Good day, ladies and gentlemen, and welcome to the TransAct Technologies First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, there will be a question answer session and instructions will follow at that time. [Operator Instructions] As a reminder this conference call may be recorded. I would now like to turn the conference over to Mr. Jim Leahy of JCIR. Sir, you may begin.

Thank you, Shannon. Good afternoon and welcome to TransAct Technologies’ 2018 First 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 first 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 measures 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 welcome to everyone joining us in this afternoon's conference call and webcast. Today, we announced our 2008 first quarter results which included net sales of $12.2 million, operating income of $900,000 and adjusted EBITDA of $1.2 million. Our results also included gross margin of 47.9%, which reflects the benefit of our ongoing sales mix shift. Steve will review the results in more detail in a few moments, but I’d like to begin by providing some high level comments about our business. During the first quarter, we made significant strides in our Restaurant Solutions business with growing terminal shipments including shipments of our flagship AccuDate XL, initial sales of our proprietary labels for AccuDate terminals and ongoing product development work which led to this week’s announcement of the debut of a new terminal. In addition, we made good progress in establishing our casino and gaming direct sales team in Europe. All this work and an ongoing shift and mix towards high-value, technology-driven solutions enable TransAct to deliver strong gross margin growth of 440 basis points in the first quarter and set us up what we believe will be a good 2018. You know roughly six weeks ago, when we announced our full year results for 2017, I highlighted several opportunities with large national multi-brand restaurant companies and large-scale food service operators that our sales and technical teams were working to close. I am happy to report today that shortly after our March call; we did indeed secure one of those customers and began shipping AccuDate X terminals to that customer in support of what we expect to be a full scale multi-quarter rollout. Importantly, this customer has also agreed to purchase our support and maintenance contract offerings which represents the start of a very attractive recurring revenue…

Thanks, Bart. Good afternoon everyone. First quarter 2018 net sales were $12.2 million, down 13% from $14 million in the first quarter last year. Looking at our first quarter sales by market; Restaurant Solutions sales were $1 million, roughly double last year’s first quarter. The significant increase in the quarter was primarily driven by higher sales of the AccuDate 9700 to our primary distributor as well as initial shipments of the AccuDate XL to the large corporate customer that Bart highlighted earlier. This customer began receiving AccuDate XL terminals late in the first quarter and is now in the midst of what will be a large-scale, multi-quarter rollout of the terminal along with recurring revenues from our service and support offerings. To-date, in the second quarter, we have continued shipments to this customer and have also begun shipping AccuDate XL terminals to a second national customer as Bart mentioned. POS automation and banking sales were down 30% or $742,000 to $1.7 million in the 2018 first quarter as we saw a decline in sales of our Ithaca 9000 POS printer to our large quick serve customer who was ordering this product at record levels last year. In addition, we continue to see declining sales of our legacy banking printers as we further deemphasize this product line. Casino and gaming sales were up 16% or $822,000 year-over-year to $5.9 million in the first quarter of 2018. Domestic casino and gaming sales grew 36% over the prior year on a continued relatively broad strength of printer sales across the domestic casino market as well as the new EPICENTRAL installation. International sales were down 14% over the prior year, as growth in sales of casino printers were more than offset by a declining in gaming printer sales. But importantly, we saw 5% year-over-year…

Thanks, Steve. Great job. From what I see in the markets, the automation of the back to the house in restaurants and food service providers is accelerating and many different technologies are now being commercialized to address this opportunity. I could not be more excited to see this all developing. As fast as it is happening now, it is an opening – it is opening an opportunity for our AccuDate XL2e terminal to become the hub for the many different products that customers might want. Internet of Things, IOT has entered the restaurant market such as temperature probing of food and other IOT and cloud-based solutions are now popping up. I am sure, we will see more at the upcoming NRA show in Chicago. But what is clearly needed is a hub in the back to the restaurant, so all these solutions have a home to base their application and a hub with a chef or manager can review what is going on. With our new TAMS in XL2e, our terminal is the solution to bring all these applications and technologies together. As we sit today, we are working with many of these technologies and products to have them integrate their solution on our terminal. As I spent time with a chef and an executive chef at an amazing new commissary type kitchen just a few weeks back, the need for a company to be the central base for all these new technologies was evident. Both chefs understood what they face through all these new technologies and agreed with my findings and recommendations, it is so needed. And now with our XL2e in TAMS we have the solution. Not only do we bring a purposely built terminal within abundance of features and the security needed, but every terminal comes with…

[Operator Instructions] Our first question comes from Kara Anderson with B. Riley FBR. You may begin.

Hi, good afternoon.

Hello, Kara.

So, last quarter, there was a significant focus on the anticipated 2Q rollout at the large national restaurant customer. I see that you are now in the early stages of that deployment. Can you help frame the tempo around the timeline for that? And any type of quantification of the rollout or maintenance contract would be really helpful.

So, the second part of your question, no, we don’t talk about pricing and things like that. I think we all have to remember, there is one thing that I’ll remind you and all of our shareholders, this is a live call with any competitor to listening. So, I will refrain from talking about pricing or sales or in particular customer names and things like that. So, I ask our – I ask you and our shareholders to be mindful of that respectful that there is nobody else that does what we do which is be public and announce as much as we can. So we have to be careful of. In regards to the rollout, it’s a process. We are at the mercy of our customers in getting the technology, getting the installation technology-ready, every location gets wired, Ethernet wiring and all that, every location that terminal goes in gets training. So, it is a process for both of our customers now in regards to the rollout. One of our customers is using it in an application and they are out bidding on more and more business for them. They actually provide a solution to certain types of food service providers and as they win more business, they put a terminal in every location if not more than one terminal. So we are also at the mercy of how many more wins that they have, but right now we’ve got a pretty good feel of the rollout scheduled for their existing business. And the second customer that came in line is one where they are rolling it out. There is actually two or three terminals per location and it just takes time to get that location up to speed trained, all the technology rolled out and then completed and then they move on to their other stores. So, it’s a process. We look at it as a multi-quarter rollout. We kind of like that in a way, because it kind of smoothes things out a little. But it’s multi-quarter.

Okay. And then just one more for me. Can you update us on the, I guess, full year outlook you provided last quarter. I think you said, you would expect revenue growth and margin expansion on the operating line. I believe that’s what the outlook was, so just if you could update us on what you are thinking now.

As we sit right now, I mean, look at the first quarter, the margin hit 47.9% on the gross line. So, clearly the gross margin is there. I think we’ve proved it over multiple quarters. We have added some people on the operating expense line. Sales of course, we’ve added to our sales force and some engineers. We are optimistic for this year. We think that, as these opportunities close, the way I see it, Kara, is, we’ve now introduced a solution that we’ve been asked, could we do for little over a year, maybe year-and-a-half now in regards to providing a lock down type solution in using the terminal. And one of the issues that some of the restaurants had was clearly security who can get on the system as it is web-based. Can they go to Google, can they go to Amazon, how do we lock that down? How do we secure it? How do we secure it on the internet? How do we secure it in the cloud since it’s an android-based system, how do we push down security updates that android has? So this was a long – not too long, but it was a process in our side to get the right talent in place and then the right software design so that we could have the XL become the XL2e in an enterprise solution. So, for better words, over the last couple weeks, we’ve been introducing the solution back to our customers that we have highlighted that we are in the close category in our sales process. So now we are back at testing it with these customers, which is great. We are the only ones out there with this type of solution and so, it’s going to all depend on how quickly they…

All right. Thank you.

Thank you. [Operator Instructions] And I am currently showing no further questions at this time. I would like to turn the call back over to Bart Shuldman for closing remarks.

I don’t know if people decided not to have questions because they thought this was a Tesla phone conference call, that I am sorry. There are no more questions. So, I’d like to thank everybody for joining us on the call this afternoon. We do look forward to reporting back to you on further progress in our business when we report second quarter results in August. I do invite you to come out to the National Restaurant Association. Our booth is well designed. We’ve got all the products and it’s going to be exciting to see some of our partners in the booth and showing the technology and you’ll get to see and understand what we’ve just accomplished. We also have our Annual Shareholders Meeting coming up. So, I invite you to attend that. Let us know if you are coming. And I thank you for attending the call today. Thank you.

Ladies and gentlemen, this concludes today’s conference. Thanks for your participation and have a wonderful day.