Scitex Announces Q3 Loss: Digital Printing Unit Down, But Optimistic for Q4
Press release from the issuing company
TEL AVIV, Israel, Nov. 17 -- Scitex Corporation, a world leader in industrial inkjet digital printing solutions, today announced results for the third quarter ended September 30, 2002.
Scitex's revenues for the third quarter of 2002 were $57.7 million, a decrease of 13% from $66.6 million in the third quarter of 2001. Operating income was $2.1 million (before amortization of intangibles of $0.8 million), compared to $3 million in the third quarter of 2001 (before amortization of intangibles of $3.1 million). Net loss for the quarter was $0.8 million, compared to a loss of $41.4 million in the third quarter of 2001. Geographically, the Americas contributed 38% of the revenues followed by Europe with 36% of revenues, and the Far East (including Japan) trailed with 23% of revenues.
Mr. Yeoshua Agassi, President and CEO of Scitex commented: "In spite of the slowdown in US capital equipment purchases and the similar trends in Japan, we have experienced some improvement in sales bookings. In this quarter, Scitex managed to continue improving its operating income as compared to the previous quarter, in spite of a slightly lower revenues level. However, our detailed results show mixed performance, with Scitex Vision demonstrating in this quarter strong revenue, margins and profitability performance while Scitex Digital Printing's results suffered due to a slippage of a few transactions into the fourth quarter. Consequently, SDP reported a weak revenue quarter affecting its profitability as well. As for the coming quarters, visibility continues to be limited and markets are expected to remain tough. We are nevertheless optimistic that SDP's revenues will pick-up with at least an additional $10 million in revenues in the fourth quarter compared to this quarter, resulting in their revenues for the second half of 2002 being higher than those for the first half of the year."
Mr Agassi concluded: "In line with our focus and commitment to the Digital Printing market we have recently announced the planned merger between Scitex Vision and Aprion Digital, which we believe will substantially strengthen the market position of both entities. We have committed as well, to make a further investment in Jemtex and support their continued development. We believe these moves will further enhance our position as the leading provider of industrial inkjet solutions."
Scitex Digital Printing, Inc. (SDP)
Revenues for the third quarter of 2002 were $34.8 million, a decrease of 17% from $41.8 million in the third quarter of 2001 and of 8.5% from $38.0 million in the previous quarter. Operating income was $0.5 million (1.3% of revenues) as compared to $1.7 million in the third quarter of 2001 and $1.5 million in the previous quarter (figures are before amortization of intangibles).
SDP's decline in revenues for the quarter is mainly attributed to the continued weakness and lengthy sales cycles in the US market as well as substantial softness in the Japanese market.
As part of SDP's focus on the Scitex VersaMark product line, the company announced an agreement with Electronics For Imaging (EFI), following which EFI will develop a new high speed version of its Fiery controller to drive the next generation of SDP's color technology. This relationship will allow SDP to address multiple workflows incorporating full high quality color images in the data center industry and will, in the longer term, enable SDP to offer its products to a wider range of mainstream commercial printing customers.
At the Xplor digital event for industrial document production, attended by many of SDP's target VersaMark prospects, SDP attracted substantial interest being the only company to present a high speed, low printing cost, color printing solution suitable to the needs of the transaction printing market.
Scitex Vision Ltd.
Revenues for the third quarter of 2002 were $22.9 million, a decrease of 8% from $24.8 million in the third quarter of 2001 but an increase of 10% from $20.8 million in the previous quarter. Operating income was $2.3 million (10% of revenues) as compared to $3.1 million in the third quarter of 2001 and $0.2 million in the previous quarter (figures are before amortization of intangibles).
Following the end of the quarter, Scitex announced a Summary of Terms agreement to merge Scitex Vision with Aprion Digital at an approximate one to one basis. Scitex holds today a 42.5% interest in Aprion and will hold more than 70% in the merged company. The merger is subject to the conclusion of due diligence, regulatory approvals and definitive agreements. It is the intent of the parties to complete the transaction by year-end. In connection with the merger, the capital structure of the merged entity will be strengthened, including by infusion of additional funds by Scitex. The merger clearly matches the customer facing strength of Scitex Vision and the stability of its ongoing business, with the new business opportunities generated by Aprion's unique product and technology assets.
At the SGIA show in St. Louis, the main marketing event for the year in the US, Scitex Vision presented its new products, the Veejet, a flatbed system for printing on rigid substrates and the Aprion developed Scitex Superjet, an advanced roll-to-roll high-end digital printer. Both products generated strong attention.
Industrial Ink Jet Companies
Aprion Digital Ltd.
Aprion develops Drop-On-Demand inkjet technologies and systems for a variety of end user digital printing applications. In the third quarter, Aprion continued to recognize revenues and make progress in the packaging market with several Shaldag systems now fully operational. Hundreds of prospective customers attended an open house event demonstrating the packaging solution organized by Aprion's distributor in Italy, Castaldini Group S.R.I..
Jemtex Ink Jet Printing Ltd.
Jemtex develops heavy-duty digital printing systems, based on its novel continuous inkjet technology. The company is specifically targeted at providing solutions to the textile printing market, as well as to the tile printing market. During the third quarter, Scitex and Jemtex concluded the terms of an additional investment which will increase Scitex's equity stake in the company. The investment will primarily support Jemtex's continued R&D efforts.
Objet Geometries Ltd.
Objet develops and manufactures inkjet printers for the creation of three- dimensional models. Objet continues to penetrate additional geographic and application markets with special progress made in the third quarter in the Far East. During the quarter, Scitex invested an additional amount of $0.4 million in Objet and holds 17.4% of Objet's outstanding share capital.
For its fourth quarter of 2002 (ended September 30, 2002), Creo reported revenues of $138.4 million compared to revenues of $143.2 million in the fourth quarter of 2001. Creo's net income under US GAAP for the quarter was $0.2 million or breakeven per share (diluted). With effect from December 1, 2001, Scitex accounts for the Creo investment as "available for sale" and the changes in its share price value are recorded to shareholders' equity. Gain or loss from this investment will only be recognized in the event of a sale of its Creo shares or in the event of impairment which is not of a temporary nature. Accordingly, the change for the quarter in Scitex's investment in Creo was a decrease of $31.5 million recorded to shareholders' equity due to the decrease in the market price of Creo's shares at quarter-end to $5.01 per share (the current market price of Creo's share on Nasdaq is $6.99). Scitex holds 12.7% in Creo's outstanding share capital.
Balance Sheet and Cash Flow
Scitex's cash and cash equivalents, on a consolidated basis, were down by $9 million compared to the previous quarter, primarily due to reduction of bank loans of $2 million and negative operating cash flow of $6.4 million for the quarter. During the third quarter receivables were increased mainly due to extended payments terms, and VAT returns. Inventory remained stable. During the quarter, an Impairment Examination Study of Scitex's Long-lived Assets, based on the requirements of FASB Nos. 142 and 144, was performed, as at June 30, 2002, by a non-related firm of leading financial consultants. This study found that no impairment of such assets exists.
WhatTheyThink is the global printing industry's leading independent media organization with both print and digital offerings, including WhatTheyThink.com, PrintingNews.com and WhatTheyThink magazine versioned with a Printing News and Wide-Format & Signage edition. Our mission is to provide cogent news and analysis about trends, technologies, operations, and events in all the markets that comprise today’s printing and sign industries including commercial, in-plant, mailing, finishing, sign, display, textile, industrial, finishing, labels, packaging, marketing technology, software and workflow.