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TransAct Technologies Inc. (NASDAQ: TACT)
TransAct Technologies Inc. (NASDAQ: TACT) 7 Laser Lane, Wallingford 06492 203-269-1198 www.transact-tech.com
President and CEO Bart C. Shuldman
Revenues (FYE December 31, 1998): $52.2 million
Net income (FYE December 31, 1998): $1.2 million
No. employees: 212
Market capitalization: $35.78 million
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Business New Haven
11/15/1999
By: Kristine Hansen
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Every day our lives are filled with transactions, large and small. It is a rare day that passes without a transaction having taken place. Even our vacations are filled with transactions for purchases, restaurant meals and transportation expenses.
For many of these transactions there is a written record or receipt, which usually finds a home in the wallet of the customer. and that's where TransAct Technologies comes in.s.
And the next time you venture into a casino you may not hear the clicking of coins spilling out from the gambling game machines. A current trend for casinos is a move to cashless slot machines. Casinos are looking into reducing the work and injury potential associated with the handling of thousands of heavy coins. As a result, the cashless slot machine may in the future give the player a paper coupon for winnings - and TransAct equipment may be the printer of those receipts.
Founded following the merger of two business units of Tridex Corp. in 1996, TransAct became a publicly traded company that year same year, with about 20 percent of its stock held by outside shareholders and 80 percent retained by Tridex. The next year Tridex spun off of its 80-percent interest in the company to shareholders.
Today, TransAct conducts business through two operations located in Ithaca, N.Y. and Wallingford, and sales offices in the U.S. and in the UK.
With a company motto of “Made to Order, Built to Last,” the company sells under the brand names of Magnatec and Ithaca. Its business is operated to design, manufacture and sell printing equipment used to generate receipts, coupons, tickets and other printed documents.
The two main markets for its products are point of sale (POS), which garnered 53 percent of sales in 1998, and gaming and lottery at 39 percent of sales for that same year. The company also has a small presence in the financial services and kiosk markets.
TransAct has seen a significant increase in its sales to overseas customers. In 1996, just four percent of sales were outside the U.S. Today, just three years after the IPO, total worldwide sales, mainly from Europe and Latin America, accounted for about 22 percent of total sales.
According to TransAct Corporate Controller Steven A. DeMartino, the company's goal is to have 50 percent of sales generated from overseas. To facilitate its marketing outside the U.S., TransAct enjoys a multiyear contract with Oki Data Corp. which allows the company to use Oki Data offices and sales resources in Europe and Latin America.
In addition, TransAct has partnered with other giants such as Hewlett-Packard Co. with which the company will develop a family of ink-jet printers expected to roll out in first half of the year 2000. Today, TransAct printers are thermal, and this new venture will broaden the company's technology base. TransAct is building fiscal printer products for IBM for distribution in Eastern Europe, as well as a printer for International Game Technology (IGT) for that firm's gaming devices.
Closer to home, DeMartino says that TransAct sales to GTECH are expected to reach $11 million for the year 2000 after a dip in 1999 due to GTECH's need to work down inventories ('98 sales to GTECH were $15 million). The 1999 slowdown in GTECH orders also had an impact on the company's Wallingford location, resulting in layoffs. GTECH accounted for 80 to 90 percent of sales for that location. However, plans are already in place for gearing up the location for year 2000 orders.
Also slated for year 2000, says DeMartino, is a $10 million in sales to ICL/Pathway for the British postal system, a project that was deferred by ICL in 1999. DeMartino explains that the revenue lost in 1999 from these two customers (GTECH and ICL) were made up by new sales to other customers through the company strategy of “more products to more markets.”
Although the company sees its outlook for the coming year as bright, performance in 1998 and 1999 slipped due to declining needs of certain OEM customers. Net sales for 1998 year were $52.2 million, compared to $58.4 million for 1997. Net income for 1998 was $1.2 million (20 cents per diluted share) compared to $4.9 million (71 cents) for the prior year.
For the nine months ended September 25, sales were $34.7 million, with net income of $704,000 (13 cents per share) compared to $39.4 million and net income of $1.4 million (22 cents) for the comparable 1998 period.
The 1999 third quarter showed promise, as the company posted record sales of $9.1 million for POS printers. The core POS business grew 62 percent as a result of demand for its Series 80 thermal printer and Series 150 impact printer. European and Latin American sales increased 300 percent for the third quarter.
Since the company's operating history dates only back to 1996, it is difficult to make comparisons with industry averages. However, analyst reporting is conservative for 1999 projecting EPS at two cents per share. Year 2000 earnings projections are more favorable at 40 cents per share. For the 52-week period, the stock has traded at a low of 2 9/16 and a high of 8. The stock closed at 6 5/8 on November 8.
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