ladies and gentlemen, and welcome to the TransAct Technologies' First Quarter 2019 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]

I will now like to turn the call over to your host Mr. Jim Leahy of JCIR.

Jim Leahy

Thank you, Natasha and good afternoon and welcome to TransAct Technologies 2019 first 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'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 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 the 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 to everyone joining on this afternoon's conference call and webcast. For the 2019 first quarter, TransAct had net sales of $11.6 million; operating income of $800,000; and adjusted EBITDA of $1.3 million, delivering a quarterly gross profit margin of 52.7%, diluted EPS for the first quarter was $0.10 per share. Of course Steve will review these financial results in more detail in a few moments.

It should not be a surprise that the first quarter of 2019 was a very important period for TransAct as we launched our BOHA! back-of-house ecosystem and recognized initial contributions from this new platform in our financial results.

I spent quite a bit of time discussing the specifics of the BOHA! ecosystem on our 2018 fourth quarter call shortly after its launch. So, I will focus my comments today on our ongoing progress, go-forward strategy, potential results, and outlook.

Since the official launch in March, our BOHA! sales team has been working diligently with our current opportunities and engaging with potential new customers to educate them about the many ways our unique new solution can benefit both their back-of-the-house operations, and their overall profitability.

Restaurants and food service providers face an environment where labor is hard to find and labor costs are rising quickly. In a recent article, I read one restaurant company has experienced 120% staff turnover and rising labor costs, while they grew their topline, rising cost drove a decline in earnings. Add to this rising food cost and we have a market ripe for the BOHA! platform.

In April, we announced that we had commitments from 10 distinct customers to deploy approximately 240 BOHA! terminals in their operations. These commitments carry revenues from hardware, software, label sales and even service. A portion of the sales related to these commitments will recognize in the 2019 first quarter. Rollouts will continue in the coming quarters and we are, of course, working to build on this initial business with these customers.

In addition, as I have said previously that we are working with some specific large customers before we actually launch BOHA! I'm excited to note that each of these potential customers is still progressing forward in the sales process with TransAct and BOHA! and we believe that we can close one or more of these opportunities soon.

With everything in front of us, we are beginning to gain traction for BOHA! in the marketplace. Much of the feedback we have received goes like this and I quote "We have been looking for a single platform solution for all we want to do in the back-of-the-house." We are currently working with prospective customers on potential BOHA! implementations that in total represent an opportunity approaching $100 million over the life of these agreements provided they become formal contracts. I provide this information not as an indication that this is the level of business that we have already booked or will book, but to provide context around prior statements we have made to the effect that BOHA! represents the single biggest individual market opportunity we have had in the company's history.

In all, our sales teams' discussions with wide variety of restaurants and foodservice operators has solidified our belief that this is true. Our team is now preparing for the National Restaurant Association Show in Chicago, which begins later next week. The NRA Show is a wonderful opportunity for our sales team to interact directly with customers and drive awareness for what is the industry's only single vendor solution for back-of-house restaurant automation.

Read the rest of this transcript on seekingalpha.com