Nov 10, 2013
Executives
Jim Leahy Bart Shuldman – Chairman and CEO Steve DeMartino – President, CFO, Treasurer and Secretary
Analysts
Adam Krejcik – Eilers Research
Operator
Good day ladies and gentleman. And welcome to the TransAct Technologies Third Quarter 2013 Conference Call.
At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session.
And instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded.
I’d now like to introduce James Leahy. Sir you may begin.
Jim Leahy
Thank you operator. Good afternoon, and welcome to TransAct Technologies 2013 third quarter conference call.
Joining us today from the company are Chairman and CEO, Bart Shuldman; and President and CFO, Steve DeMartino. Today’s call will include a discussion of the company’s key operating strategies and progress against these initiatives and details on the third quarter financial results.
We will then open the call to participants for questions. As a reminder, this conference call contains statements about future events and expectations which are forward-looking in nature.
Statements on this call may be deemed as forward-looking and actual results may differ materially. For a full list of risks inherent to the business and the company, please refer to the company’s SEC filings, including its reports on Form 10-K and 10-Q.
TransAct undertakes no obligations to revise or update any forward-looking statements to reflect events or circumstances that occur after the call. Today’s call and webcast will include non-GAAP financial measures within the meaning of SEC Regulation G.
When required, a reconciliation of all non-GAAP financial measures to the most directly comparable financial measure, calculated and presented in accordance with GAAP, can be found in today’s press release, as well as on the company’s website. At this time, I’d like to turn the call over to Bart Shuldman.
Bart?
Bart Shuldman
Thank you, Jim. And welcome everyone to joining us on this afternoon’s conference call and webcast.
I like to start this afternoon’s discussion with a high level thought on the progress we have achieved to-date in 2013. We entered the year focused on transitioning our business to the roll out of several recently introduced products targeted and improving our strong position in the gaming industry and addressing new high growth markets such as Food Safety.
These products typically carry higher margins in some that we are beginning to de-emphasize. Our progress in the transition is a focus of everyone at TransAct.
And I am extremely pleased at where we are at this point. Sales mix is changing to the new product and the effect could be seen in our growth in operating margins.
This transition is now on full motion and is establishing a strong foundation of which we can further grow the business. Our work in 2013 has quickly established our Ithaca 9700 Food Safety Terminal as a must have product for restaurant and food service operators.
And we’ve demonstrated the significant value of the Epicentral for casino operators. And we are making consistent progress with the introduction and the initial inauguration of our Printrex color printers for the oil and gas industry.
We’ve only reported results for the first nine months of 2013, but I’m very comfortable saying that this year will be regarded as one on which we created significant new value for our shareholders as we implemented the new product roadmap that will continue and accelerate our progress in 2014 and beyond. While our results to-date have been solid, it serves to confirm that we can continue to grow; we are committed to keep our foot on the accelerator and pressing forward.
So lets’ review the third quarter of 2013 results which clearly demonstrate this progress. Net sales were $16.8 million and include solid contributions from both our Food Safety Terminal and our Epicentral promotional couponing system.
For the second consecutive quarter, Food Safety Terminal sales were more than 50% of our total POS banking and Food Safety sales. Additionally the increased sales of our Food Safety Terminals have allowed us to generate higher margins compared to our legacy POS printers.
In fact gross margin in 2013, the third quarter improved 600 basis points versus the 2012 third quarter which grew to 43% leading towards 27% increase in gross profits to $7.2 million. As a result we generated net income in the third quarter of $1.5 million or $0.17 per diluted share compared to breakeven results in the year ago period.
Steve of course will review the adjusted net income and diluted EPS metrics in a few moments. As they back out significant legal costs in the 2012 third quarter that even on an adjusted basis our year-over-year growth was very strong.
Before Steve provides more details on the third quarter financials, I’d like to spend a few minutes reviewing our initiatives that are driving our growing momentum. Most importantly TransAct’s product portfolio provide significant value add for our end users.
This value is attributable to our ability to identify new market opportunities and then develop products that address these markets and opportunities with solutions that first and foremost address our customers interest and need and enhancing the profitability and efficiency. The food safety market is an excellent example of this process.
The third quarter of 2013 marked as the second quarter in which we generated volume sales for our Ithaca 9700 Terminal. However, we continue to make progress in establishing this unique product within the industry as a growing number of restaurant and food service operators see it as a solution to an existing challenge in their operations.
We previously discussed the global market opportunity of approximately 700,000 terminals. To-date we’ve generated sales from over 20 distinct customers including initial sales to some McDonald’s here in the U.S., and also in other countries, but we are also seeing sales to many non-McDonald’s customers.
In fact most of our sales again in Q3 were to non-McDonald’s customers. An important indicator of our progress with this product is the accelerations in our trial activity.
Today we are in trials with over a 120 potential customers, encompassing over 60 different restaurant companies in more than 6 countries. The current trials represent an aggregate opportunity of approximately 70,000 terminals.
Importantly the trials highlight our close alignment with these customers which has led to continuous software refinement as well as custom designs new features and enhanced functionality for these customers with our Ithaca 9700. We are demonstrating every day that we are aligned together with our customer need and building close relationships with them.
As a result, we are able to address the specific need of a wide variety of restaurant and food service operators including customized menus, nutritional labels and food segmentations. The pace of new product trials and sales momentum in our last two quarters is a clear evidence of the Ithaca 9700 can address a large untapped industry opportunities.
We continue to expect that the market will ramp over time and see similar sales levels over the next several quarters before an acceleration of sales beginning in mid-2014. The integration and trials takes time, but I believe we are demonstrating how the Ithaca 9700 clearly offers a tremendous long-term growth opportunity for TransAct.
And we are encouraged by the progress we are achieving with its commercialization. I would like to point out that we expect to experience some seasonality in the current quarter with the Ithaca 9700 Food Safety Terminal sales.
As we learn more about the back of the house operation of restaurants, we understand that we should expect to see sales slowdown as we enter the Christmas holiday period. It’s only logical.
Turning now for the worldwide casino industry, I would like to review several important recent developments. First, continued market share gains for our Epic 950 TITO printer had furthered our leadership position in the industry.
A recent example of this is Downtown Grand Casino in Las Vegas which will open next week with our Epic 950 as their exclusive TITO printer solution for their 600 slot machines. And I am pleased to report that our domestic casino revenue was up 72% in the third quarter of 2013 compared to the third quarter of 2012.
Our leadership position was also further confirmed with the third quarter of 2013 to our agreement with Suzo-Happ, which made us their exclusive gaming printer solutions provider. For those that are not familiar with Suzo-Happ, they are the leading global supplier of components and accessories to the gaming industry and now this as well, with over 20,000 customers worldwide.
Until early September, Suzo-Happ was the exclusive distributor of another gaming printer manufacturer for over 10 years. We believe their decision to align their gaming printer distribution operations with TransAct is a direct endorsement of the value we have engineered in to our products through a consistent investments and a thought leadership of our engineering team and the clear market share gains our sales team has accomplished.
Suzo-Happ’s domestic and international reach exceeds the number of gaming machines we are able to address previously, particularly in some domestic markets due to local jurisdictional requirements that required a state or direct casino license in order to sell them. Combining their reach expertise casino licenses and client relationships with the value of our Epic printers and Epicentral print system will continue to drive market share for TransAct going forward.
TransAct is also leveraging Suzo-Happ’s distribution capabilities and establishing our Epicentral real-time bonusing and couponing system as a tool to drive increase visitation, new enrollment and loyalty programs and additional play at casinos. Again, our customer centric focus is the design and development of this product is leading to higher revenue and solid returns on investors – on operators investments and the relationship with Suzo-Happ is expected to further expand the addressable market for Epicentral and should help accelerate the pace of new contracts wins and deployments.
Epicentral is a differentiated software system delivering proven performance across over a 5,000 slot machines at 5 casinos today and generating increased interest from casino operators worldwide. These first installations are clearly demonstrating Epicentral’s value proposition.
Casino customers have reported a 100% increase in lower-tier average daily theoretical on the day a random award is presented to the player; an 87% redemption rate of coupons targeted at carded players; a 73% boost in coin-in for a single one-hour promotion; a 40% redemption rate of coupons then encourage bounce back mid-week repeat visits; a 30% bump in new player loyalty club enrollment in less than 90 days; and a 25% increase in players qualifying for top-tier status. So far we’ve closed 8 agreements for Epicentral this year bringing our total addressable installed base to over 12,000 electronic gaming machines at 9 casinos.
A real-time as a device promotional system that can double ADT and drive significant increases in new player enrollment for casino loyalty programs is a differentiator, then increasing number of casino operators are taking note off. Casino revenue goes up when Epicentral goes in, as such we expect customer adoption for Epicentral will continue going forward.
Moving to the oil and gas exploration market, we are making inroads with the integration of our Printrex color printers for both the field and the in-office markets. We have an installed base of approximately 20,000 black and white printers in the field and believe our Printrex 920 colored printer will provide a multiyear upgrade replacement market opportunity for this installed base.
We are currently in various stages of the sales cycle that includes integrating the Printrex 920 with over 20 oil and gas exploration and production companies. But, this process is lengthy.
Some of these relationships are with very large companies and the integration adoption will take time as we’ve said many times. We must first work with our internal group to design the Printrex 920 into their system and they conduct several field trials.
Typically this process takes 18 or 24 months and we are approximately 6 to 8 months in on the immigration fees with our first group of our operators. Some of our shareholders on this call may remember that this was about the same length of time that took our casino vendors to get integrated into the many slot machine companies.
Accordingly, we believe the real sales momentum for the Printrex 920 will come in 2015. At that time we will begin to address the multi-year replacement market opportunity with solutions that also offers high margin recurring revenue through the sale of our proprietary thermal color paper.
To give you a sense to the potential for recurring revenue, a single Printrex 920 color printer could drive $5,000 per year in recurring revenue from paper sales. The larger Printrex 980 is currently gaining traction as a leading solution for the much smaller office markets.
This we believe is a total opportunity of about a 100 printers which has the opportunity to drive up to $50,000 per year per printer and recurring revenue from Inkjet cartridges, inkjet print heads and other consumable sales. While we are still in the early stages of commercializing the Printrex 980, I am encouraged by the success we are already achieving with our marketing and sales efforts.
And we’re already seeing the expected consumable sales that Printrex 980 color printers as they come online as the customers who purchase the printer are already buying. We like to say oil and gas is easier to find when data is easier to read.
And our new color printers for the oil and gas exploration market are doing just that. The successes we are achieving with the Ithaca 9700 our Epic printers, Epicentral and Printrex oil and gas printers are an excellent indicators of the success we have achieved in our business transition.
They are the direct results of our ability to leverage our expertise in understanding of transaction based businesses and printing and software technology to identify opportunities in current and new markets where we can develop value added solutions that help customers grow their revenue and operate more efficiently. Our engineering teams continue to develop new value added software and hardware solutions that offer our existing and new customers and excellent returns on their technology investments.
This in return creates tremendous value for our shareholders as we diversify into new high growth industries with higher margin products. Our business evolution is not done, as we expect to introduce three new products in 2014 that address unique market opportunities.
Our identification of new opportunities continued and we forward to introducing these products, these new product in 2014. We expect this type of product development cycle to continue also going forward.
While the benefits for operating results from this 3 new products that will launch in 2014, will likely come in 2015 and beyond. We are layering in even more growth opportunities and their addition to our already strong product pipeline positions us to continue our product development leadership that leads to revenue growth and value for our shareholders.
Our product pipeline is strong as ever been. Before, I turn the call over to Steve DeMartino, I would like to thank our shareholders for your support.
We began this transition during a very difficult time in the worldwide economy and some of you are very supportive. I thank you, and I thank those new shareholders who have come on Board.
I also want to thank the employees at TransAct, you committed to this transition, you worked hard and you were dedicated to the change. And your enthusiasm towards the new products kept me focused on the challenge that you had.
Once again I thank you. With that I will turn the over to Steve for a deep review of the third quarter results, after which I will make some summary remarks before we open the call to questions and answers.
Steve?
Steve DeMartino
Thanks Bart, and good afternoon everyone. As Bart noted, 2013 third quarter net sales increased 9% to $16.8 million from net sales of $15.4 million in the year-ago quarter.
Looking at our sales by sales unit, casino and gaming sales increased approximately 23% or $1.4 million year-over-year to $7.5 million. The improvement reflect a $2 million year-over-year increase in domestic casino gaming sales including a SoftTouch vision for Epicentral.
We also benefited from higher sales of our Epic 950 casino printer as an equipment supplier for the sales the majority of our large replacement order generated in the quarter. The gain in domestic sales was partially offset by a lower international casino sales in Europe and Australia.
As expected, it’s been the case throughout 2013 particularly given the historically high number of lottery printers we sold last year. Lottery printer sales in the September 2013 quarter fell $1.4 million compared to the prior year period.
Despite the decline in Q3, based on order backlog in customer forecast we expect lottery sales for Q4 will be about 50% higher than the Q3 run-rate of a $1 million. Food safety, POS and banking sales doubled for $3.7 million.
As Bart noted earlier, the growth continues to be fuelled by initial volume sales of our Food Safety Terminal. In fact Ithaca 9700 terminal sales accounted for more than half of our total sales from the sales unit in Q3.
At the same time an increase in POS printer sales largely to McDonald’s was offset by a nearly identical decline in sales of banking printers. As we’ve discussed, our focus in this market now and going forward is on the higher value Food Safety opportunity.
And we’ll continue to de-emphasize our focus on the lower margin POS market. And I think that our early success with the Ithaca 9700 this year validates the strategy.
Printrex net sales declined a little less than $100,000 to $1.1 million which is in line with our second quarter performance. And sales of our new Printrex color, oil and gas printers were offset by a decline in sales of legacy black and white printers.
We expect this trend to continue in the fourth quarter. Earlier on the call, Bart provided an update on the progress of the integration of our color printers with several large operators.
As we move through this process and towards trials and ultimately sales, we expect our Printrex color printers will represent a significant and profitable replacement market opportunity for us. They will also generate higher recurring revenue from consumable sales.
Finally, sales for our TSG unit we are down 8%, a $3.5 million in the quarter. TSG did generate year-over-year improvements from sales contributions from Printrex color printer consumables as low as higher sales in spare parts and accessories.
However, these increases were more than offset by lower testing service revenue from profit oriented contracts we secured last year that did not repeat as well as lower sales of HP inkjet cartridges which we expect to continue to decline as we deemphasize our focus on this lower margin legacy printer consumable product. Gross margin remains a great story for TransAct.
Our gross margin in the quarter increased 600 basis points to 43% from the 37% in the year-ago quarter. The substantial increase reflects the transition in our sales mix towards our higher value Food Safety terminals in Epicentral software, a trend that we expect to continue through Q4 and into next year.
In the higher gross margin combined with higher sales volume in Q3 let to a nearly 27% increase in our gross profit to $7.2 million. Total operating expenses in the quarter declined by 6% or $300,000 to $5.3 million.
Excluding legal fees for the Avery Dennison lawsuit and restructuring expenses in both periods, operating expenses were $5.1 million compared to $4.6 million last year up 12%. I like to introduce some of the drivers behind this increase since it’s partially reflection of our new product successes.
Engineering expenses were down slightly reflecting lower outside testing and prototype expenses for products that we launched late in 2012. Selling and marketing expenses increased about $0.5 million or 31% due primarily to the timing of the G2E trade show which occurred this year in September compared to early October last year.
In addition, we have also added new sales staff and incurred higher expenses from marketing initiatives in support of our newly launched Food Safety and Printrex products. G&A expenses go up slightly as well due to expenses related to the recruitment of the additional sales and other staff again in support of our newest products.
As a result of the strong improvement in net sales and gross margins, we reported operating income of $1.9 million or 11.4% net sales compared to breakeven operating income in a year ago period. Excluding the unusual items in both periods, our adjusted operating margin reached 12.3% in the quarter compared to 7.2% last year which demonstrates the operating leverage we see in our business as our sales rise.
Looking forward we expect to generate further operating margin expansion as we leveraged our fixed overhead expenses and drive higher sales of our newest products which generally carry higher margins than our legacy products. Depreciation and amortization totaled $428,000 in the third quarter of 2013, consistent with the $429,000 we recorded in Q3 last year.
EBITDA grew to $2.3 million compared to only $0.5 million in the 2012 third quarter. Adjusted EBITDA, share-based compensation expense and excludes the impact of restructuring expenses and legal fees related to the Avery Dennison lawsuit was up 58% year-over-year to $2.6 million from $1.6 million in the 2012 third quarter.
For the 2013, third quarter, we recorded diluted EPS of $0.17, compared to breakeven results in the comparable prior year quarter. Adjusted diluted EPS, which excluded the unusual items rose to 125% to $0.18 up from $0.08 in the prior year quarter.
Now turning to the balance sheet, we ended the third quarter with $2.8 million in cash down from $8.8 million at the end of the second quarter and we continue to have no debt outstanding. You’ll recall that during the 2013 third quarter, we repurchased 4900 shares of our common stock in an open market transaction for total consideration of $4.3 million.
So that was certainly the primary reason for the cash decline in the quarter. In addition, we use the portion of our available cash balance to invest in inventories to support our new product launches in long-term growth initiatives.
Looking forward, we do expect our cash balance to increase again in the fourth quarter as we began to monetize our Q3 investments in bulk receivables and inventories. Going back to stock repurchases for a moment, the 490,000 shares of common stock we repurchased during the quarter, we represented about 5.6% of our total shares outstanding.
And over the last seven quarters, we repurchased over a 1.3 million shares or 14% of our common stock for a total of $11.1 million at an average price of $8.40. In addition, we returned $611,000 to our shareholders through our $0.07 quarterly dividend in the third quarter.
So through share repurchases and the dividend, we returned just over $4.9 million to our shareholders in the third quarter and $13.4 million over the last seven quarters. Looking forward, we expect to continue our momentum as we further execute on the transition in our business.
While there is typically some seasonality in some of our markets around the holidays our focus and success with the launch of our newest products is a good indicator that the business transition is fully underway and should accelerate in 2014. For the balance of 2013, we expect to make continued progress with sales of our Food Safety Terminal and gain further tractions with our Epicentral system.
And as we continue to ramp sales of our newest products, we expect to achieve higher levels of operating income, EBITDA, net income and diluted EPS as we move to 2014. And now, before we go onto Q&A, I’d like to get the call back to Bart for some closing remarks.
Bart Shuldman
Thanks, Steve. I want to spend just a moment to highlight and summarize the important drivers why we believe TransAct is positioned for a consistent long-term growth.
First, our results for the third quarter on year-to-date clearly indicate that we are gaining market share and momentum in existing markets. We expect this to continue through the end of this year and throughout 2014.
Second, we are forging new relationships in our historical and new market that we enforce and further expand or establish revenue based. Third, we expect to generate further improvements in operating margins as we leveraged our fixed overhead expenses and drive sales of our newest products which generally carry higher margins than our legacy products.
In 2013 in the third quarter, we again achieved an operating margin of over 11% and this will expand further as revenue rises. Fourth, while we have invested prudently to bring new products to market and establish them as must have solutions.
We remain committed to developing new high growth opportunities as evidenced by our plans to introduce the three new products next year. We believe bringing to market new products the customer need will benefit their business and our shareholders going forward.
And finally, our balance sheet remains solid. And we continue to generate attractive free cash flow from operations providing us with the financial flexibility to invest in new product development and support new product commercialization while returning capital to shareholders.
Our third quarter results demonstrates the momentum in our financial results with year-over-year improvements in revenue, gross margin, gross profit, EBITDA and diluted EPS. Our new solutions continue to improve our competitive position and establish TransAct as a leader in a growing number of end-markets.
We have established a foundation for future revenue and margin growth and are laser focused on extending our momentum to the end of 2013 and into 2014. And boy, we have three more products to bring to market.
With that let’s open the call to your questions. Operator?
Operator
Certainly. (Operator Instructions) Our first question comes from the line of Adam Krejcik with Eilers Research.
Your line is now open.
Adam Krejcik – Eilers Research
Hi, good afternoon guys. Couple of questions for you, starting off on number one the food and safety, so you had 120 terminals in trial, I think you said this quarter.
And we just wanted to know how long you think these trials will last? And what is the reasonable expectation to convert those to different clients.
Then I’ve a few more follow ups. Thanks.
Bart Shuldman
Yes. So about a month maybe two months ago we put out a press release that said we had 100 trials going on with different customers.
And we are now up to 120 trials. And we haven’t established kind of the length and the hit ratio.
So based on how many trials, how many turn to sales. So we haven’t really been able to calculate that yet, because all of these trials are still going on.
We would expect the given that we have closed some we got 20 customers now, 20 new customers including McDonald’s. So close over time and a good trial can last three months, can last four months, could last six months.
Some of them started a couple of months ago, started – some of them started a month ago. So they will layer in as the trial is finished the integration is done, the operations people at the different restaurant chains decide to go forward.
So we expect them to layer in. Again, we will probably see a little slowdown as we get into the Christmas holiday season.
We are told that they are not going to put new things in the restaurant at that time, but then will pick up again in January.
Adam Krejcik – Eilers Research
Okay, great. That’s helpful.
Second question on gaming, you recently signed a distribution agreement with Suzo-Happ. Just want to know what sort of impact this new relationship is having and what you expectations for this relationship are going forward?
Bart Shuldman
Yes. So I see the benefit in three ways right now.
One, they have nine sales people on the road. So nine people added to our sales people calling on casinos directly to what we call do the pulse, which is convince them that our technology or our printers are the better printers to have in their casinos while also promoting the Epicentral print system, and we are already seeing the fruits of that, by having at least one if not two casinos already turned to TransAct from our competitor.
Two, they have licenses, so where we say that a certain states which were – in certain case is small but we weren’t able to – in some cases even go on the property of those casinos because we don’t have licenses. Suzo-Happ opens up a world of opportunity for those casinos, because they have licenses just about in every jurisdiction or with every casino in the country.
So it really does help us in regards to opening up those opportunities where we didn’t have that before. And third, there were distributors that is going to stop product along with what we are stocking.
So their ability to get out in the marketplace and help us with sales is just going to be wonderful. They are well known in the industry.
They sell all kinds of bits and pieces for slot machines or for different things that the casino uses. So they are always in the casino; they are always talking to the people – the slot managers and all that.
So we’re just going to expand our sales activity in the U.S. and just recently they bought our distributor in Australia.
So they are going to be very helpful in Australia as they give financing capability to our Australian distributor who is going to expand their role down in the Australian and Macau marketplace. So like I said, we probably close one or two casinos already where they turned over from being a competitor, where they bought the competitors printer and moved over to our printer.
And we are expecting to see more of that. So we are really excited to have them on board.
And as you know they were selling our competitors printer for 10 years. And they really saw the growth of our business not only in printer sales but they really started to feel the impact of our Epicentral system.
We really are the only one that has a true enterprise system in the casino marketplace and they are really starting to feel the impact of that and they felt that it would be a better choice to come over and represent us. And they are going to be very helpful because a lot of times when we go in and sell the Epicentral to a casino, then they sometimes have to change our printers.
And Suzo-Happ consult directly to that casino the printers that they have to change out. Sometimes they have to put in different mounting brackets or different bezels.
And they can do all of that. So they are going to be very helpful for us and we are already seeing the results of that.
Adam Krejcik – Eilers Research
Got, it great. And then one more question on gaming.
You guys had strong results this quarter, just kind of – is there any kind of onetime items in that that help to drive that growth and then what are you kind of seeing in the broader North American Casino market and your expectations going forward. And then same internationally anything specific right there and kind of what’s your baseline expectations for internationals as we move into 2014?
Thanks.
Bart Shuldman
So with international, I mean, we are looking forward to actually Macau in 2015 and 2016 opening up a couple of more casinos in the Cotai area. So really looking forward to the expansion that’s going to go on there.
And of course we follow the same news Adam that you do about Japan and Korea and places like that. Europe was a little slow this year and I don’t think that would surprise anybody given the economic situation there.
But we are hearing about Greece and in some other areas that are starting to look at expanding their gaming operation. So we think there is real potential there for 2014.
Domestically, we did see the impact of one of our customers placing a large order with one of our slot manufacturers for replacement of video poker machines. We believe about two-thirds to that order and I listen to their conference call today.
So that came right off their conference call that about two-thirds of that order is complete, and we should see another one-third of that order this quarter. We also saw a steady growth because we have won a lot of business.
We have changed; we have won a lot of business by winning customers over from our competitor. But we have also seen a fair amount of casinos that have changed over to our Epic 950 because they are getting ready for the Epicentral software system.
And we, this has been something that we have told the shareholders now for probably 2 years, where a casino that is planning to put Epicentral in goes through a bunch of different decision points. One, they might have printers from our competitor and have to change those out.
We are starting to see that. If they have to put in the wiring in the floor, if they don’t have CAT 5 or something like that.
And then they get ready for the system. So the beauty of casinos looking at buying our Epicentral software system and getting ready for that drives more printer sales for us because they will change out the competitors printer and put in ours.
So we see a pretty stable domestic market clearly we saw the benefit of that large order that was placed, but we saw a pretty consistent business across all of our slot manufacturers and we are expecting to see that continue.
Adam Krejcik – Eilers Research
Perfect, thanks Bart. Appreciate it.
You guys have a good quarter.
Bart Shuldman
Thanks, Adam, Yes, yes thanks. Good to talk to you again.
Operator
Thank you. (Operator Instructions) We will give it a few moments.
And I’m not showing any further questions at this time. Speakers please proceed with any further remarks.
Bart Shuldman
Yes. We thank our shareholders for joining us on the third quarter conference call.
We are very pleased with the results. And we’ll probably talk to you sometime after the New Year.
So I will wish you a happy holiday very early. But we will probably talk to you after the New Year when our fourth quarter is complete.
Thanks for joining us this evening. Take care.
Operator
Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program.
And you may all disconnect. Have a great day, everyone.