Presstek reports improved Q2 operating profits
Tuesday, August 10, 2010
Press release from the issuing company
Greenwich, CT, - Presstek, Inc., 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.
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
- 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.
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."
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