Presstek Reports Better Than Expected Q4 Financial Results
Friday, March 16, 2012
Press release from the issuing company
Presstek, Inc. (NASDAQ: PRST), 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 December 31, 2011. In the quarter, the Company reported total revenue of $29.8 million compared to $31.1 million in the fourth quarter of 2010, and adjusted EBITDA of negative $0.9 million compared to $0.6 million in the prior year fourth quarter. For 2011, the Company reported total revenue of $120.0 million compared to $128.6 million for 2010, and adjusted EBITDA of negative $1.4 million compared to $4.0 million for the prior year. (See "Information Regarding Non-GAAP Measures")
In the fourth quarter of 2011 the Company had a net loss of $3.8 million, or $0.10 per share, compared to a net loss of $6.7 million, or $0.18 per share, in the prior year quarter. The fourth quarter of 2010 included a $2.7 million valuation allowance against certain deferred tax assets outside the U.S., as well as a $1.9 million expense related to a bad debt reserve established for a single customer. For 2011 the Company had a net loss of $12.4 million, or $0.33 per share. The Company's 2010 net loss from continuing operations was $10.6 million, or $0.29 per share.
"Presstek faced another challenging year in 2011, as adverse economic and industry conditions continued to negatively impact print volumes," said Stanley E. Freimuth, Presstek's Chairman, President and Chief Executive Officer. "However, we were pleased with activity in the fourth quarter. We had previously reported that we expected fourth quarter revenue and gross margin dollars to be flat relative to third quarter numbers, and our results were better than expected. With the significant cost reductions that we implemented at the end of 2011, we expect adjusted EBITDA to be positive for 2012."
Fourth Quarter 2011 Financial Results Total revenue in the fourth quarter of 2011 was $29.8 million, a decrease of $1.2 million from the fourth quarter of 2010.
-- Equipment revenue increased $0.5 million, to $6.0 million, in the fourth quarter of 2011 compared with the same prior year period due to a favorable mix of DI press sales. -- Consumables revenue totaled $18.1 million in the fourth quarter of 2011 compared with $19.5 million for the same period last year due primarily to reductions in legacy product categories. -- Service revenue declined $0.3 million in the fourth quarter of 2011 compared to the year ago quarter due to lower contract service and parts revenue.
Gross margin percent for the fourth quarter of 2011 was 25.0% compared to 31.9% in the fourth quarter of 2010. Lower margins were primarily the result of a lower mix of higher margin consumables revenue, a stronger yen, and unabsorbed manufacturing overhead in our factories resulting from lower overall production.
Total operating expenses in the fourth quarter were $10.5 million, compared with $13.3 million in the prior year period. Operating expenses, excluding special charges, declined by $3.8 million, or 29%, from the fourth quarter of 2010. The decline in operating expenses was primarily related to reduced payroll and other costs resulting from recent cost reduction initiatives, as well as reduced bad debt and stock compensation expenses. (See "Information Regarding Non-GAAP Measures")
2011 Financial Results Total revenue in 2011 was $120.0 million, a decrease of 6.7%, or $8.6 million, from 2010.
-- Equipment revenue decreased 3.1% to $20.7 million in 2011 compared with last year. The Company did, however, sell five 75DI presses on three different continents during the year. -- Consumables revenue totaled $76.3 million in 2011 compared with $82.3 million for the prior year resulting from general declines in our plate and consumables product lines. -- Service revenue declined 7.6%, to $23.0 million in 2011 compared to the prior year primarily due to a decline in our analog service customer base.
Gross margin percent for 2011 was 28.9% compared to 32.6% in 2010. The reduction was primarily the result of unfavorable equipment and consumables product mix, a stronger yen, and unabsorbed manufacturing overhead in our factories.
Full year 2011 operating expenses of $44.8 million represented a reduction of $3.9 million from the prior year. The decline in operating expenses was primarily attributable to the Company's cost reduction activities and lower stock compensation expense, partially offset by higher restructuring charges of $1.3 million.
"As a result of the additional cost actions taken during 2011, all of which will be fully reflected beginning in the first quarter of 2012, Presstek has positioned itself to benefit from the favorable impact of an improving market," said Arnon Dror, Presstek's Vice President, Chief Financial Officer and Treasurer. "With the worst of the economic downturn hopefully behind us, we expect that our reduced cost structure will help drive enhanced bottom line results in 2012."
"In May we will be showcasing our 75DI press for the first time on a worldwide stage at the Drupa trade show in Dusseldorf, Germany," said Freimuth. "We are excited for the world to see the capabilities of this dynamic and versatile press. The technology in Presstek's DI presses is truly remarkable, and has come a long way since the DI press was first introduced many years ago. The 75DI is the only press on the market that can go from digital file to saleable sheet in six minutes and print at 16,000 impressions per hour. It is also the most economical press in the market for four or more color jobs with run lengths between 500 and 20,000 impressions, which is the range of most jobs being run today. We will be driving this message harder to the market to create more opportunities for Presstek as the printing industry recovers from the effects of the economic downturn."
Transfer of Stock Listing to NASDAQ Capital Market The Company also announced that it intends to apply to transfer its stock listing to the NASDAQ Capital Market from the NASDAQ Global Select Market in April of 2012, which will provide an additional 180-day period in which to regain compliance with NASDAQ's requirement that companies maintain a minimum bid price of $1.00 per share. The Company is currently required to regain compliance with the minimum bid price requirement by April 23, 2012. The Company's ticker symbol would remain unchanged, and the manner in which the Common Stock is quoted and traded should not be affected.
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 operating expenses excluding special charges; 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 supplemental financial information provided with this press release.
Conference Call and Webcast Information Management will discuss Presstek's fourth quarter 2011 results in a conference call on Thursday, March 15, 2012 at 10:30 a.m. Eastern Time. Conference call information is below:
CONFERENCE CALL ACCESS Domestic Dial In: (866) 730-5769
International Dial In: (857) 350-1593 Passcode: 91052996
Investors can access the call in a "listen only" mode via the Internet at http://www.presstek.com
In addition, for those unable to participate at the time of the call, a rebroadcast will be available following the call from 12:30 PM Eastern Time on Thursday, March 15, 2012 until 11:59 PM Eastern Time on Thursday, March 22, 2012.
REBROADCAST ACCESS Domestic Dial In: (888) 286-8010 International Dial In: (617) 801-6888 Passcode: 51306669
An archived webcast of this conference call also will be available on the "Investor Events Calendar" page of the company's web site.
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