TransAct Technologies rporated(US:TACT)2023-08-10 00:22Financial Data and Key Metrics Changes - Total net sales for Q2 2023 were $19.9 million, representing a year-over-year increase of approximately 58% but a sequential decline of about 11% from Q1 2023 [7][15] - Gross margin for Q2 was 54.5%, slightly down from 55% in the prior year but up from 43% in the same period last year [20] - Net income for the quarter was $765,000 or $0.08 per diluted share, compared to a net loss of $2.4 million or $0.24 loss per diluted share in the prior year [22] Business Line Data and Key Metrics Changes - Food Service Technology (FST) revenue was $3.9 million, up 14% year-over-year, driven by higher shipments of the AccuDate 9700 product and increased label sales [36][43] - Casino and gaming sales reached $12.2 million, an increase of 87% year-over-year but down 23% sequentially from Q1 2023 [18][39] - Recurring FST sales, including software and service subscriptions, were $2.5 million, up 14% compared to $2.2 million in the prior year [17] Market Data and Key Metrics Changes - Domestic sales increased by 141% year-over-year, indicating strong performance in the market [19] - The order rate and backlog additions have slowed due to OEMs reducing their inventory levels after over-ordering in the first half of 2023 [12][45] - The company expects a new baseline sales level to be 15% to 20% higher than pre-COVID historical averages, with this new run rate expected to be fully reflected in Q4 2023 and into 2024 [41] Company Strategy and Development Direction - The company has revamped its sales teams and go-to-market strategies, focusing on execution and improving customer engagement [3][35] - The launch of the BOHA! Terminal 2 is anticipated to enhance market penetration and customer retention, with positive early feedback from trials [38][43] - The company aims to maintain its current net sales guidance of $71.5 million to $73.5 million while raising adjusted EBITDA guidance to a range of $8 million to $8.5 million for the full year 2023 [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to capitalize on market opportunities, despite acknowledging the challenges posed by returning competitors and pricing pressures [42][51] - The company is focused on nurturing new customer relationships and retaining market share, particularly in the casino and gaming sectors [40][43] - Management indicated that the sales cycle for FST products is long but expressed optimism about future sales growth as new strategies take effect [10][11] Other Important Information - The company finished the quarter with $10.8 million in cash and $2.25 million of debt outstanding on its credit facility [49] - Adjusted EBITDA for the quarter improved to $3.2 million compared to an adjusted EBITDA loss of $2.5 million in the prior year [49] Q&A Session Summary Question: What changes have been made to the go-to-market strategy? - Management discussed implementing metrics related to funnel management and improving the connection between marketing and sales to enhance customer engagement and conversion rates [24][25] Question: How is the restaurant space performing? - Management noted that while the restaurant space is still recovering, there are opportunities with larger chains, and they are focusing on areas with more immediate ROI [27][28] Question: What is the outlook for the BOHA! Terminal upgrades? - Management indicated that there are tens of thousands of older AccuDate 9700 units in the market that present upgrade opportunities [31] Question: How is the company addressing production capacity? - Management stated that production capacity is currently good, with plans to potentially add a fourth line in a different country to enhance flexibility [60] Question: What is the expected impact of competitors re-entering the market? - Management acknowledged that the return of competitors and price reductions will impact net sales and profitability but emphasized the company's strong market position [42][51]