TransAct Technologies Inc (TACT) 2011 Q4 法說會逐字稿

Ladies and gentlemen, good day. Welcome to the TransAct Technologies fourth quarter 2011 conference call. Please note, today's call is being recorded. At this time, I'd like to turn the conference over to your host for today, William Schmidt of ICR.

Good afternoon. Welcome the TransAct's fourth quarter 2011results 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 list of risk factors please 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. 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'd like to turn the call over to Mr. Bart Shuldman.

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

A few years back, we set upon a strategy that had multiple aspects to it. First and foremost, we saw the success of the printers being added to slot machines in the domestic casino market and knew it would be just a matter of time until it expanded around the world.

And we also knew that casinos and gaming venues would expand worldwide. So we built a worldwide sales team to go after this business. And we added both fanfold and rollfed printers to our product portfolio so we could win all the printer orders for all types of gaming and casino machines. We now believe we're the number one seller of casino printers worldwide.

Just as important, we learned the printer was more than a peripheral, it was a solution. It provided the casinos with more than just a ticket. It would eliminate coins from slot machines, which would benefit the casino, while providing a better player experience for the slot player.

So we started to develop our strategy that would become the guiding force within TransAct. Produce printers that would be used as a solution, what we call printers as a solution. As we set up our strategy, we knew right away that the standard point-of-sale market for printers would not fit this strategy. A thermal receipt printer we believed would become a commodity, lower prices and lower margins.

We strategized that it was only a matter of time before the prices would decline along with margins. Despite the contract with McDonalds, which was a printer as a solution, we knew we had to diversify away from the standard point-of-sale printer market and find other markets where printers would not be a commodity, but a true solution.

Another part of this strategy we developed was the need to be the low-cost, high-reliable, more feature-rich supplier for the markets we would address as we move towards our strategy of a printer as a solution. As we have discussed many times, we moved the production of our printers to Asia. As our engineers added features and functions that would clearly separate and differentiate TransAct from our competitors, Asian manufacturing would allow us to market our printer as a cost-effective solution.

Using the production model we developed, we can produce printers in limited quantities in Asia providing every customer with a customized solution, while also reaping the benefits of this low-cost manufacturing structure Asia provides. Lastly, we would drive our profitability to enhance our cash position and build our balance sheet, so we could, when appropriate, use acquisitions to add to our portfolio of products.

Or just as important, use the cash to buy back stock when we believe the stock was undervalued. Over the last several years, we used this strategy to guide every move inside TransAct, to guide every product development program for every printer we would bring to market, and we stayed focussed on using TransAct as a cash generator to fund our growth initiatives.

Now clearly we have been through one of the most difficult economic times in our lifetime. It was not that long ago that we watched that the market sank to 6000, and government bail-outs started to take form, and as we know, continue to take form. But when you look at TransAct from the lows of 2009, TransAct has grown.

Earnings per share, including the costs of the acquisition we just completed, have more than doubled. In fact, in 2011, we just announced the second-best earnings per share at $0.49, that includes $0.02 of acquisition-related costs, in the Company's history, despite the horrible domestic casino market we have experienced in the US, and despite the decline we have seen in our banking market and in our point-of-sale market.

In reviewing our manufacturing results, our gross margin in the fourth quarter of 2011 reached a record 41.6%, and our gross profit the highest in the Company's history for all of 2011. And for the full year of 2011, our gross margin has reached a Company record 37.3%. And finally, we reached a new milestone, selling and shipping over 200,000 printers in a year. And our outlook for TransAct to continue this momentum is very positive.

So we focussed on growing our printers for the casino industry as a solution by designing and launching our Epicentral Print System. Casinos around the world now look at our printer as part of that system, part of that solution. Just the other day, we announced in the United States that five out of the six casinos that will open in the first half of 2012 have chosen the Epic 950 TransAct casino printer as the exclusive printer for their casinos.

Most have decided on the printer due to its reliability, its features and functions, and its ability to easily and without any change to the printer be connected to our Epicentral Print System. From the beginning with our Epic 950, we designed the printer to be connected to a system without any changes. And every casino that has our printer and every casino that will open in 2012 that has chosen our printer, knows that when they are ready to launch an Epicentral Print System, they can easily do it.

So we now sell a solution. That was our strategy, and one that has driven growth in our domestic casino printer sales, where we have shown our investors continued market share growth despite the very difficult market we are in.

In addition in the fourth quarter 2011, we have the financial results added for our acquisition of Printrex, the world's leading printer for the oil and gas exploration market. We did this acquisition to add to our portfolio solutions. But you should know, we did it also as we knew our standard regular point-of-sale market would be one of low margins and low prices.

So we are exchanging a low-margin printer business with many competitors with a high-margin solution printer business called Printrex. Just look at the results we achieved with the addition of Printrex and the lower point-of-sales print sales, record gross margins.

And let me ask, is there ever a day you don't hear about gasoline prices and the need to drill for more oil. To finish about Printrex, keeping as our printer as a solution strategy, we have two development programs underway right now. Both involve changing the oil and gas exploration market from printing in black and white reports to color. From the market response so far, our customers appear quite excited and eager.

There is considerable advantage to printing in color in this market, and it could have significant positive financial impact to TransAct both from a printer sale and also from the recurring consumable opportunity. We will have more to talk about regarding this exciting development on our next conference call. And our strategy of doing all this with a focus to driving cash, which allowed us to buy Printrex with no debt came through, and we also bought back almost 3% of our stock in 2011.

So we added a highly profitable business-as-a-solution product line and returned 3% to shareholders. And now with our second press release today, we announced a 1 million share buyback program for 2012. We have a solid cash position, and one we believe will grow by at least $7 million in 2012. And we're not done. Over the next few months we will launch a new product that will clearly be more than a printer for a market that we believe is right for the solution that will present a major opportunity for TransAct.

What we call the total available market, or some people call it TAM, in this product alone is $150 million. These are not yearly sales, but the total market for this new device, at least $150 million. We believe that we will have the world's best solution and in just a few months, you will know more about it, too. That is what we do. We look at using printers as a solution, where we can combine our printer technology with our ability to create solutions. Like we did with Epicentral on our Epic 950.

So before I finish, I know there will be lots of questions regarding new contracts for our Epicentral Print System. While it has taken a bit longer than we thought to close some deals, there is not one person on my team that does not believe this is going to be big for TransAct. Our list of quotes and proposals continues to grow every day. And with our first installation at the Red Wind Casino, our many casino companies can now see it in action themselves and see the benefits it is providing this casino.

Although we can not predict the exact timing and close of the closing deals, or the number that will close, we do expect to win more casinos in 2012. I can also tell you we have many proposals in front of casinos as I speak. And just adding a little bit more color to this, this week we are at the Pechanga Casino at the Ballys' User Conference demonstrating the full Epicentral Print System. From what I've heard, we've had a great response and we would like to thank both Ballys and Pechanga for letting us to demo it at the event.

So to end my part of the conference call, it was another successful year for TransAct. Increasing sales in the face of a tough economy, achieving continued gains on our margins, and ultimately increasing our earnings per share by 20%. Looking into our outlook for 2012, we expect to increase our revenue and earnings per share once again from the prior year, as well as expansion in our gross margin due to continued favorable sales mix, and continue to generate solid cash flow from operations. We will receive a full-year contribution from Printrex, and while Red Wind was a great start, we fully expect to announce more contracts for our Epicentral Print System throughout the year.

We are very excited about Printrex and Epicentral's potential to contribute to TransAct's long-term value. Furthermore, we have not stopped innovating, and we expect to announce at least two new product launches during the first half of 2012. As I just mentioned a few minutes ago, one of those launches addresses a brand new market for TransAct altogether, further diversifying our revenue stream, but more importantly adding to our printer as a solution strategy.

I end by thanking our shareholders who continue to stand by TransAct and support our work and efforts, and I also thank the entire TransAct team for their commitment and effort in achieving another successful year, and know that they will continue to overachieve in the years ahead. At this point I'll turn the call over to our President and Chief Financial Officer, Steve DiMartino, who will share the details of our financial and operation results with you. Once finished, we will both be glad to answer any questions you have.

Let's go over the details of the fourth quarter financial results. Our net sales for the fourth quarter of 2011 were $13.6 million, a decline of 16% from $16.2 million in the fourth quarter of 2010. During the fourth quarter of 2011, we shipped 33,000 printers, representing a 28% decrease in unit volume compared to the 46,000 units we shipped in the fourth quarter last year. However, for the full year 2011, we shipped over 200,000 printers for the first time ever, a new record high, eclipsing our previous record of 196,000 printers that we shipped in 2008.

The average selling price of our printers increased by 16% to $305 per printer in the fourth quarter of 2011, compared to $264 per printer in the fourth quarter 2010. The increase in ASP was due largely to sales mix, as we sold fewer POS and lottery printers, which have lower average selling prices. In addition, Printrex printers contributed to our higher ASP in the fourth quarter of 2011, as these printers have significant higher average selling prices than most of our other printers.

In the casino and gaming market, sales were approximately $6.2 million for the fourth quarter 2011, down 16% from the prior year. International casino and gaming printer sales were down 38% down from the prior year's quarter, primarily due to sales to a single customer in the Asia-Pacific market in the fourth quarter 2010 that didn't repeat to the same extent this quarter.

Our European sales were also down 51% due to VLT installations for Italy that occurred in 2010 and did not repeat in 2011. Looking ahead, we have plenty of significant growth opportunity in front of us, such as resumption of VLT installations in Italy and new proposed VLT installations in Greece, as well as market expansion in Singapore and Philippines.

On the domestic side, we experienced a 23% increase in casino and gaming sales, once again in the face of a struggling domestic market, which indicates we continue to gain market share. We believe that new casino openings, as well as potential expansion and new market opportunities in Ohio, Maryland, Massachusetts, and Illinois, should provide a much-needed boost for the domestic casino market and our revenue beginning in 2012 and beyond. During its first full quarter of operating under TransAct, Printrex contributed nearly $1.2 million in printer sales and was the material contributor to our record gross margin in the quarter. We're very pleased with the results from Printrex so far, and it should continue to provide long-term value for our shareholders in the years to come.

Moving on to our banking and point-of-sale market, sales for the quarter were $1.8 million, down 42% from the fourth quarter of 2010. The decline mainly came from our POS market, where the McDonalds upgrade from its grill and beverage initiatives in the US is ramping down and nears completion. As mentioned before, our focus going forward will be to pursue sales to McDonalds' 18,000 international stores.

Our banking printer sales also declined during the quarter, as there were no major projects in the fourth quarter from any of our banking customers. We remind you that the banking market is project-oriented, and although it is difficult to predict the level of future sales, a single win can significantly affect our results.

Our lottery market generated sales of $900,000, down 50% from the prior-year period as sales normalized from the first half of the year. If you recall, our lottery shipments reached record levels in the first half of 2011, which we don't expect to happen again in 2012 as we return to a more normalized level. Sales from TSG, our TransAct Services Group, decreased 11% in the fourth quarter of 2011, compared with the fourth quarter of 2010. The decrease was mainly driven by lower sales of consumables, partially offset by an increase in spare part sales.

Now turning to gross margin. Our gross margin in the fourth quarter of 2011 was 41.6%, compared to 34.9% in the fourth quarter of 2010, an increase of 670 basis points, and as Bart mentioned earlier, a quarterly record for us. The gross margin increase was primarily due to a more favorable sales mix, as we had more sales of casino and gaming printers, in addition to Printrex oil and gas printers, which both sell at higher margins, and lower sales of lower-margin point-of-sale lottery printers.

For the full year 2012, we expect our gross margin to expand into the 38% to 39% range due to an expected increase in sales volume, favorable sales mix, and product cost savings that we expect to realize on the Printrex product lines. Our gross margin could even approach, or even top, 40% with the right sales mix.

Operating expenses for the fourth quarter of 2011 were $4.8 million, an increase of $600,000, or 15%, from $4.2 million in the fourth quarter of 2010, driven mainly by expenses related to the Printrex acquisition. To be more specific, operating expenses for the fourth quarter 2011 included approximately $200,000 of integration expenses in amortization of intangible assets, both related to our Printrex accusation. In addition, it included a full quarter of Printrex's normal operating expenses, or about $350,000.

Looking forward to 2012, we do expect our total operating expenses for 2012 to be higher than in 2011 for a few reasons. First, Printrex will be in our results for a full year in 2012, compared to only 4.5 months in 2011. So Printrex's regular ongoing day-to-day expenses for its engineering, sales and ad min staff and expenses will be higher to reflect a full year's worth of expense.

Second, we expect to incur amortization expense of about $400,000 in 2012 on the intangible assets acquired from Printrex. This compares to about $140,000 in 2011. And finally, also related to Printrex, we expect to incur a restructuring charge of approximately $200,000 in the first half of 2012.

Let me explain. On our last conference, call we indicated that we expected to achieve operating spend synergies from Printrex of around $400,000 during 2012. We believe we're on track to realize these savings. As of the first of this year, we successfully completed the first step, which was to transition and consolidate Printrex's ERP and accounting systems to our Oracle system. I'm happy to report all their TransActions are now processing flawlessly on our Oracle system.

With the system transition now complete, our next step is to close Printrex's manufacturing facility in San Jose, California, and transfer production of all the Printrex product lines to our existing Ithaca, New York facility. Our goals is to complete this by August of this year. The shutdown will result in the termination of all the San Jose employees, with the exception of the Engineering group, who will remain with us, but work out of a new, much smaller facility we plan to secure in the San Jose area.

Although there is much work left to do before August, we're already well on our way to achieving our date and our planned cost savings. We expect a full-year effect of the Printrex cost synergies to be $800,000, which we'll begin to realize starting in 2013.

Our operating income in the fourth quarter of 2011 decreased to $900,000, or 6.3% of net sales, from $1.5 million, or 9% of net sales, in the prior-year quarter. The decrease in our operating income and operating margin were primarily due to lower gross profit resulting from a 16% decrease in net sales, combined with higher operating expenses resulting largely from the acquisition of Printrex.

We recorded income taxes at an effective tax rate of 34.3% in the fourth quarter of 2011, compared to 24.9% in the prior year quarter. Our effective tax rate for the fourth quarter of 2010 was unusually low because of the reinstatement of the federal and research tax credit retroactively back to January 1, 2010. As a result of this, we had recorded a full-year catch-up adjustment of approximately $150,000 for this credit all in the fourth quarter of 2010.

Looking forward, we expect our effective tax rate for 2012 to be around 34%. And finally, on the bottom line, our EPS for the fourth quarter 2011 was $0.06, compared to $0.11 per diluted share in the prior-year quarter. However, excluding the $200,000 of integration in amortization expenses related to our acquisition of Printrex, our EPS would have been a $0.01 higher at $0.07.

Now looking at our cash flow. Our cash balance decreased by $1.1 million to $6.9 million at the end of the fourth quarter 2011 from $7.9 million at the end of the third quarter of 2011. During the fourth quarter of 2011, we used approximately $400,000 of cash from operations. This use of cash resulted primarily from a $2.4 million, or 44% decline, in accounts payable as we significantly reduced our inventory purchases in the fourth quarter, somewhat offset by a 7% decline in accounts receivable and a 4% decline in inventories.

In terms of inventory, our year-end balance of $14.2 million is unusually high. The acquisition of Printrex added approximately $800,000 to our net inventory balance. However, during 2011, we consciously decided to use a portion of our cash to invest in inventory, specifically for the casino and gaming markets.

We did this to hedge against potential new orders and to be able to respond quickly to our customers' demands, which our largest competitor struggles to do. We believe this tactic contributed to our market share gains in the casino market in 2011. That being said, we've already begun to reduce our inventory purchases and we expect our inventory level to decline throughout 2012.

Depreciation and amortization totalled $431,000 for the fourth quarter of 2011 and $373,000 for the fourth quarter of 2010. Our Q4 2011 number included $95,000 of amortization and intangible assets acquired from Printrex. We expect this amortization to be around $100,000 per quarter going forward. Non-cash stock-based compensation expense totalled approximately $142,000 for the fourth quarter of 2011, and $131,000 for the fourth quarter of 2010.

Our capital expenditures were approximately $168,000 for the fourth quarter of 2011, including about $48,000 of software development costs for Epicentral system as we continued to expand and enhance the functionality of Epicentral. This compares to $211,000 of capital expenditures for the fourth quarter of 2010. Our total CapEx for 2011 was $1.3 million, and based on our pipeline of planned printer projects, Epicentral software development, and Printrex expenditures, we expect our capital spending for 2012 to be about $1.5 million.

And now looking at some financial metrics, our working capital increased to $27.2 million at the end of 2011 from $27 million at the end of the third quarter 2011. Our current ratio reached a record 5.7 as of the end of 2011, up from 4.2 at the end of the third quarter 2011. Our EBITDA for the fourth quarter of 2011 was approximately $1.4 million, compared to EBITDA of $1.9 million for the fourth quarter last year.

For the full-year 2011, our EBITDA was about $9.2 million, compared to $8 million for the full-year 2010. In terms of debt, during the fourth quarter we successfully renewed our $20 million revolving credit facility with TD Bank for three more years, and we continue to have no debt outstanding.

And, finally, during the fourth quarter, we repurchased 92,183 shares of our common stock for approximately $600,000 under our stock repurchase program. This brings our total buy-back for the full-year 2011 to over 275,000 shares for $2.7 million, representing 3% of our outstanding shares. And as Bart mentioned earlier, we are now authorized to buy back up to 1 million additional shares during 2012, which would represent almost 11% of our total outstanding shares.

We believe our cash on hand, together with the at least $7 million of cash flow we expect to generate during 2012, will be more than sufficient to fund this buy-back, as well as fund our working capital needs. This certainly is a testament to the solid balance sheet TransAct has built to have been able to make such a strong move, and also is a statement of how strongly we feel about the prospects for 2012 and beyond.

In closing, when you consider the weakness in the macroeconomic and domestic casino environments, 2011 was a very positive year for us. Our financial position remains solid, which was $6.9 million in cash and $27.3 million in working capital on our balance sheet. Overall, we've set TransAct on a course to achieve greater financial and operational performance, and we have high expectations for 2012.

And with that, I pass it back to Bart.

Thanks, Steve. Great job. Operator, at this time we'll open the call to questions.

(Operator Instructions) Todd Eilers, ROTH Capital Partners.

I wanted to start off on the casino and gaming segment. You mentioned in the press release before earnings and also in the call landing five of the six new casino openings in the first half of calendar 2012. Can you maybe give us a sense for how much of the casino and gaming units sold in the fourth quarter were related to new openings versus just replacement activity? And then can you also tell us if any of those five casinos that you mentioned shipped -- did you ship any of those units in the fourth quarter, or is that all expected for delivery in the first half?

Todd, most if the shipments in the fourth quarter of 2011 was for replacement slot machines. Most of them were replacement. The five out of six that we won, almost all of those shipments will be the first half of this year.

Okay. And then moving on to the lottery business, obviously you guys had guided for lottery sales to ramp down for 2011 from the first half. At this point in time, and I know this business can be volatile, but your best guess at this point in time for expectations for first quarter and fiscal 2012 on the lottery side?

Yes. So 2011 was really an anomaly with GTECH. No doubt about it. Most of the shipment of printers to GTECH went in the first 4, 4.5months in 2011. 2012, we expect really much more of a level-loaded situation with GTECH. We do expect to be more normalized at about $6 million to $8 million, and I think one of the good stories about that, Todd, is the fact that we are projecting revenue earnings per share growth, margin growth, and the whole bit, despite having a very strong 2011 with GTECH, we're clearly making that up, plus more, with our other businesses. But it will be much more of a level-loaded situation in 2012 than we saw. 2011 was clearly something, in all of the years we have been with them, we haven't seen where most of them shipped in the first four or five months.

Okay. Great. And then, I wanted to ask a question obviously on the Epicentral. Since you've lunch launched the product at the Washington casino, have you gotten any feedback, positive or negative, anything you can share with us on that? And then also I had a question on the integration costs, I believe I heard you say there was about -- I'm sorry, that was for the Printrex acquisition. Just any feedback on Epicentral installation up in Washington I think would be helpful.

Yes, so the first feedback we're getting is all positive. No doubt about it. In fact, I'm meeting with them the first week in April. We want to give them some time to -- a couple of days or a week or two doesn't really set what we hope will be phenomenal trends. But without a doubt, Todd, the first feedback is wonderful, and we're really pleased. One indication of what's going on in Washington is today at the Ballys' Users Conference, we gave, from what I hear, my staff called, we gave many presentations to the other Washington casinos on our Epicentral System. So, clearly, it's having the effect we thought it would have by getting the other casinos to look seriously at it. But to answer your question, clearly we're pleased with the first responses, the first feedback we've received from Red Wind.

Okay. Great. And then I wanted to also ask about the Printrex contributions in the quarter. Can you tell us how many units were sold in that business during 4Q?

We don't really disclose the units, Todd, but the revenue dollars were $1.2 million in the fourth quarter.

Okay. And I think I asked this question the last quarter but I'll go ahead and ask it again, is there any seasonality to the Printrex business? Is 4Q, from a revenue standpoint, is that a good run rate at this point? Obviously not taking into account any new printer launches or anything like that.

The Printrex business is pretty level-loaded. We do anticipate it actually going up in 2012, it will probably be in the $5 million to $5.5 million range.

It is a steady-eddy business. With everything that is going on in the oil and gas business, Todd, there is really no seasonality to it. You have certain parts of the country when it gets really cold, they don't drill, they don't drill as much, but you have other parts of the world that drill. So in all of the results that we've looked at, we see no seasonality to it.

Okay. And I think I heard you guys say on the remarks that you plan to introduce a color printer for that market. What would be the timing on that?

There is two projects we're looking at right now. Depending on the development, they should both happen this summer. One of them is pretty much done. We're just in the final ends of some of the firmware and some of the integration that we're doing. The other one has allotted -- when you look at new development, there is what we call R&D, research and then development. There is a fair amount of research. It is a very cool technology, and depending on the timeline, and I'll be reviewing that actually the first week of April, too, that product should come out towards the summer, but it's all going to depend on whether the engineers are done with the development.

It's actually some technology that can be applied to our other markets, and it's very interesting technology. And both printers will have a fair amount of consumable sales tied to it for TransAct. So we'll take our existing TransAct Services Group that sells cartridges today and paper and all that to the point-of-sale banking market and all that, and then we will use them to help us with the consumable sales for both these products for the oil and gas markets. So it's got some real opportunity for the Company.

Okay. Great. And I also wanted to ask on the guidance for 2012, free cash flow of $7 million, can you tell us how much of working capital benefits you expect to see in 2012? I know you mentioned inventories being a bit high, and expecting to work through a little bit of that, but just in general, how much of the working capital side do you expect to benefit from in 2012?

With what we're seeing in the casino market right now, we've seen a real good uptick in the first quarter. Some of those printers are the 950s, so we're projecting a minimum of $7 million of free cash flow. Some of that will be the inventory, and clearly the rest of it will be from our earnings. So some of it -- we're not going to break out how much of it is inventory, but we're projecting a minimum of $7 million.

If you look at where we were, we ended 2011 with almost $7 million in cash, and that's after spending $4 million on the acquisition, $200,000 on acquisition costs and buying back almost $3 million. So we're predicting some pretty good cash flow, at least $7 million, again, a lot from earnings, but some will come from the use of our inventory that we built up for the casino and gaming market. And, like I said, we're seeing a nice uptick in the casino market in the first quarter, so those 950s are coming out pretty quickly.

Okay. And then just last question on the point-of-sale and banking segment. Obviously it was weak in the quarter, and I'm assuming in that's an area you expect revenue to be probably down year over year. Do you think fourth quarter was the worst of it here? Have we hit a bottom? Or could we see further weakness on a quarterly basis from what we saw in 4Q?

Yes, I think the fourth quarter clearly is the bottom of it. One of the things that we are seeing is we've got, from the point-of-sale marketplace, there is a couple of things going on. One, with our McDonalds situation, we have the international initiatives that we've taken on, and we're starting to see orders for that printer in some of the international markets. We've also been working with McDonalds on a new concept that they hope to roll out this year that could add one additional printer to every domestic store, so that would be another 14,000 printers. I doubt they'll all ship this year. So we are working with them on that.

But like I said in my call, we are not focussing on the standard point-of-sale business. We have the initiative, we have a product coming out, I call it more of a device coming out, in the April-May timeframe, that our point-of-sale sales force will be asked to help sell for us that's clearly a just a great opportunity for the Company. It's got many features, functions, it moves us up the food chain in offering more services, more features, there is some software, there is some firmware, to a new market that we're going to ask our point-of- sale and banking sales force to sell for us.

So I think I think what you're going to is that point-of-sale market pretty much bottoming out, maybe go up a little. We have this initiative going on with McDonalds, but then towards the second half or the fourth quarter of this year you're going to see some of the things that are going to go on with this new initiative that Printrex is going to pretty much replace the profitability of our point-of-sale marketplace, and then we're going to add this new device that's got some serious, serious opportunities for us.

Okay. Perfect. Thanks, guys.

David Gorman, Empire Capital Management.

Bart, congratulations on a great year and I look forward to seeing another great year in 2012.

Thank you.

I have a couple of quick questions. Your stock buyback plan, I'm not pretty clear of how that actually is going to work. I know you bought back some stock in the last quarter fairly quickly. What type of plan is that?

Well, what we get into, the rules kind of changed over the last couple of years that companies, in order to buy outside the window, so we have a stock trading window that the employees are subject to be able to buy and sell stock in, the Company has the same rules now, also. So what we do is we get into a 10b5-1 program, where the Company can actually buy those shares outside the window, and our window would normally close with this quarter, March 16. So the 10b5-1 program would allow us to buy every day after that. We are restricted in how much stock we can buy daily based on the rules that the SEC has, and that will limit how many shares we can get every day, but we are going to be in the market, and we are looking to buy back 1 million shares.

Great. And then one last question. I don't know, this is a little bit off-color. But there was some knucklehead that put a filing out there and suggested the Company be put up for sale and the Company never commented on that. Is there anything that you can discuss about that? Or is it something that you are limited to talk about?

We can't comment on it, but what I can say is that the Board is going to do what is in the best interests of all shareholders, not just one shareholder. And, clearly, with our stock buy-back, we have three major initiatives going through this Company. We have the two big printer projects that we're working on, plus Epicentral. We're just beginning to reap the reward of our Asian manufacturing and lowering our costs, plus Printrex, which is at higher sales and higher margin business. We're just coming out of a severe recession and a horrible domestic casino market, where we entered the recession at 30% ship share, and came out of the recession at 60% ship share. So we're generating a fair amount of cash. We can fund our investment. We return capital to shareholders. The Board is going to do what's right for all shareholders, and that's all I can comment on.

Bart, thank you very much, and best of luck to you in 2012.

Thanks, David.

(Operator Instructions) Ladies and gentlemen, I'll turn the conference back over to our presenters for any additional or closing remarks at this time.

I'm sorry, I thought there would be more questions. At this time I'd like to thank our shareholders for joining us on the call today. I will be out at the ROTH conference on Tuesday of next week, I'll be glad to do, one, do one-on-ones. I'm available Monday and also Tuesday morning and Tuesday afternoon. I believe my presentation is at 1.30 pm on Tuesday. I thank you for the call and look forward to speaking to everybody on our next earnings conference call. Thank you for joining us tonight.

With that we conclude our conference call for today. Thank you, everyone, for joining our TransAct Technologies fourth quarter earnings conference call. Have a good day.