TransAct Technologies rporated(TACT) - 2020 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total net revenue for Q2 2020 declined 53% year-over-year to $5.3 million, exceeding revenue expectations of $4.5 million to $5 million [8] - Operating loss recorded at $2.7 million, with an adjusted EBITDA loss of $2.3 million, both exceeding internal projections [9] - Gross profit margin for the quarter was 43.3%, down from 50.3% in the prior year [35] - Net loss for Q2 2020 was $1.9 million or $0.25 per diluted share, compared to net income of $186,000 or $0.02 per diluted share in the year-ago period [42] Business Line Data and Key Metrics Changes - Food Service Technology (FST) market revenue increased 7% to $1.2 million, with recurring revenue growing 100% year-over-year to $659,000 [30][18] - Casino and gaming sales fell 76% to $1.4 million, with domestic revenues down 72% and international revenues down 82% [32] - POS automation and banking sales decreased 71% to $481,000, primarily due to lower sales to McDonald's [33] Market Data and Key Metrics Changes - The global casino and gaming markets faced significant challenges, with many casinos closed in the US during the first half of Q2, but approximately 85% were open by late June [11] - The Food Service industry showed varied recovery, with convenience stores rebounding faster than casual restaurants [16] Company Strategy and Development Direction - The company is focusing on enhancing its technology offerings, particularly in the Food Service Technology market, to drive future growth [21] - New product launches, such as Epicentral Clean2Play, aim to address sanitation challenges in casinos [15] - The company plans to leverage its BOHA! solution to capture growth in the convenience store and grocery sectors [20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in the restaurant industry and the uptick in order activity, particularly in the Food Service Technology market [48] - The company anticipates gradual improvement in sales as the impact of COVID-19 diminishes, projecting Q3 sales between $5.5 million to $6 million [45] - Management highlighted the importance of technology in helping restaurants and casinos adapt to new operational challenges [78] Other Important Information - The company implemented significant cost-cutting measures, resulting in a total savings of approximately $1.7 million in Q2 [25] - The company ended Q2 with $3.1 million in cash and $2.2 million in debt under the PPP loan [43][74] Q&A Session Summary Question: Thoughts on the convenience store market and Speedway acquisition - Management noted a return of orders from a large convenience store customer and highlighted the potential for significant recurring revenue from new label orders [53] Question: Business environment and customer orders - Management reported an uptick in orders in June, particularly in the Food Service Technology market, indicating a positive trend in deal flow and customer interest [61] Question: Balance sheet and debt situation - Management confirmed that the long-term debt primarily consists of the PPP loan, with only $6,000 outstanding under the credit facility [68][70] Question: Technology's role in restaurant and casino recovery - Management emphasized the growing demand for technology solutions in restaurants and casinos as they adapt to new operational requirements [78][82]