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Presstek Achieves Record Equipment and Digital Revenue

Friday, February 17, 2006

Press release from the issuing company

HUDSON, N.H., Feb. 16 -- Presstek, Inc., a leading manufacturer and marketer of high-tech digital imaging solutions for the graphic arts and laser imaging markets, today announced financial results for the fourth quarter and fiscal year ended December 31, 2005. Fourth Quarter 2005 Consolidated Financial Highlights -- Record total equipment revenue of $24.4 million, up $6.5 million, or 36%, from the third quarter of 2005; -- Record digital equipment revenue of $18.6 million, up $4.4 million, or 31%, from the third quarter of 2005; -- Record DI press equipment revenue of $10.6 million, up 63% from the third quarter of 2005; -- Solid operating income of $3.3 million, up from $1.5 million in the third quarter of 2005; -- Strong net income of $2.4 million, up from $0.8 million in the third quarter of 2005; and -- Strong earnings per share of $0.07 per diluted share, up from $0.02 per diluted share in the third quarter of 2005. Presstek President and Chief Executive Officer Edward J. Marino said, "We increased the market penetration of Presstek's digital technology and improved the quality of our revenue by successfully executing on our focused strategies and tactics throughout 2005. We are delighted with the progress made in the fourth quarter of 2005, and expect to see continued improvement in all of these areas in 2006." Full Year 2005 Consolidated Financial Results -- Record revenue of $274.1 million, up from $129.9 million in the prior year; -- Solid earnings before interest, taxes, depreciation and amortization of $21.4 million, compared to $13.4 million in the prior year; and -- Solid net income of $6.1 million, compared to $3.9 million last year. "Presstek grew its base of digital technology substantially in 2005," said Marino. "The growth can be seen clearly in the unit sales of our digital equipment. In 2004, we placed just over 300 digital units. In 2005, we placed well over 600 units, or about double the number of digital unit placements year-over-year. More importantly, however, the greatest growth came from the sales of our DI press units which grew by 75% from 2004 to 2005." Fourth Quarter 2005 Consolidated Financial Results The company reported consolidated revenue of $69.3 million in the fourth quarter ended December 31, 2005, an increase of $4.6 million, or 7%, from the third quarter of 2005. The company reported consolidated net income for the fourth quarter of 2005 of $2.4 million, or $0.07 per diluted share. This compares to consolidated net income for the third quarter of 2005 of $0.8 million, or $0.02 per diluted share, and a net loss of $2.2 million in the same quarter last year. Chief Financial Officer Moosa E. Moosa said, "Integration synergies allowed us to maintain a gross margin of 30% in the fourth quarter even with the much higher mix of equipment sales which, historically, have a much lower margin percentage. They also contributed to the decline in operating expenses from $18.1 million in the third quarter to $17.6 million in the fourth quarter." Moosa said, "Overall, our operating expenses are down and moving in the right direction. We are, however, continuing to invest in other areas of our business." Commenting on the balance sheet, Moosa said, "Our net working capital was up by $6.5 million quarter-over-quarter, primarily due to the increase in equipment revenue during the quarter, as well as some overhang from our integration activities." Moosa continued, "We paid down $1.75 million of term debt during the fourth quarter, leaving debt at the end of the year at $35.5 million, down from $41.8 million at the beginning of the year. Total debt, net of cash, continued to go down despite the increased working capital deployed and the funding of our restructuring, consolidation and integration activities." On a consolidated basis, the company generated $6.2 million in earnings before interest, taxes, depreciation and amortization in the fourth quarter of 2005, up from $4.4 million in the previous quarter. "Our balance sheet is stronger," said Moosa, "as is our ability to generate cash. We have the financial resources to take advantage of future growth opportunities." The company's Lasertel subsidiary reported record sales of $1.3 million to external customers in the fourth quarter of 2005, an increase of 30% from the $1.0 million in revenue recorded in the third quarter of 2005. The increase is due primarily to the sale of new products, including the new stacked-array product for Selex that was announced in the third quarter. Directionally, for 2006, the company is forecasting sales from external customers to increase. Moosa continued, "Lasertel's gross margins improved considerably during the quarter and operating expenses were down. During the quarter we extended the lives of certain depreciable equipment. Based on an analysis of our current use of machinery and equipment, we determined it was appropriate to extend the lives of these assets from five years to seven years. The change favorably impacted fourth quarter earnings by approximately $0.4 million on a pre-tax basis." Lasertel's loss from operations for the fourth quarter of 2005 was $0.3 million, an improvement of 76% from the loss of $1.3 million in the prior quarter. External revenue at the company's Precision operation was $3.5 million, up from $3.4 million in the previous quarter. Operating income, at $0.5 million, was up from the prior quarter. The Year in Review "2005 was a transformational year for our company," said Marino. "The year was highlighted by several key accomplishments ranging from business integration synergies to the enhancement of our sales, service and distribution channels. We are larger, stronger and more balanced than ever before." Marino continued, "We began 2005 having only recently acquired the operations of ABDick. As the fourth quarter ended, we essentially completed the integration of our businesses." "Through the second half of 2005 our efforts were directed toward building traction in our new direct sales and service force and strengthening our channels in Europe," said Marino. "These efforts were designed to increase the market penetration of Presstek technology products and improve the quality of our revenue." "In the third quarter of the year, we entered into several strategically important relationships. Among these were our agreements with Heidelberg naming Presstek's Quickmaster DI consumable as their preferred plate, and our relationship with EFI to develop a set of enterprise solutions for commercial print and in-plant customers, as well as the franchise print market. We also began a relationship with Screen USA designed to expand the market for our consumable plate products to non-Presstek proprietary CTP systems." "We also made significant changes in the third quarter that, while challenging in the short term, have improved the growth opportunities for Presstek technology products. We realigned the distribution of our DI press products worldwide, giving our sales force the opportunity to sell our DI press product directly to a broader served market. The soundness of this decision is evident by the 63% increase in DI press revenue in the fourth quarter of this year, an accomplishment of which we are very proud." "The strength of our expanded European channel was demonstrated by a 12% growth in revenue at Presstek Europe in the second half of 2005. In 2006, our goal is to continue to increase our share of the European market." Looking Ahead "Our main priorities in 2006 will be to increase the market penetration of Presstek's technology, grow our share of customer, and improve productivity in all facets of our business," said Marino. Commenting on the company's plans to further increase the penetration of Presstek technology, Marino said, "We are addressing both capacity and capability. Our North American sales and service force will continue to gain experience in advanced technology products and services. Furthermore, we intend to increase headcount in the sales, service and marketing areas to drive the market penetration of Presstek technology. We are preparing to expand our presence in Europe as well with an eye toward increasing our share of this market. Our initial efforts have been focused on the opening our new European business center in the London area which we announced yesterday. Heading into April of this year, we will begin our campaign at the United Kingdom's IPEX trade show, which will be accompanied by product announcements and a strong marketing program." Marino said, "As previously mentioned, productivity improvements are already underway in many areas of our business, and there are more opportunities to implement further process and productivity improvements in 2006. Our goal is to leverage these opportunities to their fullest, as well as use them to improve our customer-facing activities and to create a business that will be scalable as our company grows."

 

 

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