QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
(State or Other Jurisdiction of Incorporation or Organization)
|
(I.R.S. Employer Identification No.)
|
|
|
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
(
|
(Registrant’s Telephone Number, Including Area Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
||
|
|
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
|
Smaller reporting company
|
Emerging growth company
|
PART I - Financial Information:
|
Page
|
|
Item 1
|
Financial Statements (unaudited)
|
|
Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023
|
3
|
|
4
|
||
Condensed Consolidated Statements of Comprehensive (Loss) Income for the three months ended March 31, 2024 and 2023
|
5
|
|
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023
|
6
|
|
Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2024 and 2023
|
7
|
|
8
|
||
Item 2
|
15
|
|
Item 3
|
24
|
|
Item 4
|
24
|
|
PART II - Other Information:
|
||
Item 1
|
24
|
|
Item 1A
|
24
|
|
Item 2
|
24
|
|
Item 3
|
24
|
|
Item 4
|
24
|
|
Item 5
|
24
|
|
Item 6
|
25
|
|
26
|
March 31, 2024
|
December 31, 2023
|
|||||||
Assets:
|
(In thousands, except share data)
|
|||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Accounts receivable, net of allowance for expected credit losses of $
|
|
|
||||||
Inventories
|
|
|
||||||
Prepaid income taxes
|
||||||||
Other current assets
|
|
|
||||||
Total current assets
|
|
|
||||||
Fixed assets, net of accumulated depreciation of $
|
|
|
||||||
Right-of-use assets
|
|
|
||||||
Goodwill
|
|
|
||||||
Deferred tax assets
|
|
|
||||||
Intangible assets, net of accumulated amortization of $
|
|
|
||||||
Other assets
|
|
|
||||||
|
|
|||||||
Total assets
|
$
|
|
$
|
|
||||
Liabilities and Shareholders’ Equity:
|
||||||||
Current liabilities:
|
||||||||
Revolving loan payable
|
$
|
|
$
|
|
||||
Accounts payable
|
|
|
||||||
Accrued liabilities
|
|
|
||||||
Lease liabilities
|
|
|
||||||
Deferred revenue
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Deferred revenue, net of current portion
|
|
|
||||||
Lease liabilities, net of current portion
|
|
|
||||||
Other liabilities
|
|
|
||||||
|
|
|||||||
Total liabilities
|
|
|
||||||
Commitments and contingencies (see Notes 5 and 7)
|
||||||||
Shareholders’ equity:
|
||||||||
Common stock, $
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Retained earnings
|
|
|
||||||
Accumulated other comprehensive loss, net of tax
|
(
|
)
|
(
|
)
|
||||
Treasury stock, at cost (
|
(
|
)
|
(
|
)
|
||||
Total shareholders’ equity
|
|
|
||||||
Total liabilities and shareholders’ equity
|
$
|
|
$
|
|
Three Months Ended
March 31,
|
||||||||
2024
|
2023
|
|||||||
(In thousands, except per-share data)
|
||||||||
Net sales
|
$
|
|
$
|
|
||||
Cost of sales
|
|
|
||||||
Gross profit
|
|
|
||||||
Operating expenses:
|
||||||||
Engineering, design and product development
|
|
|
||||||
Selling and marketing
|
|
|
||||||
General and administrative
|
|
|
||||||
|
|
|||||||
Operating (loss) income
|
(
|
)
|
|
|||||
Interest and other (expense) income:
|
||||||||
Interest, net
|
|
(
|
)
|
|||||
Other, net
|
(
|
)
|
|
|||||
(
|
)
|
(
|
)
|
|||||
(Loss) income before income taxes
|
(
|
)
|
|
|||||
Income tax (benefit) expense
|
(
|
)
|
|
|||||
Net (loss) income
|
$
|
(
|
)
|
$
|
|
|||
Net (loss) income per common share:
|
||||||||
Basic
|
$
|
(
|
)
|
$
|
|
|||
Diluted
|
$
|
(
|
)
|
$
|
|
|||
Shares used in per-share calculations:
|
||||||||
Basic
|
|
|
||||||
Diluted
|
|
|
Three Months Ended
March 31,
|
||||||||
2024
|
2023
|
|||||||
(In thousands)
|
||||||||
Net (loss) income
|
$
|
(
|
)
|
$
|
|
|||
Foreign currency translation adjustment, net of tax
|
(
|
)
|
|
|||||
Comprehensive (loss) income
|
$
|
(
|
)
|
$
|
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2024
|
2023
|
|||||||
(In thousands)
|
||||||||
Cash flows from operating activities:
|
||||||||
Net (loss) income
|
$
|
(
|
)
|
$
|
|
|||
Adjustments to reconcile net (loss) income to net cash used in operating activities:
|
||||||||
Share-based compensation expense
|
|
|
||||||
Depreciation and amortization
|
|
|
||||||
Deferred income taxes
|
(
|
)
|
|
|||||
Unrealized foreign currency transaction losses
|
|
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
|
(
|
)
|
|||||
Employee retention credit receivable
|
|
|
||||||
Inventories
|
(
|
)
|
(
|
)
|
||||
Prepaid income taxes |
( |
) | ||||||
Other current and long-term assets
|
(
|
)
|
(
|
)
|
||||
Accounts payable
|
(
|
)
|
(
|
)
|
||||
Accrued liabilities and other liabilities
|
(
|
)
|
(
|
)
|
||||
Net cash used in operating activities
|
(
|
)
|
(
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Capital expenditures
|
(
|
)
|
(
|
)
|
||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Withholding taxes paid on stock issuances
|
(
|
)
|
(
|
)
|
||||
Net cash used in financing activities
|
(
|
)
|
(
|
)
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
(
|
)
|
(
|
)
|
||||
Decrease in cash and cash equivalents
|
(
|
)
|
(
|
)
|
||||
Cash and cash equivalents, beginning of period
|
|
|
||||||
Cash and cash equivalents, end of period
|
$
|
|
$
|
|
||||
Supplemental schedule of non-cash investing activities:
|
||||||||
Non-cash capital expenditure items
|
$
|
|
$
|
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2024
|
2023
|
|||||||
(In thousands)
|
||||||||
Equity beginning balance
|
$
|
|
$
|
|
||||
Common stock:
|
||||||||
Balance, beginning of period
|
|
|
||||||
Issuance of common stock from restricted stock units
|
|
|
||||||
Balance, end of period
|
|
|
||||||
Additional paid-in capital:
|
||||||||
Balance, beginning of period
|
|
|
||||||
Share-based compensation expense
|
|
|
||||||
Relinquishment of stock awards to pay for withholding taxes
|
(
|
)
|
(
|
)
|
||||
Balance, end of period
|
|
|
||||||
Retained earnings:
|
||||||||
Balance, beginning of period
|
|
|
||||||
Net (loss) income
|
(
|
)
|
|
|||||
Balance, end of period
|
|
|
||||||
Treasury stock:
|
||||||||
Balance, beginning and end of period
|
(
|
)
|
(
|
)
|
||||
Accumulated other comprehensive loss:
|
||||||||
Balance, beginning of period
|
(
|
)
|
(
|
)
|
||||
Foreign currency translation adjustment, net of tax
|
(
|
)
|
|
|||||
Balance, end of period
|
(
|
)
|
(
|
)
|
||||
Equity ending balance
|
$
|
|
$
|
|
||||
Supplemental share information
|
||||||||
Issuance of shares from stock awards
|
|
|
||||||
Relinquishment of stock awards to pay withholding taxes
|
|
|
Three Months Ended
|
||||||||||||||||||||||||
March 31,
|
||||||||||||||||||||||||
2024
|
2023
|
|||||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
United States
|
International
|
Total
|
United States
|
International
|
Total
|
|||||||||||||||||||
Food service technology
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
POS automation
|
|
|
|
|
|
|
||||||||||||||||||
Casino and gaming
|
|
|
|
|
|
|
||||||||||||||||||
TransAct Services Group
|
|
|
|
|
|
|
||||||||||||||||||
Total net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
March 31, 2024
|
December 31, 2023
|
|||||||
(In thousands)
|
||||||||
Unbilled receivables, current
|
$
|
|
$
|
|
||||
Unbilled receivables, net of current portion
|
|
|
||||||
Customer pre-payments
|
(
|
)
|
(
|
)
|
||||
Deferred revenue, current
|
(
|
)
|
(
|
)
|
||||
Deferred revenue, net of current portion
|
(
|
)
|
(
|
)
|
||||
Total net contract liabilities
|
$
|
(
|
)
|
$
|
(
|
)
|
March 31, 2024
|
December 31, 2023
|
|||||||
(In thousands)
|
||||||||
Raw materials and purchased component parts
|
$
|
|
$
|
|
||||
Finished goods
|
|
|
||||||
$
|
|
$
|
|
(i)
|
The extension of the maturity date from March 13, 2023 to March 13, 2025; and
|
(ii)
|
The termination of the existing blocked account control agreement and entry into a new “springing” deposit account control agreement,
permitting the Company to direct the use of funds in its deposit account until such time as (a) the sum of excess availability under the Siena Credit Facility as amended and unrestricted cash is less than $
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2024
|
2023
|
|||||||
(In thousands, except per-share data)
|
||||||||
Net (loss) income
|
$
|
(
|
)
|
$
|
|
|||
Shares:
|
||||||||
Basic: Weighted average common shares outstanding
|
|
|
||||||
Add: Dilutive effect of outstanding options and restricted stock units as determined by the treasury stock method
|
|
|
||||||
Diluted: Weighted average common and common equivalent shares outstanding
|
|
|
||||||
Net (loss) income per common share:
|
||||||||
Basic
|
$
|
(
|
)
|
$
|
|
|||
Diluted
|
$
|
(
|
)
|
$
|
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2024
|
2023
|
|||||||
Operating cash outflows from leases
|
$
|
|
$
|
|
March 31, 2024
|
December 31, 2023
|
|||||||
Weighted average remaining lease term (in years)
|
|
|
||||||
Weighted average discount rate
|
|
%
|
|
%
|
March 31, 2024
|
December 31, 2023
|
|||||||
2024
|
|
|
|
|||||
2025
|
|
|
||||||
2026
|
|
|
||||||
Total undiscounted lease payments
|
|
|
||||||
Less imputed interest
|
|
|
||||||
Total lease liabilities
|
$
|
|
$
|
|
Item 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Three Months Ended
|
Three Months Ended
|
|||||||||||||||||||||||
March 31, 2024
|
March 31, 2023
|
$ Change
|
% Change
|
|||||||||||||||||||||
Food service technology (“FST”)
|
$
|
3,300
|
30.9
|
%
|
$
|
3,458
|
15.5
|
%
|
$
|
(158
|
)
|
(4.6
|
%)
|
|||||||||||
POS automation
|
651
|
6.1
|
%
|
1,797
|
8.1
|
%
|
(1,146
|
)
|
(63.8
|
%)
|
||||||||||||||
Casino and gaming
|
5,696
|
53.3
|
%
|
15,811
|
71.0
|
%
|
(10,115
|
)
|
(64.0
|
%)
|
||||||||||||||
TransAct Services Group (“TSG”)
|
1,040
|
9.7
|
%
|
1,204
|
5.4
|
%
|
(164
|
)
|
(13.6
|
%)
|
||||||||||||||
$
|
10,687
|
100.0
|
%
|
22,270
|
100.0
|
%
|
$
|
(11,583
|
)
|
(52.0
|
%)
|
|||||||||||||
International *
|
$
|
2,922
|
27.3
|
%
|
$
|
4,673
|
21.0
|
%
|
$
|
(1,751
|
)
|
(37.5
|
%)
|
* |
International sales do not include sales of printers and terminals made to domestic distributors or other domestic customers who may, in turn, ship those printers
and terminals to international destinations.
|
Three Months Ended
|
Three Months Ended
|
|||||||||||||||||||||||
March 31, 2024
|
March 31, 2023
|
$ Change
|
% Change
|
|||||||||||||||||||||
Domestic
|
$
|
3,023
|
91.6
|
%
|
$
|
3,263
|
94.4
|
%
|
$
|
(240
|
)
|
(7.4
|
%)
|
|||||||||||
International
|
277
|
8.4
|
%
|
195
|
5.6
|
%
|
82
|
42.1
|
%
|
|||||||||||||||
$
|
3,300
|
100.0
|
%
|
$
|
3,458
|
100.0
|
%
|
$
|
(158
|
)
|
(4.6
|
%)
|
Three Months Ended
|
Three Months Ended
|
|||||||||||||||||||||||
March 31, 2024
|
March 31, 2023
|
$ Change
|
% Change
|
|||||||||||||||||||||
Hardware
|
$
|
893
|
27.1
|
%
|
$
|
1,131
|
32.7
|
%
|
$
|
(238
|
)
|
(21.0
|
%)
|
|||||||||||
Software, labels and other recurring revenue
|
2,407
|
72.9
|
%
|
2,327
|
67.3
|
%
|
80
|
3.4
|
%
|
|||||||||||||||
$
|
3,300
|
100.0
|
%
|
$
|
3,458
|
100.0
|
%
|
$
|
(158
|
)
|
(4.6
|
%)
|
Three Months Ended
|
Three Months Ended
|
|||||||||||||||||||||||
March 31, 2024
|
March 31, 2023
|
$ Change
|
% Change
|
|||||||||||||||||||||
Domestic
|
$
|
651
|
100.0
|
%
|
$
|
1,782
|
99.2
|
%
|
$
|
(1,131
|
)
|
(63.5
|
%)
|
|||||||||||
International
|
--
|
--
|
15
|
0.8
|
%
|
(15
|
)
|
(100
|
%)
|
|||||||||||||||
$
|
651
|
100.0
|
%
|
$
|
1,797
|
100.0
|
%
|
$
|
(1,146
|
)
|
(63.8
|
%)
|
Three Months Ended
|
Three Months Ended
|
|||||||||||||||||||||||
March 31, 2024
|
March 31, 2023
|
$ Change
|
% Change
|
|||||||||||||||||||||
Domestic
|
$
|
3,238
|
56.8
|
%
|
$
|
11,569
|
73.2
|
%
|
$
|
(8,331
|
)
|
(72.0
|
%)
|
|||||||||||
International
|
2,458
|
43.2
|
%
|
4,242
|
26.8
|
%
|
(1,784
|
)
|
(42.1
|
%)
|
||||||||||||||
$
|
5,696
|
100.0
|
%
|
$
|
15,811
|
100.0
|
%
|
$
|
(10,115
|
)
|
(64.0
|
%)
|
Three Months Ended
|
Three Months Ended
|
|||||||||||||||||||||||
March 31, 2024
|
March 31, 2023
|
$ Change
|
% Change
|
|||||||||||||||||||||
Domestic
|
$
|
853
|
82.0
|
%
|
$
|
983
|
81.6
|
%
|
$
|
(130
|
)
|
(13.2
|
%)
|
|||||||||||
International
|
187
|
18.0
|
%
|
221
|
18.4
|
%
|
(34
|
)
|
(15.4
|
%)
|
||||||||||||||
$
|
1,040
|
100.0
|
%
|
$
|
1,204
|
100.0
|
%
|
$
|
(164
|
)
|
(13.6
|
%)
|
Three Months Ended March 31,
|
Percent
|
Percent of
|
Percent of
|
|||||||||||||||
2024
|
2023
|
Change
|
Total Sales - 2024
|
Total Sales - 2023
|
||||||||||||||
$
|
5,624
|
$
|
12,255
|
(54.1
|
%)
|
52.6
|
%
|
55.0
|
%
|
Three Months Ended March 31,
|
Percent
|
Percent of
|
Percent of
|
|||||||||||||||
2024
|
2023
|
Change
|
Total Sales - 2024
|
Total Sales - 2023
|
||||||||||||||
$
|
1,966
|
$
|
2,269
|
(13.4
|
%)
|
18.4
|
%
|
10.2
|
%
|
Three Months Ended March 31,
|
Percent
|
Percent of
|
Percent of
|
|||||||||||||||
2024
|
2023
|
Change
|
Total Sales - 2024
|
Total Sales - 2023
|
||||||||||||||
$
|
2,083
|
$
|
2,757
|
(24.4
|
%)
|
19.5
|
%
|
12.4
|
%
|
Three Months Ended March 31,,
|
Percent
|
Percent of
|
Percent of
|
|||||||||||||||
2024
|
2023
|
Change
|
Total Sales - 2024
|
Total Sales - 2023
|
||||||||||||||
$
|
2,876
|
$
|
3,416
|
(15.8
|
%)
|
26.9
|
%
|
15.3
|
%
|
Three Months Ended March 31,
|
Percent
|
Percent of
|
Percent of
|
|||||||||||||||
2024
|
2023
|
Change
|
Total Sales – 2024
|
Total Sales – 2023
|
||||||||||||||
$
|
(1,301
|
)
|
$
|
3,813
|
(134.1
|
%)
|
(12.2
|
%)
|
17.1
|
%
|
•
|
We reported a net loss of $1.0 million.
|
•
|
We recorded depreciation and amortization of $0.4 million and share-based compensation expense of $0.3 million.
|
•
|
Inventories increased $1.4 million consistent with the slowdown in sales as discussed in our Results of Operations above. We expect our
inventories to decline, particularly during the second half of 2024, as we reduce our ordering levels and sell through our inventories on hand.
|
•
|
Accounts receivable decreased $2.0 million due to the continued collections of sales combined with the slowdown in sales as discussed in our
Results of Operations above.
|
•
|
Accrued and other liabilities decreased $1.0 million due largely to the payout of 2023 bonuses in the first quarter of 2024.
|
•
|
We reported net income of $3.1 million.
|
•
|
We recorded depreciation and amortization of $0.4 million, and share-based compensation expense of $0.3 million.
|
•
|
Deferred tax assets were down $0.5 million due to pre-tax income being recognized in the first quarter of 2023.
|
•
|
Accounts receivable increased $3.0 million in 2023 due primarily to increased sales.
|
•
|
Employee retention credit receivable decreased $1.5 million due to the collection of this receivable in the first quarter of 2023.
|
•
|
Accounts payable declined $2.8 million in 2023 due largely to the sell through of inventory on-hand at the end of 2022 as well as the timing of
vendor payments.
|
(i) |
The extension of the maturity date from March 13, 2023 to March 13, 2025; and
|
(ii) |
The termination of the existing blocked account control agreement and entry into a new “springing” deposit account control agreement, permitting the Company to direct
the use of funds in its deposit account until such time as (a) the sum of excess availability under the Siena Credit Facility as amended and unrestricted cash is less than $5 million for 3 consecutive business days or (b) an event of
default occurs and is continuing.
|
Item 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 4. |
CONTROLS AND PROCEDURES
|
Item 1. |
LEGAL PROCEEDINGS
|
Item 1A. |
RISK FACTORS
|
Item 2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Item 3. |
DEFAULTS UPON SENIOR SECURITIES
|
Item 4. |
MINE SAFETY DISCLOSURES
|
Item 5. |
OTHER INFORMATION
|
a) |
None
|
b) |
None
|
c) |
During the three months ended March 31, 2024, no director or officer of the Company
|
Item 6. |
EXHIBITS
|
Certificate of Incorporation of TransAct Technologies Incorporated (conformed copy) (incorporated by reference to Exhibit 3.2 of the Company’s
Quarterly Report on Form 10-Q (SEC File No. 000-21121) filed with the SEC on August 18, 2022).
|
||
Amended and Restated By-laws of TransAct Technologies Incorporated (incorporated by reference to Exhibit 3.2 of the Company’s Annual Report on Form
10-K (SEC File No. 000-21121) filed with the SEC on March 28, 2023).
|
||
31.1 *
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31.2 *
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.1 **
|
Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101.INS
|
Inline XBRL Instance Document (the instance document does not appear
in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document.
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
|
* |
Filed herewith.
|
** |
Furnished herewith.
|
TRANSACT TECHNOLOGIES INCORPORATED
|
|
(Registrant)
|
|
By: /s/ Steven A. DeMartino
|
|
Dated: May 14, 2024
|
Steven A. DeMartino
|
President, Chief Financial Officer, Treasurer and Secretary
|
|
(Principal Financial Officer)
|
|
By: /s/ William J. DeFrances
|
|
Dated: May 14, 2024
|
William J. DeFrances
|
Vice President and Chief Accounting Officer
|
|
(Principal Accounting Officer)
|