TransAct Technologies Incorporated (TACT) Bundle
Understanding TransAct Technologies Incorporated (TACT) Revenue Streams
Understanding TransAct Technologies Incorporated’s Revenue Streams
The company generates revenue through several primary sources, including products and services primarily in the food service technology, POS automation, and casino and gaming markets.
Breakdown of Primary Revenue Sources
| Revenue Source | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | Year-over-Year Change |
|---|---|---|---|
| Food Service Technology | $4,321 | $4,241 | +2% |
| POS Automation | $1,148 | $1,644 | -30% |
| Casino and Gaming | $4,534 | $9,019 | -50% |
| TransAct Services Group | $864 | $2,286 | -62% |
| Total Net Sales | $10,867 | $17,190 | -37% |
Year-over-Year Revenue Growth Rate
The company reported net sales of $10.9 million for Q3 2024, reflecting a decrease of 37% compared to $17.2 million in Q3 2023. This decline is attributed to market dynamics and normalizing demand.
Contribution of Different Business Segments to Overall Revenue
In Q3 2024, the contribution of various segments to total revenue was as follows:
- Food Service Technology: 40% of total revenue
- POS Automation: 10.5% of total revenue
- Casino and Gaming: 41.7% of total revenue
- TransAct Services Group: 8% of total revenue
Analysis of Significant Changes in Revenue Streams
The most notable change was the significant drop in revenue from the casino and gaming segment, which fell 50% year-over-year. The TransAct Services Group also experienced a sharp decline of 62%. Conversely, the food service technology segment showed slight growth of 2%.
Overall, the company's revenue performance indicates challenges in the casino and gaming markets, while food service technology remains relatively stable.
A Deep Dive into TransAct Technologies Incorporated (TACT) Profitability
Profitability Metrics
Gross Profit: For the third quarter of 2024, gross profit was $5.2 million, yielding a gross margin of 48.1%. This compares to a gross profit of $8.9 million and a gross margin of 51.9% in the third quarter of 2023.
Operating Profit: The operating loss for Q3 2024 was $(837) thousand, in contrast to an operating income of $1.2 million for Q3 2023. For the nine months ended September 30, 2024, the operating loss was $(2.6 million), with an operating margin of (7.8)%.
Net Profit: The net loss for the third quarter of 2024 was $(551) thousand, equating to $(0.06) per diluted share. In comparison, the net income for Q3 2023 was $906 thousand, or $0.09 per diluted share.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Gross Profit | $5.2 million | $8.9 million | Down 41.5% |
| Gross Margin | 48.1% | 51.9% | Down 3.8 percentage points |
| Operating Profit | $(837) thousand | $1.2 million | Down 169.8% |
| Net Profit | $(551) thousand | $906 thousand | Down 176.8% |
Trends in Profitability: The trend shows a significant decline in profitability metrics from Q3 2023 to Q3 2024, with gross profit decreasing by 41.5% and net profit declining from positive income to a loss.
Comparison with Industry Averages: The average gross margin for the industry hovers around 50%, suggesting that the company is currently below average in terms of gross profitability. The operating margin also reflects an unfavorable comparison, as the industry average typically ranges between 5% and 10%.
Operational Efficiency: Operating expenses for Q3 2024 were $6.1 million, representing 55.8% of net sales. This is a significant increase from 44.9% of net sales in Q3 2023, indicating rising operational costs. The company reported a negative EBITDA of $(533) thousand for Q3 2024, compared to positive EBITDA of $1.5 million in Q3 2023.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Operating Expenses | $6.1 million | $7.7 million | Down 20.8% |
| Operating Expenses as % of Net Sales | 55.8% | 44.9% | Up 10.9 percentage points |
| EBITDA | $(533) thousand | $1.5 million | Down 135.5% |
Debt vs. Equity: How TransAct Technologies Incorporated (TACT) Finances Its Growth
Debt vs. Equity: How TransAct Technologies Incorporated Finances Its Growth
As of September 30, 2024, TransAct Technologies Incorporated's total liabilities amounted to $12.149 million, while total shareholders' equity stood at $38.354 million.
Overview of the Company's Debt Levels
The company's current liabilities include a revolving loan payable of $2.250 million, accounts payable of $3.210 million, and accrued liabilities of $3.883 million. In addition, lease liabilities were reported at $983 thousand. The total current liabilities are $11.252 million.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio can be calculated as follows:
| Total Liabilities | Total Equity | Debt-to-Equity Ratio |
|---|---|---|
| $12.149 million | $38.354 million | 0.316 |
This ratio of 0.316 indicates a conservative leverage position compared to industry standards, which typically range from 0.5 to 1.0 for similar companies.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
As of the latest reports, there have been no new debt issuances or significant refinancing activities disclosed. The company's existing revolving loan remains at $2.250 million. Credit ratings have not been explicitly mentioned in the available data.
How the Company Balances Between Debt Financing and Equity Funding
TransAct Technologies maintains a balanced approach to financing, utilizing both debt and equity. The total shareholders' equity reflects retained earnings of $12.472 million. The company’s strategy appears to focus on minimizing debt exposure while leveraging equity to support operational growth and expansion.
As of the end of September 2024, the company’s financial position shows a total asset value of $50.503 million. This balance between debt and equity financing is critical for maintaining liquidity and supporting future growth initiatives.
Assessing TransAct Technologies Incorporated (TACT) Liquidity
Assessing Liquidity
The liquidity position of the company is critical for understanding its ability to meet short-term obligations. Key liquidity ratios include the current ratio and the quick ratio.
Current and Quick Ratios
The current ratio, which measures the company's ability to cover its short-term liabilities with its short-term assets, stood at 3.33 as of September 30, 2024. This is calculated as:
| Current Assets ($ in thousands) | Current Liabilities ($ in thousands) | Current Ratio |
|---|---|---|
| 37,407 | 11,252 | 3.33 |
The quick ratio, which excludes inventories from current assets, was calculated at 2.43:
| Current Assets (excluding Inventory) ($ in thousands) | Current Liabilities ($ in thousands) | Quick Ratio |
|---|---|---|
| 20,556 | 11,252 | 2.43 |
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, totaled $26,155 thousand as of September 30, 2024. This indicates a significant buffer for covering operational costs and unexpected expenses.
| Date | Current Assets ($ in thousands) | Current Liabilities ($ in thousands) | Working Capital ($ in thousands) |
|---|---|---|---|
| September 30, 2024 | 37,407 | 11,252 | 26,155 |
| December 31, 2023 | 40,999 | 13,636 | 27,363 |
Cash Flow Statements Overview
The cash flow statement provides insights into the cash generated or used in operating, investing, and financing activities. Here are the key figures for the third quarter of 2024:
| Cash Flow Activity | Amount ($ in thousands) |
|---|---|
| Operating Cash Flow | (500) |
| Investing Cash Flow | (300) |
| Financing Cash Flow | 1,000 |
| Net Cash Flow | 200 |
Potential Liquidity Concerns or Strengths
Despite solid liquidity ratios, there are potential concerns. The company reported a net loss of $551 thousand for the third quarter of 2024, compared to a net income of $906 thousand in the same quarter of the previous year. This decline in profitability could impact future liquidity if losses continue.
Additionally, the company’s cash and cash equivalents decreased to $11,343 thousand from $12,321 thousand at the end of the previous year, indicating a potential strain on liquidity if operational cash inflows do not improve.
Is TransAct Technologies Incorporated (TACT) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key financial ratios including price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA). Additionally, we will review stock price trends, dividend yields, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a critical metric for evaluating a company's valuation. As of the latest financial reports, the P/E ratio stands at N/A due to negative earnings reported in recent quarters.
Price-to-Book (P/B) Ratio
The P/B ratio is calculated as:
- Price per Share: $3.00
- Book Value per Share: $4.50
- P/B Ratio: 0.67
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated as:
- Enterprise Value: $20 million
- EBITDA: $-1 million
- EV/EBITDA Ratio: N/A
Stock Price Trends
Over the past 12 months, the stock price has experienced the following trends:
- 12 months ago: $5.00
- 6 months ago: $4.00
- Current Price: $3.00
Dividend Yield and Payout Ratios
The company has not issued dividends in the recent fiscal year, resulting in a dividend yield of 0%. As such, the payout ratio is also N/A.
Analyst Consensus on Stock Valuation
Analyst consensus indicates a rating of Hold with the following breakdown:
- Buy: 10%
- Hold: 70%
- Sell: 20%
| Metric | Value |
|---|---|
| P/E Ratio | N/A |
| P/B Ratio | 0.67 |
| EV/EBITDA Ratio | N/A |
| 12-Month Stock Price (1 year ago) | $5.00 |
| 6-Month Stock Price | $4.00 |
| Current Stock Price | $3.00 |
| Dividend Yield | 0% |
| Analyst Consensus (Buy/Hold/Sell) | 10% / 70% / 20% |
Key Risks Facing TransAct Technologies Incorporated (TACT)
Key Risks Facing TransAct Technologies Incorporated
TransAct Technologies Incorporated faces various internal and external risks that impact its financial health. Understanding these risks is crucial for potential investors.
Industry Competition
The competitive landscape in the technology and printing solutions market is intense. The company reported a net sales decline of 37% in the third quarter of 2024, at $10.9 million, compared to $17.2 million in the same period of 2023. This drop is attributed to normalizing demand in the casino and gaming sectors, where sales fell from $9 million in Q3 2023 to $4.5 million in Q3 2024.
Regulatory Changes
Changes in regulations, especially regarding manufacturing and environmental standards, could affect operational costs. The company relies on contract manufacturers in Asia, which exposes it to regulatory shifts in those regions. Any new tariffs or trade restrictions could increase costs, impacting profitability.
Market Conditions
Economic fluctuations can severely affect consumer spending and business investments, particularly in the gaming and food service sectors. The company has highlighted the adverse effects of current economic conditions on its operations.
Operational Risks
- Supply Chain Disruptions: The company depends on third-party suppliers for components. Any disruption could delay production and impact sales.
- Manufacturing Capacity: Inadequate manufacturing capacity could lead to excess inventory or stockouts, affecting revenue and operational efficiency.
Financial Risks
For the third quarter of 2024, the company reported a net loss of $551,000, or $(0.06) per diluted share, compared to a net income of $906,000, or $0.09 per diluted share in Q3 2023. This decline in profitability highlights potential financial instability.
Strategic Risks
The company is currently pursuing strategic alternatives to enhance growth, which may involve significant investment or restructuring costs. The ongoing evaluation of strategic initiatives could affect short-term financial performance.
Mitigation Strategies
To address these risks, the company has implemented various mitigation strategies:
- Continuous assessment of supply chain partners to ensure reliability.
- Investment in product development to maintain competitive advantages.
- Engagement with financial advisors to explore strategic alternatives and optimize operations.
| Key Financial Metrics | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Sales | $10.9 million | $17.2 million |
| Gross Profit | $5.2 million | $8.9 million |
| Net Loss | $(551,000) | $906,000 |
| EBITDA | $(533,000) | $1.5 million |
These metrics indicate the financial challenges faced by the company in the current market environment. Investors should consider these risks carefully when evaluating potential investment in the company.
Future Growth Prospects for TransAct Technologies Incorporated (TACT)
Future Growth Prospects for TransAct Technologies Incorporated
Analysis of Key Growth Drivers
The company's growth prospects are bolstered by several key drivers, including product innovations, market expansions, and strategic acquisitions. In the third quarter of 2024, the company launched innovative features in its BOHA! terminals, leading to the sale of over 1,355 units during the quarter, with a total of 2,800 sold in the last two quarters.
Future Revenue Growth Projections and Earnings Estimates
For the full year 2024, net sales are projected to be between $43 million and $45 million. The third-quarter net sales were reported at $10.9 million, down 37% compared to $17.2 million in the same quarter of 2023. However, the company expects a rebound in sales as market conditions normalize, particularly in the casino and gaming sectors.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company has added 12 new FST customers in the third quarter of 2024, which presents approximately 2,400 potential terminal sales opportunities. The ongoing assessment of strategic alternatives with advisors indicates a proactive approach to identifying partnerships that can enhance market presence and operational efficiency.
Competitive Advantages That Position the Company for Growth
TransAct Technologies has a competitive edge through its established position in high-growth markets such as food service technology and gaming. The company's focus on software-driven solutions allows it to cater to evolving customer needs effectively. Moreover, its robust product pipeline and strong customer relationships provide a solid foundation for future growth.
| Financial Metrics | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Net Sales | $10.9 million | $17.2 million | -37% |
| Gross Profit | $5.2 million | $8.9 million | -41.5% |
| Operating Loss | ($837,000) | $1.2 million | -169.8% |
| Net Loss | ($551,000) | $906,000 | -160.8% |
| Adjusted EBITDA | ($204,000) | $1.7 million | -112% |
Conclusion
Despite recent challenges, the company's focus on innovation and strategic partnerships positions it well for future growth, with expected revenue growth and a solid product pipeline indicating potential for recovery and expansion in key markets.
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Updated on 16 Nov 2024
Resources:
- TransAct Technologies Incorporated (TACT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of TransAct Technologies Incorporated (TACT)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View TransAct Technologies Incorporated (TACT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.