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Presstek Achieves Record Consolidated and Core Business Revenue

Friday, April 29, 2005

Press release from the issuing company

HUDSON, N.H., April 28 -- Presstek, Inc., a leading provider of direct digital imaging technology, today announced financial results for the first quarter ended April 2, 2005. President and Chief Executive Officer Edward J. Marino said, "Our first quarter 2005 results contain a number of very positive indicators and a number of major milestones, including: -- Consolidated revenues that were well ahead of our expectations for the quarter; -- Record revenue and solid earnings from Presstek's core business; -- Breakeven operating net earnings at ABDick in the first full quarter under Presstek ownership; -- Very strong cash generation for the quarter; and -- Considerable progress in our strategic realignment and streamlining of our businesses." Marino continued, "We have set a number of challenging goals for 2005, and we are doing the work necessary to achieve those goals. As a result, ABDick recorded income from operations of over $500,000 in the first quarter of 2005. This compares to a loss of approximately $700,000 in the eight weeks of ownership in the previous quarter. We are very proud of this significant accomplishment, and we expect continued earnings improvement throughout 2005." Consolidated Results The company reported record consolidated revenue of $70.4 million in the first quarter ended April 2, 2005, compared to $54.1 million reported in the fourth quarter of 2004 and in $23.3 million in the corresponding quarter last year. The company reported consolidated net income for the first quarter of 2005 of $481,000, or $0.01 per basic and diluted share, compared to a fourth quarter 2004 net loss of $2.2 million, or $0.06 per basic and diluted share. Consolidated net income for the first quarter of 2005 includes $982,000 in special charges relating to the integration of the company's businesses, as well as termination costs related to former employees. Excluding special charges, the company would have recorded net income of $1,463,000 in the first quarter of 2005. Consolidated gross margins for the first quarter of 2005 were 29%, or $20.1 million, compared to 27%, or $14.5 million, in the prior quarter. The increase in gross margins is primarily due to a more favorable product mix, better manufacturing yields at our Precision business and operating improvements at ABDick. Marino said, "The model we have built creates better end-to-end gross margin opportunities. We expect to see continued improvements in gross margins going forward due to the consolidation of our manufacturing operations, improved service productivity and further channel efficiencies." Operating expenses (the sum of research & development and sales, general & administrative, excluding unusual and non-recurring charges) were $18.0 million in the first quarter of 2005, compared to $13.9 million in the prior quarter. The increase is primarily the result of the inclusion of ABDick's operations for a full quarter, offset by improvements resulting from the strategic realignment of our businesses. Executive Vice President and Chief Financial Officer Moosa E. Moosa said, "We expect to see an improvement in operating expenses in future quarters as our first quarter 2005 numbers do not reflect actions taken at the end of the first quarter." Moosa continued, "Our cash balance at the end of the quarter was up at $12.8 million, compared to $8.7 million at the end of 2004. More importantly, we generated $6.7 million in cash from operations in the first quarter of 2005. We used this cash to reduce our debt by $2.3 million and increase our cash by $4.1 million. Total debt at the end of the quarter was $39.6 million compared with $41.9 million at the end of 2004. " Moosa continued, "Our company's financial foundation is sound and continues to strengthen. We made excellent progress with the integration of ABDick in the first quarter of 2005. Our net cash from operations has increased substantially, and our cash flows and balance sheet are strong. We believe we will see continued financial improvement throughout the remainder of 2005." Presstek Core Business Presstek's core DI and CTP business reported record revenue of $25.9 million in the first quarter of 2005, up from $22.8 million in the corresponding quarter of last year, and $24.3 million in the prior quarter. Presstek's equipment revenue for the first quarter was up 20% at $10.8 million, from $9.0 million in the prior quarter. Presstek's consumable revenue for the first quarter of 2005 was $14.7 million, down only slightly from the record $14.8 million in the prior quarter. Gross margins for Presstek's core business were 37% for the first quarter of 2005, compared to 40% last quarter, reflecting higher equipment sales. Moosa said, "Presstek's core business was very strong in the first quarter of 2005. Equipment revenue improved significantly, largely as a result of strong DI press sales. Consumable sales were also strong with record performance in our CTP consumable business, achieving over $4 million for the first time in a quarter. " Lasertel Presstek's Lasertel subsidiary recorded $737,000 in revenue from sales to external customers in the first quarter of 2005, down from $989,000 in the fourth quarter of 2004, and up 36% from $540,000 in the first quarter of 2004. Lasertel's operating loss for the first quarter of 2005 was $913,000, compared to $604,000 in the prior quarter, and $1.4 million in the first quarter of 2004. Moosa said, "Lasertel's external backlog is up from the previous quarter, however, first quarter results were unfavorably impacted by purchasing patterns in the defense sector. In addition, Presstek reduced its requirements from Lasertel in the first quarter due to a realignment of inventory relating to its new product offerings. Lasertel expects to resume normal shipments to Presstek in the second quarter of this year and to achieve considerably higher external customer sales as well." Precision Precision Lithograining recorded $6.7 million in revenue in the first quarter of 2005, compared with $7.4 million in the fourth quarter of 2004. Sales of digital products, which include the Anthem product line, achieved record levels in the quarter. On an operating basis, Precision recorded an operating loss of $300,000 in the first quarter of 2005. Moosa commented, "Precision made great progress in the first quarter of 2005. Our process changes and improvements were largely complete by the end of January and resulted in a strong performance in the second half of the quarter. We expect to see these improvements reflected in Precision's second quarter results, with continuing improvement throughout the remainder of 2005." ABDick ABDick's first quarter revenue was $41.2 million, compared to $24.3 million for the eight weeks under Presstek's ownership in the fourth quarter of 2004. On a pro forma basis revenue was up 4% from the prior quarter. On an operating basis, ABDick reported operating income of $509,000 in the first quarter of 2005, compared to an operating loss of $709,000 in the prior quarter. After including interest and taxes, but excluding the non- recurring charges, ABDick had breakeven operating net earnings in the first quarter of 2005, compared with an operating net loss of $1.2 million in the fourth quarter of 2004. Moosa commented, "We are very pleased with both the operating results and the progress of the integration at ABDick. This is the first full reporting quarter since the ABDick acquisition, and on a pro forma basis we have set our first revenue record at ABDick. In addition, ABDick generated positive cash flows in the quarter." Moosa continued, "The strategic realignment and streamlining of the ABDick business continues and is progressing well. We are on track with our plan to remove approximately $7 million in costs from the company in 2005." In Summary "In 2004 Presstek set the wheels in motion to dramatically grow the size and scope of our business. We have successfully achieved both organic growth in the core Presstek business and we have greatly expanded our ability to deliver Presstek technology to a wider served market, enabling future growth," said Marino. "We are driving the change, seeing the results, and this is the beginning. The company is on a strong upward trajectory."

 

 

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