Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | Apr. 30, 2021 | |
Cover page. | ||
Entity Registrant Name | TRANSACT TECHNOLOGIES INC | |
Entity Central Index Key | 0001017303 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2021 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Document Transition Report | false | |
Entity File Number | 0-21121 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 06-1456680 | |
Entity Address, Address Line One | One Hamden Center | |
Entity Address, Address Line Two | 2319 Whitney Avenue, Suite 3B | |
Entity Address, City or Town | Hamden | |
Entity Address, State or Province | CT | |
Entity Address, Postal Zip Code | 06518 | |
City Area Code | 203 | |
Local Phone Number | 859-6800 | |
Title of 12(b) Security | Common stock, par value $0.01 per share | |
Trading Symbol | TACT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 8,965,541 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 8,728 | $ 10,359 |
Accounts receivable, net | 4,712 | 3,377 |
Note receivable | 0 | 100 |
Inventories | 10,000 | 11,286 |
Prepaid income taxes | 2,411 | 2,409 |
Other current assets | 911 | 644 |
Total current assets | 26,762 | 28,175 |
Fixed assets, net of accumulated depreciation of $20,124 and $19,979, respectively | 1,852 | 1,950 |
Note receivable, net of current portion | 0 | 1,584 |
Right-of-use asset | 3,429 | 3,618 |
Goodwill | 2,621 | 2,621 |
Deferred tax assets | 3,489 | 2,939 |
Intangible assets, net of accumulated amortization of $4,056 and $4,005, respectively | 532 | 583 |
Other assets | 678 | 777 |
Total noncurrent assets | 12,601 | 14,072 |
Total assets | 39,363 | 42,247 |
Current liabilities: | ||
Accounts payable | 1,919 | 1,691 |
Accrued liabilities | 2,498 | 3,665 |
Lease liability | 813 | 837 |
Deferred revenue | 569 | 504 |
Total current liabilities | 5,799 | 6,697 |
Long-term debt | 2,173 | 2,173 |
Deferred revenue, net of current portion | 202 | 111 |
Lease liability, net of current portion | 2,666 | 2,864 |
Other liabilities | 160 | 166 |
Total noncurrent liabilities | 5,201 | 5,314 |
Total liabilities | 11,000 | 12,011 |
Shareholders' equity: | ||
Common stock, $0.01 par value, 20,000,000 shares authorized; 13,010,383 and 12,976,227 shares issued, respectively; 8,965,541 and 8,931,385 shares outstanding, respectively | 130 | 130 |
Additional paid-in capital | 42,816 | 42,536 |
Retained earnings | 17,512 | 19,718 |
Accumulated other comprehensive income (loss), net of tax | 15 | (38) |
Treasury stock, at cost, 4,044,842 shares | (32,110) | (32,110) |
Total shareholders' equity | 28,363 | 30,236 |
Total liabilities and shareholders' equity | $ 39,363 | $ 42,247 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Assets: | ||
Fixed assets, accumulated depreciation | $ 20,124 | $ 19,979 |
Intangible assets, accumulated amortization | $ 4,056 | $ 4,005 |
Shareholders' equity: | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 13,010,383 | 12,976,227 |
Common stock, shares outstanding (in shares) | 8,965,541 | 8,931,385 |
Treasury stock (in shares) | 4,044,842 | 4,044,842 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CONSOLIDATED STATEMENTS OF INCOME [Abstract] | ||
Net sales | $ 8,301 | $ 10,247 |
Cost of sales | 5,112 | 5,329 |
Gross profit | 3,189 | 4,918 |
Operating expenses: | ||
Engineering, design and product development | 1,803 | 1,385 |
Selling and marketing | 1,443 | 2,208 |
General and administrative | 2,609 | 2,620 |
Operating expenses | 5,855 | 6,213 |
Operating loss | (2,666) | (1,295) |
Interest and other (expense) income: | ||
Interest, net | (13) | 3 |
Other, net | (83) | (165) |
Interest and other expense | (96) | (162) |
Loss before income taxes | (2,762) | (1,457) |
Income tax benefit | (556) | (465) |
Net loss | $ (2,206) | $ (992) |
Net loss per common share: | ||
Basic (in dollars per share) | $ (0.25) | $ (0.13) |
Diluted (in dollars per share) | $ (0.25) | $ (0.13) |
Shares used in per-share calculation: | ||
Basic (in shares) | 8,948 | 7,507 |
Diluted (in shares) | 8,948 | 7,507 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS [Abstract] | ||
Net loss | $ (2,206) | $ (992) |
Foreign currency translation adjustment, net of tax | 53 | 71 |
Comprehensive loss | $ (2,153) | $ (921) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities: | ||
Net loss | $ (2,206) | $ (992) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Share-based compensation expense | 264 | 187 |
Depreciation and amortization | 240 | 238 |
Deferred income taxes | (555) | (518) |
Gain on the sale of fixed assets | (8) | 0 |
Foreign currency transaction losses | 90 | 194 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,330) | 106 |
Inventories | 1,309 | (573) |
Prepaid income taxes | (2) | 51 |
Other current and long term assets | (103) | (266) |
Accounts payable | 227 | (1,243) |
Accrued liabilities and other liabilities | (1,020) | (755) |
Net cash used in operating activities | (3,094) | (3,571) |
Cash flows from investing activities: | ||
Capital expenditures | (68) | (328) |
Collection of note receivable | 1,598 | |
Issuance of note receivable | (600) | |
Proceeds from Sales of Assets, Investing Activities | 8 | 0 |
Net cash provided by (used in) investing activities | 1,538 | (928) |
Cash flows from financing activities: | ||
Revolving credit line borrowings | 0 | 1,000 |
Revolving credit line payments | 0 | (206) |
Proceeds from stock option exercises | 91 | 353 |
Withholding taxes paid on stock issuances | (75) | (41) |
Payment of bank financing costs | (31) | (201) |
Net cash (used in) provided by financing activities | (15) | 905 |
Effect of exchange rate changes on cash and cash equivalents | (60) | 6 |
Decrease in cash and cash equivalents | (1,631) | (3,588) |
Cash and cash equivalents, beginning of period | 10,359 | 4,203 |
Cash and cash equivalents, end of period | 8,728 | 615 |
Supplemental cash flow information: | ||
Capital expenditures included in accounts payable | $ 27 | $ 38 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Total |
Beginning balance at Dec. 31, 2019 | $ 115 | $ 32,604 | $ 25,348 | $ (31) | $ 25,926 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Share-based compensation expense | 187 | |||||
Issuance of shares from exercise of stock options | 1 | 353 | ||||
Relinquishment of stock awards and deferred stock units to pay for withholding taxes | (41) | |||||
Net loss | (992) | (992) | ||||
Foreign currency translation adjustment, net of tax | 71 | 71 | ||||
Ending balance at Mar. 31, 2020 | 116 | 33,103 | 24,356 | $ (32,110) | 40 | $ 25,505 |
Supplemental share information | ||||||
Issuance of shares from stock awards (in shares) | 83 | |||||
Relinquishment of stock awards to pay withholding taxes (in shares) | 14 | |||||
Beginning balance at Dec. 31, 2020 | 130 | 42,536 | 19,718 | (38) | $ 30,236 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Share-based compensation expense | 264 | |||||
Issuance of shares from exercise of stock options | 0 | 91 | ||||
Relinquishment of stock awards and deferred stock units to pay for withholding taxes | (75) | |||||
Net loss | (2,206) | (2,206) | ||||
Foreign currency translation adjustment, net of tax | 53 | 53 | ||||
Ending balance at Mar. 31, 2021 | $ 130 | $ 42,816 | $ 17,512 | $ (32,110) | $ 15 | $ 28,363 |
Supplemental share information | ||||||
Issuance of shares from stock awards (in shares) | 65 | |||||
Relinquishment of stock awards to pay withholding taxes (in shares) | 31 |
Basis of presentation
Basis of presentation | 3 Months Ended |
Mar. 31, 2021 | |
Basis of presentation [Abstract] | |
Basis of presentation | 1. Basis of presentation The accompanying unaudited financial statements of TransAct Technologies Incorporated (“TransAct”, the “Company”, “we”, “us”, or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP to be included in full year financial statements. In the opinion of management, all adjustments considered necessary for a fair statement of the results for the periods presented have been included and are of a normal recurring nature. The December 31, 2020 Condensed Consolidated Balance Sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. These interim financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2020 included in our Annual Report on Form 10-K for the year ended December 31, 2020. The financial position and results of operations of our U.K. subsidiary are measured using local currency as the functional currency. Assets and liabilities of such subsidiary have been translated at the end of period exchange rates, and related revenues and expenses have been translated at the exchange rate as of the date the transaction was recognized, with the resulting translation gain or loss recorded in “Accumulated other comprehensive income (loss), net of tax”, in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Changes in Shareholders’ Equity. Transaction gains and losses are included in “Other, net” in the Condensed Consolidated Statements of Operations. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full year ending December 31, 2021. Impact of the COVID-19 Pandemic In the first quarter of 2020, the COVID-19 pandemic and the resulting social distancing measures, including closures and restricted openings of restaurants and casinos implemented by federal, state and local authorities, negatively impacted customer demand and disrupted portions of our supply chain, including delayed product shipments from our two manufacturers located in China and Thailand. While we began to experience a modest recovery starting in the second half of 2020 into 2021 and expect this recovery to continue during the remainder of 2021, the exact timing and pace of recovery is unknown given uncertainty surrounding responsive measures to potential future resurgences of the virus and the significant disruption that our customers have already experienced and may continue to experience. In light of this uncertainty, we implemented a number of cost saving measures during 2020 to help mitigate the impact on our financial position and operations and continued to limit discretionary spending during the first quarter of 2021. We are monitoring indicators of demand recovery, including our sales pipeline, customer orders and product shipments to ascertain an estimate of the ultimate impact of the COVID-19 pandemic on our business; however, the length and ultimate severity of the reduction in demand due to the pandemic remains uncertain. Balance Sheet, Cash Flow and Liquidity. In addition to the expense management actions implemented during , we have taken the following actions to increase liquidity and strengthen our financial position. ● Public Offering – On October 16, 2020, the Company raised net proceeds of $8.7 million, after deducting underwriting discounts, commissions and offering expenses, through an underwritten public offering (the “Offering”) and sold an aggregate of 1,380,000 shares of common stock. ● PPP Loan – On May 1, 2020, the Company was granted a $2.2 million loan (the “PPP Loan”) under the Paycheck Protection Program (the “PPP”) administered by the Small Business Administration (“SBA”) established under Division A, Title I of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES” Act), which enabled us to return employees we furloughed earlier in 2020 to full time employment and to restore certain pay cuts until the PPP Loan proceeds were exhausted. ● New Credit Facility – On March 13, 2020, we entered into a new credit facility with Siena Lending Group LLC that provides a revolving credit line of up to $10.0 million, subject to a borrowing base. See Note 6 for further details regarding this facility. ● Reduced Capital Expenditures – We limited capital expenditures during 2020. We may further modify or supplement the expense management measures we have implemented and the actions we have taken to increase liquidity as the timing and extent of customer demand recovery develops. After reviewing whether conditions and/or events raise substantial doubt about our ability to meet future financial obligations over the 12 months following the date on which the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q (this “Report”) were issued, including consideration of the actions taken to manage expenses and liquidity, we believe that our net cash to be provided by operations combined with our cash and cash equivalents and borrowing availability under our revolving credit facility will provide sufficient liquidity to fund our current obligations, capital spending, and working capital requirements and to comply with the financial covenants of our credit facility over at least 12 months following the date that the Condensed Consolidated Financial Statements were issued. Use of Assumptions and Estimates Management’s belief that the Company will be able to fund its planned operations over the 12 months following the date on which the Condensed Consolidated Financial Statements were issued is based on assumptions which involve significant judgment and estimates of future revenues, capital expenditures and other operating costs. Our current assumptions are that casinos and restaurants remain open and continue to gradually increase capacity limitations during 2021, but that many casinos and restaurants may delay purchases of new slot machines and our BOHA! products, respectively, as their businesses gradually return to pre-pandemic levels of capacity and operations. Based on these assumptions, we anticipate that sales in casino and gaming and food service technology will continue to be negatively through at least 2021. We have performed a sensitivity analysis on these assumptions to forecast the potential impact of a slower-than-anticipated recovery and believe that we are positioned to withstand the impact of lower-than-anticipated sales and that we will be able to take additional financial and operational actions to cut costs and/or increase liquidity if necessary. These actions may include additional expense reductions and capital raising activities. In addition, the presentation of the accompanying unaudited financial statements |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2021 | |
Revenue [Abstract] | |
Revenue | 2. Revenue We account for revenue in accordance with ASC Topic 606: Revenue from Contracts with Customers. Disaggregation of revenue The following table disaggregates our revenue by market-type, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Sales and usage-based taxes are excluded from revenues. Three Months Ended March 31, 2021 2020 (In thousands) United States International Total United States International Total Food service technology $ 2,564 $ 183 $ 2,747 $ 1,239 $ 132 $ 1,371 POS automation 1,160 4 1,164 1,554 4 1,558 Casino and gaming 1,964 901 2,865 2,558 2,373 4,931 Printrex 27 132 159 61 56 117 Transact Services Group 1,280 86 1,366 2,003 267 2,270 Total net sales $ 6,995 $ 1,306 $ 8,301 $ 7,415 $ 2,832 $ 10,247 Contract balances Contract assets consist of unbilled receivables. Pursuant to the over-time revenue recognition model, revenue may be recognized prior to the customer being invoiced. An unbilled receivable is recorded to reflect revenue that is recognized when such revenue exceeds the amount invoiced to the customer. Unbilled receivables are separated into current and non-current assets and included within “Accounts receivable” and “Other non-current assets” in the Condensed Consolidated Balance Sheets. Contract liabilities consist of customer pre-payments and deferred revenue. Customer prepayments are reported as “Accrued liabilities” in current liabilities in the Condensed Consolidated Balance Sheets and represent customer payments made in advance of performance obligations in instances where credit has not been extended and are recognized as revenue when the performance obligation is complete. Deferred revenue is reported separately in current liabilities and non-current liabilities and consists of our extended warranty contracts, technical support for our food service technology terminals, EPICENTRAL™ maintenance contracts and testing service contracts and prepaid software subscriptions for our BOHA! software applications, and is recognized as revenue as (or when) we perform under the contract. For the three months ended March 31, 2021, we recognized revenue of $ million related to our contract assets at . Total net contract (liabilities) assets consisted of the following: March 31, 2021 December 31, 2020 (In thousands) Unbilled receivables, current $ 293 $ 290 Unbilled receivables, non-current 516 591 Customer pre-payments (146 ) (216 ) Deferred revenue, current (569 ) (504 ) Deferred revenue, non-current (202 ) (111 ) Total net contract (liabilities) assets $ (108 ) $ 50 Remaining performance obligations Remaining performance obligations represent the transaction price of firm orders for which a good or service has not been delivered to our customer. As of March 31, 2021, the aggregate amount of transaction prices allocated to remaining performance obligations was $3.3 million. The Company expects to recognize revenue on $2.7 million of its remaining performance obligations within the next 12 months following March 31, 2021, $0.4 million within the next 24 months and the balance of these remaining performance obligations recognized within the next 36 months. |
Note receivable
Note receivable | 3 Months Ended |
Mar. 31, 2021 | |
Note receivable [Abstract] | |
Note receivable | 3. Note receivable The note receivable balance relates to loans given to a third-party software developer for whom we license our food service technology software with an interest rate of , which was originally due in April 2020. In March 2021, we received payment in the amount of $ million representing the remaining principal balance and interest due from the third-party. For the three months ended March 31, 2021 and 2020, we recorded $ thousand and $ thousand of interest income, respectively. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2021 | |
Inventories, net [Abstract] | |
Inventories, net | 4. Inventories The components of inventories were: March 31, 2021 December 31, 2020 (In thousands) Raw materials and purchased component parts $ 4,672 $ 5,467 Finished goods 5,328 5,819 $ 10,000 $ 11,286 |
Accrued product warranty liabil
Accrued product warranty liability | 3 Months Ended |
Mar. 31, 2021 | |
Accrued product warranty liability [Abstract] | |
Accrued product warranty liability | 5. Accrued product warranty liability We generally provide warranties on our products for up to 24 months and record the estimated cost of such product warranties at the time the sale is recorded. Estimated warranty costs are based upon actual past experience of product repairs and the related estimated cost of labor and material to make the necessary repairs. The following table summarizes the activity recorded in the accrued product warranty liability during the three months ended March 31, 2021 and 2020: Three Months Ended March 31, 2021 2020 (In thousands) Balance, beginning of period $ 140 $ 215 Warranties issued 5 45 Warranty settlements (29 ) (47 ) Balance, end of period $ 116 $ 213 As of March 31, 2021, $98 thousand of the accrued product warranty liability was classified as current in “Accrued liabilities” in the Condensed Consolidated Balance Sheets and the remaining $18 thousand was classified as non-current in “Other liabilities”. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2021 | |
Borrowings [Abstract] | |
Debt | 6. Debt On March 13, 2020, we entered into a new credit facility (the “Siena Credit Facility”) with Siena Lending Group LLC. The Siena Credit Facility provides for a revolving credit line of up to $10.0 million expiring on March 13, 2023. Borrowings under the Siena Credit Facility bear a floating rate of interest equal to the greatest of (i) the prime rate plus 1.75%, (ii) the federal funds rate plus 2.25%, and (iii) 6.50%. The total deferred financing costs related to expenses incurred to complete the Siena Credit Facility was $245 thousand, which were reported as “other current assets” in current assets and “other assets” in non-current assets in the Condensed Consolidated Balance Sheets. We also pay a fee of 0.50% on unused borrowings under the facility. Borrowings under the facility are secured by a lien on substantially all the assets of the Company. The Siena Credit Facility imposes a minimum EBITDA financial covenant on the Company and borrowings are subject to a borrowing base based on (i) 85% of eligible accounts receivable plus the lesser of (a) $5.0 million and (b) 50% of eligible raw material and 60% of finished goods inventory. As of March 31, 2021, we had $3.6 million of borrowing capacity available under the Siena Credit Facility. The agreement governing the Siena Credit Facility provides for the parties to update the financial covenant for periods ending after March 31, 2021 based on updated financial projections of the Company. The Company does not anticipate a material change in the financial covenant, nor does it anticipate any other material change in the terms or covenants pertaining to its current credit facilities. On May 1, 2020 (the “Loan Date”), the Company was granted the PPP Loan from Berkshire Bank in the aggregate amount of $2.2 million, pursuant to the PPP. The PPP Loan, which is evidenced by a Note dated the Loan Date issued by the Company (the “Note”) in favor of Berkshire Bank, as lender (the “PPP Lender”), matures May 1, 2022 and bears interest at a fixed rate of Under the terms of the PPP, the PPP Loan may be forgiven to the extent that funds from the PPP Loan are used for payroll costs and costs to continue group health care benefits, as well as for interest on mortgage obligations incurred before February 15, 2020, rent under lease agreements in effect before February 15, 2020, utilities for which service began before February 15, 2020, and interest on debt obligations incurred before February 15, 2020 (collectively, “qualifying expenses”), subject to conditions and limitations provided in the CARES Act. At least 60% (as amended) of the proceeds from the PPP Loan must be used for eligible payroll costs for the PPP Loan to be forgiven. The Company has maximized the use of PPP Loan proceeds for qualifying expenses and intends to apply for forgiveness of the PPP Loan in accordance with the terms of the CARES Act, as amended by the Paycheck Protection Flexibility Act of 2020. Whether forgiveness will be granted and in what amount is subject to an application to, and approval by, the SBA and may also be subject to further requirements in any regulations and guidelines the SBA may adopt. The PPP Loan is classified as “Long-term debt” in the Condensed Consolidated Balance Sheet until the forgiveness determination has been made by the SBA. In the event that no portion of the PPP Loan is forgiven by the SBA, $2.0 million in principal and interest of the $ million . |
Earnings per share
Earnings per share | 3 Months Ended |
Mar. 31, 2021 | |
Earnings per share [Abstract] | |
Earnings per share | 7. Earnings per share The following table sets forth the reconciliation of basic weighted average shares outstanding and diluted weighted average shares outstanding: Three Months Ended March 31, 2021 2020 (In thousands, except per share data) Net loss $ (2,206 ) $ (992 ) Shares: Basic: Weighted average common shares outstanding 8,948 7,507 Add: Dilutive effect of outstanding options and restricted stock units as determined by the treasury stock method – – Diluted: Weighted average common and common equivalent shares outstanding 8,948 7,507 Net loss per common share: Basic $ (0.25 ) $ (0.13 ) Diluted $ (0.25 ) $ (0.13 ) The computation of diluted earnings per share excludes the effect of the potential exercise of stock awards, including stock options and restricted stock units, when the average market price of the common stock is lower than the exercise price of the related stock award during the period, as the inclusion of these stock awards in the computation of diluted earnings would be anti-dilutive. For the three months ended March 31, 2021 and 2020, there were 705 thousand and 708 thousand, respectively, of potentially dilutive shares consisting of stock awards that were excluded from the calculation of earnings per diluted share. Regarding the three months ended March 31, 2021 and 2020, when a net loss is reported, basic and diluted net loss per common share are calculated using the same method. |
Shareholders' equity
Shareholders' equity | 3 Months Ended |
Mar. 31, 2021 | |
Shareholders' equity [Abstract] | |
Shareholders' equity | 8. Shareholders’ equity On January 23, 2020, our Board of Directors announced the cessation of our quarterly cash dividend on the Company’s common stock. The final dividend payment was made in December 2019. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
Leases | 9. Leases We account for leases in accordance with ASC Topic 842: Leases. We enter into lease agreements for the use of real estate space and certain other On February 28, 2020, we entered into an amendment to extend the lease on our facility in Ithaca, New York, . The lease, which was last amended on January 14, 2016, was scheduled to expire on May 31, 2021. The lease amendment provided for an extension of the lease for four additional years from June 1, 2021 to May 31, 2025. Operating lease expense for the three months ended March 31, 2021 and 2020 was $243 thousand and $251 thousand, respectively, and is reported as “Cost of sales”, “Engineering, design and product development expense”, “Selling and marketing expense”, and “General and administrative expense” in the Condensed Consolidated Statements of Operations. Operating lease expenses include short-term lease costs which were immaterial during the periods presented. The following information represents supplemental disclosure for the statement of cash flows related to operating leases (in thousands): Three Months Ended March 31, 2021 2020 Operating cash outflows from leases $ 262 $ 259 The following summarizes additional information related to our leases as of March 31, 2021 and December 31, 2020: March 31, 2021 December 31, 2020 Weighted average remaining lease term (in years) 4.7 4.9 Weighted average discount rate 4.1 % 4.1 % The maturity of the Company’s operating lease liabilities as of March 31, 2021 and December 31, 2020 were as follows (in thousands): March 31, 2021 December 31, 2020 2021 $ 709 $ 971 2022 880 879 2023 713 713 2024 718 718 2025 463 464 Thereafter 340 180 Total undiscounted lease payments 3,823 3,925 Less imputed interest 344 224 Total lease liabilities $ 3,479 $ 3,701 |
Income taxes
Income taxes | 3 Months Ended |
Mar. 31, 2021 | |
Income taxes [Abstract] | |
Income taxes | 10. Income taxes We recorded an income tax benefit for the first quarter of 2021 of $556 thousand at an effective tax rate of 20.1%, compared to an income tax benefit during the first quarter of 2020 of $465 thousand at an effective tax rate of 31.9%. The effective tax rate for the first quarter of 2020 was higher as it included the impact of our net operating loss (“NOL”) that we incurred during 2020 and will carry back to prior years. The CARES Act enacted on March 27, 2020 permits NOLs incurred in 2018, 2019 and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. We generated an NOL in 2020 which we will carry back to tax years that had a federal statutory tax rate of 34% compared to 21% in 2020. We are subject to U.S. federal income tax, as well as income tax in certain U.S. state and foreign jurisdictions. We have substantially concluded all U.S. federal, state and local income tax, and foreign tax regulatory examination matters through 2016. However, our federal tax returns for the years 2017 through 2019 remain open to examination. Various U.S. state and foreign tax jurisdiction tax years remain open to examination as well, but we believe that any additional assessment would be immaterial to the Condensed Consolidated Financial Statements. As of March 31, 2021, we had $121 thousand of total gross unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in any future periods. We expect that $24 thousand of the $121 thousand of unrecognized tax benefits will reverse in 2021 upon the expiration of the statute of limitations. We recognize interest and penalties related to uncertain tax positions in the income tax provision reported as “Deferred tax assets” in the Condensed Consolidated Balance Sheet. As of , we had thousand of accrued interest and penalties related to uncertain tax positions. The Company maintains a valuation allowance against certain deferred tax assets where realization is not certain. |
Subsequent events
Subsequent events | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent events [Abstract] | |
Subsequent events | 11. Subsequent events On April 30, 2021, we entered into an agreement to modify the term of the lease on our facility in Hamden, CT. The lease, which was last amended on January 3, 2017, was scheduled to expire on April 30, 2027. The lease amendment modified the expiration date to October 31, 2023 with an option to extend the lease for an additional two year period extending the expiration date to October 31, 2025. |
Basis of presentation (Policies
Basis of presentation (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Basis of presentation [Abstract] | |
Basis of accounting | The accompanying unaudited financial statements of TransAct Technologies Incorporated (“TransAct”, the “Company”, “we”, “us”, or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP to be included in full year financial statements. In the opinion of management, all adjustments considered necessary for a fair statement of the results for the periods presented have been included and are of a normal recurring nature. The December 31, 2020 Condensed Consolidated Balance Sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. These interim financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2020 included in our Annual Report on Form 10-K for the year ended December 31, 2020. |
Foreign currency translation | The financial position and results of operations of our U.K. subsidiary are measured using local currency as the functional currency. Assets and liabilities of such subsidiary have been translated at the end of period exchange rates, and related revenues and expenses have been translated at the exchange rate as of the date the transaction was recognized, with the resulting translation gain or loss recorded in “Accumulated other comprehensive income (loss), net of tax”, in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Changes in Shareholders’ Equity. Transaction gains and losses are included in “Other, net” in the Condensed Consolidated Statements of Operations. |
Use of assumptions and estimates | Use of Assumptions and Estimates Management’s belief that the Company will be able to fund its planned operations over the 12 months following the date on which the Condensed Consolidated Financial Statements were issued is based on assumptions which involve significant judgment and estimates of future revenues, capital expenditures and other operating costs. Our current assumptions are that casinos and restaurants remain open and continue to gradually increase capacity limitations during 2021, but that many casinos and restaurants may delay purchases of new slot machines and our BOHA! products, respectively, as their businesses gradually return to pre-pandemic levels of capacity and operations. Based on these assumptions, we anticipate that sales in casino and gaming and food service technology will continue to be negatively through at least 2021. We have performed a sensitivity analysis on these assumptions to forecast the potential impact of a slower-than-anticipated recovery and believe that we are positioned to withstand the impact of lower-than-anticipated sales and that we will be able to take additional financial and operational actions to cut costs and/or increase liquidity if necessary. These actions may include additional expense reductions and capital raising activities. In addition, the presentation of the accompanying unaudited financial statements |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Revenue [Abstract] | |
Disaggregation of revenue | Disaggregation of revenue The following table disaggregates our revenue by market-type, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Sales and usage-based taxes are excluded from revenues. Three Months Ended March 31, 2021 2020 (In thousands) United States International Total United States International Total Food service technology $ 2,564 $ 183 $ 2,747 $ 1,239 $ 132 $ 1,371 POS automation 1,160 4 1,164 1,554 4 1,558 Casino and gaming 1,964 901 2,865 2,558 2,373 4,931 Printrex 27 132 159 61 56 117 Transact Services Group 1,280 86 1,366 2,003 267 2,270 Total net sales $ 6,995 $ 1,306 $ 8,301 $ 7,415 $ 2,832 $ 10,247 |
Net contract assets (liabilities) | March 31, 2021 December 31, 2020 (In thousands) Unbilled receivables, current $ 293 $ 290 Unbilled receivables, non-current 516 591 Customer pre-payments (146 ) (216 ) Deferred revenue, current (569 ) (504 ) Deferred revenue, non-current (202 ) (111 ) Total net contract (liabilities) assets $ (108 ) $ 50 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Inventories, net [Abstract] | |
Inventories | The components of inventories were: March 31, 2021 December 31, 2020 (In thousands) Raw materials and purchased component parts $ 4,672 $ 5,467 Finished goods 5,328 5,819 $ 10,000 $ 11,286 |
Accrued product warranty liab_2
Accrued product warranty liability (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Accrued product warranty liability [Abstract] | |
Product warranty liability | The following table summarizes the activity recorded in the accrued product warranty liability during the three months ended March 31, 2021 and 2020: Three Months Ended March 31, 2021 2020 (In thousands) Balance, beginning of period $ 140 $ 215 Warranties issued 5 45 Warranty settlements (29 ) (47 ) Balance, end of period $ 116 $ 213 |
Earnings per share (Tables)
Earnings per share (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Earnings per share [Abstract] | |
Earnings per share | The following table sets forth the reconciliation of basic weighted average shares outstanding and diluted weighted average shares outstanding: Three Months Ended March 31, 2021 2020 (In thousands, except per share data) Net loss $ (2,206 ) $ (992 ) Shares: Basic: Weighted average common shares outstanding 8,948 7,507 Add: Dilutive effect of outstanding options and restricted stock units as determined by the treasury stock method – – Diluted: Weighted average common and common equivalent shares outstanding 8,948 7,507 Net loss per common share: Basic $ (0.25 ) $ (0.13 ) Diluted $ (0.25 ) $ (0.13 ) |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
Cash flows for operating leases | The following information represents supplemental disclosure for the statement of cash flows related to operating leases (in thousands): Three Months Ended March 31, 2021 2020 Operating cash outflows from leases $ 262 $ 259 |
Additional information related to leases | The following summarizes additional information related to our leases as of March 31, 2021 and December 31, 2020: March 31, 2021 December 31, 2020 Weighted average remaining lease term (in years) 4.7 4.9 Weighted average discount rate 4.1 % 4.1 % |
Maturity of operating lease liabilities | The maturity of the Company’s operating lease liabilities as of March 31, 2021 and December 31, 2020 were as follows (in thousands): March 31, 2021 December 31, 2020 2021 $ 709 $ 971 2022 880 879 2023 713 713 2024 718 718 2025 463 464 Thereafter 340 180 Total undiscounted lease payments 3,823 3,925 Less imputed interest 344 224 Total lease liabilities $ 3,479 $ 3,701 |
Basis of presentation (Details)
Basis of presentation (Details) $ in Millions | Oct. 16, 2020USD ($)shares | Mar. 31, 2021USD ($)Manufacturer | May 01, 2020USD ($) |
Basis of presentation [Abstract] | |||
Number of manufacturers in China and Thailand | Manufacturer | 2 | ||
Proceeds from Public Offering | $ 8.7 | ||
Shares sold in Public Offering (in shares) | shares | 1,380,000 | ||
PPP Loan [Member] | |||
Basis of presentation [Abstract] | |||
Face amount | $ 2.2 | ||
Revolving Credit Facility [Member] | |||
Basis of presentation [Abstract] | |||
Maximum borrowing capacity | $ 10 |
Revenue, Disaggregation of Reve
Revenue, Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Disaggregation of revenue [Abstract] | ||
Total net sales | $ 8,301 | $ 10,247 |
United States [Member] | ||
Disaggregation of revenue [Abstract] | ||
Total net sales | 6,995 | 7,415 |
International [Member] | ||
Disaggregation of revenue [Abstract] | ||
Total net sales | 1,306 | 2,832 |
Food Service Technology [Member] | ||
Disaggregation of revenue [Abstract] | ||
Total net sales | 2,747 | 1,371 |
Food Service Technology [Member] | United States [Member] | ||
Disaggregation of revenue [Abstract] | ||
Total net sales | 2,564 | 1,239 |
Food Service Technology [Member] | International [Member] | ||
Disaggregation of revenue [Abstract] | ||
Total net sales | 183 | 132 |
POS Automation and Banking [Member] | ||
Disaggregation of revenue [Abstract] | ||
Total net sales | 1,164 | 1,558 |
POS Automation and Banking [Member] | United States [Member] | ||
Disaggregation of revenue [Abstract] | ||
Total net sales | 1,160 | 1,554 |
POS Automation and Banking [Member] | International [Member] | ||
Disaggregation of revenue [Abstract] | ||
Total net sales | 4 | 4 |
Casino and Gaming [Member] | ||
Disaggregation of revenue [Abstract] | ||
Total net sales | 2,865 | 4,931 |
Casino and Gaming [Member] | United States [Member] | ||
Disaggregation of revenue [Abstract] | ||
Total net sales | 1,964 | 2,558 |
Casino and Gaming [Member] | International [Member] | ||
Disaggregation of revenue [Abstract] | ||
Total net sales | 901 | 2,373 |
Printrex [Member] | ||
Disaggregation of revenue [Abstract] | ||
Total net sales | 159 | 117 |
Printrex [Member] | United States [Member] | ||
Disaggregation of revenue [Abstract] | ||
Total net sales | 27 | 61 |
Printrex [Member] | International [Member] | ||
Disaggregation of revenue [Abstract] | ||
Total net sales | 132 | 56 |
TransAct Services Group [Member] | ||
Disaggregation of revenue [Abstract] | ||
Total net sales | 1,366 | 2,270 |
TransAct Services Group [Member] | United States [Member] | ||
Disaggregation of revenue [Abstract] | ||
Total net sales | 1,280 | 2,003 |
TransAct Services Group [Member] | International [Member] | ||
Disaggregation of revenue [Abstract] | ||
Total net sales | $ 86 | $ 267 |
Revenue, Contract Balances (Det
Revenue, Contract Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Revenue [Abstract] | ||
Revenue recognized | $ 400 | |
Contract liabilities [Abstract] | ||
Unbilled receivables, current | 293 | $ 290 |
Unbilled receivables, non-current | 516 | 591 |
Customer pre-payments | (146) | (216) |
Deferred revenue, current | (569) | (504) |
Deferred revenue, non-current | (202) | (111) |
Contract with Customer, Asset (Liability), net | $ (108) | $ 50 |
Revenue, Remaining Performance
Revenue, Remaining Performance Obligations (Details) $ in Millions | Mar. 31, 2021USD ($) |
Remaining performance obligations [Abstract] | |
Remaining performance obligations | $ 3.3 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-04-01 | |
Remaining performance obligations [Abstract] | |
Remaining performance obligations | $ 2.7 |
Expected timing of satisfaction, period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-01 | |
Remaining performance obligations [Abstract] | |
Remaining performance obligations | $ 0.4 |
Expected timing of satisfaction, period | 12 months |
Note receivable (Details)
Note receivable (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2021 | Mar. 31, 2020 | |
Note receivable [Abstract] | |||
Interest rate | 4.50% | 4.50% | |
Collection of note receivable | $ 1,600 | $ 1,598 | |
Interest income | $ 17 | $ 13 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Inventories, net [Abstract] | ||
Raw materials and purchased component parts | $ 4,672 | $ 5,467 |
Finished goods | 5,328 | 5,819 |
Inventories | $ 10,000 | $ 11,286 |
Accrued product warranty liab_3
Accrued product warranty liability (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Accrued product warranty liability [Roll Forward] | ||
Balance, beginning of period | $ 140 | $ 215 |
Warranties issued | 5 | 45 |
Warranty settlements | (29) | (47) |
Balance, end of period | 116 | $ 213 |
Accrued product warranty liability, current | 98 | |
Other Liabilities [Member] | ||
Accrued product warranty liability [Roll Forward] | ||
Accrued product warranty liability, non-current | $ 18 | |
Maximum [Member] | ||
Warranty [Abstract] | ||
Product warranty period | 24 months |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021 | May 01, 2020 | Mar. 13, 2020 | |
Revolving Credit Facility [Member] | |||
Debt [Abstract] | |||
Maximum borrowing capacity | $ 10,000 | ||
Maturity date | Mar. 13, 2023 | ||
Interest rate | 6.50% | ||
Deferred financing costs | $ 245 | ||
Percentage fee on unused borrowings | 0.50% | ||
Percentage of eligible accounts receivable | 85.00% | ||
Eligible inventory | $ 5,000 | ||
Percentage of eligible raw material | 50.00% | ||
Percentage of eligible finished goods inventory | 60.00% | ||
Additional borrowing capacity | $ 3,600 | ||
Revolving Credit Facility [Member] | Prime Rate [Member] | |||
Debt [Abstract] | |||
Basis spread on variable rate | 1.75% | ||
Revolving Credit Facility [Member] | Federal Funds Rate [Member] | |||
Debt [Abstract] | |||
Basis spread on variable rate | 2.25% | ||
PPP Loan [Member] | |||
Debt [Abstract] | |||
Maturity date | May 1, 2022 | ||
Interest rate | 1.00% | ||
Face amount | $ 2,200 | ||
Amount due with next twelve months | $ 2,000 |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Earnings per share [Abstract] | ||
Net loss | $ (2,206) | $ (992) |
Shares [Abstract] | ||
Basic: Weighted average common shares outstanding (in shares) | 8,948 | 7,507 |
Add: Dilutive effect of outstanding options and restricted stock units as determined by the treasury stock method (in shares) | 0 | 0 |
Diluted: Weighted average common and common equivalent shares outstanding (in shares) | 8,948 | 7,507 |
Net (loss) income per common share [Abstract] | ||
Basic (in dollars per share) | $ (0.25) | $ (0.13) |
Diluted (in dollars per share) | $ (0.25) | $ (0.13) |
Stock Awards [Member] | ||
Earnings per share [Abstract] | ||
Anti-dilutive securities excluded from computation of earnings per dilutive share (in shares) | 705 | 708 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | Feb. 28, 2020 | |
Leases [Abstract] | ||||
Right-of-use-asset | $ 3,429 | $ 3,618 | ||
Lease liability | 3,479 | $ 3,701 | ||
Operating lease expense | 243 | $ 251 | ||
Operating cash flows from leases | $ 262 | $ 259 | ||
Weighted average remaining lease term | 4 years 8 months 12 days | 4 years 10 months 24 days | ||
Weighted average discount rate | 4.10% | 4.10% | ||
Maturity of Operating Lease Liabilities [Abstract] | ||||
2021 | $ 709 | $ 971 | ||
2022 | 880 | 879 | ||
2023 | 713 | 713 | ||
2024 | 718 | 718 | ||
2025 | 463 | 464 | ||
Thereafter | 340 | 180 | ||
Total undiscounted lease payments | 3,823 | 3,925 | ||
Less imputed interest | 344 | 224 | ||
Total lease liabilities | $ 3,479 | $ 3,701 | ||
Minimum [Member] | ||||
Leases [Abstract] | ||||
Remaining lease terms | 1 year | |||
Maximum [Member] | ||||
Leases [Abstract] | ||||
Remaining lease terms | 6 years | |||
Extension period for leases | 5 years | |||
Termination period for leases | 1 year | |||
Facility in Ithaca, New York [Member] | ||||
Leases [Abstract] | ||||
Extension period for leases | 4 years | |||
Right-of-use-asset | $ 1,500 | |||
Lease liability | 1,500 | |||
Maturity of Operating Lease Liabilities [Abstract] | ||||
Total lease liabilities | $ 1,500 |
Income taxes (Details)
Income taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2021 | Sep. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2017 | |
Income taxes [Abstract] | ||||
Income tax provision (benefit) | $ (556) | $ (465) | ||
Effective tax rate | 20.10% | 31.90% | ||
U.S. corporate income tax rate | 21.00% | 34.00% | ||
Unrecognized tax benefits that would favorably affect effective income tax rate if recognized | $ 121 | |||
Unrecognized tax benefits that will lapse upon expiration of statute of limitations | $ 24 | |||
Accrued interest and penalties related to uncertain tax positions | $ 21 |
Subsequent events (Details)
Subsequent events (Details) | Apr. 30, 2021 |
Subsequent Event [Member] | |
Subsequent events [Abstract] | |
Extension period for lease | 2 years |