Transact Technologies (TACT) Tops Q3 EPS by 9c, Revenues Beat
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Transact Technologies (NASDAQ: TACT) reported Q3 EPS of $0.33, $0.09 better than the analyst estimate of $0.24. Revenue for the quarter came in at $15.8 million versus the consensus estimate of $15.49 million.
Bart Shuldman, Chairman and Chief Executive Officer of TransAct, commented, “TransAct delivered strong third quarter results across several financial metrics clearly highlighting the effectiveness of our strategy to leverage our leading position and success in the casino and gaming industry to fund the build out of our products and software solutions to address the significant opportunity in the restaurant solutions market. Reflecting this success, we generated quarterly records for gross margin, operating margin and diluted EPS.
“During the 2018 third quarter, we generated 62% year-over-year growth in our casino and gaming sales as we further expanded our global market share, which continues to benefit from our decision last year to build out a European direct sales team to better address our customers throughout that region. Our record quarterly gross margin of 50.5% in the 2018 third quarter reflects the growing proportion of higher-margin solutions in our overall sales mix, which drove our operating margin to an all-time high of 20.3% and record quarterly earnings per share to $0.33 in the 2018 third quarter.
“TransAct’s restaurant solutions opportunity continues to evolve and grow as greater emphasis is placed by operators on their need for value-added software solutions that help them digitize and automate their range of disparate back-of-the-house processes to operate more efficiently, profitably and on a value-added basis. Our early-to-market position, understanding of the industry’s needs, nimbleness, and ability to self-fund investments in the right people and technology development resources continues to open significant new opportunities for us as we build sales momentum and further position TransAct as the market leader.
“Our flagship terminal solution, the AccuDate XL2e, offers operators new breakthroughs in functionality and has been met with widespread positive industry response. We believe that the AccuDate XL2e and our growing restaurant software solutions portfolio is set to become the de-facto standard for back-of-the-house automation. Our software and hardware development teams have made continued advancements and are building a host of critical new capabilities intended to establish TransAct’s ecosystem solution as an invaluable tool for restaurant and foodservice operators of all sizes. We expect these enhancements will both support hardware sales growth and drive recurring software revenue that we estimate could be two to three times higher on an annual basis than the value of the original hardware sale.
“At the same time, our near record quarterly casino and gaming sales reflect TransAct’s continued success in leveraging our industry-leading technology to further grow our domestic and international market share. The 62% year-over-year increase and 50% year-to-date rise in casino and gaming sales are clear indications that the value we provide customers has never been higher. Our recent introduction of the Epic Edge printer, which brings next-level print resolution to gaming floors worldwide, highlights again our commitment to lead this market through consistent innovation and unmatched reliability.
“While there is still much work to do in the coming quarters, we are making consistent and meaningful progress and our hardware and software solutions are gaining the attention of customers across the large and highly complex restaurant and foodservice industry. From day one, we have leveraged our printer technology to enter new markets and grow share across a number of industries thereby establishing a long-term track record of success in delivering best-in-class solutions. Today, our teams are working on a number of large projects that have the potential to significantly transform TransAct as we create a business model built around upfront hardware sales and significant recurring software sales as well as maintenance, support and consumable label sales. We have seen an evolution of this business model as our customers continue to request more and more software solutions to help them mitigate increasing wages and food costs while also focusing on the critical aspects of food safety.”
For earnings history and earnings-related data on Transact Technologies (TACT) click here.
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