TRANSACT TECHNOLOGIES INC Q4 FY2024 earnings call

• FST: Sold 1,639 Baja terminals in Q4, highest since 2020, with 42% combined annual growth rate in Baja terminal placements over last eight quarters. Fourth quarter FST revenue $4.3M, full year $16.1M. Recurring FST revenue in Q4 was $2.7M, down almost 15% sequentially and 5% year over year, full year $10.8M, down 3% from prior year.
• Casino and gaming: Revenue in Q4 $4.8M, up 13.5%-14% year over year, full year $20.3M. Completed rollout of Epic TR80 thermal roll printer, and saw increased sales traction with Epic Central due to relationship with CasinoTrack.
• Strategic review: Management and board are focused on considering all options to increase shareholder value, process is ongoing and complex.
• Cost reductions: Two rounds of cost-cutting initiatives in 2023 Q3 and 2024 Jun, total operating expenses in Q4 $5.6M, down 19% year over year, full year operating expenses $25.1M, down 23% year over year.

Total revenue for the fourth quarter was $10.2 million. For FST (food service technology), fourth quarter revenue was $4.3 million, approximately flat sequentially and down about 8% to 9% year over year, with total FST revenue for the full year at $16.1 million. Casino and gaming revenue in the fourth quarter was $4.8 million, up 13.5% to 14% year over year and approximately 5% sequentially, with full year casino and gaming revenue at $20.3 million. POS automation revenue for the fourth quarter decreased 74% from the prior year to $411,000, with full year at $3.4 million. TransAct Services Group (TSG) sales for the fourth quarter were $759,000, down 73% from the prior year period, with full year at $3.6 million. FST revenue contribution in Q4 was approximately 42.2% ($4.3M/$10.2M), casino and gaming was approximately 47.1% ($4.8M/$10.2M).

• Total revenue expected to be in the range of $47 million to $52 million in 2025.
• Adjusted EBITDA expected to be in the range of zero (breakeven) to about negative $2 million in EBITDA, assuming continued recovery in casino and gaming with no supply chain or demand disruptions.

• Market uncertainties, especially with casino and gaming business still recovering from post-pandemic effects.
• Complexity of strategic review process which may impact shareholder value enhancement.
• Deferred tax assets had a $7.3 million noncash charge in Q4 2024 to record full valuation allowance on deferred tax assets due to cumulative pre-tax losses over previous three fiscal years, though company believes these assets still have monetary value.

Q: Jeff Martin from Roth Capital Partners asked about the breakdown of FST terminal installations in Q4, including large QSR customer contribution, replacements, and new logos.

A: John Dillon and Steve DeMartino responded that the large QSR was a significant portion, Steve noting it wasn't more than half, and John adding about winning new business in previously untapped overseas and other venues.

Q: Jeff Martin inquired about casino and gaming segment growth in 2025 and international side.

A: Steve DeMartino said domestic OEMs are back to buying, international part has some OEMs still working through inventory but expected to be stronger in 2025 overall.

Q: George Sutton from Craig Hallum asked about revenues from exited c store customer in 2024.

A: Steve DeMartino replied it was about $3 to $4 million annualized, with about half in 2024.

Q: George Sutton asked about complexity in strategic review.

A: John Dillon stated it's complex due to two different businesses, economic analysis complexity, and differences between the two businesses.

Q: George Sutton asked about size of Epic TR80 market opportunity.

A: Steve DeMartino said it targets the sports betting market, especially in Europe, with potential for growth as they reestablish relationships and get good interest again.