Good day, ladies and gentlemen, and welcome to the TransAct Technologies Third Quarter 2014 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 to Mr. Jim Leahy, Investor Relations. You may begin.

Thank you, Dephney. Good afternoon and welcome to TransAct Technologies 2014 third 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 and progress against these initiatives and details on the third 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, Rich, and welcome to everybody joining us in this afternoon’s conference call and webcast. This afternoon, we reported revenue of $13.4 million, adjusted EBITDA of $900,000 and diluted and adjusted diluted EPS of $0.01 and $0.04 respectively. Steve will review the financial results in detail in a few moments, but let me start the call by noting it’s that probably not new news to most of you that the domestic casino and gaming industry remains very challenged, as evidenced by both gross gaming revenue and unit sales trends. Of course, printer sales are closely tied to the number of slot machines sold each quarter. So even as we maintain a strong worldwide market share of printer sales it’s clear that constrained casino operators’ capital budgets especially in the regional markets on the domestic front impact our business. Given our outlook for the domestic casino and operating environment, I want to review several strategic initiatives underway that we believe are prudent for TransAct and our shareholders. The first initiative is a recently implemented plan that will bring our cost in-line with our current outlook for the casino market. In total, through reductions in expenses we expect to reduce total cost in our business by $1 million on an annualized basis. By the first quarter of 2015, we should be largely on plan on a quarterly run-rate basis with the full effect of these cost reductions. While we believe that this is the action to take at this time it is equally important for me to tell you and that we communicate to our investors our intention over the next 12 to 14 months to continue to invest in products and people that represent significant growth opportunities for TransAct. So we will decrease cost on an overall basis but maintain…

Thanks, Bart, and good afternoon, everyone. 2014 third quarter net sales were $13.4 million, which was down from $16.8 million in the year ago quarter. By sales unit, casino and gaming revenue was $5.1 million compared to $7.5 million in the year-ago quarter reflecting a lower overall domestic unit volume and no Epicentral softer installation this quarter where we had one installation in last year’s third quarter. The decline in domestic casino and gaming revenue was partially offset by higher printer sales to international casino and gaming customers. Lottery sales of $1.5 million improved 44% year-over-year as GTECH had normal than their normal minimal contractual buy in the 2014 third quarter. Food safety, point-of-sale and banking revenue was $2.6 million essentially flat on a quarterly sequentially basis but, down $1 million year-over-year. Sales of our Ithaca food safety terminals were down $1.3 million year-over-year as last year we had a $1.5 million stocking order from a distributor that didn’t repeat this year. However, sales to other food safety customers actually increased by $300,000 or 75%. In addition, sales of point of sale printers to McDonald’s increased $200,000 as they accelerate their roll out of Ithaca 9000 printers for a new check out application. Total revenue of our Printrex branded printers was approximately $1 million, which is down slightly from last year’s third quarter but relatively consistent with the run rate we’ve achieved each quarter this year. Despite the decline in our overall worldwide sales of oil and gas printers, which we believe is being negatively impacted by declining oil prices, sales of our Printrex color printers remain flat both on a year-over-year and quarterly sequential basis. Finally, TSG sales were down 8% year-over-year to $3.2 million in the quarter though up slightly on a quarterly sequential basis. As Bart noted,…

Thanks, Steve, that was just wonderful, thank you. Before opening up the call to your questions I want to emphasize our key ongoing strategic initiatives. First, to address the current outlook for the domestic casino industry, we have effected cost reduction initiatives that will result in an annualized savings of $1 million. Second, we remain fully committed to our investing in and funding the growth of our highest potential growth and high return products, Epicentral, our Ithaca food safety line and our Printrex line of color printers for the oil and gas seismic and exploration market. Each of these products offer compelling value enhancing solution and will also continue to support the rollout of our new Responder MP2 and our new BANKjet 3000 printers. And third, and I think Steve said it wonderfully, we remain committed to returning capital to shareholders through our quarterly cash dividend and through repurchases of our common stock. TransAct has the financial foundation to both support our return on capital initiatives while simultaneously advancing our revenue enhancing strategies. With that, let’s open up the call to your question. Operator?

(Operator Instructions). And our first question comes from Mitchell Sacks of Grand Slam. Your line is open.

Hey guys, I got a couple of questions around food safety and then I wanted to ask some questions about the casino side. On the food safety, you guys obviously mentioned you had a couple of wins. When did that start to show up in revenue? And is it really based on the fact that these wins are of a parent company and, therefore, there is some lag because there may be franchise who have to make the purchase decision?

Mitch, it’s a combination. So once we win the brand approval, in most cases, we then are given the license to sell to the franchisees. And in certain cases there is a lot of franchisees with a small amount of restaurants and in certain cases of some restaurants that we won there is bigger, there are franchisees that own a lot of restaurants. And so we’ve got an attack plan of how to address that, we’ve kind of changed up our sales force a little so that for the bigger franchisees we can go after them with personal calls and the ones that have smaller amount of franchisees we can do that through telemarketing. There are certain amount of customers that we’re talking to, one in particular that we won where they bought all the terminals at once and they’re putting them out in the restaurants. But the norm is right now that they have franchisees and we sell to those franchisees. So it does take a little time. I got to say we were encouraged over the last couple of weeks, I’d say over the last six weeks, Mitch, because we closed that more than just a couple. And it took time, and I think I’ve mentioned it on the call that it does take time to get their attention, it does take time to show them the technology, then management to buy into it and to go through the trials, both normally in their headquarters and then out in the field. But over the last couple of weeks, we started to see some open up and some close. And that has given us the -- I mean we’ve always been very enthusiastic about the market and I think you know that in the many times we’ve talked at our meetings. But it clearly is very encouraging when we close it and see it and now have the license to go and sell it and the response we -- I got an e-mail just yesterday where we were at a meeting of the company where they had all their franchisees together and we had franchisees standing up selling our product, because they truly believed in it. So, we’re really encouraged by the wins and the fact that our technology was chosen.

And those franchisees that were standing up and trying to counting your products, so these are franchisees that have in test restaurants effectively or how were they able to do that?

Yes, so we didn’t approach, we had a two prong approach to the market where clearly we weren’t at the headquarters level and in some cases we actually worked at the franchisee level, so we got both the push and the pull on the parent to look at the technology. So, in one case where we work with some franchisees and they put the technology out and then it got approved, they helped to push it through the corporate office. And then when we went to the meeting they were able to stand up and say hey, look we’ve had the technology for a couple of months in our stores, it really works, it’s really the thing to buy. In the case of where the trial was done by the franchisee then they were able to explain how it benefited them.

Okay. And so when did that start possibly offset some of the negativity that’s going on with the casino side of the business?

We expect next year. There is no doubt that we expect next year to be a better year because of food safety.

Okay. and then with respect to Echolab, when are they able to start selling or when did they start to become additive to food safety sales?

I can’t answer that right now. One of the things that we’re doing, Mitch, is we are -- with our sales programs and our sales initiatives, we are looking at where we can get the biggest hits first. And we’ve identified some real big opportunities for us, and from a company focus that’s what we are focusing. And I can’t really make comment, we’re under non-disclosure with Echolab. But as a company we’re, due to the fact that the domestic casino market is as weak as it is, we’re fishing where there is fish. We’re not putting a line in the water and hoping some fish comes up. We know where we’ve got the strongest relationships where we’ve been the most successful where the response in terminal has been the most your positive, where we’re getting the best response from corporate, and our guys are focused there to close those orders. And so we’ve got a very, very focused approach to get closed as many orders as we can and go out and hunt those opportunities and work those where we can get the orders the soonest.

Okay. And then with respect to Epicentral, G2E I guess you’d had some positive feedback from people who have it rolled out in their casinos. Can you just walk us through Epicentral and what you’re seeing there and how we should think about it in going forward from a -- your ability to bring people across the trench and close them?

Yes, this has been a -- I would call it a frustrating year just because we had so many headwinds. We had a clearly declining market. I think you were at G2E probably could probably call it the biggest job fair I’ve ever been to. And there was been a lot -- there has been a lot of headwinds this year in rolling out the technology that we have. I think the good think is, and you got the see it in the boost, Mitch, was we had customers that have the technology in their booth selling it for us, talking to customers. And our list of opportunities continue to grow, not decline. And so we are -- we’re optimistic about next year because the response, and given the headwinds and given all the software upgrades that were thrown to the industry that stop people from buying or looking at up Epicentral because they had to upgrade their slot machine system instead, we’re pretty optimistic about next year with Epicentral. And it’s around the world, Mitch. It’s very interesting how in markets that you wouldn’t expect taking how we’re getting some of the strongest response. Peru is a great example where not only that we place -- what did we put in six or seven system, Steve? But we replaced our competitors’ product in order for them to do it. So, the response has been good, the result have been for better words just been wonderful. And the fact that customers are willing to stand up and talk about it has been great. I mean I think you and I -- forget if you were at a dinner with Bank of America the night in at G2E where one of the casinos that actually has our system was there and with an invited guest of Bank of America, and he stood up and said it was the best decision he has ever made as a casino manager. And when other operators hear that and they know him, they look at him and say we need to know more. So I think we exit a very difficult year. I don’t think anybody should minimize how difficult 2014 was for the industry. We exited with about as much positive feelings about it as we ever have.

Thank you and our next question comes from Phil Bernard of Eilers Research. Your line is open.

Thanks for taking my questions guys. First about your outlook on the market, you are saying that you have a negative view on that casino positive with restaurants; one of the other products that you intend to focus a lot on is the oil and gas industry. How do you guys view oil and gas moving forward?

Yes, yes, talk about hit another headwind. , Yes, look we entered the market, it’s an exciting market, I think we’re all benefiting from lower gas prices and it probably the best tax break we’ve gotten in a long time considering what’s been going on. Right now, we’re staying very close to the industry, and the good thing that I’m hearing right now from our staff is nobody is laying down any rigs, the rigs are still working and there is still pumping. I think we will see a slowdown in our truck market because as they slow down production as long they don’t lay the rig down there will be trucks that go out but I think we’ll see somewhat of a slowdown in that business. But I think you’ve heard us over the last couple of quarters talk about our office printer and that’s where we are walking into a market with truly the best mousetrap, right. We’ve got the best product. Our competitors are Jerry-rigging an existing page at a time printer that try to do a continuous form printer where our printer was designed for continuous form. And we’ve already sold as many printers as we thought we would get in five years; we’ve done that basically in a little over a year. And the opportunities continue to grow and the opportunities because there is still going to print out these reports because now even more than before they need to know how that well is working, and it’s really the office people that are looking at those reports. So we’re optimistic that we’ll be able to continue the progress we’re making with our 980 printer. And the good think about the 980 printer is the amount of consumables, right. I mean now it’s averaging about 20,000 and that’s because we had some printers in some markets where they don’t print as much. So, if some customer is doing 30,000, 35,000, we’ve some doing less and the average is somewhere between $20,000 and $25,000 a year recurring revenue. But every printer we get out there does that. So being that it’s only a $4 million or $5 million business for us, we think we’re going to be fine but we’re really going to focus on that 980 business because that’s where it’s a real easy sell. We put our printer in an office where they’ve got our competitors printers, they’ve had kinds of reliability issues, our printer goes in, it just works and then of course they buy the consumables and they buy a lot of them. So, right now we would expect our truck market to slow down a little but we’d expect our office market to pick that up.

Okay, great, and that’s the consumables that’s approaching $1 million in recurring revenue over a year. Correct?

That’s right, that’s right

All right. How do you expect that to ramp up?

Well every time we sell with printer its $20,000 in recurring revenue. So the goal is to get as many printers out there as possible and we are very, very focused on it. The good news is three out of the four big companies have our product now. One or two of them have pretty much almost standardized on our product. So which means every time there is an opportunity where they need to replace a product, we’re first on the list and we’re also -- and what we found it’s a worldwide market too. So the opportunities are not just in Texas or Midland Texas or Oklahoma City or Denver but they’re also in Singapore, they’re also in Asia, they’re also in Mexico, they’re also in Brazil. So they’re taking us everywhere. And the product is just so much better than what’s out there that we’re optimistic that that business will clearly, once we get a printer out there, then the consumer business starts and just builds.

Okay, great, thank you. Last question, in referring to the $1million in cost reductions in terms of the timeline you’re saying you expect to see that in the next year, where is that going to come from, is that primarily G&A?

It’s a lot of G&A. Steve.

Well yes, most of it will come from operating expenses, actually a big chunk will in product development.

Okay.

If you think about it we launched four new products in 2014 and look I, as tough as the casino market has been, and I know our shareholders are not happy with it, that’s the reality, right. We woke up one day just like everybody else that in the industry, there was no buy-side or sell-side analysts talking about a major decline in the casino market. But we stay to our program of bringing our four new products. So we have the engineers to do that, we have the infrastructure to do it and our last product is done. We can now cut back on that engineering costs because the launches are now done. We can also -- we also changed some G&A, some selling, some marketing to address some of the concerns we have like in the casino market and some other areas. So we’re able then to take our cost down, but we got our four products out there. And I love what Steve said. Through this all we’ve returned over $16 million to shareholders, but the big thing for us was to diversify. And like I said, I don’t remember reading an analyst report in the late 2013 or early 2014 that said hey, be careful, the casino market is going to come, fall of a cliff. I think we all woke up one day and saw what was going on. But we stayed with our plan of getting those products out addressing some big market opportunities. The MP2, the Responder MP2 was going after a very big opportunity, our BANKjet 3000 the first printer it’s going to be low cost, it’s going to do receipt, it’s going to do validation but it’s also going to print the check image on the receipt which is what happens at the ATM but does not happen at the teller station and at BAI next week it’s going to be launched and we’ve had customers talking about it. So we stayed to our program of developing these new products so we could diversify around what can only be considered a difficult casino market.

Thank you. And I am showing no further questions at this time. I would like to turn it back over for closing remarks.

Well we thank everybody for joining us on the call this afternoon. We want to thank our shareholders for their support and we also would like to thank all of our team members here at TransAct for the hard work that they’re doing. We look forward to reporting back to you on further progress in our business and also when we report the fourth quarter results in March of 2015. Everybody have a good night. Thank you.

Ladies and gentlemen, this does conclude the program, you may all disconnect. Everyone, have a great day.