TransAct Technologies Incorporated

Greetings and welcome to the Transact Technologies fourth quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ryan Gardella, Investor Relations. Thank you. You may begin.

Thank you, Tasha. Thank you. Good afternoon and welcome to the Transact Technologies fourth quarter and full year 2024 earnings call. Today we'll be discussing the results announced in our press release issued after market close. Joining us from the company is CEO John Dillon and President and CFO Steve DiMartino. Today's call will include a discussion of the company's key operating strategies, the progress on these initiatives, and details on our fourth quarter and full year financial results. We'll then open the call to participants for questions. As a reminder, this conference call contains statements about future events and expectations which are forward-looking in nature. Statements on this call may be deemed as forward-looking and actual results made different materially. For a full list of risks inherent to the business and the company, please refer to the company's SEC filings, including its reports on 10-K and 10-Q forms. Transact undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances that occur after the call. Today's column of tasks will include non-GAAP financial measures and the meaning of SEC Regulation G. When required, reconciliations of all non-GAAP financial measures and most directly comparable financial measures calculated and presented in accordance with GAAP can be found in today's press release as well as on the company website. And with that, I'd like to turn the call over to John.

Thank you, Ryan, and good afternoon, everyone, and thank you for joining us. So I'm pleased to announce what I consider a relatively strong year at the end, particularly for FST. Total revenue for the fourth quarter was $10.2 million, highlighted by the sale of 1,639 BOHA terminals. It's the highest quarterly number we've recorded since 2020. And in fact, I did some math, and over the last eight quarters, beginning in Q1, two years ago, 2023, we've seen a 40% plus 42% combined annual growth rate in our quarterly BOHA terminal placements. That's compounded. And this demonstrates, in my opinion, the improvements we've made in our go-to-market, the GTM strategies, and our internal sales motions. They are, in fact, working well to improve the business. We are also pleased that the momentum is here, and we believe that terminal placements will continue to trend upward throughout 2025. So let's review some of the other fourth quarter and full year results. For the fourth quarter, we generated total FST revenue, that's food service technology, 4.3 million. It's approximately flat sequentially and down about 8% to 9% year over year. And recurring FST revenue of 2.7 million down almost 15% sequentially and 5% year over year. For the full year, we recorded FST revenue of $16.1 million and FST recurring revenue for the year was $10.8 million, down about 1% and 2.9% respectively from the prior year. As a reminder, we stopped receiving recurring revenue and additional hardware sales as previously discussed from a large client in the third quarter of 2024. meaning that much of our third and all of our fourth quarter recurring revenue results include only a de minimis contribution from that client, but our year-over-year comparisons do. So that's wiped down a little bit. However, we believe that our improving results ultimately will offset the loss from that one client, unexpected as it was. I'm not happy about it, but, you know, it is what it is. It happens occasionally to any company. So we're working our way past that, and the numbers, I think, show that. The growing success in FST markets direct results, as I pointed out, of the reorganization, refocusing the FST sales team and marketing teams during the past 18 months. We acknowledge and understand that there's still work to be done. This is a recurring and improving process, you know, constant improvement. But I'm pleased with the progress so far and the growing momentum in the FST side of our business. It's still going to be lumpy. But we expect overall the trends will be upward and to the right, which is where you want them to be. We're also seeing good conversion stream, a good conversion stream coming from the existing customers who are using either our AccuDate terminal or earlier terminals that we provided in the past to the new BOHA Terminal 2. And this is including from our large QSR customer who refuses to let us use their name. However, they're continuing to roll out the Terminal 2 as planned. In addition to our large QSR and a large sushi customer, this is Hiso, we have a major convenience store chain customer that has begun to upgrade about 1,400 of their old workstations to the new BOHA terminal. As a reminder, we discontinued our prior generation Accudate 9700 at the end of 23, which also makes the AccuDate install base of about 40,000 units a potential target for upgrades to the Terminal 2. And we're gradually targeting that and finding a successful opportunity there. For the quarter, we landed six new accounts. Not lots, but it's good. However, I'll point out that these six accounts represent future potential opportunity for about 6,000 units over time. We tend to use a bit of a land and expand strategy. It's easier to get the first bite of the apple, as it were. And then the goal is to get the rest of the camel's nose, not just the nose, but the rest of the camel into the tent. And that's usually what happens with us. So land and expand the strategy and the six new accounts are an excellent opportunity for us in the future. Additionally, the new pipeline remains solid, new business pipeline. With quarter-over-quarter difference in the rolling four-quarter pipeline numbers remaining consistent and constant, so the pipeline's holding up good. I'll point out that when I took over, the pipeline discipline was pretty weak. The discipline around vetting the pipeline and making sure you know what's in it and what's going to close and what's not going to close has improved significantly since we began the GTM overhaul last year. Moving on to casino and gaming, we recorded revenue in the fourth quarter of $4.8 million, up 13.5% to 14% year-over-year, and approximately 5% sequentially. We're pleased to see the continued normalization of this market. As we predicted, there is evidence of improvement in the demand side of the market, with our first quarter this year trending a bit stronger than the fourth quarter last year so far. And on the inventory side, we believe we now have all of our major domestic OEM partners back in buying positions after working with them, and in some cases to reconfigure existing inventory they had so they could sell it in other markets. So that's worked out well. I'd also like to highlight two pieces of news that we think will be important for 25, and that's first we have completed the rollout of our Epic TR80 thermal roll printer, This printer is used in sports betting kiosks, some video lottery terminals, and other non-casino games. And it's going to be something that's going to complement some of the other systems that we already sell in casino and gaming, so we're happy about that. We expect it to fuel additional sales more or less throughout the year. And second, we are again encouraged by the increased sales traction we're seeing with Epic Central due to our new relationship with CasinoTrack. CasinoTrack sells Epic Central as part of their slot suite product offering on a subscription basis. So we receive, if you will, recurring revenue per month, per unit, basically per slot going forward. And it basically helps encourage players to expand their play, play longer, improves the average daily play. So this is exciting. They've got a really nice solution with slot suite, and we're a component of that, which helps us as well. We believe that 2025 will be a positive year, over a year of casino and gaming sales. However, it's incumbent upon me to add that that business, we call it CNG, but casino and gaming, it's still recovering from the pandemic and the exuberant post-pandemic rebound. And now it's in a bit of a hangover. I mean, everybody came back to the casinos and everyone went crazy when the pandemic was over. And now the casinos are sitting there figuring out, well, what's steady state going to look like? However, all in all, we see no systemic problems in the midterm for our C&G business, but our clients are still dealing with some amount of day-to-day market uncertainties. But again, we feel that the industry is back and it's going to be in good shape. I know some of the casino stocks are down a little bit and some of them have posted down results, but we don't see any slowdown in the long-term or the mid-term situation. relative to those industries. Next, I want to provide you with an update on our strategic review process. We began that only just a year ago. We started it, we announced we were going to do it in Q4 of 23. We began in earnest in 24. The process is active and it's ongoing. Our management team and our board of directors are focused on the process, believe me. And collectively, we're determined to consider any and all options that increase and or deliver shareholder value. We don't have further updates right now, but the process, when the company determines that a disclosure is appropriate or required, you will hear about it immediately from us. Many of our shareholders have said, well, it seems like it's taking a long time. Believe me, the process is way more complex than you might think. suspect from the outside, but we're working very hard at it. You can trust me on that. We're not turning away any opportunities that might come our way. We're looking at everything, and I believe that the process is doing the things that most investors would want us to do. Finally, before I turn the call over to Steve, let me provide our 2025 financial outlook. For total revenue, we're expecting a range of between $47 million and $52 million in top-line revenue. And for adjusted EBITDA, we're expecting a range of zero, which is breakeven, to about a negative $2 million in EBITDA. These ranges assume we see continued recovery in casino and gaming throughout the year with no disruptions in either supply chain or demand. While we believe this will be the case, we felt it was important to provide that additional color commentary. Overall, we are pleased with our momentum on AISP side of the business. including the 40-plus percent compound annual growth rate in terminal units placed in the last two years. We got a strong balance sheet. We got enough working capital to weather a potential downturn in the economy, which we don't expect. However, we're prepared if needed, and our casino and gaming business is recovering. While we're continuing to press forward to grow our success in FST, we also simultaneously will vigorously pursue Our strategic review focused on maximizing and returning value to shareholders. And with that, I'd like to turn the call over to Steve for a more detailed review of the financials. Steve?