TransAct Technologies Incorporated (TACT) Q2 2015 Earnings Report, Transcript and Summary

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 I have done in recent calls, I want to briefly review the success we are having in the markets we serve and our outlook for continued progress in these markets going forward. First I'll speak about our line of food safety terminals and back with the restaurant terminal solutions and the ongoing rollout of these products. Sales for our food safety terminals increased 77% year-over-year and by 20% on a quarterly sequential basis. At this point, the progress we have made with our AccuDate 9700 is evident as we are receiving new orders for this terminal just about every day. With the growing global customer base and consistent progress with potential customers, we remain confident in our outlook for continued year-over-year sales growth in this product line over the balance of the year. Helping to fuel this positive outlook is the tremendous response we have got for our AccuDate Pro Solution which was reintroduced and branded with our product family name AccuDate, with some new features and functionality of the National Restaurant Show in May. The AccuDate Pro is very unique in the industry and I'm hesitant at this point to even identify it as a food safety terminal since that description is somewhat limited relative to its full functionality. The feedback we continue to receive confirms that the AccuDate Pro is going well beyond the labeling to become a true back-of-the-restaurant assistant. In addition to handling all food rotation and prep levels, it can distribute and manage menu updates from essential locations, link menu items to higher resolution images or prep and plating instructions. And reduce inventory waste by connecting directly to the restaurant company essential computer system In addition, the key differentiator of this AccuDate Pro that is garnering tremendous industry interest is its ability to act as an in-kitchen platform for displaying training videos right at the prep station. With this functionality and others that I have not mentioned, I think you can see why we refer to it as restaurant assistant. Industry interest for the AccuDate Pro is very encouraging and even ahead of our earlier expectations. We will ship the first units in the current quarter, and I expect the ramp in sales will follow somewhat fast the pace than the ramp to date for the AccuDate 9700. Importantly, the functionality of the AccuDate Pro is a potential to add in a component, a recurring revenue, which could develop into an exciting opportunity for TransAct. We'll have more to say over the next several quarters about it. By providing innovative solutions that help restaurant and foodservice operators, reduce cost in their business, we believe TransAct has established a solid reputation for addressing multiple opportunities for sustainable long-term growth in this industry. Our AccuDate 9700 and AccuDate Pro are becoming a very large revenue generating opportunity for TransAct, and overtime as we continue to innovate future solutions for the industry, we expect to achieve a lot of success and benefit from its significant growth driver for years to come. Now, onto our gaming and casino business where we generated not just a second consecutive quarter of growth in this market, but also very healthy year-over-year sales growth. Significantly, we believe we have consistently grown our market share for electronic gaming machine printers over the last several years. Based on reported industry date and surveys, we believe that the worldwide market ship share in the second quarter of 2015 for our epic 950 casino printer is at all-time high. This is especially noteworthy as it approves ability to grow ship share , even in an overall slot machine sales remain relatively sluggish. Ultimately, this is a testament to the ease of use and reliability of our epic printers and a direct reflection of the expertise and capabilities of our engineering team and the great work being done by our TransAct sales and marketing teams. We work tirelessly to take care of our customers at extremely high levels. Now, a very exciting part of the casino sales efforts is the business activity for our Epicentral software system is also gaining momentum. We went live with Epicentral on over 2,500 devices at Resorts World New York in the second quarter. In the current quarter we expect Epicentral to go live at more casino's while the interest from casino operators around the world for this unique solution is steadily increasing as more come to understand the benefits Epicentral offers their gaming floor operations. Including substantial increases and new player loyalty program enrolment, weekday afternoon slot handle, slot handle the evening of a coupon drawing promotion, growing lower tier player average daily theoretical, the number of returning players, and average player time on device among other benefits. We are communicating to the slot player real-time. Epicentral is hitting its stride now, and we are extremely encouraged about the potential for accelerating installations around the world. In addition, lottery again was a very strong market for us in the second quarter 2015. Many of you are aware that we recently renewed our lottery printer agreement with GTECH, and expect to again achieve year-over-year growth in this business in the second half of 2015, we do not expect this growth to be at the same rate as he achieved in the first half of the year. We are pleased to continue our tremendous long-term relationship with GTECH. I'll add, that with an installed base of well over 500,000 lottery printer's, we benefit from a high level of spare parts and accessory orders from this customer. You can see that we have two very exciting growth drivers in our business, both of which can offer attractive recurring revenue opportunities, our AccuDate Pro terminal and our Epicentral software solution. Now onto our Printrex line of oil and gas seismic and exploration products. There really have not been any changes from our prior commentary, the very dramatic slowdown in drilling activity impacted this industry and we’ll continue to impair ourselves or printers for their foreseeable future. We are managing this business accordingly with a focus on maintaining the profitability of this product line despite the industry headwinds and I believe we’re doing a good job in this regard. I also want to also comment on the success TransAct is having at McDonalds with our Ithaca 9000 Thermal Printer. As most of you know, McDonalds is making many different moves to address their business to a changing market dynamic. As they make these adjustments, McDonalds has decided to add many more printers to their stores. This decision in turn has driven a considerable amount of printer sales for TransAct, which we believe will continue at least through the remainder of 2015 and it looks very promising to continue to 2016. We’re truly thankful for the faith that McDonalds has put into our products and we will continue to work very hard in their behalf. And finally in regard to our RESPONDER mobile printer brand that addresses the machine to machine market, the measured rollout of the RESPONDER MP2 all-in-one mobile printing solution is ongoing and we expect the benefit from higher sales of this product as we end the second half of the year following some initial benefits from early shipments in the first half. This is a Greenfield opportunity for TransAct and we continue to believe there is a tremendous opportunity for mobile printers given all that is going on with software, that is connecting machines and vehicles. So our results for the first half of 2015 have demonstrated that we're executing on our goal of making this year all about sales. We are driving very healthy increases in our profit reflecting the leverage in our business model we have developed. By selling higher margin products and controlling our costs, the incremental revenue is driving higher gross margins and operating profit. We continue to be focused and harvesting our growth opportunities including the expansion of our casino industry printer market share, growing the number of casinos that feature our Epicentral print system, and moving into the machine-to-machine mobile market with our RESPONDER line. And we can see now the traction for AccuDate product is gaining momentum. At the same time, we’re doing a very good job at actively managing our cost. I like to take this time to thank the employees of TransAct who continue to be very focused on our transformation and growth initiatives. Everyone has worked hard doing what is necessary to get our new products to market and that our marketing sales team turning them into the sales. I want to thank our operations team who are supporting all these efforts, while helping to drive our cost lower. And our finance team who is managing the accounting and cash flow, as we quickly paid-off the debt we took on to help fund the lawsuit settlement payment to Avery Denison and now have over $2 million of cash on the balance sheet once again. What a great team at TransAct and I cannot thank you enough. And I also want to thank our shareholders who have supported us over the last few years. We are working hard in your behalf and are staying focused on, it’s all about sales. With that I'll turn the call over to Steve for a deeper review of the 2015 second quarter results. After which I'll make some summary remark before opening the call to questions and answers. Steve?

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 growth in sales to McDonalds. As Bart mentioned, McDonalds has accelerated the rollout for four different initiatives that are all using our printers. And we expect this accelerated rollout to continue through the rest of 2015 and likely into 2016. We also continue to expect positive sales trends for our food safety terminals throughout the balance of 2015, including the benefit of initial sales of our new AccuDate Pro terminal. Total revenue for our Printrex oil and gas and medical mobile printers was approximately $200,000 compared to $1 million in the year ago quarter, as sales continue to be impacted by lower capital spending by oil and gas customers, as a result of dramatically lower level of drilling activity caused by the steep drop in oil prices. Given the current state of the oil and gas industry, we expect this trend to continue to impact Printrex oil and gas printer sales throughout the remainder of 2015. Finally, TSG sales were up 9% year-over-year to 3.4 million primarily due to a significant increase in sales of spare parts and accessories related to higher volume from GTECH. Gross margin for Q2 was 41.6% compared to 41.9% in Q2 last year. Even with the much higher percentage of sales coming from lottery printer sales this quarter compared to the year ago period, our gross margin was fairly comparable to Q2 last year due to growing contributions from our higher margin new products. We expect our gross margin to continue to climb into the mid 40% range during the second half of this year, as sales of our new products increased and lottery sales moved to more normalized levels. Total operating expenses were $5 million for the second quarter compared to $5.4 million a year ago, as we benefited from the cost reduction actions we initiated in the fourth quarter of last year. In fact, we continue to pace nicely ahead of our target of saving $1 million end of operating expenses this year. Engineering, design and product development expenses for the second quarter were down $291,000 or 25% year-over-year reflecting staff reductions resulting from our cost reduction efforts, as well as lower product development expenses. Selling and marketing expenses for the second quarter declined $157,000 or 7% to $2.1 million primarily reflecting lower sales commissions and travel expenses largely related to our Printrex business, as we are prudently reducing spending in response to the downturn in the oil and gas market. G&A expenses for the second quarter were $2 million which were inline with the year ago period. Operating income grew to 2.2 million or 12.8% of net sales compared to just 300,000 or 2.5% of net sales in the prior year second quarter. This truly demonstrates the operating leverage we are achieving in our business through a combination of growing sales and decrease in expenses. Both GAAP and adjusted diluted EPS for the 2015 second quarter were $0.18 compared to $0.02 in the year ago period, and adjusted EBITDA for the second quarter 2015 tripled to 2.7 million from 900,000 in the second quarter of last year. Turning to the balance sheet, we ended the quarter with $2.3 million in cash and we had no debt as of the end of the June, even though we did them to our credit line in April to help fund the lawsuit settlement payment Avery Dennison. We had anticipated of repaying these borrowings by early in the third quarter but we were able to utilize the strong cash flow generated in Q2 to repay the borrowings earlier than anticipated and we ended the second quarter debt free. During the second quarter we retuned approximately $600,000 of capital to shareholders through our quarterly cash dividend of $0.08 per share and through the first half of the year, we returned approximately 2.3 million to shareholders through a combination of our regular quarterly dividend and share repurchases made in the first quarter. We continue to have approximately 3.8 million available under our current $7.5 million share repurchase authorization. Yesterday we announced our regular quarterly dividend of $0.08 per share payable to shareholders of record as of the close of business in August 20. So we remain committed to return the capital to shareholders even as we invest to support our sales focus growth player. As Bart mentioned, we are expecting a solid second half of the year including continued growth in lottery sales of another significant as we achieved in the first half of the year, a continued year-over-year improvement in sales of our food safety terminals, as well as our Ithaca 9000 POS printer, as McDonalds continue its roll out of new initiatives. And we continue to expect a better year in 2015, as we focus on sales execution and benefit from the cost savings initiatives we implemented last December. Notwithstanding the strong sales we saw in the first half of the year for the casino gaming market, we remain cautious with our year-over-year growth expectations for this market. But we do expect the benefit from new Epicentral installs in the second half of the year. We remain similarly cautious with the Printrex oil and gas market given the continued impact of declining oil prices. With all that said, 2015 continues to shape up to be a year of solid execution with our sales initiatives. And at this point, I'd like to give the call back to Bart Shuldman for closing remarks. Bart?

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 to inform the restaurant let's call up a new menu item, that could all be downloaded from a central system to our terminal. So the AccuDate PRO is really becoming the assistant in the back of the restaurant and the attractiveness of it yes, we’re labeling food and yes we’re controlling their food safety but now we’ve opened up the discussion into saving money on food waste, helping them do menu items, helping to train their Prep Shops by downloading videos to the terminal, and this has got the restaurant excited. And then the third bucket clearly as they’re implementing the Food Safety Act, restaurants are taking notices to how are they going to control their food safety. There have been episodes around the world, I don’t think I have to tell you where certain episodes of bad food has caused certain companies their brand for better word. So restaurant companies are taking notice. The Food Safety Act is going through its development, more information is coming out, restaurants are clearly taking notice of it. But you got all these other things that we’ve introduced to the restaurant industry, which really has us quite excited about the future. And look it’s going to take time but we're in really interesting discussions about how the food - especially our AccuDate PRO becomes the assistant not just the food safety terminal.

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.