Good day, ladies and gentlemen and welcome to the TransAct Technologies Second Quarter 2015 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] I would now like to turn the call over to Jim Leahy. You may begin.

Thank you, Michelle. Good afternoon and welcome to TransAct Technologies 2015 second quarter conference call. Joining us today from the Company are Chairman and CEO, Bart Shuldman; and President and CFO, Steve DeMartino. Today's call will include a discussion of the Company's key operating strategies, progress against these initiatives and details on the second 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. TransAct undertakes no obligations to revise or update any forward-looking statements to reflect events or circumstances that occur after the call. Today's call and webcast will include non-GAAP financial measures within the meaning of SEC Regulation G. When required, a reconciliation of all non-GAAP financial measures to the most directly comparable financial measure, calculated and presented in accordance with GAAP, can be found in today's press release, as well as on the Company’s website. At this time, I would like to turn the call over to Bart Shuldman. Bart?

Thank you, Jim, and before I begin I would like to thank you and Rich and everybody at JCIR to have helped us over the last couple of years get ready for what we consider to be the transformation to TransAct. So I just want to thank you guys for your hope and guidance. Now I'd like to welcome everybody in joining us on this afternoon's conference call and webcast. This afternoon we reported a 25% year-over-year increase in second quarter revenue to $17.2 million, adjusted EBITDA of $2.7 million, and GAAP and adjusted diluted EPS of $0.18 per share. Steve will review the financial results in detail in a few moments, but let me start by saying I am extremely pleased with the results for the second quarter of 2015, and the first half. In fact reflecting year-over-year growth and revenue for each of our casino and gaming, food safety, point of sale and banking and our lottery business units, total net sales are up nearly 22% to the first half of 2015, which has resulted in 155% increase in adjusted EBITDA to 5.2 million and 350% increase in adjusted net income compared to the same period last year. We came into 2015 entirely focused on sales execution and so far performed extremely well against our operating goals. Our market identification and development efforts over the last several years have positioned TransAct with the diverse portfolio solutions that address attractive growth opportunities. And as a result of cost reduction initiatives implemented near the end of 2014, we are benefitting from the leverage in our operating model as topline growth is translating at the significant increases in our bottom line and cash flow generation. Steve will review our second quarter financial results in more detail in a moment, but as…

Thanks Bart. Good afternoon to everyone. 2015 second quarter net sales were $17.2 million, up 25% compared to the $13.8 million in the year ago quarter. As Bart pointed out earlier, Q2 benefited from a second consecutive quarter of strong lottery printer sales, year-over-year and quarterly sequential growth in casino and gaming sales and solid growth in sales of our food safety terminals. Looking at our sales by market for the second quarter, casino and gaming sales were up $1.1 million or 19% year-over-year to $7.3 million primarily reflecting the benefit of revenue from the Epicentral installation at Resorts World New York, as well as the 20% increase in international casino and gaming sales. Domestic sales of casino printers to OEMs were flat year-over-year, but as Bart noted earlier, we believe our quarterly ship share of casino printers is now at an all time high. On a quarterly sequential basis, casino gaming sales increased 30%. As anticipated, lottery sales rose significantly increasing 246% to $2.9 million from last year's Q2 sales of $800,000, as GTECH took significantly more than the minimum required quantities this quarter. While we continue to expect a year-over-year growth in lottery sales during the second half of this year, this growth will come at levels below what we generated in the first half of 2015 as we move back towards a more normalized level of the quarterly sales. Food safety, POS and banking sales were $3.4 million in the second quarter 2015, an increase of $700,000 or 25% year-over-year and 1.2 million or 54% on a quarterly sequential basis. Results for the 2015 second quarter reflect a 77% increase in sales of our food safety terminals compared to the prior year and an 18% increase in sales of a point of sale printers led by significant…

Thanks, Steve. Before opening up the call to your questions, I want to emphasize that the transformation of TransAct is now on full gear. In 2015 we are focused on executing on our sales initiatives and are excited about our opportunities for the year. With that, let's open up the call to your questions. Operator?

[Operator Instructions] Our first question comes from Phil Bernard of Eilers Research. Your line is open.

Congratulations on the good quarter, with the first question going into casino and gaming, saw some good growth there, do you see that primarily from international or domestic, and then do you see those results as part of the broad recovery in the market or something specific to TransAct's strategy?

I look at in a couple different buckets, I don't think there is any question that the domestic market is struggling or not doing all that great , but we gained a fair amount of ship share. So what we've been able to do is stay flat in a down market, and I congratulate our sales people for being able to win the new openings and to gain the market share and we can only be called the difficult domestic market. I leave it to the IGT's of the world and the scientific games to talk about what's happening in the marketplace and whether they see it growing or not going forward, but in the meantime, we're maintaining our volume and growing our share significantly. The other thing that's happening is our Epicentral business, and we had an installation in the second quarter and we plan on installing the system in the third quarter, and with an installation comes a sale. So we're really pleased with the attention that we're getting with Epicentral, and so domestically in a flat market, we're growing our market share with printers and clearly installing more Epicentrals and getting more revenue from that, and that's just wonderful as the Epicentral software system has some pretty good margins. Internationally we're doing great. We've done a great job in Macau, we're winning a lot of the openings and we've got a solid presence in Europe, where our sales team is just doing a great job. So there's nothing in particular that we didn't – like we didn’t win one order that drove everything, it's just constant execution of our sales, we are gaining a significant amount of ship share in the U.S., we've got Epicentral now selling around the world, and we'll have more to say in the third quarter, I think we'll have a bit of a surprise in the third quarter for some people and internationally we're doing just great. So, we're really hitting on all cylinders in our gaming and casino market right now.

Can you see the landscape difference with respect to you're competing with internationally or domestic, and is your ship share similar between the two?

We always had pretty high ship share in Asia. So we've got a very strong presence in Asia. I would say Europe is about the same, hard to say given so many small little OEMs and of course in the U.S. we're clearly gaining ship share. As for the landscape of the market, again I leave it, it's hard to say what's going to happen to the market, I'm sure that you know that skill based gaming is hopefully coming and I think that's going to be the next revolution and we'll be there with our printer in every one of those machines. And so as more states approve it, I think we're going to see a pretty - potential big uptick in gaming sales, machines sales, once skill based gaming comes into the marketplace.

Okay, great. And you had mentioned about the GTECH contract, though it was renewed, some of the exclusivity agreements are gone - in the new contracts, is there any effect in this last quarter or will we see more of that - you're saying that you expect to see less lottery sales in the future?

No, we always said was the second half of the year. Look, we're having extremely strong year with GTECH, it's a banner year for us and they're pleased with us and we're pleased with them. They've now been bought by IGT, we already have our order for next year, and it's going to be a good year next year. So, we already have secured our order for next year, it's going to be another good year for us. Look, there were some discussions between us and GTECH which we can't get into, that we both decided that the exclusivity wasn't something each of us wanted to do any more, but if you look at our results and look at ourselves, we already have next year secured, we have over half million printers in the marketplace, we have a great relationship with GTECH, we're going to be supplying them printers and spare parts for many years. And like I said, next year is already secured, so there is really no issue. At the level we're out right now, the second half of the year is got to come down versus the first half. The interesting thing about our business though and Steve mentioned this, as lottery sales does come down in the second half of the year, our high margin products, our new products are going to continue to accelerate, and as Steve said, our gross margin is going to start approaching the mid 40s. So if you look at the Company over the last go 8 or 10 years, we were at the mid 20s, high 20s, then we got to the mid 30s and gross margin, and now we're talking about the second half of the year heading towards the mid 40s and that's really the transformation of the TransAct that we wanted to occur. We've added much more technology to our products, we're selling software in regards to our Epicentral system, clearly there is a big software component to our AccuDate Pro and that's driving higher ASPs and higher margins. So even with GTECH coming down, the margins are going to go up. So, we've done exactly what we wanted to do even with such a big year with GTECH in the first half, and it's going to slowdown - not slowdown, just going to come down to normalized levels in the second half. By the way one of things I said in the previous call, is that we are working on a special project for GTECH, and we won that, and that will ship in the fourth quarter. So we secured some good business for the third and fourth quarter with them.

Okay, great, so exciting. Actually continue with innovative new projects for you guys in products. As far as the RESPONDER, I know you mentioned that you booked few light sales in first quarter or the first half of the year. Just from a modeling standpoint, what bucket of revenue are you guys going to throwing that into? Or where would that be included if you were to look for it?

Right now it's in Printrex. If you look at the mobile - if you look at the machine to machine market, and I can only point, if anybody watches commercials today and you see a GE commercial, what are they talking about, GE software, right? They are connecting machines by software, either through the Internet of things back to home offices, being able to monitor how machines are doing, going back out and repairing that, that's where our Printrex is right, you got people now connecting machines to systems to how - the quality, the reliability if something breaks, they run out and fix it, that's where our mobile printer fits. You got insurance adjusted that goes out and finds out there's a car accident, goes and prints out to somebody that's going to go get their car repaired, here's a form to go get it done, there's so much going on in that market, that we are just taking our time to truly understand the demands. If you look at the business that we are looking at, couple of years ago everything was PC based. Now it's iOS based, it's android based. It's all mobile computing, we're just freaking excited about what's going on, but as a Company that wasn't in that kind of business before, we're learning, we are hiring the right engineers to design the technology, we are working with customers to understand what they need, and we're very patient because we think that the market has some exciting opportunities for us. And by the way, that will be a 2016 better story. But remember 2015 is really going to be about Epicentral and AccuDate.

Got it. All right that's great. Congratulations again on the good quarter and look forward to seeing how this progresses.

[Operator Instructions] Our next question comes from Jeff Burstein of Concept Capital. Your line is open.

Hi guys, it’s a great quarter. I just wanted to follow-up on a couple of things. Can you talk to us a little bit about what the McDonalds applications are and kind of what the prospects are for other people going down those roads?

We don’t really get into specifics about our customer and what they’re exactly doing, but I don’t – look, I don’t think it’s a mystery as to what’s going on with them in regards to hamburger competition. In fact right before the conference call Bloomberg put out some information about something called create your taste, this is something you should look at that we're quite involved with. So, well I'll talk about specifics but I don’t think it’s a mystery to really look at what they’re doing, seeing the initiatives that are taking and understanding that if we're just about every application that they’re doing, they are either adding one, two or three printers. So it's very exciting for us and look its humble that they’re looking at these opportunities and changes to their business and they’ve included us in it. So, like I said Bloomberg today right before the conference call put out something about create your taste and there you could see some of the things that are going on.

Terrific, I’m going to look at that. And then in terms of the food safety opportunity, are we seeing the impact of the regulations that were struck a few years ago now or is that really not been motivating factor yet or is it going to be and just talk a little bit more about the AccuDate opportunity?

Yes, so look I'd break it - I like to put things in buckets right. I think the success of the AccuDate 9700 is based on all the trials that we talked about over the last two or three years. And when I would tell the shareholders we're in this many trials, with this many terminals, it just took time to get everybody to accept it and roll it out. So the success in a 9700 is really based on all the work we've done over the couple of years. The AccuDate PRO and for better words we're going to have good better best product line. So the AccuDate PRO fits into the better not the best category. The best is yet to come. The AccuDate PRO has introduced to restaurants capability that is really got their attention not only from food safety, but think about what drives cost in the restaurant food, waste, being able to track food. When our terminal is being told - when a Prep Shop is told to make something, they know that they’re going to use so many tomatoes, so much olive oil, so much garlic if they’re making tomato sauce. Well, if you can download that to the terminal and we open and close that order, we can immediately tell the inventory system how much food they used. Well that's just amazing cost savings to a restaurant and now they can do real time monitoring of their food and how it’s being used. So that’s just one application that the AccuDate PRO is being looked at. Many widen ,changes if a casual restaurant chain wants to add a menu item, delete a menu item, there is a lot of process that goes on inside the multiple restaurants that they own, that they have…

Terrific. And lastly just wanted to dig in a little bit deeper on gaming printers. I think you had a competitor that ended up getting sold, you're definitely taking share there. I think they also offer something like in Epicentral, but maybe not totally comparable. Just talk a little bit about the competitive environment and the way you think your competitors are?

Yes, look we haven't seen much from them. I think Jeff what's really exciting right now. Look, the domestic casino market even the international casino market even Macau right now, has gone through a major change right. I mean we went through a great recession here in the U.S. and casinos needed to get their budgets under control, get their bottom line under control, and now they’re fighting for market share. And the Epicentral system can promote and speak to their customer real time where the only system that we believe can talk to the customer real time by driving some type of action, giving them a coupon, giving them a promotion, giving them a ticket. And that's clearly starting to notice in the marketplace as this market the domestic market healed from a very deep recession. And I think the casino market has lagged, for better words the economic recovery in the U.S. which questionable anyway has lagged the recovery. In Macau, think about what’s going on. The VIP player, the Junkets are leaving and it's a mass market play now. That fits right into our sweet spot, right. Now they’re becoming Vegas, now they’re becoming a locals market, now they’ve got to get repeat players, now they’ve got to get players to play more, they can no longer rely on the VIP and the Junkets. Well that's right square, right in our warehouse with Epicentral. So there is clearly wonderful conversations going on. So, look it took time and the industry went through its issues in regards to the economic recovery, I mean I heard on a conference call yesterday that one company is talking about software sales looking much better. We’re clearly seeing the opportunity. We really believe we have the only product out there that does exactly what the casinos want. I think we’re going to have a couple of surprises in other quarter or two to show our investors why we really believe that this product has real legs and real sales opportunities. Remember it’s got a nice recurring revenue piece to it, it’s got a nice sales piece, nice recurring revenue piece. And by the way in the AccuDate PRO, we're looking at developing a recurring revenue model with it also that will add to more of our recurring revenue. So, we just don’t see the compete – we look forward and we look at what's in front of us and the opportunities are really starting to build. So we’re very excited, it’s going to take time, can’t promise anything. But what we’re seeing today is much better than what we seen in the last couple of years.

Terrific. Well, keep up the good work guys. Thanks.

[Operator Instructions] Our next question comes from Sam Namiri of Grand Slam. Your line is open.

Hi Bart and Steve, congrats on a great quarter. First question I had was for Steve, I haven’t heard his voice in a while. Quickly can you tell me like the average selling price of the printers and the number of printers sold in the quarter?

The number of printers sold I believe was a little over 50,000, it was 52,000 in the quarter.

Okay. And do you have the average selling price there?

ASP we don't disclose Sam.

You don’t, okay. And then Bart for the 9,000 was in the 9,000 printer I believe that you’re selling to McDonalds. Is there interest from other groups in that type of printer at all, as I know McDonald was generally the leader in terms of -

Not really. I mean if you look at the focus of our business, we are really focused on food safety in Epicentral and then finishing up the work that we are doing on the RESPONDER line. We happen to have a very wonderful customer for McDonalds that is doing a transformation like we just completed and they [brought] [ph] Epicentral for the next couple of years. I can tell you, we're probably have 60,000, 70,000 printers in McDonalds right now. So eventually there is going to be a nice follow-up on just replacement printers over the years to come. You are really not focused on the POS market, but this one is for better words fell in our lap, and we love it. We are really focused on food safety. You asked about our average selling price, it's clearly going up because of our AccuDate Pro and our AccuDate 9700, clearly those are selling at much higher prices and higher margins. The sales team is really focused on food safety in Epicentral and supporting the McDonalds needs.

Okay. And then with food safety printers, is there with the expansion of grocery stores offering or prepared foods like sandwiches and such. Is that a target market for that printer as well?

Yes. And others Sam, - and other I'm not going to give it away because I’m sure my competitors are listening or my competitors listening, but it's not just grocery stores that we are targeting. By our estimate there is probably 600,000 locations that can get the terminal. Now, it will take time, I mean we - it took a couple of years to get the 9700 rolling but the Pro is a sweet spot into a market that is above the quick serve and by our estimate there is 600,000 potential locations.

Okay.

And Sam, I also want to say look, if a quick serve restaurant is watching McDonalds and says, hey we want to linear this label printer and we see printer that does with our 9,000 does rely, that our 9,000 does, the coffee chit, the grilled chit in the back, a wider liner label, and a receipt regular paper, all in one printer. And if there is restaurant companies out there, that start taking notice what McDonalds is doing, and needs that style printer, Sam there is no doubt we will sell it to them. We’d love everybody to follow up McDonald what it is doing and then come call us. So I don’t want to say that we would have looked for more business, it's just we are flat out right now in food safety with our POS sales team.

Got it. Okay, thanks. Appreciate the color.

I'm showing no further questions. I would like to turn the call back over to Bart Shuldman for any closing remarks.

Thank you everybody for joining us on the call this afternoon. We want to thank our shareholders for their support. We also want to thank all our team members at TransAct. We’d also like to take a moment to invite our shareholders to meet with us if you plan to attend the Global Gaming Exhibition G2E next month in Las Vegas. For those that can't make it, we look forward to reporting back to you on further progress in our business when we report the third quarter results in early November. I truly appreciate your support and thank you for attending tonight.

Ladies and gentleman, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a great day.