Good day, and welcome to the TransAct Technologies Fourth Quarter 2021 Earnings Conference Call. Today's conference is being recorded. At this time, I’d like to turn the conference over to Mr. Ryan Gardella, Vice President of Investor Relations. Please go ahead, sir..

Thank you. Good afternoon and welcome to TransAct Technologies fourth quarter and full year 2021 earnings call. Today, we'll be discussing the results announced in our press release issued after market close. Joining us today from the company are Chairman and CEO, Bart Shuldman; and President and CFO, Steve DeMartino.

Today's call will include a discussion of the Company's key operating strategies, progress on these initiatives and details on our fourth quarter and full year 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 obligation to revise or update any forward-looking statements to reflect events or circumstances that occur after this 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.

And with that, I'll turn the call over to Bart.

Bart?.

Thank you. Ryan, and thank you to everyone for joining us on the call today. Our fourth quarter results demonstrated strong momentum in both the food service technology or FST market, as well as fantastic results from our casino and gaming market.

We experienced an almost 22% sequential increase in sales of our industry leading casino and gaming products in the quarter and continue to see demand outstripping supply as the international bounce back begins and domestic strength continues.

We also saw another quarter with over $2 million and recurring FST revenue and I will expand on both these points shortly. Our preliminary fourth quarter and full year 2021 total net revenue were $11.1 million $39.4 million respectively, gains of 43% and 29% from the year-over-year comparisons.

Our fourth quarter revenue also represents a sequential acceleration of 5% from our third quarter revenue, which as we mentioned had been our highest revenue numbers since the fourth quarter of 2019. Our total FST revenue set another all time record in the fourth quarter of 25% year-over-year to $3.5 million.

Our FST recurring revenue, which includes software subscriptions, labels and service posted its third consecutive quarter of over $2 million, coming in at $2.1 million, which was 124% year-over-year increase. For the full year 2021, we generated $7.4 million and recurring FST revenue, which was above our guidance expectation of at least $7 million.

Breaking this down or a bit. Our BOHA software sales were impacted in the fourth quarter as we decided to accommodate an overseas customer and provide a credit due to their BOHA terminals being an inactive from COVID during the year. This resulted in an ARPU of $965 in the fourth quarter, a $51 decline sequentially.

Moving on to our terminal install base. As we have previously stated hardware sales and the number of paid terminals in the markets are the lifeblood of our recurring revenue stream. As we increase the number of terminals in the market, recurring revenue will grow, fueling a predictable stream of FST revenue.

In the fourth quarter, we added an additional 1069 terminals for a total of 9818 terminals at the end of 2021. Well, we are slightly disappointed in the final number it's worth noting that this number was affected by supply chain constraints with our customers.

The opportunities for BOHA terminals and workstations remain high and I am so happy to announce that a restaurant company with over 1500 stores has just approved our BOHA terminal, allowing franchisees to replace our older 9700 Food Safety terminals.

We expect to begin shipping some BOHA terminals during Q1 of this year and we'll work with their franchisees as they convert to our BOHA enterprise online system. This is an exciting project for TransAct as the customer is working with us on a special label design that will be used as a marketing tool for the grab and go items.

Once the label is designed, completed and sponsored by the corporate office, we believe all 1500 stores could eventually need our BOHA terminal to print out this special marketing label along with a typical food safety labeling needs. This opportunity is right in our wheelhouse.

We have two other large restaurant opportunities we are working on right now. And we also continue to have opportunities centered around fresh foods in the convenience store market. There the need for labeling or remains high as they build out their fresh food program.

We continue to build the opportunity funnel across the spectrum of our different FST markets. While we do have additional large opportunities in the restaurant market that are progressing forward, I must reiterate some comments on the labor food shortage situation that we have spoken about previously.

We are still hearing from many prospective BOHA customers that we have been working with that they simply do not have the personnel right now to work on new technology installations as they work to improve their supply chain situation and their labor shortage and wage issues.

However, we remain positive that when this situation begins to approve, and as the country continues to open up, we are well-positioned to capitalize even more on these opportunities as our technology is being evaluated. And that's our BOHA workstation and BOHA terminal.

With the labor shortage, as we just noted, has been impacting the testing and deployment new technology at large restaurant companies we have seen some great progress within our SMB sales group basically in the small market store market.

These opportunities are typically quicker to close and small chains have no choice but to continue operations as best as possible, as they face the difficult macroeconomic headwinds.

As we announced last week, in the fourth quarter we sold 44 workstations and terminals and 26 different small chains and franchisees with the total opportunity for up to 900 more workstations and terminals for just these businesses alone.

There is no restaurant too small to benefit from our BOHA technology and we continue to test key success momentum in this SMB space. An additional initiative we started in our SMB sales group with the call on an answer calls from franchisees directly as they need technology to offset their labor and food shortage challenges.

While the corporate office has their own personnel issues to address, we are proud to be assisting these franchisees and streamlining their processes. This initiative has proved successful so far. And not only are they buying our BOHA our technology, but they are helping to promote our technology into the corporate office.

As this part of the market grows, we'll continue to add to our inside sales team. As I said, I'm very encouraged by the many opportunities in our FST pipeline despite the labor and food shortage issues in the market, and continue to be impressed with our relationship with Apple as we both work to win the restaurant market.

Together with our friends at Apple, we are working on a clear message to the CIO office, highlighting both our technologies and how we can streamline the operations and demonstrate the cost benefit of the BOHA technology over individual solutions. We are also working on doing more customer and sales events together as the U.S. starts to open up.

Hopefully we'll have more to say in the future. Before I end our discussion about the FST market another bright spot for TransAct is in regards to our POS printers we sell to the front of the house for restaurants, mainly McDonald's.

I'm very pleased to report that we experienced growth in our POS market in 2021 but want to make a special note to our investors regarding this year. We are embarking on a special project for McDonald's and coupled with our competitors issues with manufacturing printers for them, we expect to double the sales in our POS market in 2022.

Now let's move on to our casino and gaming market. Revenue in the quarter was $4.9 million, up 84% year-over-year and revenue for the full year was $15.3 million up 39% from the full year 2020.

We're seeing very strong demand continue in the domestic market and we are pleased with the recent rebound of the international market, which was up 100% sequentially. As more markets around the world open up from COVID related closures we expect to see demand continued to accelerate as we move through 2022.

Finally, I wanted to make a few broader comments about our business and the macro environment we are in. We are incredibly proud of our team at TransAct for navigating through a challenging environment. But certain effects of the worldwide supply constraints and ongoing COVID pandemic have started to impact our business.

In the third and fourth quarters of 2021 we benefited greatly from having a very good inventory level. But unfortunately, as I've spoken about before regarding the word decommit as we ended 2021 we found ourselves dealing with deep commitments of the chips and printheads that were ordered and needed for the production of our hardware in 2022.

Not only a sales rising, but we experienced higher sales in 2021 so we need to replenish our inventory. Chips shortages cannot be avoided and delays in the production by suppliers have impacted our ability to build back our inventory positions. Going forward, our hardware sales will be hand to mouth in every market in 2022.

Well not ideal, there are plenty of silver linings here. First, we believe we are well ahead of our competitors in terms of managing our supply chain. We have even seen instances where customers of our competitors are replacing the products with TransAct products as we are able to facilitate the delivery of hardware in a timely fashion.

I can tell you one of our competitors has not been able to deliver a printer to a certain customer for over six months. Second, the demand pipeline continues to be very strong. Every unit that is produced either already has a buyer or soon have a buyer. In fact, we currently have orders going all the way to the end of 2022 which is not typical for us.

You need to know we are working very closely with our chip manufacturer who has really responded to our needs as they are helping us to align our company with their latest chip technology. We are doing this so we utilize the mass production chips to ensure better availability as we end 2022.

I cannot thank our engineering staff enough, who have committed to complete the necessary board and firmware redesigned some hardware that will go through two different redesigns to meet all demands in 2022 and beyond. Our investors should know the chip shortage issue is no joke and worldwide demand easily continues to outstrip supply.

I can point to a major car manufacturer who recently announced cutting production by 500,000 cars in 2020 due to the chip shortage issue. Finally, in order to combat rising costs and inflation, and having to ship our hardware by air, we are implementing our second across the board price hike on our hardware.

This price increase will allow us to absorb the vast majority of the increased cost pressure we are facing. I am pleased to say we are not seeing any pushback from customers on this new pricing level. They need our hardware. And by working hard with our suppliers in the market and flying in the products they can continue to purchase from TransAct.

To close out, I wanted to discuss our guidance for 2022 and our rationale behind it. First, we are expecting to add another 6500 to 7500 paid terminals and service for the year.

Unfortunately, as we deal with the supply of chips and wafers to put in our products, we felt that proven to guide to a level that we feel confident in our ability to produce rather than sell. Should that set situation to be quicker than expected we'll revisit that number.

Similarly, we're guiding between $10.5 million and $11 million in recurring FST revenue for the full year 2022. As you know, our FST recurring revenue is largely a function of the number of paid terminals and service.

Despite all these headwinds, and chip and processes, supplies, and hopefully the beginning of the end of the pandemic, you can see we're excited about the future of our business as we transition our company into a software and service organization.

And with that, I'd like to turn the call over to our President and Chief Financial Officer Steve DeMartino, for a comprehensive rundown of our fourth quarter and full year numbers. .

Thanks, Bart. And thanks everyone for joining us today. Let's turn to our fourth quarter and full year ‘21 results in more detail. Total net sales for the fourth quarter '21 were $11.1 million, which was up 43% year-over-year, and net sales for the full year were $39.4 million, which was up 29% in 2020.

Sales from our food service technology market or FST were $3.5 million in the fourth quarter '21 which was a 25% increase over the fourth quarter 2020 and $12.6 million in the full year '21, which was up 63% from 2020.

FST hardware sales in the fourth quarter were down 24% from the prior year due to the timing of orders, but were up 33% for the full year versus 2020.

Our recurring FST sales, which includes software and service subscriptions, as well as consumable label sales were $2.1 million in the fourth quarter and $7.4 million for the full year, which were up 124% and 95% respectively over the comparable prior year periods. The increase was due to strength across all three components.

But particularly from strong label sales as restaurant and C store activity resumed a more normalized pace in '21 and we placed over 4000 additional terms into service during '21.

As Bart mentioned, our recurring revenue is a function of how many pay terminals we have in service and as those numbers continued to climb, so to what our label sales and other recurring revenue. Our ARPU for the fourth quarter '21 was $965, which was down from $1,016 in the third quarter '21.

As a reminder, we calculate ARPU by annualizing the quarters recurring revenue and then dividing that number by the number of paid terminals and service at the end of the prior quarter.

Given that we're still in the early stages of building out our installed base of terminals, our ARPU will likely fluctuate quarter-to-quarter based on the size of individual orders, and the timing of terminal shipped.

Our casino and gaming sales were $4.9 million in the fourth quarter '21 and $15.3 million for the full year, which are increases of 84% and 39% over the comparable COVID impacted prior year's periods.

As Bart touched on, we continue to see great improvement in the domestic market and during the fourth quarter, we also finally began to see a pickup in our international casino markets which were up 100% over the fourth quarter 2020 and 32% sequentially from the third quarter '21.

POS automation sales, which consists mostly of sales of receipt in line with label printers to McDonald's were $1.2 million in the fourth quarter of '21 and $4.8 million for the full year. That was up 23% and 28% over the comparable prior year periods respectively.

Demand for printers for use at McDonald's stores continued to increase throughout '21 compared to the COVID lows of 2020. And we expect this trend to continue into 2022. Printrex sales were 200,000 in the fourth quarter, and 631,000 for the full year.

As Bart mentioned, we made the decision to end of life our Printrex products, which resulted in some large final sales to customers in the fourth quarter '21. Going forward, we don't expect any future sales of Printrex products. Moving on to TransAct services group or TSG sales.

TSG sales totaled $1.3 million in the quarter and $6 million for the full year, which is up 3% and down 14% respectively from a year ago periods. As a reminder, TSG sales include legacy POS paper and service contracts on legacy baking printers and spare parts for lottery printers, which we are no longer focused on.

We expect TSG revenue to continue to decline over time. We believe the slight bump in the fourth quarter may been due to part shortages causing customers to repair their existing printers due to limited availability of new printers for purchase.

Moving down the income statement, gross margin in the fourth quarter was 39.7%, compared to 30.6% in the fourth quarter of 2020 and for the full year '21 was 38.7% compared to 42.3% in 2020.

Despite 29% higher sales year-over-year, our gross margin for '21 was lower, mostly due to higher costs of our hardware as well as shipping costs, both resulting from parts shortages, which were significantly higher than 2020. Unfortunately, we expect these elevated shipping and part costs to continue for the foreseeable future.

However, as Bart mentioned, during the first quarter of '22, we've instituted and across the board price increase on all of our hardware products. We expect these price increases to at least cover our cost increases and protect our gross margin around the current level.

Our operating expenses for the fourth quarter of '21 increased $1.8 million, or 37% to $6.9 million, and for the full year increased $3.7 million or 70% to $24.8 million.

This increase can mostly be attributed to higher selling and marketing expenses as we hire new sales and marketing staff, expanded marketing programs to support BOHA and incurred higher sales commissions and travel expenses, as trade shows resumed and travel began to return to more normalized run rates throughout the year.

Also included in this increase were higher engineering expenses as we hired additional software developers and incurred higher expenses for BOHA software development projects pay to our third party development firm from whom we license the software. Breaking this down a bit further.

In the fourth quarter, our engineering expenses were up 32% to $1.9 million. Our selling the marketing expenses were up 102% to $2.5 million. And our G&A expenses were up 4% to $2.4 million. And for the full year '21 our engineering expenses were up 31% to $7.5 million. Our selling and marketing expenses were up 25% to $7.7 million.

And our G&A expenses were up 4% to $9.6 million. We incurred operating loss of $2.5 million or 22% of net sales in the fourth quarter '21, which compares to an operating loss of $2.7 million or 34% of net sales in the fourth quarter of 2020.

The full year ‘21 we incurred an operating loss of $9.5 million, or 24% net sales which compares to an operating loss of $8.2 million, or 27% net sales in 2020.

As I mentioned last quarter, our full year results include the $2.2 million PPP loan from the SBA under the Cares Act, which was formerly forgiven in the third quarter, and shows up in our other income line item.

Additionally, in the fourth quarter '21 other income includes the recognition of a $1.5 million gain from the employee retention credit or ERC under the Cares Act.

On the bottom line, we recorded a net loss of $735,000 or $.07 per diluted share in the fourth quarter '21 which compares to a net loss of $1.9 million or $0.22 per diluted share in the fourth quarter of 2020.

Excluding the employee retention credit, our adjusted EPS was a net loss of $0.19 per share for the fourth quarter '21 which compared to a net loss of $0.22 in the fourth quarter 2020. For the full year '21 we recorded a net loss of 4.1 million or $0.45 per diluted share, compared to a net loss of $5.6 million or $0.72 per diluted share in 2020.

Excluding both the PPP loan forgiveness and the employee retention credit our adjusted EPS for the full year ‘21 was a net loss of $0.81 per share, which compares to a net loss of $0.72 per share in 2020.

Adjusted EBITDA for the fourth quarter ‘21 was a negative 2.1 million, which includes removing the impact from the $1.5 million employee retention credit, which compares to negative $1.7 million in the year ago period.

For the full year '21 adjusted EBITDA was negative $7.6 million, which includes removing the impact from both the ERC and the forgiveness of the PPP loan which compares to negative $5.9 million in 2020. And lastly, we ended 2021 with $19.5 million in cash, and no outstanding debt.

At this point I'd like to turn the call over to Bart for any closing remarks.

Bart?.

Thank you, Steve. As always, what a great job. Before I open this call to questions, I'd like to send our company's thoughts and prayers to Ukrainian people. Our shareholders might not know but we have a programmer in Kiev, who has helped us with the design of our technology.

We found out he evacuated Kiev about a week ago, trying to get out of the country. We hope and pray he is safe. I also want to thank the employees at TransAct, who had to endure and have worked through the most difficult times first getting us through the pandemic and now the parts shortages we face.

You are an amazing team, never giving up and finding solutions to move our business forward. I'm truly thankful for your dedication. There are not enough words to say how grateful I am. And finally, I invite our shareholders to the Roth Capital investor conference next week where I will be doing one on ones on Monday. My calendar is getting quite full.

But I will make time for you before after the one on ones on Monday to meet with you should you decide to attend. Just let me know. Operator, it's now time for questions. .

Thank you. And we will go first to George Sutton of Craig-Hallum..

Thank you, Bart. First you suggested that your guidance reflected some of the supply constraints and labor constraints. But correct me if I'm wrong, you didn't give guidance.

So I just wanted to make sure we could quantify these two items; supply and labor in terms of how they're impacting what you would expect results to be?.

Well, what we're saying is at this point, we're looking to do 6500 to 7500 terminals or workstations based on the availability of chips. So should that change, we'll be happy to come back and look at that.

And based on some of the opportunities, one that we just got the other day, and the other two that we're working on, and then the many that we're working on at the convenience store market, should we find ourselves in a better chip situation we will advise differently..

Okay, I apologize. So then if we went to those numbers, can we talk about how much impact you think you're seeing from those two constraints? I know it's a hypothetical question. But..

Yes George. This has been just an amazing time. As we ended the year expecting the shipments of these chips these are purchase orders that we placed over a year ago.

So Steve and his team look out 12 to 18 months and placeholders for things like chips and all the specialty components over a year ahead of time and as we were expecting delivery, we started getting word from our, we actually bought through a distributor, but it's our major manufacturer that makes them that they were having problems.

Some of it had to do with COVID. China has shut down certain areas of the country where these chips are actually made and therefore they couldn't be made. And then of course, there's a worldwide supply shortage. The three restaurant companies that we're working on ones for 1500, the others will add up to probably another 8500.

So that would be 10,000 alone realizing that we have existing customers that will keep ordering from us. 711 will continue the order and most of our customers continue to place more orders with us as they expand.

We're working very closely with each customer to try get a hold on when exactly they want deliveries and when exactly they want deliveries and all that, and then working very closely with our chip supplier to find out what we can get.

What I can tell you is between my, I actually called the CEO of a major chip manufacturer myself and then I also got one of our largest customers to write a letter to get their attention to the need for those chips. And I can't be more thankful to the CEO and his team, for looking at us as an important customer.

There is granted that there are a lot larger customers and us out there and actually starting to supply the chips that we need. We're actually getting into a, George, we're getting into a better position. But we just can't call it yet.

But I am pleased with the work that my head of operations Andy Hoffman did, our purchasing department, our engineering team, because our chip manufacturer said if we move to a different chip, that's the one they're mass producing now, I think it's mainly driven by the car demand, the car manufacturers demand.

And they were very helpful in getting us to the design specifications. So we could rewrite our firmware and redesign our boards. In some cases, we're designing printers twice to get to the end of the year where we'll finally implement these new chips. So the demand is rising, there's no doubt George.

I don't think I have to tell you about the headwinds facing the restaurant companies. I talked to one restaurant CEO just the other day, who said it's not the labor shortage, as much as every time he hire somebody, literally, within a month or two, they get an offer for dollar more and they jump to a different restaurant.

I think today the unemployment has 4.5 million jobs, that are more than the unemployed. The numbers today were amazing in regards to the amount of job openings there are. So we're coming out of the pandemic. We're working with our restaurant companies closely to understand.

Like I said, we've got three restaurant companies right now, one that told us to go ahead. We're now putting our products into their system and then, and working with them on this nice label design.

This QR code stuff is pretty cool and the ability for them to communicate to their customers almost real time when they get a grab and go item is what's driving the demand for the terminal. Because from the headquarters, they can make a design change on the label instantaneous and get it down to all their stores. So we're energetic, we're positive.

The upside is there. Sad to say that we could be limited by chips and timing of orders..

One other question, if I could, supply and labor constraints aside.

When you look at how you are performing your go-to-market in terms of sales, management and quota carriers and partners, can you just give us a broad update of how successful you view that to the, are you where you'd like to be in terms of touch points?.

In one area, yes and one area, no. Our small, medium business has been a real success for us I think. And in fact, the reason why we got this one restaurant company is we started working with some of their stores directly, because they were actually calling us for help.

And through that, and the back channel that was going on, we won this order, we won this business. I wouldn't say to order. It's an agreement to go forward and get these terminals out in the marketplace so they could do this marketing. On the direct, we direct sell we have sales managers in the field, it has been difficult to find people.

And we could use some more. So we'll also as most of we don't have a head of sales for FST but that looks promising in regards to finding somebody. But that's the one area George that we could use some more people.

The good news is our customer success team that we built, is actually full of people and where necessary, they fit, they fill in for a sales presentation or a video presentation or answer some questions about our technology. But I would like a couple more salespeople George. There is no doubt..

Thank you very much. Appreciate it..

Sure. Thanks, George..

And we'll go next to Chris Howe of Barrington Research..

Thanks. Thanks for taking my questions Bart and Steve..

Hey Chris..

Hey. The 6500 to 7500 paid terminals there's a lot of supply chain constraints going on.

Can you talk about how we should think of the mix of terminals this next year? Because of the supply chain constraints, would you think the mix of terminals favors the second half of the year as perhaps chipsets become more readily available for you?.

So I would like to answer it in two ways. First of all we actually have two products that we sell them, the BOHA terminal and the BOHA workstation. Where we're seeing in certain restaurants, the BOHA terminal is the one that they're looking at, because it's kind of a standalone, it's all included.

But the beauty of the workstation with the help of Apple, as Apple continues to sell their iPad into restaurants, all we have to add to the equation other than our software is the workstation itself. It's the unit that has the two printers and a stand for the iPad.

And that makes more our sales offering our product offering quite inexpensive, because they already bought the tablet. So it's going to be interesting to see how the mix goes because Apple is even getting more aggressive now and helping us in the marketplace as the market opens up and they actually get the okay to travel again.

I do think that the second half is going to be bigger than the first and that's because of the chip supply. There is no doubt. And also, if you look at the order this project that we just won, I think it's going to probably take three or four months to finish up all the work that we're doing for them on the label design and getting it right to them.

And then teaching them how to use what we call the command center which actually can talk to all the terminals in the marketplace. And that's going to probably take us another couple of months to do. However, they are starting to buy the terminal. We expect orders to come in next week or the week after as we enter in our information into their system.

But I would say that the second half will be bigger than the first due to the chip issue..

That's excellent. Very helpful. And can you talk about terminal allocation? There is a lot of puts and takes here. You have the 1500 stores, as it relates to the restaurant company. You have your SMB initiatives that are generating success for the company here. You also have a large convenience store that continues to roll out its terminals.

How should we think about the different buckets? It's your side where to place terminals this year?.

What we told ourselves for us is pretty simple, Chris. He who places the order gets the product. What it's doing is it's forcing our customers to kind of think ahead and say, when do we want and when do we need them and to lock it up. This just happened at Christmas time.

We were expecting chips shipments the first week of January when we were literally told that they weren't coming in. And the sad part is we were given no heads up to this. Thankfully, we were able to get on the phone and with the necessary people to get that turned around. But we are telling our customers first come first serve.

It's hard for me to reserve product for a customer when our pipeline of opportunities is growing. So it has put a little pressure on our sales force to talk directly to the customers to say what make your commitment and I think that's good for us. If you saw our backlog of the casino industry. I mean, they're in.

I mean, the orders are in there trying to lock up our supply as quickly as possible. So we could see that also in the restaurant market..

Okay. You lead me right into my last question. And then I'll give some others a chance. The casino and gaming industry, you're seeing a quick sequential pickup on the international front. It also sounds like you're picking up some market share in this environment as you mentioned some of the logistical issues that persist in the market space.

Can you talk about what you're seeing there and perhaps once we normalize out of this casino and gaming looks better than it's ever been?.

Yes. So let's break it down into the three markets, Chris. We have the U.S. We have Europe and we have Asia. Asia, it's still dead. Asia is still a problem. China has a zero tolerance e program where should something break out, they shut everything down. Macau was still very slow. We do have some pockets of business.

The Philippines we get some business out of. And then there's Laos and Cambodia. I don't think everybody knows how many different countries we sell to. But the biggest market is Macau. And that's still pretty soft. Europe is what came back and it's been nice. And we continue to see the orders.

Well, our biggest customer there is trying to lock up production for their slot machines through the year. And maybe Steve can talk about that some more in regards to what's coming in. And clearly the U.S. has picked up.

And there is no doubt that we have one market share where either our competitor could not ship, or we believe that they're going back to an older printer to be able to ship and customers are telling us they don't want to do that and coming to us. Now that's put a little extra pressure on us.

The one thing that that happened as we ended Q4 was the all these orders coming in and nobody forecasting it ahead of time. People started to get desperate based on the issue and the point of sale market, our biggest competitor hasn't been able to ship to our customer in over six months. I mean, think about that, Chris.

imagine if I told you I couldn't ship for six months. But it was all a surprise to us. And a lot of that came to light when they wanted to do this new project, where they're going to buy a lot more printers from us for their stores. And we realized the problem that they were in.

I can't thank them enough for working with us and helping us through the issue. So yes, we have picked up some market share. I don't know when we'll see Asia come back.

I'm in constant contact with our sales manager out there, as well as Tracy is our head of sales to get some, we've got a project on the board that if they can open up or get close to opening up, we see a fair amount of printers shipping into Asia because we've won the business. But right now we have no visibility to that..

Okay. Thanks for taking my questions..

Chris, thanks for your help. Thanks to you..

And we will go next to Jeff Martin of ROTH Capital Partners..

Hey. Good evening. Bart I wanted to get a sense of, hey, Bart, thanks for all the details. Very helpful. Sounds like you're working through extremely difficult conditions and it sounds like you're handling it well. So congratulations there. On the engineering side, sounds like you're having to do a lot of reengineering on product.

Is that both on the gaming and casino side as well as the FST side? And if so, where are you in the phases of that? And do you have any of that and Q4? Or is that really starting to happen in Q1?.

Yes. So Jeff I got the call probably Steve, always in a day or two before Christmas, when we got the –.

Yes right around Christmas..

Yes. So that's when we got the call, probably the toughest Christmas I have had when you find out that product you're expecting was being pushed out months and we had to go, we work all the way through Christmas and New Years to get that reversed. Jeff, every hardware product at TransAct is being redesigned right now.

Luckily, and thankfully, our chip manufacturer found some chips for us so we could keep going but told us if you look at our products versus what some of these chips do, we don't need all the bells and whistles. We need to move motors printed on a piece of paper, have a sensor tell us whether we're out of paper and all that.

But our chip manufacturer said those types of processes, while they're not in the lighting there's just not going to be a lot of production of it, and you should go to our latest and then got us in touch with their engineering team to help our engineering team understand the design criteria. It's not a horrible project.

It's one that our engineering took on with a lot of -- I mean this is what they they're hired to do. They love this stuff. Let us go to work and designing some latest technology, it's just work. It's a different chip. It's so it's a different platform, a package. That means the board's got to be redesigned.

And then the firmwares got to be redesigned because each one has different IOs and how many IOs. We literally have it down in detail Jeff. You saw what we were doing we literally have it laid out by months, when products, go to the next version, and then go to the next version.

As it stands right now, we have weekly meetings almost three, four times a week where we are. I'm pleased to say that we're right on schedule, if not ahead of schedule where we need to be. The real issue is going to be just getting the chips. I think on the engineering side, we will get that done. The team is very excited.

They're working with the latest and greatest chip technology even though probably won't use half of it even though they'd like to use it and tell me that they can get the printer to sing when we don't need it to sing.

But every hardware product at TransAct will be redesigned by the end of this year, so we can get on the new platform, and we can be in the high production area..

Okay, great. And then wanted to ask you about the two large restaurant organizations within the pipeline, that could be an additional 8500 terminals, that would exceed your guidance of 6500 to 7500, for the year.

And I would imagine as we progress throughout 2022, you're going to see other large restaurant organizations look to move forward at a faster pace than they are currently and just wondering if you could kind of help shape the perspective maybe give some observations over the last three, four or five months in terms of any shift in mentality.

I know, you talked about the issues of the labor shortages and the things that they're focusing on having to put their attention to, whereas technology implementations or evaluations are still on hold somewhat.

But just curious if you could comment with respect to the 8500 in those two opportunity pipelines and then relative to any shift in sentiment or engagement level, from the larger restaurant organizations..

Yes, great question again Jeff. Thank you.

So if I kind of break it up, if a restaurant like this one that we just got the commitment for, where they saw the need for technology, not only for the back of the house, but to help drive demand for their product, their marketing messages and things like that, they've got to get away from the old technology that's out there.

They can't do it with like our 9700 and some of the older terminals out there. So they're driven to use the latest technology. In most of the applications that we're working on it's being driven by the need for labeling.

Some of the restaurants where you talk to them about labor savings and you've got this inflation going on, if they don't have a real need to go do it right now, such as the one customer that we just won where they want to do this labeling on the grab and go items, they put everything on hold.

We're getting emails, we apologize, we're still going to test it. But we got to get through the labor issue. We got to get through our food shortage issues. We got to get through the inflation issues. And we understand that. We're going through our own parts issues. So we understand that.

So where there's a real need for the technology that's being driven forward.

So when you combine that in a certain part of the restaurant market that's doing that, and then you look at the convenience store market, where each one is looking at fresh food initiatives, and in the need of being able to print the right nutritional information and grab and go information that's what's driving our business forward right now.

If you looked at the standard restaurant business where we can go in and do timers and temperature checking, and temperature sensing, and all that, if they don't have a real need right now to accomplish something other than, hey what, we can save labor, we can help you automate.

We can help you streamline the operation, they look at us and go, but I can't get labor in or every time I bring somebody in, I got to pay $1 or $2 more. And we're just juggling that. So where we see the need for the technology, a real need right now that's where we're hunting. That's where we're going because they need our technology.

So while we have this two other opportunities in the restaurant market, we have many opportunities in the convenience store market too. So we've just got to manage through that. We've got to manage through their expectations. We got to manage through their trials and evaluations.

And also not scared them about the technology in the chip issue, but work with them closely to say you want to roll this out at a certain time let's make sure that we're in tune to that so that we can provide you the technology. While we're also supplying or existing customers.

We heard from one of our customers that they might buy another 200 terminals. So we got to make sure that we're on top of all that. I actually meet with the sales team every week. Monday mornings, we go over it. We go over the demand, and making sure that we effectively let Steve and his operations team know what we're seeing..

Very helpful. Thanks. next week. .

Yes. Like, hey, life in color. It's fabulous..

About time..

It's about time..

We'll go to Chris Sakai of Singular Research. .

Hi, good afternoon. I have a couple questions.

With recent inflation have you guys increased your label pricing for BOHA customers?.

Yes. Chris, across the board, we are implementing our second price increase. And one of the things that we're doing to help our customers because nobody likes PPV going up. So what we're doing is we actually split on certain products. We split the price increase into two parts.

One is to help us pay for the airfreight and that doesn't go to their PPV and one for the inflation that we're experiencing. So we're actually helping our customers so that, look, one of our customers shared with us the inflation that they're facing.

It is just amazing to see the millions and millions of dollars that they're facing in regards to inflation. We are nothing compared to some of the other stuff that they're facing. But we've raised, where we were pushing through our second price increase Steve, what four months I think we did the last one September October. .

Yes..

Yes. So we're pushing through our second. I've been CEO of this company for quite a while and all we did was lower our prices or hold our prices. We never had to raise prices before. This is, it's not fun to have to do. But I got to tell you, when you talk to the customers and share with them we're very open.

We're very transparent with them with what's going on. They go we understand. We're seeing it across the board, we expected you to raise our prices..

Okay, great. Well, thanks for that. I am just wondering can you shed some light on the ARPU for BOHA units in the fourth quarter? And what do you think that'll be for 2022..

I still believe that our average revenue per units can be between $1000 to $1200 every project that we work on is right around there. In the fourth quarter, as I said, we took a credit to help our overseas customer who hadn't used the year, they've been shut down. And this customer is very important to us as they also buy our casino printer.

So the right thing for us to do was to help them out. And in times like this you can build relationships, when even you have to take a credit and give him back some money or give him credit. You actually can help build on the relationship when you do something like that. But they're too important a customer for us to have said no.

So it impacted our ARPU. That's all. It's okay..

Okay.

How many BOHA unit installations you guys believe you can achieve in 2022?.

I think we said that. 6500 to 7500. One thing I don't think our shareholders realize is, we have almost 60,000 terminals in the marketplace today. Now realize we were first into the restaurant market with a food safety terminal, or let's call it a BOHA terminal. We have 60,000 terminals in the marketplace.

Now our 9700 income with recurring revenue and all that, but they're out there. They're working. They're working every day at many restaurant companies. This recent one that we that we won is we want it because they want to do more than just food safety labeling, which drove them to our terminal.

We will work with them on solving that issue of being able to print out a marketing label for them for grab and go. But our shareholders should really we have almost 60,000 terminals in the marketplace today..

Okay, great. Thanks..

And yes we do have a question from a private investor Richard ..

Yes, hi, Bart. Just want to tell you how impressed I am, how informative and transparent the call is almost feel like I'm talking to someone sitting next to me. So in advance, I 'm just a lowly shareholder for probably the past 10 years.

And I'm impressed with the detail and how the company to help its customers and you calling CEOs on behalf of they get chips and stuff like that. And I'm also impressed with all the SEC filings I'm seeing about the board that's by either buying more stock or granting stock options. So there's obviously a faith in the future.

But what my question is, is, what is being done for the shareholders? The price of the stock is, is my barometer, as much as I'd like to be impressed by everything that's going on, is, I just feel that every call I listen to it's sort of the same shareholders and we're each telling the same story to the same people.

How do we broaden, hire a PR company, some company to help broaden and tell this great story that you're telling today.

Yes. Thank you. Thank you for the question. When we did the two capital raises over the last year or so year and a half, one of our goals was to expand our shareholder base which we believe we have.

It's been difficult in regards to we couldn't attend investor conferences and things like that where I think we can tell a great story and meet face to face with the shareholder and explain what we're doing. Thankfully, will be our first. I could not thank him enough for deciding to go live. So the goal is to drive this stock price up.

In all fairness, it's been headwind, after headwinds. You launch restaurant technology in the middle of 2019 and wake up in March of 2020, with orders coming in to a massive pandemic that shut our business, shut our customers down.

I like to say that had been in the casino market for probably 25 years, and never saw a casino close before and we watched casinos around the world all closed for months. But the big thing for us is to stay positive and focused which we are. The chip shortage what came out came out of nowhere in Christmas we were not expecting it.

But you handed the cards you handed and we went to work, and we worked all through the holidays to turn that around. I think our strategy is spot on. I think what we're doing for convenience stores is helping them out. And think we got to close a couple more the sales force knows that.

I think we're finally starting to see restaurants open up their first, their pocketbook. This latest one is a good one for us, I think we'll get to get a couple more. And then we just got to focus on the business. We really do, we got to focus on growing it.

And if you kind of go out a couple of years and start thinking about terminals going out, and hopefully more, you start thinking about that recurring revenue and you get up to 30,000/40,000 terminals out there, you start talking about $30 million/$40 million recurring revenue. So we're very focused on that.

I'm very pleased to see the casino industry coming back to a very profitable business for us. And that also helps us and that clearly, the surprise was our point of sale business. As much as we're focused in the back of the house, we do have a front of the house business.

And I do think it's going to, it could, it should double this year, as long as we continue to get the chips and so it's up to us to stay focused. We do have an investor relations firm, probably the best on the street. ICR could not be more happy with them. Truthfully, they're just wonderful, the best we've ever had.

They know that we've got to get the story out. They know that the challenges we've had the last two years and they've been very helpful. Unfortunately, they had a conference in January that had to get canceled at the last minute Omicron set us back a lot in December, January and February.

But I think ICR is just a wonderful firm and helping us out tremendously..

And it appears there are no further questions at this time. I would now like to turn the call back over to Bart Shuldman for any additional or closing remarks..

Thank you, operator and thank you shareholders for being on the call. I do send my thoughts and prayers to the Ukraine. Like I said, we have an engineer out there and we just hope he's safe. I also thank our shareholders for all your support.

I think our employees who have just have gone through the wringer the last two years, I do hope that some of you come out to Roth, let's get together. Let's shake hands again. Let's see each other face to face again. Let's talk about what we're going to do as a company, but let's just say hello to each other again.

So hopefully, I'll see a bunch of you out at Roth. I thank you for listening on the call. We'll talk to you again. Thank you..

And this concludes today's call. Thank you for your participation. You may now disconnect..