Indigo Reports 3Q Results: $7 Million Net Loss, Revenue Strong
Press release from the issuing company
MAASTRICHT, The Netherlands---Nov. 6, 2001--Indigo N.V., a leader in digital color printing, today reported financial results for the third quarter ended September 30, 2001. Third quarter revenues were $44.1 million, up 14 percent from the $38.7 million reported for the third quarter of 2000. Revenues were the highest ever reported by the company for a third quarter and follow a similar record profile achieved during the second quarter of this year. Revenue growth would have been 16 percent before the negative impact of currency conversion.
Third quarter unit shipments were also at an all-time high for a third quarter, increasing by more than 20 percent over the third quarter of 2000, with the newest Indigo press, the Platinum, which was introduced in July 2001, making up nearly half of the units shipped. Revenue from equipment sales increased 14 percent to $23.7 million, compared with $20.8 million in the third quarter of last year. Equipment gross margins in the quarter were 28 percent compared with 45 percent in the same quarter last year, primarily due to the product mix, the increased contribution of lower-margin sales to distributors and OEMs in the sales mix, and price reductions in the USA.
Post-sales revenues, including consumables and service, were $20.3 million in the third quarter of 2001, a 14 percent increase compared with the third quarter of 2000. A 24 percent increase in the number of pages printed by Indigo customers worldwide was offset by lower service and consumables pricing and a negative impact from currency conversion. Post-sales gross margin was $10.0 million, or 49 percent of post-sales revenues. The lower than expected post-sales gross margin is a result of a larger percentage of pages being printed on UltraStreams and a lower margin from UltraStream Series Two imaging products, compared with the more mature Series One imaging products.
"We are pleased with Indigo's performance in the third quarter, despite the weak economic climate,'' said Benny Landa, Indigo's chairman and chief executive officer. "The slow-down in the economy was clearly evident at the Print '01 show with lower attendance and generally less activity than usual. By way of contrast, we were pleased with the acceptance at the show of our newest product offering - the Platinum - which made up almost half of our units shipped in the quarter. This is a clear indication that this product should be a strong contributor to our performance going forward.'' Landa added, "We are excited about the HP acquisition of Indigo and the potential new opportunities this combination will yield. Both Indigo and HP teams are working diligently to meet all regulatory requirements to close this transaction, which was announced on September 6, 2001, as soon as possible.''
Indigo's net loss for the quarter was $7.0 million, compared with a net loss of $2.4 million for the third quarter of 2000, impacted by the decrease in gross margin as well as by expenses associated with the HP transaction, and with the Print'01 exhibition, and an increase in the bad debt reserve. Loss per common share was $0.06, compared with a loss per common share of $0.03 in the third quarter of 2000 (excluding $61.6 million, or $0.78 per share, in dividends and conversion inducements on preferred shares).
Third quarter net research and development (R&D) expenses were $3.8 million, a 28 percent decrease compared with the third quarter of last year. Gross R&D expenses of $7.0 million were up 13 percent compared to the third quarter of 2000. Sales, general and administrative (SG&A) expenses increased 28 percent to $20.9 million from $16.3 million in the third quarter of 2000. General and administrative expenses, excluding a $1 million increase in the bad debt reserve, and $1.5 million related to the HP deal, were up slightly compared to the comparable quarter last year. Sales expenses increased due to the growth of Indigo's direct sales force. Marketing expenses were up as there were no major shows during the third quarter of last year, while this year's third quarter marketing expenses include approximately $2 million for the Print '01 exhibition which took place in Chicago in September 2001.
Indigo's Chief Financial Officer, Alon Bar-Shany, commented, "This is the 17th quarter in a row that our operating revenues have grown compared to the same quarter in the previous year, though at a rate more modest than that achieved in the last several quarters. Through the first nine months, revenue has grown 17 percent year over year, very close to our guidance. However, there is less visibility for revenue growth in the fourth quarter, given the weak economic conditions.''
Mr. Bar-Shany added, "We ended the quarter with a strong balance sheet, including $77 million in cash and investments, and $18 million in short-term utilization of our credit lines. The increased bad debt reserve reflects the slowdown in some of our customers' business due to the weak economy.''
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