TransAct Technologies Incorporated

Greetings, and welcome to the Transact Technologies first quarter 2025 earnings call. At this time, all participants are in listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star then zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ryan Gardella, Investor Relations. Please go ahead, sir.

Thank you. Good afternoon. Welcome to the Transact Technologies first quarter 2025 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 of these initiatives, and details of our first quarter financial results. We will 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 may differ 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 Form 10-K and 10-Q. Trades Act undertakes no obligation to revise or update any forward-looking statements to reflect the venture circumstances that occur after the call. Today's call and webcast will include non-GAAP financial measures and the meaning of SEC regulation change. When required, reconciliation of all non-GAAP financial measures, the 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.

Thanks, Ryan, and good afternoon, everyone, and thanks for joining us today. I'm pleased to report that Transact started off 2025 with a strong quarter, delivering record bohat terminal sales We had 2,350 units, which surpasses last quarter's results, which I believe were 1,639 units. This performance in our food service technology or FST business is a high bar for the year, and while we believe it's likely to be our strongest quarter for 2025, we're pleased with the strength and execution of our revised go-to-market strategies and the dedication of our reorganized sales team. So let me start by reviewing some of the FST highlights for the quarter. First, total FST revenue increased to $14.9 million, up an impressive 49% year-over-year, driven largely by hardware sales. Recurring FST revenue remained stable, and we're happy to report positive net income and adjusted EBITDA for the quarter, demonstrating that our operational and cost discipline is delivering positive results. Clearly, we're encouraged by this momentum and our team is excited about what's the potential for the future. The key driver for this quarter was a conversion of three tier one customers from our first generation Bolha terminal to the Bolha terminal two. These upgrades include rollouts with a major QSR and convenience store chains and highlight the confidence our customers have in the platform. The terminal two is streamlining operations, driving efficiency, And that sales story is resonating. The feedback we're getting is positive. That fuels our optimism for continued growth. Our sales teams refined lead tracking and nurturing processes, which I spent significant time and effort overhauling are paying off with what I consider well scrubbed pipeline. A lot of times pipelines are kind of a mess, but we're feeling like we're in pretty good shape and it's holding steady quarter over quarter. We also, as previously reported, continue targeting the about 40,000 unit Accudate 9700 install base. This was a prior terminal, probably the baby terminal in the early days. Then we had the Terminal 1, then we had the Terminal 2. So that's a significant long-term opportunity, and we're targeting that, I believe, effectively. Our success in convenience store market demonstrates the solid footing that we're finding with this Terminal 2. We secured a major BOHA Terminal 2 upgrade order with a leading national convenience store chain that operates over 700 locations. What started out as a simple pilot has expanded into a full rollout. The chain is replacing legacy workstations to enhance food safety, labeling, and operational tasks. The rollout showcases our growing traction in the convenience store vertical, which we believe is an important vertical. and there's a lot of headroom there and opportunity in the future. We're seeing strong adoption in this sub-vertical and expect this wind to unlock further opportunities as we move forward. The success reinforces the commitment to what I call a land and expand strategy where we secure initial deployments and then grow our footprint over time. Being a little glib here, simple winds, easy expansion. The product is probably the best salesperson we have on the staff. It works well. It's reliable. It delivers the value we promised. And once we get that unit in the store and operational, the customers easily see the advantage, and that's the way we expand the business. We're very proud to demonstrate the power of the terminal and its applicability across a large range of industries. In Q1, we got a contract with the national company healthcare food service provider to deploy BOHA terminals for nutritional labeling and compliance in hospital and care facility kitchens. This new use case in a large sub-vertical demonstrates the flexibility of the technology, how it adapts seamlessly to different demands for different industries, in this case healthcare, yet delivering the same reliability that the restaurant and food service customers, the typical food service customers that we target rely on. This foothold opens new growth avenues and proves the BOHA is a versatile platform built for innovation, and we think we can serve a number of different industries. We're excited to explore that, and we believe the terminal can drive a lot of value. Shifting over to casino and gaming, we're seeing the rebound that we forecasted last quarter with notable strength in our domestic markets. We recorded casino and gaming revenue of $6.7 million, up 18% year over year, and 41% sequentially. The growth was driven by improving market demand, as we highlighted on our last call, and we're pleased that all of our major U.S. OEM partners have returned to what we call buying positions after resolving the prior inventory oversupplies. A new win with a major OEM also was a significant contributor to this quarter's success, and we're eager to deepen the partnership with that supplier moving forward. Our new Epic TR80, it's a thermal roll printer, has now fully entered the market and is available for purchase. It handles printing in sports betting kiosks, video lottery terminals, and other non-casino gaming applications. And during Q&A, if somebody wants to know what those are, I'd be happy to help describe that, but it's not betting the same way. It's more like a lottery system for things like a Lions Club or a Rotary Club or a veteran's home. Anyway, the TR80 is gaining momentum, and we expect sales to climb steadily through 2025, complementing the existing casino and gaming portfolio. Additionally, our partnership with CasinoTrack continues to drive epicentral sales through their slot suite offering, which generates subscription-based revenue that enhances player engagement and supports our recurring revenue income stream. We are mindful of the macroeconomic uncertainties, yet we see no systemic challenges in the midterm for our casino and gaming business and the industry's somewhat slow and perky-jerky, but nonetheless headed up to the right, the recovery gives us confidence for the year ahead. Next, let me provide you with an update on the strategic review process. As you've likely seen in our press release, the Board of Directors and management have determined that it would be most appropriate to suspend the process for now due to increasing levels of uncertainty in the macroeconomic environment at this time. And then given the increased momentum in both the FST and casino business, we think slowing down right now is the best strategy. And yet the Transact and our board and management feel the intention to focus on incremental growth now, executing on a corporate plan in order to expand the business and invest where prudent, yet retaining a commitment to disciplined spending. If and when conditions seem more favorable or opportunities arise, the board and management will jump right back into resuming the process. As always, the board is committed to maximizing stockholder value and is constantly evaluating best strategies to achieve that goal. Before I turn the call over to Steve, I wanted to provide a brief update on our financial outlook for 2025. We're maintaining a full year revenue guidance of 47 to 52 million with adjusted EBITDA now expected to range from break even to negative 1.5 million. That moves the bottom of end of the range up by half a million dollars based on a solid first quarter. The ranges we assume we see continue to be based on recovery in casino and gaming throughout the year without any unexpected disruption in either supply or demand. While we believe this will be the case, we felt it was important to highlight this with some additional color. We have a strong balance sheet, ample working capital to provide a buffer against economic and potential uncertain headwinds. We are pretty strong in the area of cost discipline, evident in Q1's positive EBITDA and positions as well for the year. So I'm pretty comfortable with that. And in summary, we're pleased with a strong first quarter. We achieved record BOHA terminal sales. We delivered positive net income in EBITDA and drove robust growth in FST and casino and gaming sales appear to be back. The BOHA platform is demonstrating its value to customers in convenience stores, healthcare, and beyond. We're seeing the rebound we anticipated last quarter in casino and gaming, including a win with a new OEM customer that helped us generate strong results for products like the TR880. We're focused on execution, improving processes, and fiscal discipline, as I believe you'd hope we would be. And net-net, I'm pleased with the results for the quarter and confident in our team's ability to execute during the remainder of the year. And with that, I'd like to hand the call over to Steve for a detailed review of the financials. Steve?