Good afternoon, ladies and gentlemen, and welcome to the TransAct Technologies Q2 2023 earnings conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, August ninth, twenty twenty-three. I would now like to turn the conference over to Ryan Gardella, Investor Relations. Please go ahead. Thanks, Chris. Good afternoon, and welcome to TransAct Technologies second quarter 2023 earnings call. Today, we'll be discussing the results announced in our press release, issued after market close. Joining us from the company is CEO, John Dillon, and President and CFO, Steve DeMartino. Today's call will include a discussion of the company's key operating strategies, the progress on those initiatives, and details on our second quarter financial results. We will then open the call to participants for questions. As a reminder, this conference call contains statements about future events and expectations, which are forward-looking in nature. Statements on this call may be deemed as forward-looking, and actual results may differ materially. For a full list of risks inherent to the business and the company, please refer to the company's SEC filings, including its reports on Forms 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 the call. Today's call and webcast will include non-GAAP financial measures within the meaning of SEC Regulation G. When required, reconciliation of all non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in today's press release, as well as on the company website. With that, I'd like to turn the call over to John. Thank you, Ryan. Good afternoon, everyone, and thanks for joining today. Last time I had a chance to present to you all, I was only about a month into the job as CEO for TransAct, and now, 127 days, I counted them up, and I've had at least a little bit more of an opportunity to roll up my sleeves and dig into some of the work in earnest. I'm happy with the progress we've made, and I'm going to share some of that with you today. At a high level, the results came in as expected and discussed on the last call. Net sales came in at $19.9 million. Year-over-year, the increase was approximately 58%, but it was a sequential decline of approximately 11% from the first quarter, as we expected. We've all tried to work hard, setting the stage for success in the back half of the year, and more importantly, on into 2024 and beyond. Last quarter, I talked about the fundamental goodness I found here at TransAct and as well as some of the parts of the business that were going to require some action to allow us to take advantage of the opportunities up ahead in the market. I can say that we're almost done revamping the parts of the business where that needed to be done, and we've added some new internal process where there was none before. We have moved some personnel around. We've let a few go. We've added a few. I like the progress we've made, and I feel that we're fully ready to add some much-needed momentum for the business. The reality is that our sales teams, processes, and go-to-market, GTM strategies, really required a pretty significant overhaul, and I'm really happy to say that the first phase of that is largely complete. I also feel confident that we now have the right people in the right places, and we can now turn our attention to the other parts of the equation, predominantly focusing on execution. While change takes time, and shifting behaviors and habits in any business can be a long game, I'm pretty confident that we're now moving all in the right direction. Let me go over some of the results from our two markets. First, on our Food Service Technology or FST market. FST revenue was $3.9 million, up about 14% year-over-year. This was led primarily by higher shipments of our AccuDate 9700 product and increased label sales. We also added 743 net new BOHA! terminals in the quarter, bringing the total number of our online terminals in the market up to 13,476 as of the end of the quarter, June 30, 2023. That's up from 10,941 in the prior period a year ago. Honestly, I, I know we can improve on these numbers, and that's one of the focuses that's pretty key for me. Our FST sales team is rebuilt and is refocused on the number 1 priority, which is selling as many of these new units as possible into the marketplace. We have implemented the personnel changes I mentioned, where needed, and we're out there every day pitching both the new and existing clients on this freshly launched BOHA! Terminal 2. We've also made some excellent progress revamping the sales motions and GTM strategy. While this is an iterative process that will continue to take time, we've already been seeing beginning promises of momentum and some pre-orders from of the new terminal from some of our existing customers. As I mentioned, after digging in a bit, I frankly found a lot of room for improvement in this GTM and its execution. While they were far from optimal, the good news is that these things are relatively all easily fixable. It's not rocket science. We just have to do it, and that's why it took moving around a few people and creating a little bit of focus where there wasn't many. However, given the long sales cycle, it still is going to take time for the good work to manifest in results. Further, as I discussed last quarter, we are very happy with the BOHA! Terminal 2. The product turned out bigger, faster, brighter, and more capable, and frankly, just a lot plain better than the original. And we're happy as well with the positive reception we've gotten from those customers and clients who have trialed it so far. We believe that there's a large opportunity within the existing installed customer base who are looking to upgrade from our older AccuDate 9700 product, and to some extent, our earlier, original BOHA! terminal as well. As a reminder, the BOHA! sales cycle is long, I've already said that, and it's complex, but it pays dividends. And when the headquarters grants us a green light to engage with their franchisees, this typically is the case with most of the established franchises. Once they say, "Yes, it's okay, we've authorized it, we've approved it," then that gives us an opportunity to go out to the individual franchisees and introduce them to the unit and basically hope for upsell and uptake. That is really key, and we're well on the way to getting some of those approvals at some of our key accounts. We're optimistic that the approvals will begin to yield results towards the back end of this year, and on into 2024. Next, on the Casino and Gaming side, we saw a total Casino and Gaming revenue of $12.2 million, up 87% year-over-year, but down 23% sequentially from the all-time high we saw in the first quarter. There are two main reasons for that, the sequential decline. First, we had predicted -- as we predicted on our last call, we did see the first signs of our major competitor reentering the market, and they did make some deliveries of their product in the last quarter. Not a lot, but some. Second, the order rate and backlog additions to our books are certainly slowing, which we believe is a result of the slot OEMs having built a large inventory position of printers in the first half of 2023. As supply chain tensions eased, combined with the fact that some OEMs had over-ordered printers just in case supply chain problems continued, we are no longer seeing manufacturers placing orders 6 to 9 months out as we had previously. We were certainly at the right place at the right time, with the ability to capitalize on this influx of pent-up demand during the market recovery, and we believe this benefit will benefit us beyond the short-term spike in sales and profitability that was created earlier this year. We're not resting on our laurels, as you say. We have increased our Casino and Gaming sales staff and are actively going out to our new customers in an effort to retain as much of the market share gain as possible. A portion of those new customers will certainly become long-term buyers for our printers. We also expect to reduce pricing a little bit on these products in order to make sure that we stay, competitive in the marketplace as much as possible. The prize here is a new baseline sales level as a result of a permanent increase in market share. We believe we are well positioned to capture that demand going forward, and at this stage, we would estimate that our go-forward net sales run rate in the market should be about 15%-20% higher than our pre-COVID historical average. We would expect this new run rate to be fully reflected in the fourth quarter of this year and on into 2024. Further, we hope to see some benefit from our newest Casino and Gaming printer. It's called the Epic 888, which we believe will help us retain some of these new customers. We expect to launch this towards the end of the year. That launch, et cetera, will happen publicly at some point, but it's a really nice-looking unit, and we expect it to be a nice boost to some of the gaming and casino customers. Finally, I wanted to discuss our outlook for the rest of 2023 and provide some color on how we are seeing the business progress. As I discussed, we are in fact seeing the downward trajectory of casino and gaming that we did expect and spoke about last quarter. While we're taking strong action to retain as much of that business as possible, the reality is the return of our competitors, as well as price reductions that we're talking about, will continue to impact both our net sales and profitability on adjusted EBITDA. As such, we have decided the most prudent approach to our guidance is to maintain our current net sales guidance of $71.5 million-$73.5 million and raise our adjusted EBITDA guidance to a range of $8 million-$8.5 million for the full year 2023. These ranges take into account all of the points I have mentioned today. There's still work to be done here at TransAct, but I'm pleased with our results for the quarter and believe the company is now moving in the right direction as a whole. I believe the pieces are in place across the company from a personnel perspective, but again, the impact does take time. Our rebuilt FST, Food Service Technology sales team, and newly reinforced casino and gaming sales teams are now in the best position to capitalize on opportunities in front of us. Our sales cycles, particularly for FST, take time, but the feedback we're getting early on is very encouraging for pre-orders on the BOHA! Terminal 2. While as predicted, our competitive environment in Casino and Gaming began to normalize in the quarter. The printer sales began to decelerate with OEMs no longer stockpiling, we are hard at work to nurture these new customer relationships to retain as much of that share as possible. That's pretty much it, and now I'd like to turn the call over to Steve for a more detailed review of the numbers. Steve? Thanks, John, and thanks everyone for joining us this afternoon. Let's turn to our second quarter 2023 results in more detail. As John mentioned, total net sales for the second quarter were $19.9 million, which was up 58% compared to the $12.6 million we reported a year ago. Sales from our Food Service Technology market, or FST, for the second quarter were $3.9 million, which was up 13% sequentially and also up 14% compared to $3.4 million in the prior year period. The increase was largely due to higher shipments of labels in our AccuDate 9700 product, as well as record-high BOHA! software subscription revenue. As John mentioned, we added 743 terminals in the second quarter, which gave us 13,476 in the market at the end of the quarter. While we're encouraged by the sequential increase in our FST sales, our sales initiatives will take time to implement and then flow through to our bottom line results. We believe this number may continue to be lumpy for a while. Our recurring FST sales, which include software and service subscriptions, as well as consumable label sales, for the second quarter were $2.5 million, which was up 14% compared to $2.2 million in the prior year period. Our ARPU for the second quarter 2023 was $782, which was down 9% compared to $861 in the second quarter of last year, up sequentially by 3% compared to $761 in the first quarter. As a reminder, we're currently selling some BOHA terminals with no recurring revenue attached to them to start. While this presents an opportunity to sell recurring elements in the future, for now, they represent a drag on our ARPU. Our Casino and Gaming sales were $12.2 million, which was up 87% from the second quarter 2022, down sequentially 23% from the first quarter record high of $15.8 million. As John mentioned, this is due to a combination of the gradual re-entry of our major competitor into the market, as well as OEMs working down high levels of printer inventory they stockpiled during the supply crisis that's now eased. Despite these factors, we continue to see strength in our domestic sales, which were up 141% year-over-year. POS automation sales for the second quarter increased by 63% from the prior year to $1.9 million. This was a result of higher Ithaca 9000 sales as compared to this time last year, when sales were limited due to supply chain issues that restricted our product availability. We expect sales in this market to return to more normalized levels as competitors begin re-ramping production, and we lower prices to remain competitive. Moving to TransAct Services Group, or TSG, sales. For the second quarter, TSG sales were up 30% year-over-year to $1.9 million. This increase was largely due to higher sales of spare parts and service for our legacy lottery printers. We had a strong second quarter, sales of legacy lottery printer spare parts can be sporadic, difficult to predict, and can vary significantly from quarter-to-quarter. Moving down the income statement, our second quarter gross margin was 54.5%, down slightly from our record high of 55% in the prior year quarter, but up from 43% in the prior year period. This comes as a result of higher overall sales volume, improved mix of higher margin in Casino and Gaming printer sales, and the effect of two rounds of price increases we instituted during 2022 to account for increased production and shipping costs at the time. However, as John mentioned, we expect to see some modest deleveraging of our gross margin due to expected price reductions across certain products, particularly in Casino and Gaming. As a result, looking forward to the second half of 2023, we expect our gross margins to return to a level closer to our historical pre-COVID average. Our total operating expenses for the second quarter increased 15% to $9.6 million. Excluding a severance charge, which I'll talk about in a bit, our operating expenses decreased 3%. Breaking this down a bit, our engineering and R&D expenses for the second quarter increased 15% to $2.5 million. The increase was largely due to higher incentive compensation, as well as additional software quality resources and increased outside testing fees. Our selling and marketing expenses decreased 19% to $2.7 million for the second quarter on a year-over-year basis, largely due to reduced trade show expenses and BOHA! market studies conducted in the first half of 2022 that we did not repeat in 2023. Lastly, our G&A expenses increased 52% to $4.4 million for the second quarter. The increase was largely due to a one-time severance charge of $1.5 million related to the resignation of our former CEO in April. Excluding this charge, G&A expenses would have been relatively flat at approximately $3 million, up only 2% year-over-year. We generated operating income of $1.2 million in the second quarter of 2023, compared to an operating loss of $3 million in the prior year period. Our results last year were negatively impacted by lower sales volume associated with the COVID-related supply chain issues. On the bottom line, we recorded net income of $765,000 or $0.08 per diluted share, compared to a net loss of $2.4 million or $0.24 loss per diluted share in the year-ago period. Excluding the $1.5 million severance charge I just discussed, our EPS would have been $0.22 for the current quarter. Our adjusted EBITDA for the quarter improved to $3.2 million, compared to an adjusted EBITDA loss of $2.5 million in the second quarter last year. As John mentioned, for 2023, we now expect to generate total adjusted EBITDA of between $8 million and $8.5 million. Lastly, on the balance sheet, we finished the quarter with $10.8 million in cash and $2.25 million of debt outstanding on our credit facility with Siena Lending. With that, operator, I think we'd like to open up the call for questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press Star followed by one on your touch-tone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be polled in the order they are received. Should you wish to decline from the polling process, please press Star followed by two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Jeff Martin, Roth MKM. Jeff, please go ahead. Thanks. Hi, John. Hi, Steve. Hope you're doing well. Hi, Jeff. John, wanted to dig in a little bit more on what's changed with the go-to-market, how quickly that starts to produce changes in behavior and then ultimately improved, you know, improved sales results. Yeah. There's a lot of stuff that you can do relative to marketing automation, to use that as a kind of you know, go out, and you try to find somebody that's got some possibility of being interested in your product ultimately, and you've got to work it all the way to the point where you close a deal. Then, frankly, you've got to, you know, treat that customer well. I call that from A to A, from awareness to advocacy. We just really had a disconnect, in my opinion, between marketing and sales. The market opportunity is big. We really didn't have our arms around it. We've implemented a number of what I'd call GTM metrics related to funnel management, everything from awareness to nurture track, to marketing qualified leads, to sales qualified leads, and then ultimately turning over sort of conversation-ready opportunities to the sales team. You can't take a salesperson and say, "Well, there's a lot of potential customers out there, go get them," and have them basically making all the cold calls, and yet you're still doing a bunch of trade shows and getting a bunch of people to scan badges. We've put in a process in place that sort of manages that, looks at the yield at every step, and then figures out, is it getting better? Is it getting worse? What's working and what's not? How do we improve where it's not working as well and as it should be? How do we do more of the stuff that works well? This is just something that we didn't do much of. A couple other things are I'm gradually implementing some metrics that I think for those of you and the investors that track companies that deliver services, I think you're going to see us reporting on attrition, and expansion, net retention, even customer acquisition costs, and a lot of things that you find in most of the modern SaaS companies. I'm pretty familiar with most of those things, and we're creating a, an awareness in the team, around, excuse me, around all that. We're also, excuse me. We're also finding that some of the marketing initiatives that we've undertaken don't yield the best results or that the results are very expensive, and some of the other ones are easy to do, and we get better results, and the yields, the yields, the conversion yields are much better. A lot of the focus has been on that. We've got a great product, and there's a big, more or less, untapped market opportunity, and that's kind of what we're where we're putting a lot of the, a lot of the, you know, sort of the business process focuses in place there. It's underway. I've got a great Chief Revenue Officer. She's been with us for quite a while, but she knows all about the company, and she's kind of a take-no-prisoners kind of a manager in a good way. She's got great bedside manner, but she's expecting the sales team to produce. We've made some personnel changes. We've moved some people around. One of the things that... The two businesses are different, but one of the things we are focused on is account retention and continued market share penetration into the gaming and casino space, where it's a more steady Eddie kind of business. We picked up a fair amount of extra market share in the last year, and that's a key area as well. We're not taking our eye off that ball as well. Great. One more, if I could. In terms of FST markets, where they stand, you know, are large restaurant groups looking to deploy further technology at this time? Are we still in an environment where, you know, inflation costs related to inputs and labor are still affecting their decision making? Then maybe you could touch on, like, convenience store and, and, and like the grocery market in terms of touching on the, you know, the major end markets for FST in terms of their receptiveness in this environment. Well, I think the restaurant space is still, you know, back on its heels a little bit. Prices are up. Most of them are focused on the front of the house right now. That's a more immediate payback kind of thing. I just read the Toast print and, you know, it looks good. They've done a really good job in my opinion. We see that market opportunity coming back. We're engaged, and if you get into the, you know, quick-serve restaurants, I mean, some of the large chains are very good candidates for us. I will mention, because it's been mentioned before, one of the large ones is buying again from us. They kind of slowed down while they were revamping some of their stores. We're having good conversations with some of the other large groups. In terms of your fine dining and those sorts of opportunities, where maybe they've got a handful of stores or maybe 20 or 30 or 40 or 50 stores, we're focused now predominantly on the larger chains and the larger restaurant operators because the effort to sell there is pretty much the same calorie investment as it is if we're trying to get somebody who's got 30 stores. If we do get a green light from some of the franchisors, the headquarters, on 2 of these large ones, where the individual franchisees have an opportunity to actually decide, "Yes, I do want to use this," I think you're going to see, well, I wouldn't call it floodgates open, but I would say I think you're going to see a real steady uptick in business throughout those franchise organizations. Right now, grab-and-go, grocery store, sushi, as an example, and food service managers are easier sales- sales right now. I mean, everybody's still eating food, and, you know, it's everything from compliance. We, we help you with compliance. We help you by eliminating food waste. We help you by reducing labor, and we help you by not making mistakes. Frankly, a lot of these places have a lot of head, headcount turnover, and the ability to use these systems to train people or to make sure that they don't make the errors really makes a difference. The economics and the ROI on the product is actually pretty excellent. We're focusing right now where there's more low-hanging fruit. We've just done a pretty extensive market review, where we're looking at the top X number of companies in every one of the different buckets, and we kind of know where we've been, where we haven't been, and who needs us and who doesn't, and that's part of the go-to-market strategy that we've kind of implemented. We're targeting both the sales and marketing teams at, at the place where we-- the places where we think there's greatest opportunity, if that makes sense. Yep, very helpful. Thanks for your time. Thank you. Ladies and gentlemen, as a reminder, should you have a question, please press star one on your touchtone phone. Your next question comes from George Sutton, Craig-Hallum. George, please go ahead. Thank you, John. Just to follow up on something you just mentioned, you, you, talked about the ROI being excellent for the, the BOHA! terminals. I, I've not seen anything published or really discussed relative to ROI, so how do you actually communicate that? Verbally. Unfortunately, that's an area from a marketing standpoint that we're upleveling. You know, we got a great product, technically. We're very proud of it. We got great engineers, but, you know, feeds and speeds isn't why managers buy stuff. They buy it because of the business value it adds. And, one of the things that I have encountered is that you can look at a brochure from TransAct, and candidly, it talks about a nice, bright screen. It talks about 300 DPI printing. It talks about, you know, how reliable it is, and those are all really important. At the end of the day, you want to apply those things to some business problem you've got in your operation. I'm working to, if you will, add the business value dimension to our go-to-market from a sales team, whether it's prospecting, a proof of concept or even here's the ROI on how much it's going to save if you buy one of these things. Frankly, the terminals easily pay for themselves in a matter of a few months, and we don't really market that way. I think that's something that we're going to... you're going to see that be, you know, part of the pointy end of the spear, as we move forward. Great. You mentioned that with the BOHA! 2, you've got an ability to go after some of your existing terminals out there. Can you just give us a sense of AccuDate? How many of those are out there in the market that you would view as opportunistic? If I'm specifically looking at the BOHA! 1, a relevant number there as well. Steve, you want to hit that 1 because you got the numbers? Yeah, George, probably, I mean, I think we're mainly talking about our first gen, the replacing the 9700, and there's tens of thousands of those out there. The difference between those two is the 9700 is a standalone unit. Works great, very reliable, good little workhorse, but it's not online. It's not connected. Ultimately, my opinion is the BOHA! terminal can be a platform in the back-of-house, and frankly, it could run any software you want it to run. The fact that it's connected and, you know, for large organizations that have multiple stores, the ability to have sort of one menu, as it were, or different menus in different geographies, or to be able to upload stats and this, that, and the other thing. There's just a big difference between having the interconnectivity of the BOHA! Terminal 2 and the older 9700. We're pretty excited about that. We think we're going to get a lot of upgrades. The downside in all of this is that dang products we make are so darn reliable that, you know, I love it on one hand, but on the other hand, they don't break. There's no planned obsolescence in these things. We've got printers out there, doing workhorse printers that are out there, been working hard at work for 10 years, and we're just waiting for the customer to finally say, "It broke. Could you get me another one?" You know, with the AccuDate 9700, the upgrade to being fully connected, and being able to do some of the things like you can do today in the 21st century, I think ultimately it's gonna be really important for the organizations that wanna, you know, use technology to gain competitive advantage. Gotcha. Final question, relative to the printer side. When supply chain normalized and you were able to start shipping, you built a fairly significant production capacity, added lines, et cetera. Can you just give us an update on what your plans are from a production capacity perspective? We've got pretty good production capacity. It's all CM, contract manufacturing, and they are pretty elastic. In that regard, we're in pretty good shape. We're probably gonna add a 4th line in a different country. We haven't made an economic decision as to where is best. We've moved almost 100%, almost, not all, 100% of our manufacturing is not in China, but there's a little bit of stuff still left there. I think we're gonna pick another location. It may be in Asia, but then we might find an opportunity to do some manufacturing in the Americas. I haven't decided that yet, but we like the flexibility. We've got a really good engineering team and manufacturing and operations team. It's one of the areas where it ain't broke, so don't fix it. As you saw, I mean, we did marvelously well during the recovery from the pandemic, when most companies couldn't ship, didn't have product, didn't have parts, and we were able to come through on that front, and I give the, the team, you know, enormous kudos for being able to work their way through that. As I mentioned in the call, I think we're gonna retain, you know, easily 10-15% increase in market share, at least in the gaming and casino printing business. Perfect. Thank you very much. Thank you. Thank you. There are no further questions at this time. Please proceed. Let me, let me wrap this up here. Bottom line, I think we put together a pretty solid quarter. I think we're doing a lot of the right work to, you know, put the company on the right track. You know, I mentioned that we've retooled the FST go-to-market piece. Manufacturing's in good shape. We're watching expenses and optimizing, you know, the spend on marketing, the spend on sales. The new terminal, the BOHA! Terminal 2, looks to be a winner, and we're taking that to market. The only other thing I'd say is, I'm not done figuring out everything that I think we need to be doing here, ultimate strategy, tactics, and the like. I'm 127 days in here, but we're gonna be formulating and are formulating our thoughts and plans, you know, going forward. You'll probably see us discuss things like strategy issues, initiatives, and this, that, and the other thing, probably either later in this quarter or very early in Q4, after we do our earnings announcement. Where we really wanna give the stakeholders an understanding of the opportunity ahead, the future, the trade-offs, and the opportunities, and what we believe are the best courses of action. That's something to be determined yet, it's a work in progress, and I would hope everybody will stay tuned and give us a little more time to sort of vet the future and communicate that transparently to the stakeholders. That's all I have. Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please-