2018 was a particularly great year for casino equipment supplier TransAct Technologies. It saw 69% growth compared to the previous year, allowing the company to report a net profit of $5.4 million. However, what goes up, with very few exceptions, must come down, and 2019 saw TransAct’s numbers take a huge hit. So huge, in fact, that they almost completely wiped out all of the gains from the previous year.
According to a company filing from yesterday, TransAct saw a 2019 fourth-quarter loss of $800,000, an almost complete 180 to the $962,000 profit it reported for the same quarter a year earlier. For all of 2019, profit plummeted a massive 90.5%, wiping out the $5.4 million 2018 gain and leaving just $516.000.
The weaker results are due to a drop in net sales of around 5% in the last quarter compared to the same period a year earlier, shrinking from $11.76 million to $11.16 million. That activity was a reflection of the entire year’s performance, which saw net sales slide 16.2% to $45.75 million from just under $54.6 million a year earlier.
Still, the company’s chairman and CEO, Bart Shuldman, is apparently happy with the performance, although shareholders probably don’t share his upbeat spirit. He said when turning over the financial numbers, “We are pleased with our execution throughout the year as we transition the focus of our business to the very large food service technology market opportunity that is served by our Boha ecosystem of recurring software and service subscriptions, consumable label sales and our purpose-built BOHA! Hardware.”
Boha is the company’s food inventory monitoring and food safety tracking system. It was selected by a casino resort in Macau last summer, but the company didn’t identify the property by name. Just the announcement, though, was enough to send the NASDAQ-listed company’s price up from $8.49 at the beginning of June to a yearlong high of $12.88 just a few days later. However, since then, the price has fallen and now sits at $8.50 as of yesterday.
It wasn’t all bad news for TransAct, though. The company also states that fourth-quarter sales from its food service technology operations skyrocketed 58% to almost $1.81 million. For all of last year, the segment saw year-on-year growth of 20% to reach $6.10 million. In addition, there were several charges last year, such as a lease liability of $945,000, that impacted the final numbers, but which won’t repeat this year.
That wasn’t enough to right the ship, though, and adjusted EBITDA (earnings before interest, taxation, depreciation and amortization) was -$140,000 compared to a positive $1.31 million in 2018. On the year, adjusted EBITDA dropped 69.9%, falling from $8.12 million to $2.44 million. In anticipation of the weaker year, the company had announced this past January that it was suspending quarterly cash dividends on common stock, which would help it free up around $2.7 million a year. It’s likely that suspension won’t be reinstated anytime soon.
