TransAct Technologies Inc (TACT) 2011 Q1 法說會逐字稿

Good day, and welcome to the TransAct Technologies first-quarter 2011 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Bill Schmidt of ICR. Please go ahead, sir.

Thank you, Jill. Good afternoon, and welcome to TransAct's first-quarter 2011 results conference call. Joining us today from the Company are Mr. Bart Shuldman, Chairman and CEO, and Mr. Steve DeMartino, President and CFO.

The format of the call will be a brief business review by Bart, followed by Steve providing details on the financials. We will then have time 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 risk factors inherent to the business and the Company, please refer to the Company's SEC filings including the Company's most recent report on Form 10-K for the year ended December 31, 2010. The Company undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances that happen after the call.

At this time, I would like to turn the call over to Mr. Bart Shuldman. Please go ahead, sir.

Thank you, Bill. Good afternoon, everyone, and thank you for joining us on today's call.

The first quarter of 2011 was a record breaker for TransAct, led by the fantastic results in our lottery market.

We've said on past quarterly conference calls that our strategy is to diversify along product lines and geographies, specifically finding new areas outside the domestic casino market to grow our revenues, and once again, we have proved that strategy successful in the first quarter of 2011 with the success of the launch of our next-generation thermal lottery printer for GTECH.

Not being reliant on one particular market allows us to grow our revenues and profit, especially when a specific market or economy remains weak for several periods. In particular, the domestic casino market remained difficult in our first quarter of 2011, but we grew our revenues and profits to record levels despite it. However, I think, looking forward, I can finally say that we are starting to see things improve in the domestic casino markets.

So, the 355% growth in sales in our lottery market, led by our new thermal lottery printer, drove TransAct to achieve record revenues of approximately $20.7 million in the first quarter, up 46% from the $14.2 million in the first quarter of 2010, and drove record earnings per share at $0.19 for the first quarter, well ahead of the $0.07 in the prior-year period.

Now let's dive further into our other markets. In our casino and gaming market, revenue was approximately $7 million for the first quarter of 2011, flat with the prior year. Digging down further into these results, on the international side, casino and gaming printer sales were up 7% from the prior-year quarter, led by strong growth in our European market as well as growth in our Asian-Pacific market.

The increase in international casino and gaming sales helped to offset the effects of the difficult domestic casino and gaming market where we experienced a sales decline of 11%. However, our sales in the domestic casino market were impacted by one of our domestic slot manufacturers, who purchased printers in the last quarter -- in our last quarter, Q4 2010, in anticipation of a large order in that quarter. Since their order did not materialize, this particular slot manufacturer ended the year with extra TransAct printers, which they used to fulfill orders the last few months. Taking this into account, we believe our ship share in our first quarter of 2011 into the domestic casino market once again was 50% or more.

Our strategy of gaining significant market share in the domestic market continued to hold.

Moving onto our new casino and gaming software product, I know there will be some questions regarding our new Epicentral print system and the trial at the MGM Grand at Foxwoods. Let me tell you, the trial is going well. And our goal to run the system for an extended period of time to test out the system has been nothing but positive. I am pleased to report we have had no issues or downtime.

We have printed over 150,000 coupons for the Foxwoods customers, which means we touched their customers 150,000 times. To give you a perspective of what that means, the cost to Foxwoods to print those coupons and messages was approximately $900 for the paper. Just think about how much Foxwoods would have to spend on direct mailing costs to get 150,000 messages to their customers. I'm sure it would be a lot more, and not in real time.

I'm as positive and excited about the prospects for our Epicentral system as I was the day we launched it. We are very optimistic that the Epicentral print system will begin contributing to the top- and bottom-line in 2011, and our expectations remain high for the system in the coming years. I will be happy to answer any questions you may have about Epicentral during the question-and-answer period of the call.

Moving onto our banking and point-of-sale markets, sales were up 5% for the quarter, to $2.5 million, from the first quarter of 2010. Our point-of-sale market had another solid quarter with domestic revenue growth of 8% as we continued to see significant sales of our thermal printers to McDonald's for their POS upgrade, grill, and combined beverage initiatives. The upgrade program is expected to continue throughout 2011 and also to start in some international markets, and thus we expect the McDonald's business to be a material contributor to sales this year.

We're also pleased at the triple-digit POS sales growth on the international side of that business. And in our banking market, which is project-oriented, our sales were down as we did not have any new projects in the quarter.

Now let's move on to TSG, our TransAct Services Group business, which saw revenues increase 15% in the first quarter of 2011, compared with the first quarter of 2010. The increase was mainly driven by higher sales of consumables due to higher inkjet cartridge sales for our largest and newest customers. TSG was also aided in the quarter by increasing domestic spare parts sales.

So, to sum it up, our diversification strategy paid off in a big way in the first quarter with record-breaking sales and earnings per share. We are extremely proud of the entire TransAct team and the work they have accomplished to get us to this point despite the fragile global economic environment and, on a micro level, the difficult domestic casino market.

Our lottery market performed fantastically, thanks to our innovative next-generation thermal printer. Our strategy of developing and launching industry-leading products will continue with the eventual launch of two more printers scheduled for mid next year.

Our casino and gaming market is holding onto its 2010 gains, and is in prime position for when the domestic casino market rebounds, while our international casino and gaming market continues to impress each and every quarter with continual sales gains. Our Epicentral system is getting through its battery of tests, and the future looks extremely promising.

Our balance sheet remains very strong with $9.2 million in cash, and we have started to use some of our excess cash to repurchase shares. Our inventory levels are stable and allow us to garner as many extra orders as possible, and also to avoid any issue from the Japanese disaster that took place. It is truly an exciting time to be at TransAct.

At this point, I turn the call over to our President and CFO, Steve DeMartino, who will share the details of our financial and operational results with you. Once finished, we will both be glad to answer any questions you have. Steve?

Thanks, Bart.

Let's go over the first-quarter financials. Our earnings per share for the first quarter of 2011 was $0.19 on revenue of $20.7 million, compared to EPS of $0.07 on $14.2 million of revenue in the first quarter of 2010.

Now let's look at the details of the first-quarter financial results. As Bart explained, our net sales for the first quarter of 2011 reached a record high of $20.7 million, up 46% from $14.2 million in the first quarter of 2010. During the first quarter of 2011, we shipped 72,000 printers, a quarterly record high, representing a 72% increase in unit volume compared to the 42,000 units we shipped in the first quarter last year. This increase in unit volume was led by the lottery market, where our unit volume more than quadrupled.

The average selling price of our printers declined by 10% to $237 per printer in the first quarter of 2011, compared to $264 per printer in the first quarter of 2010. The decline in ASP was due largely to sales mix, as we sold substantially more lottery printers in the first quarter of 2011, which are and have always been at lower average selling prices than our other printers.

Now turning to gross margin, our gross margin in the first quarter of 2011 was 33.5%, compared to 36.5% in the first quarter of 2010, a decline of 300 basis points. The gross margin decrease was due mainly to significantly higher sales of lottery printers that are at lower margins than our other printers.

Looking forward, we expect our gross margin for the remainder of 2011 to rise to the 35% to 36% level as our product mix normalizes, with the potential to rise even higher.

Operating expenses for the first quarter of 2011 were $4.1 million, down 1% from $4.2 million in the first quarter of 2010. The decline was primarily due to lower selling and marketing expense from reduced headcount in our TSG sales and marketing departments compared to the first quarter of 2010.

Our operating income in the first quarter of 2011 close to tripled to approximately $2.8 million, or 13.5% of net sales, from $1 million, or 6.9% of net sales, in the prior-year quarter. Thanks to a 46% increase in revenue, combined with the lower operating expenses, we realized significant operating margin gain in the quarter. This truly highlights the powerful leverage of our business model as sales increase.

We recorded income taxes at an effective rate of 35% in the first quarter of 2011, compared to 36.5% in the first quarter of 2010. Our effective tax rate for the first quarter last year was unusually high because it did not include any benefit from the federal research and development credit that expired at the end of 2009. We expect our effective tax rate for 2011 to be around 35%.

And on the bottom line, diluted EPS for the first quarter of 2011 was a record $0.19, compared to $0.07 per diluted share in the prior-year quarter.

Now let's take a look at our balance sheet at the end of the quarter. Cash flow, I'll talk about in detail a bit later. Receivables were $14.7 million as of March 31, 2011, up 35% from $10.9 million at the end of the fourth quarter of 2010. The increase in our receivables reflects the considerable increase in sales during the first quarter, especially during the month of March 2011 as our sales hit a monthly record of $9 million.

Our inventory balance rose to $13.1 million at the end of the first quarter, up slightly by $300,000, or 3%, from the end of last year. Looking forward, we expect our inventories to decrease as we move through the remainder of the year, with the most significant decline expected during the back half of 2011. And of course, as our inventory declines, we expect our cash position to rise.

Our accounts payable rose by about $600,000, or 7%, to $8.9 million during the first quarter of 2011. The increase was due to mainly to an increase in inventory purchases made during the quarter to support our higher level of sales. And in terms of debt, we continued to have no debt outstanding under our $20 million revolver with TD Bank.

Now turning to our cash flow, our cash balance decreased by $2.1 million to $9.2 million at the end of the first quarter of 2011 from $11.3 million at the end of last year. Although our cash balance declined, it declined for the right reasons -- to fund growth in our receivables from our record sales quarter and to support the purchase of Treasury shares under our stock repurchase program.

During the first quarter of 2011, we used approximately $1.3 million of cash from operations, including a $3.8 million increase in accounts receivable, a $300,000 increase in inventories, and a $600,000 increase in accounts payable.

Our capital expenditures were approximately $440,000 for the first quarter of 2011, including approximately $318,000 of software development costs for our Epicentral print system as we continued to expand and enhance the functionality of Epicentral. This compares to $209,000 of capital expenditures for the first quarter of 2010. Based on our pipeline of planned printer and Epicentral software development projects, we expect our capital spending for 2011 to be between $1.5 million and $2 million.

Depreciation and amortization totaled $384,000 for the first quarter of 2011 and $399,000 for the first quarter of 2010. Non-cash compensation expense totaled approximately $140,000 for the first quarter of 2011 and $171,000 for the first quarter of 2010.

Looking at some of our financial metrics, our working capital increased to $27.2 million at March 31, 2011, from $25.5 million at the end of last year. The increase in working capital was largely due to the increase in accounts receivable, somewhat offset by the decrease in cash during the quarter. Our current ratio is 3.2 as of March 31, 2011, consistent with the current ratio at the end of last year. A significant increase in accounts receivable was mostly offset by an increase in accounts payable and a reduction in cash in the quarter.

Our EBITDA for the first quarter of 2011 was approximately $3.3 million, more than double our EBITDA of $1.6 million for the first quarter of 2010.

And finally, during the quarter we repurchased about 49,000 shares of our common stock for $544,000 under our stock repurchase program. As a reminder, we're authorized to repurchase up to $10 million under our current repurchase program through May 2013. We have up to $9.3 million remaining available to repurchase as of the end of the first quarter.

In closing, we are very pleased with our first-quarter results, led by a terrific performance from our new thermal lottery printer for GTECH. We expect solid year-over-year results again in the second quarter, led again by the lottery market as we ship the backlog of orders for our new lottery printer. Looking at the full-year 2011, we reiterate our expectations of both revenue and EPS growth over 2010.

Our financial position remains solid with $9.2 million in cash and $27 million in working capital on the balance sheet. But we are positive about the prospects for the rest of 2011.

And with that, I'll pass it back to Bart.

Thanks, Steve. Operator, we'll now open the call to questions.

(Operator Instructions). Todd Eilers, ROTH Capital Partners.

Congratulations. Excellent quarter. A couple of questions. Let's see, I wanted to start off on the lottery side, obviously a big driver in the quarter for you guys with the new printer there. Can you help us understand, was the bulk of sales there, was that primarily -- were you guys replacing existing printers out in the field with the new thermal printer or was this primarily just new lottery terminals that GTECH plans to deploy either in the quarter or in the future? And just kind of help us understand what's going on there, and then how to kind of look at that as we go through the rest of the year. I know you guys guided for another strong quarter in the second quarter as well, but just, it would be helpful to try to get a sense for the magnitude, I guess, for the next couple of quarters there.

I'll take the positioning of the product first, and then I'll address the -- what the year looks like.

The printer is probably the best design -- it is the best design we've done for the lottery industry, so GTECH has got -- it's really going in two directions. One, they're bidding it with their new terminal for either new contracts or extensions. When a contract reaches its end and they get extensions, they're bidding it as a replacement to their existing, and they're also, when the extension ends and they have to rebid for a full contract, they are bidding it out their next-generation lottery terminal. And clearly, the functionality of the printer, it is our understanding that GTECH, that's one of the leading parts of their bid is the printer, so it's really been unbelievably accepted in the marketplace.

The other thing that they are doing when they can is replacing the printer in the market with their existing accounts when they get that opportunity, and that's more of when they get an extension. So, if they want an order for four years, but they have four extensions, they might in the fifth year start replacing the existing printer with the new printer.

It's just very powerful. It's a very powerful printer. It does a lot of things. And you know, it's something that GTECH leads with.

Clearly, the first half of the year is going to be very strong with GTECH, and our visibility goes out a bunch of months, and so what we see right now is clearly Q2. The way we see this, Todd, is with our increasing visibility of the domestic casino market improving and some of the awards that we've gotten already in regards to winning new business in the domestic casino market, you'll see some of that GTECH trail off in Q3 and Q4, but what you'll see is the domestic casino markets start really taking hold in Q3 and Q4.

So you'll get a benefit -- we'll get the benefit of increasing domestic casino sales in the second half of the year as some of the lottery trails off, and that's strictly due to the timing of their orders and all that and -- on the GTECH side. So we'll see in Q3 and Q4 GTECH start to trail off, and then we'll see some of these wins that we just won in the domestic casino market to pick up. And you get a -- you'll basically -- you'll exchange a GTECH printer for a higher-margin gaming printer. So it's going -- that's why, as Steve has told you, we expect the gross margins to go up a couple of hundred basis points as more of the casino market comes in and replaces some of this GTECH business.

Okay. Great. And then, just to follow on the comments on the domestic casino market. Is the pick-up you're anticipating in the back half of this year driven by potential replacement orders or are you talking about new casino openings where you've secured an exclusive contract?

New. We've won a couple of really good deals. And so, they're new openings. We've won a couple here in the U.S. and we won a really nice one overseas, a very big one overseas.

So we see that rolling -- some of it rolling in the second quarter, and then third and fourth quarter.

We've also -- are holding onto our market-share gains, and as I said in the call, we -- the first quarter was somewhat impacted by one of our slot manufacturers having too much inventory, but that's going to end. So you'll see some of that kick in because that will get back to more normalized levels. So we'll see a pick-up from that, and then we're going to see a pick-up from some of the wins. I think we've just about won everything out there, and you'll see that really start flowing in towards the end of Q2, Q3, and Q4.

Okay. Great. And then, just last question on the Epicentral product. Number one, have you -- what's the activity like right now in terms of kind of new customers, other than the Foxwoods trial? Can you give us a sense for how active it is right now, how close we might be to seeing some activity on new customers? That would be helpful. Thanks.

Yes. Clearly, clearly. Todd, the pipeline is big. And it's as big as we thought it was going to be, and it continues. The thing that -- as we've told everybody, we're running the system to ensure these casinos that we are working with right now to close, that we want to make sure that this system is going to work and perform, and we're on track with that. The pipeline is quite big.

Okay. And then, also, you mentioned some continued software development costs related to the Epicentral product. Can you maybe give us a sense for what some of that might be and how that might enhance the product?

Yes. So in October, at the G2E show, you'll see more of the features and functions we're going to be offering.

As part of our development plan for the product, we've got two or three new modules that we had scheduled to get done and designed, and we'll launch those at G2E. They're pretty cool features and functions that we can -- that we think the casino market, and based on feedback we've received from the casino market, that they're going to like.

The nice part about it, it continues to offer the casinos more functionality. It also helps to drive some of the pricing up, which the pricing has just been great, but it really, really gives them a full suite of features that they can use. Depending on the casino and what they want to do, it gives them a full suite of features to use.

Larry Haverty, GAMCO.

Just curious on the new printer at Foxwoods. This doesn't require a new slot machine. This can be retrofitted onto old slot machines, I take it.

Yes. The system, Larry, hooks up. What we did is, every 950 that has been purchased out there, which is our standard printer in the casino industry, what we did is we designed a module that we call ServerPort that sits right next to the printer, that connects to the printer through our patented Dual-Port technology.

And what that does is it sets the IP address of the machine so our Server Manager software can find -- once we know a player is on a certain slot machine, we know what the IP address of the slot machine is, and then we can target-market right to that player. So every printer in the marketplace can be upgraded to this system without having to replace it.

When this starts to get adopted in broader terms, it would seem to me you're going to have lumpy orders of 3,000 machines or something like that, though. They'll have to put it for every machine on the floor, or am I mistaken?

Our belief is that when a casino decides to roll the system out, they'll roll it out on all slot machines of the floor. That's right.

So, looking at the customers, now this is at MGM in Foxwoods, right?

That's right. Inside MGM at Foxwoods.

It's not at the principal Foxwoods Casino. How many machines do you have there now?

About 1,100.

The whole casino is bigger than that, though, right?

Right, all four casinos probably add up to 6,000. We're running a test on the -- we chose MGM. We actually, together with Foxwoods, chose that because that was the latest casino to be opened by Foxwoods and had the latest communication technology. So it was an easy upgrade to add in Epicentral.

So, how many casinos right now -- I mean, I would -- the only one I could think of that really would be equipped to do this would be Aria.

No, no, almost every casino can -- depending on the technology on the floor -- I would say about 70% to 80% of the casinos out there today can run with the system, depending on the wiring that they have and the technology that they have. In fact, we can actually run it in serial, not even just ethernet. We can actually run it in a serial environment if we had to.

But most casinos that were built the last five or seven years have wiring underneath the floor, or they have wiring duct underneath the floor, so the opportunity to hook this up is not very difficult. So I would put it in the 70% to 80% range. There are some smaller casinos out there that we probably won't bother with, and I'm not sure what the wiring capabilities of those are.

So, not in downtown Las Vegas, in other words.

I'm not sure I understood that, Larry.

They haven't really improved the floor there in about 30 years.

We've talked to (multiple speakers)

Anyway, when you look at how this thing is going to evolve, do you think it will evolve where casino operator A in a market buys it, and then B would have it -- I'm thinking, have you had any talks with the Mohegan Sun who are obviously watching what's going on at Foxwoods MGM? Where do you think it will go [to] multi-markets, and if you had to predict a market, where would you think the next one would be?

You know, I think from looking at the success we've had in talking to casinos, I think casinos in the locals market will go first because there you've got frequent trip players. So you've got players that -- it's not a destination resort.

So, if you look at the country with 911 slots out -- casinos out there, taking out Vegas and Atlantic City, most of them are in the locals market. So, we are attacking that first. Not to say that Vegas or Atlantic City wouldn't go. I don't want to say anything like that, but I would say that most of the locals market around the country are looking at it very seriously because they're the ones that are target marketing to the frequent player, people that come two, three, four times, maybe six times a year, and the ability to communicate to them on a regular basis while they're on the slot machine.

So, I would say you'll see more of it roll out early to the locals market. Kind of like Foxwoods.

(Multiple speakers). And when do you think you'll get your next order?

Clearly in the second half of the year, we're going to start seeing revenue and profit come from the system.

Jim Roumell, Roumell Asset Management.

Congratulations on a terrific quarter. Going back to the domestic casino market and market share and so forth, you made a comment in your remarks that you're starting to see improvement in the domestic casino market. And you also, in response to one of the earlier questions regarding that, you said you've had some big wins for some new casinos and also a very big win overseas.

My question is, in the last quarter, you recall there was a -- you guys were up unit-wise 50% while the industry was down, showing a huge dispersion and indicating TransAct taking significant share domestically, being able to grow while the market is declining. So I'm just curious whether that you have a sense that that is still going on, even though this quarter, in terms of domestic slots, was not as robust as the last quarter, given this one particular client who kind of loaded up.

Are you -- can you point to -- so you made a comment that you're winning everything in sight, so to speak. I think those were your -- pretty close to your exact words. So I just want to be -- I just want to kind of emphasize this point, because it seems like an important one, that separate and apart from the exciting going stuff going on in lottery, the exciting stuff going on in Epicentral, the kind of -- your core legacy business, whether it's domestic or internationally, you're stealing share. And is there more evidence or color you can give to support that thesis?

So, let me break it up between -- the question between domestic and international. Clearly, the domestic market is going to be down in this quarter versus Quarter 1 last year, probably between, I don't know, 5% and 12%, maybe 5% and 17%. Based on the announcement by the other slot manufacturers, the industry at best is going to be down 5%, probably worse.

If you were to add in the slot machines -- the printers that we actually did ship, even though our one slot manufacturer had too much inventory, our unit volume and revenue would've been up this quarter. So, we clearly outdid the market, and we've been growing share every quarter. So, eventually it will somewhat level off, but we had pretty good share gains first quarter last year. Now, again, we've had pretty good share gains.

But if you add in what we should've shipped to the manufacturer, our business clearly would've been up and the industry is down. So there is no doubt about it. We've continued our share gain, and it was a pretty good quarter. When I look at ship share, I look at what the slot manufacturers shipped and how many printers we had in those slot machines and what our ship share was.

On the international side, Jim, it's just very exciting what's going out there. It's kind of -- you have different markets doing different things. We had a fabulous result in our European market through our European distributor. And you've got to remember, we shipped a lot of printers for the Italy market in the first quarter last year and still grew the business. And Italy was a big -- it was a big order for us. So, we continue to grow that without Italy. So that's kind of ongoing business that came in.

Asia continues to be exciting, just the things going on in Macau and the opportunities there. Galaxy opening up, which we won 100% of. We won another order that will ship over the next, probably, three to six months. All the excitement that's going on over there in the different countries. I like to say that when Singapore became so successful with casinos, I think it woke up every country out there to say if that country can do it and as strict as that country is, if they can be successful with casinos, then the other countries can also and not worry about some of the other side effects that maybe casino in market can do.

So, we have a very -- in fact, in Asia we had a very big order for our gaming business, not even our casino business.

So both sides are kicking in, and they'll kick in at different levels. Europe could be up and Asia could be flat, or Asia is up or -- it just so happens in this quarter, both Europe and Asia were up, and Europe overcame a very large order for Italy. And what we see going forward, based on some commitments that we've already received, both in Europe and in Asia, we don't think it's going to end, and it's just very exciting in the international markets.

We like to say that we're shipping more printers into the international market than all the domestic manufacturers, slot machine manufacturers, are shipping domestically. So we're selling many more printers than the domestic guy -- than what's being shipped into the domestic -- our printer shipments overall into the international market exceed what the domestic slot manufacturers are shipping domestically. It's that big of an opportunity and it's not going away.

Like I said, we've got two commitments, one in Europe that should close this week and we've already got another commitment that we've won in Asia for, like I said, we'll ship over the next three to six months. So it's not going away.

So we really have a very good feeling for this business right now, and you look at our results anyway and you say, wow, we did these results, record earnings, record revenue without the domestic market right now. We're at cycles that we've never seen this low. Just imagine if we got to a 10-year replacement cycle, what that would mean to us. So, we feel very good about what we see going forward in both the domestic and international markets.

Got it. Okay. So, regarding the specific comment about you're starting to see things improve in the domestic casino market, which is, as you just indicated, contrary to what some of the slot manufacturers have said, are you then referring specifically to some of the new construction wins?

Yes (multiple speakers). And you know, there is -- by the way, there's -- yes, yes.

Okay, and so you've won those.

Yes.

Okay. Then just a couple quick follow-ups. On the Epicentral, appreciated the conversation, and it makes sense of how you're going after -- or one of the first uses of this is to the casinos serving the local market, get someone to stay over another night, and what not. Can you give some color as to what you think will be the, say, top three ways in which casinos will use couponing? From your experience at Foxwoods, how are they and might it be different than others?

So one of, I guess, the beauties of this is different casinos may decide to use it in a different way, just as people use different technologies differently. But I guess I'm trying to figure out is there -- do you think there is a consensus growing or do you see a consensus emerging of how Epicentral will actually be used by marketing departments?

Yes, it's very interesting, Jim. And I've clearly have attended some of the sales meetings and I read every trip report that our sales guys write about their sales calls.

We -- there are certain things or certain campaigns that I think every casino is going to do. And we go in and we start talking about you could do this, you could do that, you could bounce back coupons, or an uncarded player can send them to the cage and get a card and get some free play and all that. There's a couple that are clearly strong and everybody will roll out.

What is really exciting about the sales call is the amount of creativity that comes out of the marketing department when they start realizing what this system can do. And when we think we've heard it all, we hear another different way to use this system, and, so, I think you're going to have 10 or 15 definite ways that everybody is going to use it and maybe even more.

And you've got to remember, it's limitless. We don't -- this isn't a system based on you can only do three things or you can only do five things. It is limitless what you can do. So, while we go in and we actually provide certain ideas to get them going -- a case in point is Foxwoods. While we worked all this time with Foxwoods, they just came out with two new ideas that are just fabulous. And their IT department is working on it right now, and so it just doesn't end. It's just the opportunity to take their database and take our system and just run with it.

So, you're going see not every casino do the same thing. Now, I think, like I said, there's going to be 10 or 15 things that they all do because that's just no-brainers. Uncarded players, how do I get them to become a carded player? The system sees money going into a slot machine. There is no card. We send them a message and say, look, if you go over to the cage and sign up for a card, we'll put $50 free play on it. That's a no-brainer. That's going to allow the casino to turn an uncarded player into a carded player. There are other things like that that will be standard uses of the system.

In fact, we're starting to offer services in the marketplace -- actually charging for it because there are so many different ideas out there. We can help them quantify it and help them put it together with our system, and we can actually help them create the coupon. And we've started to create a team of people that can actually go in and do that, and we charge for that. So, we're actually taking -- I wouldn't call it taking advantage, but a lot of times the casinos are saying how can you help us, and we're doing that. So, you're going to see many different ways that the system will be used.

We've also talked to systems people out there that are thinking, okay, well, we've got these modules. If we tie into your system, can we do this? And we go, yes, and so they're thinking about using our system to sell their system. So, there's so many different things going on out there.

We're going to get through the test, we're going to get -- we printed 150,000 coupons. We've touched 150,000 customers at Foxwoods. We're going to start doing some real coupons over the next couple of months, and then we're going to be rolling it out to the casinos we're talking to.

Final question is guidance for CapEx for the full year of 2011.

Steve?

$1.5 million to $2 million.

For the whole year?

Yes, for the whole year.

[Simon Baruch], private investor. (Operator Instructions). I'm sorry, Mr. Baruch has left the queue.

With no more questions in the queue, I'd like to turn the call back to Mr. Bart Shuldman.

Okay. Ladies and gentlemen, thanks for joining us today on the first-quarter conference call. Clearly, we're excited about the results.

I'd like to thank the employees of TransAct for a job well done. I'd also like to thank our shareholders for all the support that you've given us. We really do appreciate it. I'd like to invite you to our annual shareholders meeting here at our office at 10 o'clock on Friday, May 27, at our offices here in Hamden, Connecticut. If I don't see you at that annual shareholders meeting, clearly we'll talk again after our second-quarter conference call.

So I thank you for joining us tonight on our first-quarter 2011 conference call. Thank you.

This concludes today's call. We thank you for your participation.