Presstek today announced its first quarter earnings results. The company reported revenue of $70.4 million compared to $23.3 million in the same period last year, and $54.1 million in the last quarter. Net income for the quarter was $481,000, or $0.01 per diluted share, compared to $1.89 million, or $0.05 per diluted share, in the same period last year. The acquisition of ABDick accounts for most of the difference from last year.
Topics of this Summary
- Quarter Highlights
- Segment Performance
- Raine Radar
- Q & A
- Cash balance at the end of the quarter was $12.8 million, up from $8.7 million at the end of 2004.
- Total debt decreased to $39.6 million from $41.9 million at the end of 2004.
- EBITDA for the Q1 was $4.9 million.
- The company incurred $982,000 in integration charges and employee termination costs.
- Presstek announces that integration of ABDick is progressing ahead of schedule.
- The company hires a new President, new VP of Sales, VP of Service, and a new HR director.
- ABDick has started selling Presstek products to its existing customer franchise.
- Presstek will be consolidating the Rochester ABDick operations into the Hudson facility.
Revenue for Presstek’s DI and CTP business reported record revenue of $25.9 million during the first quarter, up from $22.8 million in the same period last year. Equipment revenue for the fourth quarter was $10.8 million, up from $9 million last quarter. Consumable revenue was a record $14.7 million in the first quarter, down slightly from $14.8 million last quarter. CTP consumable sales topped $4 million for the first time. Gross margins fell to 37%, down from 40% 3 months ago. Net income for the segment this quarter was $3.5 million.
External Lasertel sales were $737,000, up from $540,000 in the first quarter of 2004. Lasertel’s reported an operating loss of $913,000, compared to $1.4 million in the same period last year. Lasertel is planning on bringing on an additional reactor online in the next several months.
In its first full quarter as a Presstek subsidiary, ABDick posted first quarter revenue of $41.2 million, up 4% on a pro-forma basis from the eight week period in the Q4 2004 following the acquisition. The business reported operating income of $509,000 in the first quarter, up from a loss of $709,000 last quarter. On a net income basis, excluding special charges, ABDick broke even in the first quarter.
Revenues from Precision Lithograining were $6.7 million in the first quarter, down from $7.4 million last quarter. The segment reported an operating loss of $300,000 for the first quarter, although March was profitable. The company expects Precision to be profitable in the second quarter. Precision was acquired in July, 2004.
Presstek plans on achieving an annualized revenue run-rate of at least $300 million by the end of 2005, with an annualized EBITDA run-rate of $30 million or greater. As of the end of the first quarter, the revenue run-rate is approximately $280 million, with an EBITDA run-rate of approximately $20 million. The company claims its initiative to cut $7.0 million in costs throughout 2005 is on track. Presstek provided no further guidance for 2005.
ABDick saw over a $1 million dollar swing in net income from last quarter, which is impressive. As the integration continues, ABDick should start to contribute to Presstek’s bottom line shortly. In addition, Precision seems capable of returning to profitability during the Q2, and Presstek’s core business seems solid, especially in consumables. It seems as though the pieces are coming together very nicely at Presstek, and it looks like the business is poised to grow. Last quarter, I commented on the debt and cash picture looking less than ideal. During the first quarter, Presstek paid down some of their debt and increased their cash, improving the state of their balance sheet.
Q & A
- The ABDick run-rate of $160 million is better than the company expected, and Presstek expects that number to improve as the distribution of Presstek digital solution through the ABDick channel improves.
- Gross margin, currently at slightly above 29%, is expected to rise as the integration of ABDick continues, however, Presstek is more concerned with equipment penetration than maximizing equipment margins.
- The operating expense to sales ratio was at 26% for the quarter. Presstek has a target ratio of approximately 20%.
- Lasertel is installing the new reactor based on customer demand for volumes above what were unattainable. The new reactor will triple the capacity at Lasertel. The company is hopeful that Lasertel will reach breakeven by the end of 2005.
- Presstek has a total customer franchise of 18,000 (3,000 of which are Presstek customers, and the balance come from ABDick).
- The company is comfortable with current inventory levels.
- ABDick is not anticipating any delays in the delivery of product during the consolidation.
- Presstek is expecting to cut about 80 people from the approximately 550 employees at ABDick.