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Presstek Reports Third Quarter 2007 Financial Results
HUDSON, N.H., Jan. 24 /PRNewswire-FirstCall/ -- Presstek, Inc. (NASDAQ: PRST) today reported results for the third quarter of 2007. The net loss from continuing operations for the third quarter was $3.6 million, or $.10 per share. This compares to a net loss of $40,000, or $.00 per share, in the third quarter of last year. The third quarter 2007 loss includes a pre-tax impact of $6.3 million in charges primarily related to previously disclosed reviews of inventory and receivables conducted by the company. Consolidated revenue from continuing operations was $59.6 million, down $1.8 million from the same quarter last year. As a result of the previously disclosed review of European business and revenue recognition practices, the company identified certain revenue transactions totaling $1.5 million that were incorrectly recorded in prior quarters, and were reversed in the third quarter of 2007. Absent this adjustment, third quarter revenue was essentially flat from the prior year. Presstek President and Chief Executive Officer Jeff Jacobson said, "As you know, we have experienced some temporary disruptions to our business over the past several months related to an extensive worldwide review of inventory and receivables, as well as certain European business processes and revenue recognition practices. As reported in our December 19, 2007 press release, these disruptions have negatively impacted our third quarter results and will also impact our fourth quarter results to a lesser extent. Our Business Improvement Plan which we announced on October 25, 2007 is well underway and on track and, based upon actions already taken, we now expect we will exceed our previously announced 9% reduction in headcount. We are looking forward to a much improved 2008." The company reported that debt net of cash was $30.0 million as of September 29, 2007, down $2.7 million from the end of the second quarter and down $7.0 million, or 19%, from the high point at the end of first quarter 2007. "I am pleased with our improving cash position and note that this trend has continued through the fourth quarter of 2007," said Jacobson. "This strong focus on cash will provide us with the liquidity we need to grow our business. We have been saying all along that it is our goal to drive operational excellence and we are starting to see positive results." Revenue from the company's growth product portfolio, which includes the 34DI and 52DI digital offset solutions, Lasertel operations, and the Presstek family of chemistry-free computer-to-plate (CTP) solutions, comprised 50% of total revenue in the third quarter of 2007 (excluding the adjustment for prior period transactions noted above), up from 41% of total revenue in the same quarter last year. Revenue from the growth product portfolio was up 22% over the prior year period, led by a 24% increase in DI press sales. Consolidated gross margin was $14.8 million in the third quarter, or 24.8% of revenue. This includes $4.0 million of charges primarily related to inventory, including $2.7 million of excess and obsolete, as well as physical inventory charges of $0.4 million. The excess and obsolete reserve increase covers various product areas, and was necessitated by certain product strategy and methodology changes. Excluding these charges, gross margin would have been 31.5%, up from 29.4% in Q3 of last year. Operating expenses in the third quarter totaled $21.1 million, including charges of $2.2 million related to increased receivable reserves and legal and professional accruals. Also included were $0.4 million of restructuring charges related primarily to the company's Canadian operation. Presstek's Lasertel operation recorded external sales of $2.0 million for the third quarter of 2007, up from $1.8 million in the same quarter last year. Lasertel recorded an operating loss in Q3 of $1.4 million, driven by increased receivable reserves, physical inventory adjustments, and a change in inventory accounting practices. Additionally, the company plans to report in its September 29, 2007 Form 10-Q that management identified material weaknesses in internal control over financial reporting related to revenue recognition, as well as account reconciliation processes in the company's European operation. Presstek has initiated actions to remediate these material weaknesses. In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the company provides non-GAAP financial measures, including debt net of cash, which is defined as debt minus 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 Management will discuss Presstek's third quarter 2007 results in a conference call today at 5:00 p.m. (ET). To participate in the conference call, please dial 888-873-4896 (domestic) or 617-213-8850 (international). The pass code for the call is 71152452. Additionally, a live web cast of the conference call will be available on the "Investor Events Calendar" page on the company's web site at www.presstek.com/investors/calendar.html . A replay of this conference call will be available from 7:00 p.m. Eastern Time on Thursday, January 24, 2008 through midnight Eastern Time on January 31, 2008 at 888-286-8010 (domestic) or 617-801-6888 (international). The replay pass code is 54182471. An archived web cast of this conference call will also be available on the "Investor Events Calendar" page of the company's web site, at www.presstek.com/investors/calendar.html. About Presstek Presstek, Inc. is the leading manufacturer and marketer of high tech digital imaging solutions to the graphic arts and laser imaging markets. Presstek's patented DI(R), CTP and plate products provide a streamlined workflow in a chemistry-free environment, thereby reducing printing cycle time and lowering production costs. Presstek solutions are designed to make it easier for printers to cost effectively meet increasing customer demand for high-quality, shorter print runs and faster turnaround while providing improved profit margins. Presstek subsidiary, Lasertel, Inc., manufactures semiconductor laser diodes for Presstek's and external customers' applications. For more information visit www.presstek.com, or call 603-595-7000 or email: info@presstek.com. 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 results of internal reviews and their impact on future performance, expected improvement in 2008 performance, operating income (loss), improving cash position, anticipated results from the company's Business Improvement Plan, anticipated headcount reductions, 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, market acceptance of and demand for the company's products and resulting revenue, the results and impact of the company's internal reviews, the ability of the company to achieve the objectives of its Business Improvement Plan, the timing of the filing of the company's 10-Q for the period ending September 29, 2007, the ability of the company to meet its stated financial and operational objectives, the possible delisting of the company's stock from the Nasdaq Stock Market, the company's dependency on its strategic partners (both on manufacturing and distribution), and other risks detailed in the company's 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," 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.
Contact: Investor Relations, Presstek
(603) 594-8585 x3559
investorrelations@presstek.com
PRESSTEK, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per-share data)
(Unaudited)
Three months ended Nine months ended
September September September September
29, 30, 29, 30,
2007 2006 2007 2006
Revenue
Product $50,124 $50,578 $164,239 $164,924
Service and parts 9,488 10,841 29,276 34,705
Total revenue 59,612 61,419 193,515 199,629
Cost of revenue
Product 36,759 35,280 117,086 114,962
Service and parts 8,097 8,095 24,568 25,074
Total cost of revenue 44,856 43,375 141,654 140,036
Gross profit 14,756 18,044 51,861 59,593
Operating expenses
Research and development 1,492 1,660 4,746 4,885
Sales, marketing and customer
support 9,503 9,920 30,319 29,824
General and administrative 9,150 5,585 24,407 14,738
Amortization of intangible assets 577 807 1,999 2,336
Restructuring and other charges 398 (208) 1,527 (208)
Total operating expenses 21,120 17,764 62,998 51,575
Income (loss) from operations (6,364) 280 (11,137) 8,018
Interest and other expense, net (586) (96) (2,476) (1,264)
Income (loss) before income taxes (6,950) 184 (13,613) 6,754
Provision (benefit) for income
taxes (3,324) 224 (4,267) 1,237
Income (loss) from continuing
operations (3,626) (40) (9,346) 5,517
Gain (loss) from discontinued
operations, net of tax $10 (383) $(78) (470)
Net income (loss) $(3,616) $(423) $(9,424) $5,047
Earnings (loss) per share - basic
Income (loss) from continuing
operations $(0.10) $(0.00) $(0.26) $0.15
Gain (loss) from discontinued
operations 0.00 (0.01) (0.00) (0.01)
$(0.10) $(0.01) $(0.26) $0.14
Earnings (loss) per share - diluted
Income (loss) from continuing
operations $(0.10) $(0.00) $(0.26) $0.15
Gain (loss) from discontinued
operations 0.00 (0.01) (0.00) (0.01)
$(0.10) $(0.01) $(0.26) $0.14
Weighted average shares outstanding
Weighted average shares
outstanding - basic 36,545 35,609 36,080 35,541
Dilutive effect of options - - - 386
Weighed average shares outstandi
- diluted 36,545 35,609 36,080 35,927
PRESSTEK, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
September 29, December 30,
2007 2006
ASSETS
Current assets
Cash and cash equivalents $8,253 $9,449
Accounts receivable, net 49,051 53,158
Inventories, net 50,226 46,050
Assets of discontinued operations 74 3,321
Deferred income taxes 4,210 4,162
Other current assets 3,103 2,600
Total current assets 114,917 118,740
Property, plant and equipment, net 39,500 42,194
Goodwill 19,807 20,280
Intangible assets, net 6,750 8,741
Deferred income taxes 11,896 7,515
Other noncurrent assets 946 544
Total assets $193,816 $198,014
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt
and capital lease obligation $7,039 $7,037
Line of credit 21,000 15,000
Accounts payable 21,982 27,126
Accrued expenses 16,088 10,471
Deferred revenue 7,532 7,901
Liabilities of discontinued
operations 722 3,707
Total current liabilities 74,363 71,242
Long-term debt and capital lease
obligation, less current portion 10,259 15,535
Total liabilities 84,622 86,777
Commitments and contingencies
Stockholders' equity
Preferred stock - -
Common stock 366 357
Additional paid-in capital 115,276 108,769
Accumulated other comprehensive
income 1,162 297
Retained earnings (accumulated
deficit) (7,610) 1,814
Total stockholders' equity 109,194 111,237
Total liabilities and
stockholders' equity $193,816 $198,014
PRESSTEK, INC.
CONTINUING OPERATIONS SUPPLEMENTAL FINANCIAL INFORMATION
$000's
(Unaudited)
Q3 2006 Q4 2006 Q1 2007 Q2 2007 Q3 2007
Key Units
Presstek DI Presses
(Excludes QMDI) 36 54 44 51 37
Presstek CtP Platesetters
(Excludes DPM) 36 35 44 47 47
Revenue - Growth Portfolio
Presstek DI Presses
(Excludes QMDI) 11,340 17,248 15,215 18,873 13,071
DI Kits 397 429 870 462 125
DI Plates 3,386 3,778 3,996 4,306 4,567
Total DI Revenue 15,123 21,455 20,081 23,641 17,763
Presstek CtP Platesetters
(Excludes DPM) 2,643 2,539 3,415 3,753 2,962
Chemistry Free CtP Plates 4,449 3,976 4,953 4,914 5,034
Total CtP Revenue 7,092 6,515 8,368 8,667 7,996
Service Transfer (633) (1,001) (913) (1,253) (1,105)
Service Revenue 1,464 2,012 1,983 2,368 2,184
Lasertel Revenue 1,807 1,874 1,689 2,186 1,951
Total Revenue - Growth
Portfolio (B) 24,853 30,855 31,209 35,608 28,789
Revenue - Traditional
Portfolio
QMDI Platform 6,228 6,880 5,243 5,750 5,121
Polyester CtP Platform 5,690 5,257 5,477 5,529 4,961
Other DI Plates 2,134 2,289 2,263 2,571 2,541
Conventional/Other 13,387 12,782 13,276 12,039 11,109
Total Product Revenue -
Traditional 27,439 27,207 26,259 25,889 23,732
Service Transfer (251) (249) (249) (246) (219)
Service Revenue -
Traditional 9,378 8,253 7,933 7,500 7,310
Total Revenue -
Traditional Portfolio
(B) 36,567 35,211 33,943 33,143 30,823
Total Revenue (B) 61,419 66,066 65,152 68,751 59,612
Product Revenue
Components %
Digital 76.6% 79.4% 78.4% 82.1% 80.2%
Analog 23.4% 20.6% 21.6% 17.9% 19.8%
Geographic Revenues
(Origination) (B)
North America 48,099 51,990 46,133 51,454 46,789
Europe 13,319 14,076 19,019 17,296 12,823
Consolidated 61,419 66,066 65,152 68,751 59,612
Gross Margin
Presstek
Equipment 9.2% 11.2% 13.0% 8.5% -0.3%
Consumables 43.6% 43.6% 41.8% 46.2% 45.7%
Service 25.3% 28.0% 22.4% 11.1% 14.7%
Lasertel 14.2% 20.1% 17.6% 30.3% -16.9%
Consolidated 29.4% 29.3% 28.4% 27.1% 24.8%
Operating Expense
(Excluding Special
Charges) $17,972 $17,514 $18,459 $22,290 $20,722
Profitability
Net income (loss) $(423) $4,697 $(978) $(4,830) $(3,616)
Add back: Net (income)
loss from discontinued
operations $383 $2,803 $112 $(24) $(10)
Net income (loss) from
continuing operations $(40) $7,500 $(866) $(4,854) $(3,626)
Add back:
Interest 644 612 754 842 757
Other (income)
expense (548) (50) 143 151 (171)
Tax charge (benefit) 224 (11,880) (317) (626) (3,324)
Incremental charges 0 0 1,020 4,917 6,286
Other charges
(credits) (208) 5,689 335 793 399
Operating income (loss)
from continuing
operations 72 1,871 1,069 1,223 321
Add back:
Depreciation and
amortization 2,566 2,502 2,437 2,425 2,321
Other income (expense) 548 50 (143) (151) 171
EBITDA From Continuing
Operations (A) $3,186 $4,423 $3,363 $3,497 $2,813
Cash Earnings From
Continuing Operations
Net income from
continuing operations (40) 7,500 (866) (4,854) (3,626)
Add back:
Other charges
(credits) (208) 5,689 335 793 399
Depreciation and
amortization 2,566 2,502 2,437 2,425 2,321
Non cash portion of
equity compensation
(2006 forward 123R
related) 146 167 306 2,491 650
Non cash portion of
taxes 143 (11,234) (254) (1,408) (2,767)
Cash Earnings From
Continuing
Operations (A) 2,607 4,624 1,958 (553) (3,023)
Working Capital
Current assets
(excluding net assets
of discontinued
operations) $102,498 $115,419 $122,727 $123,465 $114,843
Current liabilities
Short-term debt 16,000 22,000 29,000 28,000 28,000
All other current
liabilities 42,834 45,498 48,067 49,354 45,602
Current liabilities 58,834 67,498 77,067 77,354 73,602
Working capital 43,664 47,921 45,660 46,111 41,241
Add back short-term
debt 16,000 22,000 29,000 28,000 28,000
Working capital,
excluding short-term
debt (A) $59,664 $69,921 $74,660 $74,111 $69,241
Debt net of cash (A)
Calculation of total
debt:
Current portion of
long-term debt $7,000 $7,000 $7,000 $7,000 $7,000
Line of credit 9,000 15,000 22,000 21,000 21,000
Long-term debt, net of
current portion 17,250 15,500 13,750 12,000 10,250
Total debt 33,250 37,500 42,750 40,000 38,250
Cash 6,345 9,449 5,711 7,319 8,253
Debt net of cash $26,905 $28,051 $37,039 $32,681 $29,997
Days Sales Outstanding 60 62 73 68 70
Days Inventory
Outstanding 61 61 69 69 78
Capital Expenditures $1,117 $736 $1,330 $748 $455
Employees 852 813 813 792 770
(A) EBITDA [earnings before interest, taxes, depreciation, amortization
and restructuring and merger-related charges (credits)]; Working
capital excluding short-term debt; Debt net of cash; and Cash earning
from continuing operations 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 EBITDA
provides meaningful supplemental information regarding Presstek's
current financial performance and prospects for the future.
Presstek's management believes that Cash earnings from continuing
operations provide meaningful supplemental information regarding
Presstek's current financial performance and prospects for the future.
Presstek's management believes that Working capital, excluding short-
term 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.
(B) Q3 2007 results reflect $1.5 million decrease in revenue due to the
correction of certain revenue transactions.
** Certain amounts may be subject to reclassification to conform to
current presentation.
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