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Presstek Reports Improved 2010 Second Quarter Operating Profits
09 Aug, 2010 @ 06:30 am EDT
GREENWICH, CT -- (Marketwire) -- 08/09/10 -- Presstek, Inc. (NASDAQ: PRST)
-- 75DI digital offset press draws large crowds at the IPEX tradeshow in
the UK
-- Year-on-year CTP plate and DI plate revenue growth of 8% and 4%,
respectively
-- 18% reduction in Operating expenses excluding special charges
-- $2.3 million improvement in year-on-year adjusted EBITDA
Presstek, Inc. (NASDAQ: PRST), a leading supplier of digital offset printing solutions to the printing and communications industries, today reported financial and operating results for the second quarter ended July 3, 2010. In the quarter, the Company reported adjusted EBITDA of $0.3 million, an improvement of $2.3 million when compared to the second quarter of 2009. Excluding the one-time costs of the IPEX tradeshow, which occurs once every four years, adjusted EBITDA would have been $0.7 million, or an improvement of $2.8 million from the prior year's second quarter. (See "Information Regarding Non-GAAP Measures")
In May 2010 the Company previewed its new 75DI digital offset press at the IPEX tradeshow in the United Kingdom to considerable interest and favorable reviews from the industry. The Presstek 75DI with its revolutionary 6-minute job-to-job turnaround, high quality output and expanded sheet size fits perfectly within the Company's up-market strategy. The 75DI has been engineered to produce pages at a manufacturing cost of below a penny per page. This new press, which will be commercially available in 2011, will increase efficiency and provide improved productivity and profitability for Presstek's customers.
The Company reported total revenue of $31.6 million in the second quarter of 2010, a decline of 6% from the amount reported in the second quarter of 2009. The Company had an operating loss of $1.8 million in the second quarter of 2010, a $21.0 million improvement from a loss of $22.7 million in the 2009 second quarter. Excluding a one-time $19.1 million charge for the write-off of goodwill in the second quarter of 2009, operating income improved by $1.9 million from 2009 levels. During the second quarter of 2010, the Company incurred a net loss from continuing operations of $1.8 million, or $0.05 per share, compared to a net loss from continuing operations of $39.9 million, or $1.09 per share, in the second quarter of 2009. The 2009 second quarter results included the one-time charges for the write-off of goodwill and deferred tax assets of $19.1 million and $16.8 million, respectively. Excluding those special charges the 2010 net loss from continuing operations represents an improvement of $2.1 million versus the 2009 second quarter. (See "Information Regarding Non-GAAP Measures")
"We have now achieved positive adjusted EBITDA levels in each of our last three quarters and we were pleased to see the continuing development of our 'growth' consumables of CTP and DI plates which increased 8% and 4%, respectively, versus the prior year's quarter," said Presstek Chairman, President and Chief Executive Officer, Jeff Jacobson. "However, during the quarter we saw a reluctance by our North American base of small to mid-sized customers to make capital equipment purchases primarily due to reduced access to financing and an increased skepticism that the US economic recovery was sustainable in the near term. Operationally, we continue to reap the benefits of our operational discipline as our adjusted EBITDA improved $2.3 million in the quarter compared to the 2009 quarter."
Second Quarter 2010 Financial Results
Total revenue in the second quarter of 2010 was $31.6 million, a decrease of $1.9 million from the second quarter of 2009.
-- Equipment revenue decreased $0.5 million to $4.7 million in the second
quarter of 2010, compared with $5.2 million for the same period last
year. The decrease versus the prior year's quarter is due primarily to
a reduction in DI press revenue of $1.0 million and a decline of CTP
platesetter revenue of $0.5 million; offset by an increase in
traditional equipment during the quarter.
-- Consumables revenue totaled $20.7 million in the second quarter of
2010, compared with $21.1 million for the same period last year.
Increases in the "growth" thermal CTP plates and DI plates of 8 percent
and 4 percent, respectively, were more than offset by reductions in the
Company's "traditional" product categories.
-- Service revenue declined approximately 15 percent to $6.1 million in
the second quarter of 2010 compared to the year ago quarter primarily
due to the impact of the overall decrease in equipment placements and a
general trend by customers to delay service calls and maintenance to
save money in a difficult economy.
Gross margin percent for the second quarter of 2010 was 32.6% compared to 32.9% in the second quarter of 2009. The reduction versus the second quarter of 2009 was due primarily to the negative impact of reduced equipment manufacturing productivity and lower service margins caused by reduced equipment placements and service calls; partially offset by improved consumable margins, which increased to 46.4% in the quarter.
Second quarter 2010 operating expenses of $12.0 million represented a reduction of $21.7 million from the second quarter of 2009. Excluding the impact of the one-time write-off of goodwill in the second quarter of 2009, operating expenses declined by $2.6 million, or 18%. The decline in operating expenses was primarily related to reduced payroll costs, professional service fees and travel expenses; offset partially by increased non-cash stock compensation expenses and the cost of the IPEX tradeshow, which caused an increase in operating expenses of $0.4 million in the 2010 second quarter.
Debt net of cash totaled $8.8 million at the end of the second quarter, a reduction of $4.3 million versus the second quarter of 2009. The primary cause of the decrease from the prior year level was the proceeds received from the sale of our Lasertel subsidiary in the first quarter of 2010; partially offset in the 2010 second quarter by increases in working capital, primarily related to increased inventory levels to meet the anticipated demand for the Company's "growth" products and the timing of European equipment installations.
"We continue to be committed to maintaining a proper balance of maximizing cash generation from operations while investing strategically in our long-term growth initiatives," said Presstek Executive Vice President and Chief Financial Officer, Jeff Cook. "While our debt net of cash did increase sequentially, it increased within the range of our expectations and we continue to be vigilant in our efforts to drive the future growth of our business in a managed and controlled way. Even with the decline in revenue in the quarter we were able to remain EBITDA positive due to our strong cost containment discipline."
"While we are disappointed that the global economic recovery is taking longer than expected, we are pleased with the 'growth' consumables ramp up, our operating expense discipline and our year-on-year adjusted EBITDA improvement," commented Jacobson. "We are confident in our growth strategy. We have expanded our product portfolio with thirteen new and innovative products that allow us to move up-market, expanded our geographic reach beyond our US and UK strongholds and optimized our cost structure. We have the products and resources in place to drive our strategy and we continue to be confident that following this downturn we will emerge as a leader in the graphics industry. As we've said many times before, future top-line growth, particularly in consumables, will provide strong bottom line results as we leverage our optimized cost structure."
Information Regarding Non-GAAP Measures
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the Company provides non-GAAP financial measures, including operating expenses excluding special charges; operating loss excluding special charges; adjusted EBITDA; adjusted EBITDA excluding the IPEX tradeshow cost; net loss from continuing operations excluding special charges; working capital excluding short-term debt; debt net of cash; and other GAAP measures adjusted for certain charges, which the Company believes are useful to help investors better understand its past financial performance and prospects for the future. A full reconciliation of GAAP to non-GAAP measures is provided in the financial tables below. Supplemental financial information has been provided with this release to provide additional details on the Company's performance.
Conference Call and Webcast Information
Management will discuss Presstek's second quarter 2010 results in a conference call on Monday, August 9, 2010 at 10:30 a.m. Eastern Time. Conference call information is below:
Conference Call Access: Domestic Dial In: (800) 638-5439 International Dial In: (617) 614-3945 Passcode: 13576021
In addition, for those unable to participate at the time of the call, a rebroadcast will be available following the call from Monday, August 9, 2010 at 1:30 PM Eastern Time until Monday, August 16, 2010 at 11:59 PM Eastern Time.
Rebroadcast Access: Domestic Dial In: (888) 286-8010 International Dial In: (617) 801-6888 Passcode: 77692840
An archived webcast of this conference call will also be available on the "Investor Events Calendar" page of the Company's web site, www.presstek.com.
About Presstek
Presstek, Inc. is a leading supplier of digital offset printing solutions to the printing and communications industries. Presstek's DI® digital offset solutions bridge the gap between toner and conventional offset printing, enabling printers to cost effectively meet increasing customer demand for high quality, short run color printing with a fast turnaround time while providing improved profit margins. The Company's CTP portfolio ranges from two-page to eight-page systems, many of which are fully automated. These systems support Presstek's line of chemistry-free plates as well as Aeon, a no preheat thermal plate which offers run lengths up to one million impressions. Presstek also offers a range of workflow solutions, pressroom supplies, and reliable service. Presstek is well positioned to support print environments of any size on a worldwide basis. Visit www.Presstek.com or call +1.603.595.7000 for more information.
DI is a registered trademark of Presstek, Inc.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:
Certain statements contained in this News Release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the Company's strategy and the ability of the Company to execute the strategy with its product portfolio, and the ability of the Company to achieve its stated objectives. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to: the severity and length of the current economic downturn, the impact of the economic downturn on the availability of credit for the Company's customers, market acceptance of and demand for the Company's products and resulting revenue and adjusted EBITDA, the ability of the Company to successfully expand into new territories, the ability of the Company to meet its stated financial and operational objectives, the Company's dependence on its partners (both manufacturing and distribution), and other risks and uncertainties detailed in the Company's 2009 Annual Report on Form 10-K and the Company's other reports on file with the Securities and Exchange Commission. The words "looking forward," "looking ahead," "believe(s)," "should," "may," "expect(s)," "anticipate(s)," "project(s)," "likely," "opportunity," expressions of optimism concerning future events or results, and similar expressions, among others, identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. The Company undertakes no obligation to update any forward-looking statements contained in this news release.
PRESSTEK, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
July 3, January 2,
2010 2010
---------------- ---------------
ASSETS
Current assets
Cash and cash equivalents $ 2,392 $ 5,843
Accounts receivable, net 22,956 22,605
Inventories 30,303 30,378
Assets of discontinued operations - 12,624
Deferred income taxes 243 243
Other current assets 2,649 2,598
---------------- ---------------
Total current assets 58,543 74,291
Property, plant and equipment, net 22,699 24,307
Intangible assets, net 4,585 4,316
Deferred income taxes 1,593 1,140
Other noncurrent assets 1,216 481
---------------- ---------------
Total assets $ 88,636 $ 104,535
================ ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Line of credit $ 11,184 $ 17,910
Accounts payable 11,840 9,887
Accrued expenses 5,257 8,049
Deferred revenue 5,558 6,497
Liabilities of discontinued operations - 5,203
---------------- ---------------
Total current liabilities 33,839 47,546
Other long-term liabilities 122 141
---------------- ---------------
Total liabilities 33,961 47,687
---------------- ---------------
Stockholders' equity
Preferred stock - -
Common stock 368 368
Additional paid-in capital 121,297 120,005
Accumulated other comprehensive loss (4,816) (3,810)
Accumulated deficit (62,174) (59,715)
---------------- ---------------
Total stockholders' equity 54,675 56,848
---------------- ---------------
Total liabilities and stockholders'
equity $ 88,636 $ 104,535
================ ===============
PRESSTEK, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per-share data)
(Unaudited)
Three months ended Six months ended
July 3, July 4, July 3, July 4,
2010 2009 2010 2009
---------- ---------- ---------- ---------
Revenue
Equipment $ 4,737 $ 5,213 $ 11,130 $ 10,200
Consumables 20,728 21,111 42,223 43,020
Service and parts 6,142 7,186 12,745 14,750
---------- ---------- ---------- ---------
Total revenue 31,607 33,510 66,098 67,970
---------- ---------- ---------- ---------
Cost of revenue
Equipment 5,249 5,171 11,347 9,863
Consumables 11,115 11,936 22,961 23,621
Service and parts 4,947 5,367 10,101 11,356
---------- ---------- ---------- ---------
Total cost of revenue 21,311 22,474 44,409 44,840
---------- ---------- ---------- ---------
Gross profit 10,296 11,036 21,689 23,130
---------- ---------- ---------- ---------
Operating expenses
Research and development 972 1,164 2,053 2,424
Sales, marketing and
customer support 5,780 6,884 11,064 13,249
General and administrative 5,055 6,321 10,132 12,293
Amortization of intangible
assets 203 233 413 487
Restructuring and other
charges 37 38 49 122
Goodwill impairment - 19,114 - 19,114
---------- ---------- ---------- ---------
Total operating expenses 12,047 33,754 23,711 47,689
---------- ---------- ---------- ---------
Loss from operations (1,751) (22,718) (2,022) (24,559)
Interest and other expense,
net (484) (246) (856) 214
---------- ---------- ---------- ---------
Loss from continuing
operations before income
taxes (2,235) (22,964) (2,878) (24,345)
Provision (benefit) for income
taxes (390) 16,905 (489) 16,630
---------- ---------- ---------- ---------
Loss from continuing
operations (1,845) (39,869) (2,389) (40,975)
Gain (loss) from discontinued
operations, net of income
taxes 8 (1,580) (70) (1,665)
---------- ---------- ---------- ---------
Net loss $ (1,837) $ (41,449) $ (2,459) $ (42,640)
========== ========== ========== =========
Loss per share - basic
Loss from continuing
operations $ (0.05) $ (1.09) $ (0.07) $ (1.12)
Loss from discontinued
operations 0.00 (0.04) (0.00) (0.04)
---------- ---------- ---------- ---------
$ (0.05) $ (1.13) $ (0.07) $ (1.16)
========== ========== ========== =========
Loss per share - diluted
Loss from continuing
operations $ (0.05) $ (1.09) $ (0.07) $ (1.12)
Loss from discontinued
operations 0.00 (0.04) (0.00) (0.04)
---------- ---------- ---------- ---------
$ (0.05) $ (1.13) $ (0.07) $ (1.16)
========== ========== ========== =========
Weighted average shares
outstanding
Weighted average shares
outstanding - basic 36,887 36,665 36,877 36,652
Dilutive effect of stock
options - - - -
---------- ---------- ---------- ---------
Weighted average shares
outstanding - diluted 36,887 36,665 36,877 36,652
========== ========== ========== =========
PRESSTEK, INC.
SUPPLEMENTAL FINANCIAL INFORMATION
$000's
(Unaudited)
Q2 2009 Q1 2010 Q2 2010
---------- ---------- ----------
Key Units
DI Presses (Excludes QMDI) 11 17 8
CTP Platesetters (Excludes DPM) 21 16 15
Product Revenue - Growth Portfolio
DI Presses (Excludes QMDI) $ 3,732 $ 4,792 $ 2,709
Presstek Branded DI Plates 4,301 4,255 4,477
---------- ---------- ----------
Total DI Revenue 8,033 9,047 7,186
Thermal CTP Platesetters (Excludes
DPM) 1,505 992 1,018
Thermal CTP Plates 3,678 3,766 3,959
---------- ---------- ----------
Total CTP Revenue 5,183 4,758 4,978
---------- ---------- ----------
Total Product Revenue - Growth 13,216 13,805 12,164
========== ========== ==========
Product Revenue - Traditional Portfolio
QMDI Platform 2,987 2,853 2,456
Polyester CTP Platform 3,178 3,230 3,136
Other DI Plates 1,128 1,288 1,151
Conventional/Other 6,608 7,139 6,861
---------- ---------- ----------
Total Product Revenue - Traditional 13,901 14,510 13,604
========== ========== ==========
Gross Product Revenue 27,117 28,315 25,768
Installation Transfer (793) (427) (303)
---------- ---------- ----------
Net Product Revenue 26,324 27,888 25,465
========== ========== ==========
Service Revenue 7,186 6,603 6,142
---------- ---------- ----------
Total Revenue $ 33,510 $ 34,491 $ 31,607
========== ========== ==========
Gross Product Revenue Components %
Growth 48.7% 48.8% 47.2%
Traditional 51.3% 51.2% 52.8%
Geographic Revenues (Origination)
North America $ 26,076 $ 26,894 $ 24,145
Europe 7,434 7,597 7,461
---------- ---------- ----------
Consolidated $ 33,510 $ 34,491 $ 31,607
========== ========== ==========
Gross Margin
Equipment 0.9% 4.6% -10.8%
Consumables 43.5% 44.9% 46.4%
Service 25.3% 21.9% 19.5%
---------- ---------- ----------
Consolidated 32.9% 33.0% 32.6%
========== ========== ==========
Operating Expenses excluding Special
Charges
Total Operating Expenses $ 33,754 $ 11,664 $ 12,047
less: Restructuring and Other
Charges 38 12 37
less: Goodwill Impairment 19,114 0 0
---------- ---------- ----------
Operating Expenses excluding Special
Charges (a) $ 14,602 $ 11,652 $ 12,010
========== ========== ==========
PRESSTEK, INC.
SUPPLEMENTAL FINANCIAL INFORMATION
$000's
(Unaudited)
Q2 2009 Q1 2010 Q2 2010
---------- ---------- ----------
Adjusted EBITDA
Net income (loss) from continuing
operations $ (39,869) $ (544) $ (1,845)
Add back:
Interest 110 297 250
Tax charge (benefit) 16,905 (99) (390)
Depreciation and amortization 1,150 1,293 1,267
Impairment / Other non-cash charges 19,114 - -
Non cash portion of equity
compensation 505 811 976
Restructuring and other charges 38 12 37
---------- ---------- ----------
Adjusted EBITDA (a) $ (2,047) $ 1,770 $ 295
========== ========== ==========
Working Capital
Total current assets $ 73,994 $ 57,587 $ 58,543
Current liabilities 48,937 32,563 33,839
---------- ---------- ----------
Working capital 25,057 25,024 24,704
Add back short-term debt
Current portion of long-term debt 1,644 - -
Line of credit 15,948 8,849 11,184
---------- ---------- ----------
Working capital excluding debt (a) $ 42,649 $ 33,873 $ 35,888
========== ========== ==========
Debt net of cash
Current portion of long-term debt $ 1,644 $ - $ -
Line of credit 15,948 8,849 11,184
---------- ---------- ----------
Total debt 17,592 8,849 11,184
Cash 4,453 3,477 2,392
---------- ---------- ----------
Debt net of cash (a) $ 13,139 $ 5,372 $ 8,792
========== ========== ==========
Days Sales Outstanding 69 57 62
Days Inventory Outstanding 105 78 85
Capital Expenditures $ 238 $ 574 $ 104
Employees 608 515 518
a. Operating expenses excluding special charges, Adjusted EBITDA [earnings before interest, taxes, depreciation, amortization and restructuring and other non-recurring charges (credits)]; Working capital excluding debt; and Debt net of cash are not measures of performance under accounting principles generally accepted in the United States of America ("GAAP") and should not be considered alternatives for, or in isolation from, the financial information prepared and presented in accordance with GAAP. Presstek's management believes that Adjusted EBITDA and Operating expenses excluding special charges provide meaningful supplemental information regarding Presstek's current financial performance and prospects for the future. Presstek's management believes that Working capital excluding debt, provides meaningful supplemental information regarding Presstek's ability to meet its current liability obligations. Presstek's management believes that Debt net of cash provides meaningful information on Presstek's debt relative to its cash position. Presstek believes that both management and investors benefit from referring to these non-GAAP measures in assessing the performance of Presstek's ongoing operations and liquidity, and when planning and forecasting future periods. These non-GAAP measures also facilitate management's internal comparisons to Presstek's historical operating results and liquidity. Our presentations of these measures, however, may not be comparable to similarly titled measures used by other companies. Reconciliations of these measures to GAAP are included in the tables above.
PRESSTEK, INC.
Reconciliation of GAAP amounts to Non-GAAP amounts
(Dollar amounts in thousands)
Three months ended
July 3, 2010 July 4, 2009
------------ ------------
Operating Loss $ (1,751) $ (22,718)
Add Back:
Restructuring and other charges 37 38
Goodwill impairment - 19,114
------------ ------------
Operating Loss excluding special charges $ (1,714) $ (3,566)
============ ============
Loss from continuing operations $ (1,845) $ (39,869)
Add Back:
Restructuring and other charges 37 38
Goodwill impairment - 19,114
Deferred tax asset valuation allowance - 16,776
------------ ------------
Loss from continuing operations
excluding special charges $ (1,808) $ (3,941)
============ ============
Adjusted EBITDA $ 295 $ (2,047)
Add Back:
Cost of the IPEX tradeshow 416 -
------------ ------------
Adjusted EBITDA excluding impact of IPEX
tradeshow $ 711 $ (2,047)
------------ ------------
CONTACTS:
Investor Relations
Tim McCauley
Director of Business Planning & Investor Relations
(203) 769-8054
Email Contact
Trade Relations
Brian Wolfenden
Director of Marketing Communications
(603) 594-8585, ext. 3435
Email Contact
For more information, go to www.marketwire.com
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