ImageX Announces 35 Percent Improvement in Cash Loss Per Share
Press release from the issuing company
KIRKLAND, Wash., Nov. 1 ImageX (R), Inc., the leading e-print service provider for the online management and procurementof branded communications materials today announced revenues of $12.8 million for the quarter ended September 30, 2001, compared with revenues of $18.5 million for the same period last year. The company attributes the decline in revenues over the same period last year to general economic weakness as well as the events on September 11.
ImageX president and CEO Rich Begert said he was disappointed in the results of the third quarter, and attributed the company's decline in revenues to deteriorating economic conditions made worse by the events of September 11. Begert pointed out that business for many of the company's major customers "ground to a near halt during the weeks immediately following the terrorist attack.''
"Despite the overall downturn in revenues this quarter, we launched one of our largest re-branding efforts ever for a major international corporation,'' Begert said. "This is in line with our renewed focus on our core technology, the ImageX Print System, and the new ImageX brand announced in October,'' he said. "Our online print business continues to grow and software revenues improved quarter over quarter.''
For the quarter ended September 30, 2001, the company reported a cash loss of $4.6 million, or ($0.15) per share, based on 30.7 million weighted average shares outstanding versus the updated Thomson/First Call consensus estimate for the third quarter 2001 of ($0.18) per share. This compares with a cash loss of $6.3 million, or ($0.23) per share, based on 27.3 million shares outstanding for the previous quarter, and a cash loss of $10.7 million, or ($0.41) per share, based on 26.1 million shares outstanding for the same period last year.
Including non-cash items, the company's net loss for the quarter ended September 30, 2001, was $8.3 million, or ($0.27) per share, on 30.7 million weighted average shares outstanding, compared with a net loss of $14.3 million, or ($0.55) per share, on 26.1 million weighted average shares outstanding for the three months ended September 30, 2000.
ImageX reported gross profit of $4.4 million for the quarter ended September 30, 2001 compared with gross profit of $6.3 million for the same period last year. Gross margin decreased from 35.5 percent in the second quarter to 34.5 percent in the third quarter as a result of lower ordering volumes. Total operating expenses before depreciation, amortization, loss on disposal of assets, and the write-off of IPRD were $9.1 million for the quarter ended September 30, 2001 compared with $17.9 million for the same period last year, a decline of 49 percent. Comparing the third quarter 2001 to the second quarter 2001, cash operating expenses fell 24 percent, demonstrating the company's continued focus on expense control. The company reported cash and cash equivalents of $20.2 million at September 30, 2001.
Chief Financial Officer, Robin L. Krueger, said the company is resolutely committed to managing costs in line with revenue performance. "Over the past year, we have succeeded in effecting consistent cost reductions and increased productivity in both the print and software business lines,'' she said. "The good news is that cash operating expenses have declined, both in dollar terms as well as a percentage of revenues, and will continue to do so over the next several quarters. These actions all support our drive toward profitability.''
The company cited five major operations initiatives that brought success over the past quarter:
* An effective cost management plan that delivers results. The results of cost initiatives from previous quarters and continuing diligence in cost management resulted in the 24 percent decline in cash operating expenses in the third quarter compared to the second quarter of 2001. "While we had been hopeful that the second quarter represented a turning point for economic softness in our industry sector, we recognize that the next few quarters will be challenging and we are prepared for that,'' said Rich Begert. "The bright light is that, while revenues declined, operating expenses declined an even greater amount -- at more than 24 percent this quarter compared to last quarter and delivering the fourth consecutive quarterly decline in operating expenses.'' Compared to the third quarter last year, operating expenses declined 49 percent. Cost efforts will be further assisted by the successful sale of the Creativepro.com content Website, originally developed by the Extensis Product Group, which closed in October. As of September 30, 2001, total team members were 505.
* New customers, new products, new order volume. The company added 14 new online customers during the quarter, bringing the total customers introduced to the ImageX Print System over the past three years to 366, Begert said. Order volume for the quarter ended September 30, 2001 were nearly 47,000 items, a decrease of 28 percent compared to 65,000 items the prior quarter, but up 50 percent from 31,000 orders one year ago. During the third quarter, 13 new customized corporate Web sites went live and over 600 new products were set up on customer Web sites.
* Major re-branding customers choose ImageX. With the selection of ImageX as print provider of choice for branded communication materials by a number of major US corporations, the company continues to widen its lead in the large corporate re-branding and e-procurement arena. Customer testimonials make it clear that these corporate customers have chosen ImageX for its ability to offer high quality, on time, branded materials throughout the country on an expedited basis. In addition to completing sites for some of the largest business units of GE under a newly awarded contract, major corporations in the oil industry, such as Unocal and another recently-merged oil company, have gone "live'' with ImageX as their provider.
* New brand and product focus. The launch this past quarter of the ImageX Print System enables ImageX to offer a suite of print solutions to both medium and large corporations. The new suite delivers up to a 60 percent cost savings for most corporate customers by providing e-procurement management of print as well as fast printing of branded printed materials during a brand change. ImageX will now offer four distinct editions in the suite: e-Procure, e-Brand, e-Print and Enterprise. Affirming its focus on delivering print to medium and large corporate customers, ImageX has launched a new name, logo, and tagline: "ImageX. Print. To the Power of X.'' ImageX's new brand and updated ImageX Print System reflects the company's focus on quality printing delivered through technology.
* New software product releases positively impact revenue. Two new product releases by the Company's Extensis software line, Suitcase 10 and Suitcase Server, resulted in a six percent improvement in software revenues in the quarter. While it was expected that the new product introductions would result in revenue improvements, the impact has been magnified by a distribution agreement signed with Apacabar, Ltd. in France and significant positive reviews from domestic and international publications. These include the influential Electronic Publishing and MacWorld (UK). The improvements to these products enable creative professionals to realize efficiencies in workflow on their desktop and in their creative workgroups.
CFO Robin L. Krueger described the third quarter as "disappointing,'' but pointed out that the company "already had appropriate cost initiatives in process to sustain our progress toward profitability.'' She added, "As a consequence of weakness in the third quarter, our revenue estimates for 2001 will be between $55 and $60 million, representing growth of 10 percent to 20 percent over the full year 2000.'' In addition, she pointed out that cash operating expenses are expected to continue to decline. "Based on our latest updated revenue forecast and cost management plan, our cash balance remains sufficient to reach cash flow breakeven and profitability.''
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