TransAct Technologies Incorporated (NASDAQ: TACT), a global leader in software-driven technology and printing solutions, reported a decline in total sales to $10.9 million for the third quarter of 2024, which represents a 6% decrease sequentially and a 37% drop year-over-year.
Despite the overall downturn, the company's Foodservice Technology (FST) segment showed resilience with a slight increase in revenue and a significant rise in units sold. The company revised its annual revenue outlook to between $43 million and $45 million due to the lagging gaming market but expects normalization by early 2025.
Key Takeaways
- Total (EPA:TTEF) sales for Q3 2024 reached $10.9 million, a 37% decrease from the previous year.
- FST segment revenue rose to $4.3 million, a 2% increase year-over-year, with unit sales up by 90%.
- Casino (EPA:CASP) and gaming sector revenue dropped 50% to $4.5 million due to a major OEM's inventory reduction.
- The company revised its full-year revenue forecast to $43 million - $45 million.
- Cost reduction measures are expected to save $5 million annually.
- Gross margins were reported at 48.1%, with operating expenses down by 22% year-over-year.
Company Outlook
- TransAct expects terminal placements to continue growing into 2025.
- Revenue normalization in the casino and gaming sector anticipated by early 2025.
- Adjusted EBITDA range maintained despite the revised revenue outlook.
- Gross margins are projected to stabilize in the mid to high 40% range.
Bearish Highlights
- Casino and gaming sales halved due to a large OEM customer's oversupply.
- POS automation sales fell 30% to $1.1 million amid heightened competition.
- TransAct Services Group sales plummeted 62% to $864,000, mainly because of diminishing legacy lottery spare parts sales.
Bullish Highlights
- FST recurring revenue increased 3% sequentially.
- The company is gaining traction with its Epicentral product through a CasinoTrac partnership.
- 12 new customers were added in the last quarter, with a potential of 2,800 units.
Misses
- An operating loss of $837,000 and a net loss of $551,000 ($0.06 per diluted share) were reported.
- Adjusted EBITDA stood at negative $204,000.
- Approximately 5,300 terminals went offline after losing a C-store customer, impacting ARPU.
Q&A Highlights
- The company is focused on maintaining market share in the competitive casino and gaming sector.
- Expansion in the food service industry is pursued through a targeted sales strategy.
- Management is committed to cost control and improving operational efficiency.
TransAct Technologies is navigating a challenging market landscape, particularly in the casino and gaming sector, which has been hit by oversupply issues. However, the company's FST segment continues to perform well, and the recent addition of new customers shows promise for future growth. The management team, led by CEO John Dillon, is working on maintaining a strong balance sheet and is actively engaging with investors and industry participants to discuss the company's strategy and outlook.
InvestingPro Insights
TransAct Technologies' recent financial performance aligns with several key metrics and insights from InvestingPro. The company's market capitalization stands at $42.29 million, reflecting its current position in the market amidst challenging conditions.
InvestingPro Data shows that TransAct's revenue for the last twelve months as of Q3 2024 was $46.42 million, with a significant revenue decline of 39.97% over the same period. This data corroborates the company's reported decrease in total sales and the revised annual revenue outlook mentioned in the article.
An InvestingPro Tip indicates that TransAct holds more cash than debt on its balance sheet. This financial position could provide the company with some flexibility as it navigates the current market challenges, particularly in the casino and gaming sector where it's experiencing a significant downturn.
Another relevant InvestingPro Tip suggests that analysts anticipate a sales decline in the current year, which is consistent with the company's revised revenue forecast and the overall market conditions described in the article.
It's worth noting that InvestingPro offers 13 additional tips for TransAct Technologies, providing investors with a more comprehensive analysis of the company's financial health and market position.
The Price to Book ratio of 1.1 as of Q3 2024 suggests that the stock is trading close to its book value, which might be of interest to value-oriented investors considering the company's current challenges and potential for recovery.
These insights from InvestingPro complement the article's analysis, offering readers a broader perspective on TransAct Technologies' financial situation and market valuation.
Full transcript - TransAct Technologies Incorporated (TACT) Q3 2024:
Operator: Greetings, and welcome to the TransAct Technologies' Third Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ryan Gardella, Investor Relations. Thank you. You may begin.
Ryan Gardella: Thanks. Good afternoon, and welcome to the TransAct Technologies' Third Quarter 2024 Earnings Call. Today, we'll be discussing the results announced in the 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 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 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 figures 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 it over to John.
John Dillon: Thanks, Ryan, and good afternoon, everyone, and thank you all for joining us today. Total sales for the quarter were $10.9 million. We had excellent progress in the FST foodservice technology space, was highlighted by 1,355 units sold, meaning that in the last two quarters, the last six months, given that last quarter, we sold about 1,476 units. Last six months, we've sold 2,800 units, and we're feeling pretty good about that. We're proud of the sales progress we've made with the team, and we expect this approximate level of quarterly terminal placements to continue as we head into 2025. So that's some pretty good news. But let's walk through some of the other FST highlights. First, the FST from a revenue line standpoint was $4.3 million, up 2% year-over-year and 3% sequentially. The FST recurring revenue was $2.9 million, down 8% year-over-year, but up 3% sequentially on continued strength from several of our large chain customers. So we feel pretty good about that as well. FST hardware sales were up 30% year-over-year and up approximately 3% sequentially. And as I mentioned, in Q3, we sold 1,355 units in the quarter, which was up 90% from the prior period a year ago. As we discussed on the last call, we believe this momentum is just the start from the reorganization and refocusing of our FST sales group. We spent a lot of time on that since I started as full-time CEO, I guess it was April last year. We're going to continue to fine-tune the process, but fundamentally, I believe that we've got the right directionality here. We've made excellent progress. And especially with our focus that's related to developing, tracking, and nurturing the lead process, which we didn't do very well in the past, we've got a really good process now, and it's beginning to work pretty well. I will reiterate, as I said before, that sales will continue to be lumpy. We're an enterprise B2B company. And when enterprises buy, they usually buy in lumps. We use a land and expand strategy somewhat where a client will start with our technology and then buy more. But sometimes it's very hard to predict those large additional acquisitions. And the final thing I'll just say on that is I think that we should assume that the current run rate of terminal placement is sustainable. I think that's pretty encouraging for us. And as well, the rollout of our Terminal 2 to our large QSR client continues to go as planned with a large number of the terminals this past quarter being placed with them. The feedback on the product continues to be overwhelmingly positive, and we even sold about 100 units to a sushi customer in the quarter, which is also a good sign. And we have a couple of large major convenience store customers set to upgrade their entire installed base of some of our older units. For those of you who don't remember, we sunsetted the AccuDate 9700 terminal at the end of the 2023, which means all those units that are out there installed are installed base that we can use for potential upgrades to the new BOHA! Terminal 2. We also had a strong quarter on the new logo line. We added 12 new BOHA! clients in the quarter, representing an opportunity for about 2,400 units over time. The New business pipeline remains strong. Quarter-over-quarter difference in the 4-quarter pipeline remains solid and consistent. It's holding steady even though we book business from last quarter, we take it out, and we have to add new opportunities into the pipe, and I'm feeling very good about the pipeline coverage compared to the target revenue goals that we set for the sales team. Moving on to casino and gaming. We reported revenue of $4.5 million. That's down 50% year-over-year. However, on a positive note, we're seeing continued normalization of this market as we predicted on previous calls. On the inventory side, I'm happy to say that we're down to just one of our major OEMs who is stuck in an oversupply situation. We're actively working with this client to reconfigure some of their existing stock for other markets in order to help them accelerate the liquidation and begin buying product from us again. However, we still expect them not to be buyers until at least the start of the year. And anecdotally, I know some of you have heard this as well, but casino activity seems to be slowing a little bit. We were just at IGT -- I'm sorry, G2E. IGT is a nice client, but G2E in Las Vegas. And we kind of got a sense that right now, the gaming industry is a little slow. We think it's macroeconomic factors. We don't think there's anything serious there, but we may see this trend continue into 2025. And we also believe it's contributed to the slower pace of slot sales from some of our OEM customers. On a final note, relative to gaming and casino, we're seeing some increased sales traction with our Epicentral product as a result of our relationship with CasinoTrac. CasinoTrac is selling Epicentral as part of their Slot Suite product offering on a subscription basis. We like subscription revenue, especially when it's software. In August, we shared some results from the 6-month deployment of Slot Suite, which was developed in this partnership with CasinoTrac and TransAct across an installed base of 2,500 games and compared against data from the previous 12 months, the customer where we're doing this pilot saw substantial increases in carded play, rated coin in, overall coin in as well as rated and overall WPU, that's win per unit. And we believe this could represent some significant white space for us in the casino market, and we're excited about that over the long term. Next (LON:NXT), I wanted to provide you with a bit of an update on our strategic review process. And while I cannot provide any further details at this time, I wanted to ensure investors that we are working hard on the process. We're driving quickly towards an optimal outcome for our company and its stakeholders. But we don't really have any news. We promise that we will update everyone via the appropriate channels as soon as we have something to report and something to talk about. And before I turn the call over to Steve for more detail, I wanted to provide a bit of feedback on our financial outlook. Due to the unexpected lengths of demand lag in the casino and gaming, we feel it's most prudent for us to revise our revenue outlook to a range of between $43 million and $45 million. Our adjusted EBITDA; however, range will remain the same as we've been very disciplined on the cost side of the business. So I wanted to make sure you heard that information from me. So in summary, we are pleased with the progress, particularly on the FST side of the business. Year-over-year terminal placement up 90%. We continue to see additional demand from several of our larger key FST customers. The product is a winning product, the Terminal 2. It's one of the best products we've come up with, and I'm really excited about the potential. We're getting strong positive feedback and growing sales opportunities. The process improvements have clearly started to show results. And on the casino and gaming side, while the lag in demand has been longer than anticipated, we're down to really only one OEM customer who is not currently buying from us, and we expect this dynamic will resolve and normalize in the first half of 2025. So that's really much the news for my report. And with that, I'd like to pass the call over to Steve for a more detailed review of the numbers. Steve?
Steve DeMartino: Thanks, John, and thanks, everyone, for joining us today. Let's turn to our third quarter results in a little more detail. Total net sales for the third quarter were $10.9 million, which was down 6% sequentially and down 37% compared to $17.2 million in the prior year period. Sales from our foodservice technology market or FST, for the third quarter were $4.3 million, which was up 3% sequentially and also up 2% compared to $4.2 million in the prior year period. Our recurring FST sales, which includes software and service subscriptions as well as consumable label sales for the third quarter were $2.9 million. That was up 3% sequentially, but it was down 8% compared to $3.1 million in the prior year period. Our ARPU for the third quarter of '24 was $700. That was down 3% sequentially and down 25% compared to $929 in the third quarter of last year. As a reminder, we're currently selling a number of BOHA! terminals to a large QSR with no recurring revenue attached to them to start. While this presents an opportunity to sell recurring elements in the future, for now, they still represent a drag to our ARPU number. In the quarter, a large number of our terminals again fell into this category, and we expect this to continue into the near future. I also wanted to remind everyone that we had approximately 5,300 terminals that just came offline due to the loss of a C-store customer that we discussed on our first quarter call. The new online terminal number and ARPU will be reflected in our fourth quarter results, but we expect our ARPU to rise to around the $800 range once these changes have occurred. Our casino and gaming sales were $4.5 million. They were down 50% from the third quarter of '23, primarily due to one remaining large OEM customer who continues to work down high levels of printer inventory that they stockpiled during the supply crisis in '23. As John mentioned, we're working with this customer to reconfigure their in-stock printers for the global market in order to accelerate the liquidation of their inventories and return them to a buying position. On the positive side, all the rest of our largest OEMs resumed buying again in the third quarter. We believe our sales in the third quarter may also have been impacted by some demand softness in the global casino and gaming industry. POS automation sales for the third quarter decreased 30% from the prior year to $1.1 million. This decline was largely the result of difficult comps as we experienced unusually high sales in '23 due to a competitor's inability to supply product. In addition, the competitors in this market are now fully back online, and we're returning to a more normalized competitive environment. As a result, we continue to take steps, including adjusting our pricing to ensure our products are in line with the new dynamics of the market. Moving to TransAct Services Group or TSG. For the third quarter, TSG sales were down 62% year-over-year to $864,000. This decrease was largely due to unusually high sales of legacy lottery spare parts in the prior year due to a customer's last buy in '23. As a result of this last buy, we don't anticipate any future sales of these spare parts. Therefore, we expect our current quarterly sales level for TSG to be about our new run rate going forward. Moving down the income statement now. Our third quarter gross margin was 48.1%, which was down from 51.9% in the prior year period. This comes as a result of lower overall sales volume, including significantly lower casino and gaming sales that are higher margins. Going forward, we expect our gross margin to continue to be in the mid to high 40% range as we head into '25. Our total operating expenses for the third quarter decreased by 22% from the prior year third quarter to $6.1 million, and they were also down sequentially by 7%. The year-over-year decline came in large part as a result of the savings we achieved from initiating two separate and successful rounds of cost reduction actions totalling $5 million on an annualized basis. In late Q3 of last year, we initiated our first round of broad-based cost-cutting efforts. We estimate that this initiative would produce operating expense savings of about $3 million on an annualized basis, and we've experienced the full effect from these reductions throughout '24 to date, including the third quarter. We then instituted the second cost reduction initiative in June of this year, focused largely on further reducing headcount and other external third-party resources. We estimated that the second initiative would generate an additional $2 million of annualized cost savings over and above the $3 million of savings from the first round. I'm happy to report that we also experienced the full effect from the second round of cost reductions in the third quarter. There's one thing I'd like to note regarding our expected operating expense level for the fourth quarter. While we will continue to see the effect from both rounds of our cost savings in the fourth quarter, we also will see an uptick in marketing spend due to the timing of annual trade shows that we attend as our two largest shows, G2E and NACS, both occur in the fourth quarter. This is consistent with prior years, though we have reduced our overall spend on these trade shows for this year. So as a result, on a sequential basis, we expect total operating expenses to be higher in the fourth quarter as compared to the third quarter. And now returning to our third quarter OpEx, they break down as follows: Our engineering and R&D expenses for the third quarter were down 35% year-over-year to $1.6 million. Our selling and marketing expenses were down 22% to $1.9 million, and our G&A expenses were down 10% to $2.5 million. For the third quarter, our operating loss was $837,000 or negative 7.7% of net sales compared to operating income of $1.2 million or 6.9% of net sales in the prior year period. On the bottom line, we recorded a net loss of $551,000 or $0.06 per diluted share for the third quarter, which compares to net income of $906,000 or $0.09 per diluted share in the year ago period. And our adjusted EBITDA for the quarter was negative $204,000, which was down from $1.7 million for the third quarter of last year. And lastly, turning to our balance sheet. It continues to remain solid. Even with the reported net loss for the quarter, our working capital trends remained positive, and we ended the quarter with over $11 million in cash and only the minimum required $2.25 million of borrowings under our credit facility with Siena Lending. So overall, our liquidity position continues to be strong. And with that, I'd like to turn the call over to the operator for questions. Operator?
Operator: [Operator Instructions] The first question is from George Sutton from Craig-Hallum Capital. Please go ahead.
Logan Lillehaug: Hey, good afternoon, guys. This is Logan on for George. I wanted to start on that casino and gaming side. And can we maybe just double-click on the one OEM that you guys are talking about still being in oversupply. I just want to make sure I understand what you kind of are doing with them to kind of try to work through that. It sounded like you talked about liquidating or repurposing. And then kind of a follow-up to that is, I mean, it sounds like that maybe subsides in 2025. Thinking beyond that, just how would you characterize the competitive environment there relative to your ability to kind of take market share? Or what does that look like?
Steve DeMartino: John, do you have that one?
John Dillon: Steve, yes. Well, so the way I expressed it was there's other markets and the machines that go into other markets have different configurations. And so for a large OEM who makes different types of gaming systems, it's possible that the printers that they have that might be an oversupply in one geographical market may work well in another one. And that might be an easy way for us to make some slight changes to the existing inventory and have them move out to other markets that we also like those other markets, but where there's not an oversupply. So we're kind of working with that with one of our large OEMs, and we're optimistic we might be able to get that worked out.
Steve DeMartino: Yes. Logan, sometimes we add or take off accessories depending on the geographic market that it's going into or it might add different firmware that gets loaded depending on the games that they're going to be used in. So those are the type of reconfigurations John was referring to.
Logan Lillehaug: And then just anything on the competitive environment there? I know usually you guys are kind of competing with kind of you and one other player. I'm just kind of wondering what that looks like.
John Dillon: Yes. Well, the other guys were missing an action during the recovery from the pandemic, and they're back. We tend to do a pretty good job head-to-head, and that particularly is placements in new casinos and new construction projects. But they kind of got their bastion with moats around them. We have ours with our moats around them. We made pretty good inroads, and we're working real hard to maintain, if you will, those inroads. But just to give you a sense of it, if you are operating a single operation, you might want our units or you might want units from another vendor. Mixing and matching is great from a supply chain redundancy standpoint. But frankly, the engineers on the floor, the techs, they kind of want to work with one vendor, not more than one vendor. So we're doing the best we can to show that our products are more reliable, more cost effective, et cetera, et cetera. And we will gain market share or the market share that we gained, some of it will be sustainable. But it's too early to tell because you kind of have to go through a few replacement cycles to kind of find out how much your inroads are going to make a difference in terms of garnering additional business within the same existing customer.
Operator: [Operator Instructions] The next question is from Tyler Nguyen from ROTH Capital Partners (WA:CPAP). Please go ahead.
Tyler Nguyen: Good afternoon, guys. I had a quick question on your FST. So you added 13 clients in the second quarter and the third quarter. So how is your average client size trending? And what is the initial order attachment rate for new clients versus a gradual ramp over time?
John Dillon: That's a complicated question. One of the things that we did when we refocused the team is our product is sophisticated and very capable and it's suitable for a large operation. That's why we're successful with large QSRs and some of the food service management companies where -- they care an awful lot about the data. It's not just a mom-pa operator. So now most of our focus from a selling standpoint is on companies or organizations that can buy a minimum of 50 to 100 units. So that's typically the scale at a minimum where we're going to get a new client. Now that doesn't mean if somebody calls up and they're not going to represent a big challenge from an implementation or a support and service standpoint, we'll take a smaller client because that's good for the brand, and it's a good experience for us because we always learn things from our clients just like they learn things from us. But the interesting thing is with a land-and-expand strategy, it may be the case with a new operator, we might pick up an early order for 5 or 10 machines while they'll try it out in a few of their stores or a few of their operations. And then with the success, it's a lot easier for us to go back and work with the customer on expanding that product success into other -- either other branches or more facilities or more stores, depending on what kind of operation they have. So I would say that you should assume -- I mean, if we added 12 companies as new customers this last quarter, and we're telling you that 2,800 units is the potential, that's a couple of hundred units maybe on average. I mean that's kind of the sweet spot for us. But it's pretty hard to tell that ASP, the average selling price is not really a good indicator because if it's a big QSR and they want to try the product out in four or five stores and they want to buy five or 10 machines, it's not going to be a big order, but getting the camel's nose into the tent is really important. And as I think everybody on the call knows, selling more product to an existing customer is massively easier and massively cheaper than trying to land a new customer. So we try to get in early and small, prove the technology, it works so well and then grow that business from there. So our sales team is targeting like that, and it seems to be working.
Tyler Nguyen: So are there any particular end markets that the clients are within?
John Dillon: Say again?
Tyler Nguyen: Are there any particular end markets that the clients are within?
John Dillon: Not in particular. We sell across about 5 sub-verticals within the foodservice industry. We've got QSRs, quick service restaurants. We have convenience stores. A strong space for us is sushi. Now sushi oftentimes is going into grocery stores. If you go in and you pick up a sushi thing, you want to read the label and you want to know that it's safe and what the ingredients are. We also sell into restaurants. We also serve into food service management companies, people like Sodexo (EPA:EXHO) and Aramark. And they're kind of all over the map, frankly. They all do different things when it comes to food. And we're very happy with the fact that we're learning a lot about those different industries. We're understanding the ROI, the return on investment, clients get from installing the BOHA! system. And candidly, our salespeople are getting better and better at sharing success stories and kind of getting the first meeting and then getting the next step and the next step. And we've got a pretty good close rate now, which is great. A lot of times, if your sales team is kind of new or not very experienced, you'll get a lot of first calls, but you don't get much follow-up. And part of where we're focused, as I mentioned on the call, is we're looking at the whole GTM, the go-to-market which starts out with where do you get a lead, and that could be a trade show, it could be a banner ad online, it could be e-mail, it could be through LinkedIn or other different vehicles. And then you start out with somebody that you know, which I would prefer to call a suspect, and then you kind of work from there. We study the personas of the different people who need the technology, whether it's somebody in charge of operations, somebody in charge of food safety or somebody in charge of store efficiency from a data standpoint and a digital standpoint. And then we work through that, and we're actually tracking this with a funnel at each stage. The marketing team develops it with a nurture track to a point where all of a sudden, they can hand it off to the sales team, either because a client -- a potential client says, I'd like to talk to somebody or I like a proposal, can I get a demonstration? I'd like some more information and we carry it all the way through and it becomes an SQL, a sales qualified lead. And one of the things that we are doing now, it's early days still, but we're tracking the yield of each one of these steps, and we're figuring out, are there any choke points in there? Are there new bottlenecks? What can we do better? And in each step along the way, we're creating tools for the sales organization to help it be easier for them to get from that step to the next one, like, say, an ROI calculator or maybe a white paper on how customers have gotten a good ROI from the investment in the BOHA! platform. And that's kind of the sales process that we're refining. It's kind of one of these wash rinse improve, repeat things. And I feel like as each quarter goes by, we're getting better and better and better. We've got a good team. They're motivated and they're well targeted.
Tyler Nguyen: And also, you guys mentioned the potential for improved conversion rates in '25. Could you elaborate what particularly is driving that?
Steve DeMartino: It's a process. If you think about what a lead is, it's a name at the most lowest common denominator, it's a name. Well, if you don't know anything about that name, your ability to work that person from the top of the funnel all the way down to a closed deal, the yield is going to be really, really, really low. So the reason the yield is getting better is that we have better metrics. We're paying attention to the metrics. The sales team and the marketing team are joined at the hip. And nobody wins in our -- in the building unless we get an order and everybody is targeted on that and everybody's goal on that. But we're looking at the process end to end. And there's an old saying that if you don't measure it, you can't improve it. Well, trust me, we're measuring it, and we're looking at areas where we can improve, and we're working on it, and I think we're doing a better and better job. And that's kind of the product is good. We just have to be really good at executing in the field, and that's kind of where a lot of our focus is.
Tyler Nguyen: And lastly, so you guys were mentioning that customers in the gaming casino market are still working through excess inventory. When do you expect to return back to normal patterns?
Steve DeMartino: It's pretty hard to say. I mean the pandemic was a gut punch for everybody in the gaming industry. And then when the supply chain thing cropped up at the end of the pandemic and then the people wanted to swing back into action and get things going again and they couldn't get product. A lot of them just went crazy and overbought. They were afraid that the supply chain problems would persist. There were many vendors in our industry or adjacent to our industry that basically had stock outages and couldn't supply if you're making a slot machine and you need a ticket in, ticket out or a bill validator and you can't get one, you can't ship a slot machine. And so when they started buying, they went crazy because normally, it's kind of hand to mouth in the industry because as a good supplier, usually, if a client calls up and says I need 50 or 100 units, I need them in about two or three weeks, we can get them to them. But when the supply chain hit, I mean, there were times when we were basically triaging and allocating to various clients. And so they all got nervous and some of the other vendors in the business couldn't even supply anything. So they overbought. And they got to work their way through that. And then as I mentioned on the call, we're seeing a little bit of a slowdown right now in the gaming industry. And my belief in that -- the reason for that is that just like the slot manufacturers overbought, we believe that a lot of the casinos roared back to life and a lot of people, especially in the American, North American marketplace, flocked back to the casinos and things like that. So there was a bulge kind of in there and everybody kind of love that bulge and now things are settling back down to normal. And when that happens, it's kind of like, okay, now it's time to take a breath, catch our breath and gradually now plot going forward in kind of a new normal, whatever that looks like. We don't see any long-term problem with the market opportunity, but we do see a little bit of headwinds right now, which we think are going to subside in 2025.
Operator: This concludes the question-and-answer session. I would like to turn the floor back over to John Dillon for closing comments.
John Dillon: Well, listen, folks, thanks a lot for joining us today. I hope you've got the message. We feel pretty good about FST. We believe that gaming casino is just going to reach a new normalcy here. It's probably 2025. We are working with the one remaining OEM that's not quite out of the stock -- still overstocked. We're going to work that through. And we're heads down. Steve is doing a great job running the business. We're doing -- spending a lot of time and cost control and we're showing that we can operate as a smaller top line company with reasonably good bottom line. We're focused on the process. I mentioned that. And just one last thing. I'm going to be at the ROTH Conference coming up here in November. I think it's the 19 and the 20, and I'll be in New York City, if any of you are there, and you want to get a one-on-one with me or if you want to take a call, we can do that. We're always open to a call, and I'm happy to take them any time. So with that, I think we'll wrap up. Again, thank you very much. And if I don't speak to you again soon, we've got some great holidays coming up, and I hope you all enjoy them. Thanks a lot. God bless.
Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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