Presstek Reports Strong Equipment Revenue and Improved Operating Profit in Q2
Thursday, August 11, 2011
Press release from the issuing company
GREENWICH, CT, Presstek, Inc.
- $6.2 million of equipment revenue in second quarter 2011... a 32% year-over-year increase, and up sequentially by 22%
- Revenue includes seven 52DI presses... highest number in past six quarters
- Operating Loss reduced by $0.6 million (34% improvement) from prior year quarter... adjusted EBITDA of $0.3 million remains positive for seventh consecutive quarter
- Operating expenses down 8% from Q2 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 second quarter ended July 2, 2011. In the quarter, the Company reported total revenue of $31.4 million, a comparable level with the amount reported in the second quarter of 2010.
The Company reported adjusted EBITDA of $0.3 million in the second quarter, the seventh consecutive quarter of positive EBITDA. The Company had an operating loss of $1.2 million in the second quarter of 2011, a 34% ($0.6 million) improvement from the amount reported in the 2010 second quarter. The improvement was driven primarily by an increase in equipment gross margin and lower operating expenses, offset partially by lower consumables margin. During the second quarter of 2011, the Company incurred a net loss from continuing operations of $1.7 million, or $0.05 per share, compared to a net loss from continuing operations of $1.8 million, or $0.05 per share, in the second quarter of 2010. (See "Information Regarding Non-GAAP Measures")
"I'm pleased with the strong growth in equipment revenue during the second quarter, especially in view of the continued difficult economic conditions faced by our customers," said Presstek Chairman, President and Chief Executive Officer, Jeff Jacobson. "Our equipment sales were up 32% ($1.5 million) from the second quarter of 2010, and up 22% ($1.1 million) from the prior quarter. We recorded the second 75DI sale after a very successful installation at Blue Cross Blue Shield of Tennessee, and the momentum behind this new product also created increased opportunities for the 52DI press, as evidenced by the sale of seven units in the quarter, the highest level since the fourth quarter of 2009. The favorable market reaction to the 75DI continues to grow, with five orders already in hand for a product that was commercialized only seven months ago. We recently announced the first order from our Europe, Africa and Middle East Region, and the global pipeline continues to grow. The 75DI is a revolutionary product that has the potential to have an important influence on the industry, and be a critical element to drive future equipment and profitable consumables growth for the Company."
Second Quarter 2011 Financial Results Total revenue in the second quarter of 2011 was $31.4 million, down $0.2 million from the second quarter of 2010.
- Equipment revenue increased $1.5 million to $6.2 million in the second quarter of 2011 compared with the same period last year, an increase of 32%. The increase was driven by a higher number of DI unit sales and a mix improvement toward more 52DI presses.
- Consumables revenue totaled $19.3 million in the second quarter of 2011, compared with $20.7 million for the same period last year. The decrease, which was more prominent in the U.S. during the second half of the quarter, was driven by lower customer consumption due to economic conditions.
- Service revenue declined 4% to $5.9 million in the second quarter of 2011 compared to the year-ago quarter. This decline was primarily due to the continued erosion of the analog service base and a general trend by customers to delay service calls and maintenance to save money in a difficult economy. Despite these pressures, Service revenue continues to remain fairly stable.
Gross margin percent for the second quarter of 2011 was 31.7% compared to 32.6% in the second quarter of 2010. The reduction versus the second quarter of 2010 was due primarily to product mix driven by the sizable increase in equipment sales which traditionally have lower margins than consumables.
Operating expenses declined by $0.9 million, or 7.8%, from the second quarter of 2010. The decline in operating expenses was primarily related to lower equity-based compensation as well as lower bad debt reserves and trade show costs. The Company will participate in the 2011 Graph Expo trade show in Chicago during September, and expects to incur a sequential increase in marketing costs of approximately $0.3 million in its third quarter results related to this show.
Debt net of cash increased slightly ($0.4 million) during the second quarter of 2011 compared with the second quarter of 2010 and the first quarter of 2011, ending at $9.2 million. The primary driver for the increase was the introduction of the new 75DI press.
"Our continued success in reducing operating expenses allowed us to reduce our operating loss during the second quarter by $0.6 million from the same quarter in 2010, a 34% improvement," said Presstek Executive Vice President and Chief Financial Officer, Jeff Cook. "We've seen a slowdown in equipment and consumables sales during the beginning of third quarter related to the renewed economic weakness across the U.S. and Europe. In response, we expect to incur special charges during the quarter in relation to additional cost reduction actions underway to help offset some of the impact from this weakness." (See "Information Regarding Non-GAAP Measures")
"We are very excited with the growth prospects of the 75DI, and will maintain the investment in this product required to continue our highly successful launch," continued Mr. Cook. "This includes our presence at the Graph Expo trade show in September, as the success of the 75DI is the most critical project within Presstek. While we maintain our focus on strong cash management, we expect that some top line weakness combined with our continued focus on the 75DI will drive an increase in our debt net of cash by approximately $1.0 million to $2.0 million during the third quarter." (See "Information Regarding Non-GAAP Measures")
Information Regarding Non-GAAP Measures In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the Company provides non-GAAP financial measures, including adjusted EBITDA; debt net of cash; and other GAAP measures adjusted for certain charges, which the Company believes are useful to help investors better understand its past financial performance and prospects for the future. A full reconciliation of GAAP to non-GAAP measures is provided in the financial tables below. Supplemental financial information has been provided with this release to provide additional details on the Company's performance.
Conference Call and Webcast Information Management will discuss Presstek's second quarter 2011 results in a conference call on Wednesday, August 10, 2011 at 10:30 a.m. Eastern Time. Conference call information is below:
Conference Call Access: Domestic Dial In: (866) 804-6921
International Dial In: (857) 350-1667 Passcode: 64650637
In addition, for those unable to participate at the time of the call, a rebroadcast will be available following the call from Wednesday, August 10, 2011 at 1:30 PM Eastern Time until Wednesday, August 17, 2011 at 11:59 PM Eastern Time.
Rebroadcast Access: Domestic Dial In: (888) 286-8010 International Dial In: (617) 801-6888 Passcode: 93101508
An archived webcast of this conference call will also be available on the "Investor Events Calendar" page of the Company's web site, www.presstek.com.
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