Presstek Reports Improved Q1; Q2 Outlook Shows Growth
Tuesday, May 10, 2011
Press release from the issuing company
Presstek, Inc., a leading supplier of digital offset printing solutions to the printing and communications industries, today reported financial and operating results for the first quarter ended April 2, 2011. In the quarter, the Company reported total revenue of $31.9 million, a decline of 7.6% from the amount reported in the first quarter of 2010, and an increase of 2.6% from the fourth quarter of 2010.
In the quarter, the Company reported adjusted EBITDA of $0.7 million, the sixth consecutive quarter of positive EBITDA. The Company had an operating loss of $1.2 million in the first quarter of 2011 versus an operating loss of $0.3 million in the 2010 first quarter. The majority of the increased operating loss in the first quarter of 2011 was related to lower revenue along with lower gross margins on equipment sales and service. During the first quarter of 2011, the Company incurred a net loss from continuing operations of $1.5 million, or $0.04 per share, compared to a net loss from continuing operations of $0.5 million, or $0.02 per share, in the first quarter of 2010. (See "Information Regarding Non-GAAP Measures")
"We had indicated during our last earnings call that we expected first quarter 2011 revenue and adjusted EBITDA to be relatively flat in comparison with our fourth quarter 2010 results. I am pleased to report we exceeded that expectation with a 2.6% sequential quarterly increase in revenues and 14% more in EBITDA," said Presstek Chairman, President and Chief Executive Officer Jeff Jacobson. "The sale of consumables accelerated during the latter part of the quarter, providing us with our highest quarterly total revenue performance in four quarters. Additionally, we continued to generate positive quarterly adjusted EBITDA. We successfully completed installation of our first 75DI during the quarter, and the sales prospect funnel for the 75DI continues to be robust. It's exciting to see the different types of customer solutions that the 75DI press can serve, including folding cartons, book covers, and applications requiring sensitive treatment of various substrates. In fact, the high level of interest generated by the 75DI has led to increased awareness of the 52DI. I'm also pleased that compared to the first quarter of 2010, consumable sales from our 52DI solutions increased 23% and consumable sales from our open architecture computer-to-plate solutions increased 31% during the first quarter of 2011." (See "Information Regarding Non-GAAP Measures")
First Quarter 2011 Financial Results Total revenue in the first quarter of 2011 was $31.9 million, up $0.8 million from the previous quarter and a decrease of $2.6 million from the first quarter of 2010.
-- Equipment revenue decreased $1.3 million, to $5.1 million in the first quarter of 2011, compared with the same period last year.
-- Consumables revenue totaled $20.7 million in the first quarter of 2011, compared with $21.5 million for the same period last year, as bad weather across much of the U.S. and Canada during January and February resulted in reduced customer demand. However, March sales showed a strong recovery, resulting in a sequential quarterly increase of 6.4%. Consumable sales in the Europe, Africa and Middle East Region during the first quarter were up 11.4% from the comparable year-ago quarter.
-- Service revenue declined 8.7% to $6.0 million in the first quarter of 2011 compared to the year-ago quarter. This decline 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. Service revenue has remained fairly stable during the past four quarters.
Gross margin percent for the first quarter of 2011 was 31.2% compared to 33.0% in the first quarter of 2010. The reduction versus the first quarter of 2010 was due primarily to lower service and equipment margins. The Company implemented cost reduction actions in the Service business during the first quarter of 2011 in response to lower Service margins.
Operating expenses declined by $0.5 million, or 4.2%, from the first quarter of 2010. Excluding special charges of $0.3 million, operating expenses were down 6.8% on a year-over-year basis. The decline in operating expenses was primarily related to reduced payroll costs, professional service fees, and equity-based compensation. The Company incurred restructuring expenses of $0.3 million during the first quarter of 2011 related to cost actions taken to reduce future annual operating expenses and Service business costs aggregating approximately $1.3 million.
As the Company expected, debt net of cash increased during the first quarter of 2011, ending at $8.8 million compared to $6.1 million at the end of fiscal 2010. The primary causes of the increase were cash expenditures incurred with the introduction of the new 75DI press, pre-payment of certain annual operating expenses in the normal course of business, and higher receivables resulting from stronger March sales.
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