TransAct Technologies rporated(US:TACT)2019-05-09 18:37Financial Data and Key Metrics Changes - For Q1 2019, the company reported net sales of $11.6 million, a decrease of 6% from $12.2 million in Q1 2018 [25] - Operating income was $777,000, or 6.7% of net sales, compared to $856,000, or 7% of net sales in the prior year [36] - Adjusted EBITDA for Q1 2019 was $1.3 million, slightly up from $1.2 million in the same quarter last year [36] - Gross profit margin reached 52.7%, attributed to a decline in sales of lower-margin products [33] Business Line Data and Key Metrics Changes - Restaurant solutions sales declined 11% year-over-year to $900,000, driven by lower sales of the AccuDate 9700 terminal [25] - Casino and gaming sales decreased 8% year-over-year to $5.5 million, with domestic sales down 18% due to a large one-time shipment in the previous year [26][27] - POS automation and banking sales fell 26% to $1.3 million, primarily due to a slowdown in sales of the Ithaca 9000 POS printer [29] - TSG sales increased 7% year-over-year to $2.8 million, with BOHA! related sales increasing six-fold over the prior quarter [32] Market Data and Key Metrics Changes - Domestic casino and gaming sales were negatively impacted by a government shutdown and rising interest rates, leading to lower printer shipments in January and February [22] - International sales were up 18% year-over-year, driven by a large order from an Asian customer [28] - Lottery printer sales increased 9% to $697,000, although overall lottery sales are expected to decline as the company shifts focus [31] Company Strategy and Development Direction - The company is focusing on the BOHA! back-of-house ecosystem, which is seen as the largest market opportunity in its history, with potential revenues approaching $100 million [12][51] - The strategy includes increasing awareness through marketing initiatives and participating in industry events like the National Restaurant Association Show [13][15] - The company aims to build recurring revenue through software subscriptions, maintenance contracts, and label sales as BOHA! deployments increase [16][19] Management's Comments on Operating Environment and Future Outlook - Management noted that the restaurant and food service industry is facing challenges with labor shortages and rising costs, creating a favorable environment for BOHA! [9] - The sales cycle for new BOHA! opportunities is expected to take time due to the need for trials and customization [20] - Management expressed confidence in the long-term growth potential of BOHA! and its SaaS-based business model, which is anticipated to drive increased profitability [38][39] Other Important Information - The company ended Q1 2019 with $1.9 million in cash and no debt, returning approximately $700,000 to shareholders through dividends [37] - Two new board members were nominated, bringing valuable experience in the restaurant and foodservice sectors [44] Q&A Session Summary Question: Revenue opportunities with large customers - Management highlighted that the potential revenue from large customers related to BOHA! is approaching $100 million, encompassing hardware, software, and maintenance contracts [51] Question: Development process for BOHA! apps - The company engages with customers to identify pain points and develop apps that address specific operational needs, leading to a collaborative development process [52][53] Question: Inventory buildup - The increase in inventory is aimed at ensuring availability of BOHA! terminals and related hardware to meet anticipated demand from large customers [57][59]