What changed in this filing

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Item 1. Financial Statements

2024-08-09 compared with 2024-05-14 · 108 added, 80 removed, 282 unchanged (40% of the section changed)

2 unchanged sentences

C ONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2024

June 30, 2024

December 31, 2023

37 unchanged sentences

TRANSACT TECHNOLOGIES INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

CONDE NSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Six Months Ended

(In thousands, except per share data)

5 unchanged sentences

Operating (loss) income

Interest and other (expense) income:

Interest and other income (expense):

Interest, net

3 unchanged sentences

Net (loss) income per common share:

Shares used in per-share calculations:

Shares used in per-share calculation:

See notes to Condensed Consolidated Financial Statements.

TRANSACT TECHNOLOGIES INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE

(LOSS) INCOME

CONDENSED CONSOLI DATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

Three Months Ended

Six Months Ended

(In thousands)

5 unchanged sentences

CONDE NSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(In thousands)

1 unchanged sentence

Net (loss) income

Adjustments to reconcile net (loss) income to net cash used in operating activities:

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

Share-based compensation expense

9 unchanged sentences

Accrued liabilities and other liabilities

Net cash used in operating activities

Net cash (used in) provided by operating activities

Cash flows from investing activities:

5 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents

Decrease in cash and cash equivalents

(Decrease) increase in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Supplemental schedule of non-cash investing activities:

Supplemental schedule of non-cash investing and financing activities:

Non-cash capital expenditure items

Right of use asset obtained in exchange for new operating lease liabilities

See notes to Condensed Consolidated Financial Statements.

TRANSACT TECHNOLOGIES INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

CONDENSED CONSO LIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Three Months Ended

Six Months Ended

(In thousands)

Equity beginning balance

Common stock:

Balance, beginning of period

12 unchanged sentences

Balance, beginning and end of period

Accumulated other comprehensive loss:

Accumulated other comprehensive (loss) income, net of tax

Balance, beginning of period

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should be read in conjunction with the audited financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”).

The results of operations for the three months ended March 31, 2024 are

not necessarily indicative of the results to be expected for the full year ending December 31, 2024.

The results of operations for the three and six months ended June 30, 2024

are not necessarily indicative of the results to be expected for the full year ending December 31, 2024.

Current Business Trends

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reduce orders until their stock normalized.

This slowdown impacted our results in the fourth quarter of 2023 and the first quarter of 2024, and we expect this trend to continue to impact results during 2024 until these customers are able to sell

their on-hand inventory.

Further, our primary competitor in the casino and gaming market has resumed supplying product and continued to increase volume at what we believe is full capacity, which has resulted in the beginning of downward pricing

pressure in that market and could exacerbate the demand slowdown, which has negatively impacted our worldwide casino and gaming sales.

In addition, we have experienced cost increases as a result of current economic conditions, most of which we have

been able to offset by increasing prices of our products.

However, there can be no guarantee that we will be able to increase prices sufficiently to offset any future such cost increases that cannot be predicted, and we may be further impacted by

supply chain disruptions, inflationary pressures and other global economic conditions that may affect the markets we serve and from which we source our supplies and parts.

This slowdown impacted our results in the fourth quarter of 2023 and the first half of 2024, and we expect this trend to continue to impact results during 2024 until these customers are able to sell their

on-hand inventory.

that market and could exacerbate the demand slowdown, which has negatively impacted our worldwide casino and gaming sales.

In addition, we have experienced cost increases as a result of current economic conditions, most of which we have been able to

offset by increasing prices of our products.

However, there can be no guarantee that we will be able to increase prices sufficiently to offset any future such cost increases that cannot be predicted, and we may be further impacted by supply chain

disruptions, inflationary pressures and other global economic conditions that may affect the markets we serve and from which we source our supplies and parts.

Balance Sheet, Cash Flow and Liquidity .

During the third quarter of 2023, we began a cost reduction initiative to reduce our overall level of operating expenses that included reducing

employee headcount, trade show, advertising and other promotional marketing expenses, certain third party engineering resources and other expenses, and to a lesser extent, certain general and administrative expenses.

We saw the full impact of these

actions in the first quarter of 2024 and expect they will result in approximately $ 3 million of annualized savings compared to the 2023

levels, partially offset by typical annual inflationary and cost of living increases in operating expenses.

Notwithstanding the foregoing, there is no assurance that the cost-cutting efforts we have taken to bring expenses in line with our revenue

and mitigate the impact of global economic conditions such as supply chain disruptions and inflation, and conditions in our markets will be sufficient or adequate, and we may be required to take additional measures, as the ultimate extent of the

effects of these risks on the Company, our financial condition, results of operations, liquidity, and cash flows are uncertain and are dependent on evolving developments which cannot be predicted at this time.

employee headcount, trade show expenses, advertising and other promotional marketing expenses, certain third party engineering resources and other expenses, and to a lesser extent, certain general and administrative expenses.

We experienced the full

impact of these actions in the first quarter of 2024 and expect they will result in approximately $ 3 million of annualized savings compared

to the 2023 levels, partially offset by typical annual inflationary and cost of living increases in operating expenses.

We also began an additional cost reduction initiative in the

second quarter of 2024 focused largely on further reducing employee headcount and other external third party resources.

Savings from this initiative are expected to be approximately $ 2 million on an annualized basis and realized beginning in the third quarter of 2024.

Notwithstanding the foregoing, there is no assurance that the cost-cutting

efforts we have taken to bring expenses in line with our revenue and mitigate the impact of global economic conditions such as supply chain disruptions and inflation, and conditions in our markets will be sufficient or adequate, and we may be

required to take additional measures, as the ultimate extent of the effects of these risks on the Company, our financial condition, results of operations, liquidity, and cash flows are uncertain and are dependent on evolving developments which cannot

be predicted at this time.

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

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Recently issued accounting pronouncements:

On November 27, 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) .

The amendments improve reportable segment

disclosures requirements and clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment and contain other disclosure

requirements.

These amendments are effective for fiscal years beginning after December 15, 2023 and for interim periods beginning after December 15, 2024.

These segment disclosure requirements must be applied retrospectively to all periods

presented in the financial statements.

We are currently evaluating the impact of adopting this standard;

On November 27, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting

Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280) .

The amendments improve reportable segment disclosures requirements and clarify circumstances in which an entity can disclose

multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment and contain other disclosure requirements.

These amendments are effective for fiscal years beginning after

December 15, 2023 and for interim periods beginning after December 15, 2024.

These segment disclosure requirements must be applied retrospectively to all periods presented in the financial statements.

We are currently evaluating the impact of

adopting this standard;

however, we do not expect it to have a material impact on our Consolidated Financial Statements.

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our Consolidated Financial Statements.

We account for revenue in accordance with ASC Topic 606:

We account for revenue in accordance with Financial Accounting Standards Codification (“ASC”) Topic 606:

Revenue from Contracts with Customers.

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Total net sales

Six Months Ended

(In thousands)

United States

International

United States

International

Food service technology

POS automation

Casino and gaming

TransAct Services Group

Total net sales

Contract balances

10 unchanged sentences

software applications and is recognized as revenue as (or when) we perform under the contract.

For the three

months ended March 31, 2024, we recognized revenue of $ 0.4 million related to our contract liabilities at December 31, 2023.

contract liabilities consisted of the following:

March 31, 2024

months ended June 30, 2024, we recognized revenue of $ 0.7 million related to our contract liabilities at December 31, 2023.

net contract liabilities consisted of the following:

June 30, 2024

December 31, 2023

7 unchanged sentences

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, 2024, the aggregate amount of transaction prices allocated to remaining performance obligations was $ 6.8 million.

The Company expects to recognize revenue of $ 6.5

million of its remaining performance obligations within the next 12 months following March 31, 2024, $ 0.2 million within the next 24 months following March 31, 2024 and

the balance of these remaining performance obligations recognized within the next 36 months following March 31, 2024.

R emaining performance obligations represent the transaction price of firm orders for which a good or service has not been delivered to our customer.

As of June 30, 2024, the aggregat e amount of transaction prices allo cated t o rem aining performance obligations was $ 4.8

The Company expects to recognize revenue of $ 4.5 million of its remaining performance obligations within the next 12 months following June 30, 2024, $ 0.2 million within the next 24 months

following June 30, 2024 and the balance

of these remaining performance obligations recognized within the next 36 months following June 30, 2024.

The components of inventories were:

March 31, 2024

June 30, 2024

December 31, 2023

22 unchanged sentences

the Siena Credit Facility, tested as of the end of each calendar month, beginning with the calendar month ended July 31, 2021.

From July 31, 2021 through March 31, 2024, we remained in compliance with our excess availability covenant.

As of March 31, 2024, we had $ 2.3 million of outstanding borrowings under the Siena Credit Facility and $ 3.0 million of net borrowing capacity available under the Siena Credit Facility.

From July 31, 2021 through June 30, 2024, we remained in compliance with our excess availability covenant.

As of June 30, 2024, we had $ 2.3 million of outstanding borrowings under the Siena Credit Facility and $ 4.3 million of net borrowing capacity available under the Siena Credit Facility.

On July 19, 2022, the Company and the Lender entered into Amendment No.

26 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands, except per share data)

4 unchanged sentences

Net (loss) income per common share:

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, 2024, there were 89 thousand

of potentially dilutive shares consisting of stock awards that were excluded from the calculation of earnings per diluted share.

Furthermore, in periods when a net loss is reported, such as the three months ended March 31, 2024, basic and diluted

net loss per common share are calculated using the same method.

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 and six months ended June 30, 2024, when a loss was reported, basic and

diluted EPS are calculated using the same method and as a result, 1.6 million and 1.5 million shares, respectively, of potentially dilutive shares consisting of stock awards were excluded from the calculation of earnings per diluted share.

Anti-dilutive

stock awards excluded from the computation of earnings per dilutive share were 0.9 million in each of the three and six months ended

June 30, 2023.

We account for leases in accordance with ASC Topic 842:

We enter into lease agreements for the use of real estate space and certain equipment under operating leases and we have no financing leases.

Our leases are included in

“Right-of-use-assets” and “Lease liabilities” in our Condensed Consolidated Balance Sheets.

are included in “Right-of-use-assets” and “Lease liabilities” in our Condensed Consolidated Balance Sheets.

Our leases have various lease terms, some of which include options to extend.

On May 31, 2024, we entered into an amendment to extend the

lease on our facility in Ithaca, New York, which resulted in a right-of-use asset obtained in exchange for a new operating lease liability of $ 465

The lease amendment provides for an extension of the lease for an additional year from May 31, 2025 to May 31, 2026, with an

option to extend for an additional year.

Lease expense is recognized on a straight-line basis over the lease term.

Operating lease expense for the three months ended March 31, 2024

and 2023 was $ 282

thousand and $ 237 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 expense for the six months ended June 30, 2024

and 2023 was $ 500 thousand

and $ 483 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

Six Months Ended,

Operating cash outflows from leases

The following summarizes additional information related to our leases as of March 31, 2024 and December 31, 2023:

March 31, 2024

The following summarizes additional information related to our leases as of June 30, 2024 and December 31, 2023:

June 30, 2024

December 31, 2023

1 unchanged sentence

Weighted average discount rate

The maturity of the Company’s operating lease liabilities as of March 31, 2024 and December 31, 2023 were as follows (in thousands):

March 31, 2024

The maturity of the Company’s operating lease liabilities as of June 30, 2024 and December 31, 2023 were as follows (in thousands):

June 30, 2024

December 31, 2023

2 unchanged sentences

Total lease liabilities

We recorded an income tax benefit in the first quarter of 2024 of $ 277 thousand at an

effective tax rate of ( 21.1 %) compared to an income tax expense in the first quarter of 2023 of $ 629 thousand at an effective tax rate of 16.7 %.

We recorde d an income tax benefit in the second

quarter of 2024 of $ 86

thousand at an effective tax rate of ( 21.2 %) compared to an income tax expense in the second quarter of 2023 of $ 391 thousand at an effective tax rate of 33.8 %.

For the six months ended June 30, 2024, we recorded income tax benefit of $ 363 thousand at an effective tax rate of ( 21.1 %) , compared to an income tax expense for the six months ended June 30, 2023

of $ 1.0 million at an effective tax rate of 20.7 % .

We are subject to U.S.

federal income tax, as well as income tax in certain U.S.

state and foreign

jurisdictions.

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 2019.

However, our federal tax returns for the years 2020 through 2023 remain open to examination.

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.

The Company maintains a valuation

allowance against certain deferred tax assets where realization is not certain.

However, our federal tax returns for the years 2020

through 2023 remain open to examination.

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

The Company maintains a valuation allowance against certain deferred tax assets where realization is not certain.

Subsequent events

The Company has evaluated all events or transactions that occurred up to the date the Condensed Consolidated Financial Statements were available to be issued.

upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the Condensed Consolidated Financial Statements.

The Company has evaluated all events or transactions that occurred up to the

date the Condensed Consolidated Financial Statements were available to be issued.

Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the Condensed Consolidated

Financial Statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements