TransAct Technologies Reports Third-Quarter Net Loss on 10.7 Percent Decline in Casino and Gaming Sales

TransAct Technologies Inc posted a net loss of $440,000 for the three months ended September 30. This compares with a net profit of $15,000 a year earlier and follows a net loss of $50,000 in the preceding quarter. Casino and gaming sales fell 10.7 percent year-on-year to just under $6.4 million, according to reporting by GGRAsia.

Group-wide net sales rose 9.3 percent to $14.4 million. Food service technology sales increased 32.7 percent to $6.4 million. The company recorded an operating loss of $415,000 versus operating income of $14,000 the prior year.

Segment Results and Adjustments

Gross profit edged up to nearly $6.7 million while the gross margin fell to 46.4 percent from 49.8 percent. Adjusted EBITDA declined 56.8 percent to $289,000. That figure excluded $120,000 in shareholder advisory costs tied to activism.

John Dillon, TransAct’s chief executive, attributed the casino and gaming decline to cyclical patterns. "Casino and gaming softened in the quarter, consistent with the cyclicality that we have seen in the past, and we expect the softer demand environment to continue into the fourth quarter," Dillon stated. He added that the business fundamentals remain unchanged as a regulated market with high barriers to entry and a long-standing OEM customer base.

Guidance Revision and Strategic Review

TransAct lowered its full-year net sales forecast to $55 million to $56 million from a prior range of $55 million to $57 million. Adjusted EBITDA guidance narrowed to $1.5 million to $1.75 million from $1.5 million to $2.0 million. The board is evaluating a potential sale of the food service technology business separately or in a broader transaction.

The formal strategic review announced in August remains focused on the casino and gaming business. Management engaged BofA Securities Inc during the quarter and has set no public timetable for completion. In September the company launched its EPIC TT+ tabletop ticket-in ticket-out printer for use in cashier cages, player clubs and redemption areas.

The cyclical softening points to near-term revenue pressure in casino supply while the food service segment provided offsetting growth. The pending review outcome will determine whether the company narrows or diversifies its exposure.