By Steven Schnoll November 9, 2004 -- Presstek, Inc. (NASDAQ: PRST) reported strong third quarter numbers, revenues were announced at $29.8 million up 51% over the same period in 2003; an increase of 31% from 2004 Q2 revenue. These quarterly results were the highest in company history. These significant gains include the consolidated revenue from Presstek’s newly acquired subsidiary, Precision Lithograining Company (PLC), which infused $3.1 million into the reported figures. Consolidated gross margins for the quarter declined to 34% compared to 39% in 2003 Q3 and 40% in Q2 2004. The cash balance declined to $16.8 million. Topics of the summary Overall Performance Guidance Q & A Overall Performance Presstek has achieved significant growth with 9 consecutives quarters of profitability. They have experienced an organic growth rate of 35% and a total growth run of 50%. This growth has been generated by a mix of consumables new press sales and CTP devices. Consumables have experienced a 15% year-to-year growth rate. At both Drupa and Graph Expo the company experienced an overwhelming positive response to all products in their booth and OEM partners’ booths. Management reported that the new technology portion of the business grew by over 60%, 37% in consumables and 70% in equipment. Lasertel has a new president and that subsidiary is receiving positive feedback on its product array. Lasertel recorded $1.9 million in sales for the first 9 months of 2004 as compared to $1.6 million in all of 2003. In the two months that PLC was part of Presstek it contributed $3.8 million in gross revenue and $3.1 million in accretive sales. This was all completed while PLC was not even working at full capacity due to a production line upgrade. This quarter represented the best quarter ever for the new management team headed by Ed Marino. The company also reported that their pursuit of AB Dick is winding down in the courts. No new suitors have put bids in but two internal restructuring proposals have been presented to the court. The company remains confident and a decision should be announced in November. [Note on November 3, 2004 the US Bankruptcy Court accepted Presstek’s bid for the assets of AB Dick] Raine’s Radar Presstek is no longer waiting for the market to crystallize. Its strong demonstration of a diversified product portfolio at both Drupa and Graph Expo clearly marked Presstek’s market leadership in the direct imaging, plate consumable and CTP device world. They are no longer dependent on Heidelberg for a good portion of revenue and have opened channel partner arrangements with several excellent organizations. The acquisition of Precision Lithograining Company certainly had a positive impact in quarterly results. While a positive spin was put on the Lasertel operation it is still cloudy how that subsidiary will play out in the long term. Several of their previously announced products like Dimension, Anthem and Applause should continue to increase revenue and profits. Ed Marino and his team should be applauded for taking this decaying company to an industry leading position. Guidance The company is looking forward to a strong year-end. While it did not share any financial predictions it seems they are confident they will provide sustained earnings and growth through year-end. Q & A The consumable burning engines continue to grow, past 4 quarters approximately 200 units sold, 500-600 CTP devices in the field Strength will continue to come from US market PLC impacted Q3 results for only 9 weeks in a 13 week quarter and it was not a peak performance quarter for PLC due to several factors The company is increasing inventory in aluminum due to their changing business model. It is very comfortable with the $4 million inventory level. Sales are flat with Heidelberg. Not anticipating much from that relationship It is tough to track sales success from events like Drupa and Graph Expo. Lead time on press sales 6- 9 months, CTP devices 3-6 months Gross margins will continue be a function of product mix. One should look at “pile of dollars” not margin percentage Geographical sales breakdown is 50% North America, 40% Europe and 10% rest of world with 5% of this number in Japan SG&A should maintain itself at current levels should get some benefit from decrease in R&D Fuji lawsuit in Germany almost complete should see some rulings in November The Applause plate won the 2004 GATF InterTech award. This award not only recognizes outstanding technology but customer response to product. Applause is a product to attract new customers not compete with Anthem Breakeven for Lasertel is anticipated early 2005, very pleased with progress and customer cycle Not attempting to penetrate Creo market space at this time