TransAct Technologies rporated(US:TACT)2025-05-14 20:56Part I - Financial Information Financial Statements (Unaudited) TransAct Technologies reported Q1 2025 net sales of $13.1 million and net income of $19 thousand, a significant improvement from prior year's net loss, with total assets at $44.2 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $14,178 | $14,394 | | Total current assets | $38,918 | $38,362 | | Total assets | $44,164 | $44,034 | | Total current liabilities | $12,752 | $12,884 | | Total liabilities | $13,223 | $13,401 | | Total shareholders' equity | $30,941 | $30,633 | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Account | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net sales | $13,053 | $10,687 | | Gross profit | $6,359 | $5,624 | | Operating loss | $(15) | $(1,301) | | Net income (loss) | $19 | $(1,036) | | Basic EPS | $0.00 | $(0.10) | | Diluted EPS | $0.00 | $(0.10) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(161) | $(1,490) | | Net cash used in investing activities | $(10) | $(106) | | Net cash used in financing activities | $(50) | $(71) | | Decrease in cash and cash equivalents | $(216) | $(1,690) | | Cash and cash equivalents, end of period | $14,178 | $10,631 | Management's Discussion and Analysis of Financial Condition and Results of Operations Q1 2025 revenue grew 22.1% driven by strong FST and Casino/Gaming sales, while gross margin declined due to product mix, and operating expenses decreased, leading to a near break-even operating loss Results of Operations Q1 2025 net sales increased 22.1% to $13.1 million, primarily from FST and Casino/Gaming growth, while gross margin declined due to product mix, and operating expenses decreased, significantly reducing the operating loss Net Sales by Market (in thousands) | Market | Q1 2025 Sales | Q1 2024 Sales | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Food service technology (FST) | $4,908 | $3,300 | $1,608 | 48.7% | | POS automation | $618 | $651 | $(33) | (5.1%) | | Casino and gaming | $6,719 | $5,696 | $1,023 | 18.0% | | TransAct Services Group (TSG) | $808 | $1,040 | $(232) | (22.3%) | | Total Net Sales | $13,053 | $10,687 | $2,366 | 22.1% | - FST sales growth was driven by a 152% increase in hardware sales, primarily BOHA! Terminal 2 units to a large convenience store, an international QSR, and a new sushi customer, offsetting the loss of a significant customer who contributed approximately $300 thousand in revenue in Q1 20247374 - Domestic casino and gaming sales rose 49% as major customers resumed normal ordering after depleting excess inventory built up during the supply chain crisis, with a new OEM customer for charitable gaming also contributing to sales79 - Gross margin decreased by 390 basis points to 48.7% in Q1 2025, largely due to a higher mix of BOHA! hardware sales which have lower margins than casino and gaming products82 - Operating expenses decreased by $551 thousand (8%) year-over-year, reflecting the impact of cost reduction initiatives started in late 2023 and Q2 202487 Liquidity and Capital Resources Cash and equivalents decreased to $14.2 million in Q1 2025, with improved operating cash flow, and the company maintains a $3.0 million credit facility, believing resources are sufficient for future liquidity needs - Cash used in operating activities improved significantly to $161 thousand in Q1 2025 from $1.5 million in Q1 2024, primarily due to a $2.5 million increase in accounts receivable offset by a $1.8 million decrease in inventories9298 - As of March 31, 2025, the company had $3.0 million in outstanding borrowings under its Siena Credit Facility at an interest rate of 9.25%, with an additional $3.3 million of net borrowing capacity available100 - The company expects more normalized sales in the casino and gaming market in 2025 after customers worked through excess inventory in 2024, and management believes existing resources are sufficient for the next twelve months despite uncertainties from tariffs and economic conditions9495 Quantitative and Qualitative Disclosures About Market Risk The company is a smaller reporting company and is not required to provide information for this item - As a smaller reporting company defined in Item 10(f)(1) of Regulation S-K, TransAct is not required to provide information under this item101 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of March 31, 2025, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level102 - No change in internal control over financial reporting occurred during the fiscal quarter ended March 31, 2025, that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting103 Part II - Other Information Legal Proceedings As of March 31, 2025, the company is not aware of any material pending legal proceedings or any material legal proceedings contemplated by government authorities - The company is unaware of any material pending legal proceedings as of March 31, 2025104 Risk Factors The company faces material risks from its dependence on a single Thai manufacturer, exacerbated by new U.S. tariffs on goods from Thailand, potentially increasing costs and disrupting supply - The company is dependent on a single contract manufacturer in Thailand for the assembly of substantially all its printers and terminals, creating significant concentration risk106107 - On April 2, 2025, the U.S. government imposed a 10% tariff on goods imported from Thailand, effective April 5, 2025, with a potential 36% reciprocal tariff announced but subsequently suspended until July 2025108 - These tariffs and potential trade policy changes could lead to additional costs, pricing pressures, and supply chain disruptions that the company may not be able to fully mitigate by raising prices or changing its supply chain108109 Unregistered Sales of Equity Securities and Use of Proceeds None reported for the period - None111 Other Information During the three months ended March 31, 2025, no director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" during the first quarter of 2025113 Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO pursuant to the Sarbanes-Oxley Act and Inline XBRL data files