TransAct Technologies (TACT) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales were $11.6 million, up 9% sequentially but down 42% year-over-year, with a net loss of $319,000 or $0.03 per diluted share versus net income of $765,000 ($0.08 per share) a year ago.

• Foodservice Technology (FST) segment showed strong momentum, with revenue up 7% year-over-year and 27% sequentially, and 13 new customers added.

• Casino and gaming revenue declined 56% year-over-year due to OEM customers working down excess inventory and competitive pressures.

• Cost reduction initiatives implemented in late 2023 and Q2 2024 are expected to yield $5 million in annualized savings, with $2 million starting Q3 2024.

• Strategic review process is ongoing, with Roth Capital Partners engaged to evaluate alternatives.

Financial highlights

• FST recurring revenue reached $2.8 million, up 12% year-over-year and 15% sequentially.

• Gross margin for Q2 was 52.7%, down from 54.5% a year ago.

• Operating loss was $438,000, compared to operating income of $1.2 million last year.

• Adjusted EBITDA for Q2 was $89,000, up from -$701,000 in Q1 2024 and down from $3.2 million in Q2 2023.

• Cash and equivalents at June 30, 2024, were $11.1 million, with $2.25 million in outstanding borrowings.

Outlook and guidance

• 2024 net sales guidance maintained at $45–$50 million.

• Adjusted EBITDA guidance raised to $1–$2 million for 2024, from previous negative $2.5–$3.5 million.

• Gross margin expected in the mid- to high-40% range for the remainder of 2024.

• Additional cost reductions expected to further lower operating expenses in H2 2024.

• Business expected to be close to cash break-even for the full year.