Presstek reports fiscal 2010 profit improvements and third 75DI order
Tuesday, March 15, 2011
Press release from the issuing company
Greenwich, CT - Presstek, Inc.
- $38.6 million improvement in net income for 2010
- $5.6 million improvement in full year adjusted EBITDA
- Growth consumables increase 4% in 2010
- Debt net of cash of $6.1 million, a $0.8 million reduction in the
fourth quarter of 2010
Presstek, Inc., a leading supplier of digital offset printing solutions to the printing and communications industries, today reported financial and operating results for the fourth quarter and fiscal year ended January 1, 2011. In the quarter, the Company reported total revenue of $31.1 million, a decline of 7% from the amount reported in the fourth quarter of 2009, and adjusted EBITDA of $0.6 million, a reduction of $0.5 million when compared to the prior year fourth quarter. For fiscal 2010, the Company reported total revenue of $128.6 million, a decline of 4% from 2009, and adjusted EBITDA of $4.0 million, a $5.6 million improvement from the prior year. The Company also reported a 50% reduction in debt net of cash in 2010. (See "Information Regarding Non-GAAP Measures")
During the fourth quarter of 2010 the Company recorded two significant non-cash charges, a $1.9 million expense related to a single customer bad debt reserve and a $2.7 million valuation allowance against certain deferred tax assets outside the United States. Although reserved in the fourth quarter, the benefits of these deferred tax assets remain available to offset the Company's future income tax liabilities. Presstek anticipates implementing tax planning strategies which management believes will make possible the reversal of some or all of this allowance in future periods.
Including these non-cash charges the Company had an operating loss of $3.4 million in the fourth quarter of 2010 versus an operating loss of $0.7 million in the 2009 fourth quarter. The majority of the increased operating loss in the fourth quarter of 2010 relates to the $1.9 million customer bad debt reserve referenced above with the remainder relating primarily to a $0.8 million increase in non-cash equity-based compensation charges. For fiscal 2010 the Company had a full year operating loss of $6.8 million, an improvement of $24.6 million from the $31.4 million operating loss in 2009. The 2009 results include a $19.1 million charge for the write-off of goodwill. Excluding the goodwill write-off in 2009 and the customer bad debt reserve in 2010, operating loss improved by $7.4 million during fiscal 2010. (See "Information Regarding Non-GAAP Measures")
Inclusive of the non-cash charges referenced above the Company incurred a net loss from continuing operations during the fourth quarter of 2010 of $6.7 million, or $0.18 per share, compared to a net loss from continuing operations of $1.5 million, or $0.04 per share, in the fourth quarter of 2009. The Company's 2010 net loss from continuing operations was $10.6 million, or $0.29 per share, compared to a net loss from continuing operations of $49.1 million, or $1.34 per share, in 2009. The 2009 results included special charges for the write-off of goodwill and deferred tax assets of $19.1 million and $16.8 million, respectively. Excluding the non-cash charges for 2009 and 2010, net loss from continuing operations improved by $7.3 million versus 2009. (See "Information Regarding Non-GAAP Measures")
"2010 was again a difficult year in our industry but I was pleased with our ability to not only continue to generate positive quarterly adjusted EBITDA but to increase it by $5.6 million on a full year basis compared to 2009," said Presstek Chairman, President and Chief Executive Officer, Jeff Jacobson. "Additionally, in 2010 we reduced our debt net of cash by $6.0 million against a backdrop of a 4% decline in overall revenues. We also successfully introduced our 75DI digital offset press to the market. We believe that the 75DI with its 6-minute job-to-job turnaround, high quality output and expanded sheet size will be a key driver to our growth strategy and the initial market reception supports this belief. In addition to the two North American orders that were previously announced, we are pleased to announce that we have now received our first international order for the 75DI. In the brief time since introducing this dynamic product we have received three orders and are continuing to work with many other customers on potential deals."
Fourth Quarter 2010 Financial Results Total revenue in the fourth quarter of 2010 was $31.1 million, essentially flat from the previous quarter and a decrease of $2.4 million from the fourth quarter of 2009.
- Equipment revenue decreased $0.3 million, to $5.5 million in the fourth quarter of 2010, compared with the same period last year. The slight decrease versus the prior year's quarter is due primarily to an unfavorable shift in product mix.
- Consumables revenue totaled $19.5 million in the fourth quarter of 2010, compared with $20.6 million for the same period last year, as increases in CTP plates of 10% from the prior year quarter were more than offset by reductions in "traditional" product categories.
- Service revenue declined approximately 15 percent to $6.0 million in the fourth quarter of 2010 compared to the year ago quarter. This drop is primarily due to the continued erosion of the analog service base, lower installation revenue and a general trend by customers to delay service calls and maintenance to save money in a difficult economy.
Gross margin percent for the fourth quarter of 2010 was 31.9% compared to 33.9% in the fourth quarter of 2009. The reduction versus the fourth quarter of 2009 was due primarily to lower service margins and a lower mix of higher margin consumables.
Excluding the $1.9 million non-cash charge in the fourth quarter of 2010 for a customer bad debt reserve, operating expenses declined by $0.6 million, or 5%, from the fourth quarter of 2009. The decline in operating expenses was primarily related to reduced payroll costs, professional service fees and restructuring charges, partially offset by increased non-cash equity-based compensation expenses.
2010 Financial Results Total revenue in 2010 was $128.6 million, a decrease of 4% or $5.9 million from 2009. In 2010 equipment revenue increased 9% to $21.4 million compared with last year. Consumables revenue totaled $82.3 million in fiscal 2010, compared with $85.7 million for the prior year. Revenue in our "growth" consumables, DI and CTP plates, increased by 4% from the prior year but this increase was more than offset by reductions in "traditional" product categories. Service revenue declined approximately 14 percent to $24.9 million in 2010 compared to the prior year due to the factors noted in the fourth quarter discussion above.
Gross margin percent for 2010 was 32.6% compared to 31.4% in 2009. The improvement versus 2009 was due primarily to increased manufacturing efficiencies.
Fiscal 2010 operating expenses of $48.7 million represented a reduction of $24.9 million from the prior year. Excluding the impact of the one-time write-off of goodwill in the second quarter of 2009 and the customer bad debt reserve in the fourth quarter of 2010, operating expenses declined by $7.7 million, or 14%. The decline in operating expenses was primarily related to reduced payroll costs and professional service fees, partially offset by increased non-cash equity-based compensation expenses.
Debt net of cash totaled $6.1 million at the end of the year, a reduction of $6.0 million versus 2009 and a reduction of $0.8 million from the end of the 2010 third quarter. The primary cause of the full year reduction was the net cash proceeds received from the sale of the Company's non-core Lasertel subsidiary and the improvement from the third quarter was primarily due to net cash provided by operations in the fourth quarter of 2010.
"Despite the impact of the economy we have maintained our positive adjusted EBITDA levels for the fifth consecutive quarter and during fiscal 2010 reduced our debt net of cash position by $6.0 million, a 50% reduction from 2009," said Presstek Executive Vice President and Chief Financial Officer, Jeff Cook. "We expect first quarter 2011 revenue and adjusted EBITDA to be within the range of our fourth quarter 2010 results. Additionally, we believe that with changes in international tax planning strategies, we could be in a position to reverse the fourth quarter 2010 valuation allowance against deferred tax assets in future periods."
"While our revenue did not rise to the level we would have liked in 2010, the year was filled with many achievements for Presstek," commented Jacobson. "Now that 2010 is behind us we can look back at the many accomplishments we have had. During 2010 we:
- successfully sold our Lasertel business;
- entered into a new credit facility with PNC Bank;
- reduced our debt net of cash to $6.1 million (a 50% reduction);
- completed development and introduced our 75DI digital offset press;
- posted positive adjusted EBITDA in every quarter of the year.
We feel we have accomplished much this year in a very difficult economy and in particular a difficult one for our industry, and with the addition of the 75DI to our product portfolio we feel confident in our ability to grow this business."
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