Presstek Reports Strong First Quarter 2003 Results
Press release from the issuing company
HUDSON, N.H., April 24 -- Presstek, Inc., a leading provider of direct digital imaging technology, today announced financial results for the first quarter ended March 29, 2003.
The company reported net income for the first quarter of 2003 of $1.8 million, or $.05 per diluted share, compared to $183,000, or $.01 per diluted share, for the corresponding period in the prior year, and net income of $2.4 million, or $.07 per diluted share in the fourth quarter of 2002. Fourth quarter 2002 net income includes a $1.0 million favorable adjustment to the company's restructuring reserves. Revenues for the first quarter ended March 29, 2003 were $22.44 million, compared to $20.80 million in the same period a year ago, and $22.38 million in the fourth quarter of 2002.
Consumable revenues for the first quarter of 2003 were $13.6 million, down slightly from $13.7 million in the corresponding period in the prior year, and up slightly from $13.5 million in the fourth quarter of 2002. Equipment revenues for the first quarter were $7.6 million, up 22% from $6.2 million in the same period a year ago, and down slightly from $7.8 million in the previous quarter. Revenue and net income for the first quarter of 2003 were only minimally impacted by the implementation of the company's new DI consumable distribution channel in Europe.
Results for the first quarter of 2003 include an operating loss before inter-company charges of $1.1 million at the company's Lasertel subsidiary, compared to an operating loss before inter-company charges of $1.4 million in the previous quarter, and $1.6 million in the same period a year ago. Lasertel recorded $275,000 in revenues from sales to external commercial customers in the first quarter of 2003.
Gross margins for the first quarter were 42%, compared to 39% in the first quarter of 2002. This was primarily the result of lower warranty costs, productivity and yield improvements, and the favorable impact of the external sales by Lasertel.
Operating expenses (being the sum of research & development and sales, general & administrative expenses) were $7.5 million in the first quarter of 2003, compared to $7.1 million in the prior quarter, and $7.7 million in the same period last year. The slight quarter-over-quarter rise in operating expenses in the first quarter of 2003 is primarily the result of increased service and support costs.
Commenting on the first quarter, President and Chief Executive Officer Edward J. Marino said, "We are very pleased with our first quarter results. Excluding the one-time $1.0 million favorable restructuring reserve adjustment to net income last quarter, net income of $1.8 million for the first quarter of 2003 is the highest reported in the last nine quarters, and we have now recorded three consecutive quarters of steady growth in revenues, gross margins and net income. These results are particularly gratifying because they were achieved in the continuing soft capital equipment and graphic arts market. We believe they are a direct result of the operating and marketing initiatives we began a year ago."
"In the first quarter of 2003, we had a meaningful increase in revenues from external commercial customers at Lasertel," said Marino. "These revenues came primarily from sales of production laser diode products for military applications, and are the result of our targeted marketing efforts."
Commenting on the balance sheet for the first quarter of 2003, Chief Financial Officer Moosa E. Moosa said, "I am happy to report that our balance sheet continued to improve in the first quarter of 2003. During the quarter the company generated $4.1 million in cash from operations. Cash and cash equivalents at the end of the quarter increased significantly to $20.6 million from $17.6 million at the end of the fourth quarter of 2002."
Moosa continued, "Total debt at the end of the first quarter of 2003 was down $755,000 from the previous quarter. More importantly, our cash position continues to be in excess of our debt."
Presstek also announced today that it has begun to implement a further streamlining of its operations. The streamlining responds proactively to the company's evolving business model, which over the past year has included the addition of new partners, the expansion of existing partner relationships, a shift in distribution channels and a revamped outsourced service strategy. In addition, the company plans to realign its workforce to gain maximum efficiency, which is expected to result in a workforce reduction of approximately 20%. The company expects to incur one-time charges in the second quarter of this year of approximately $0.7 million related to the severance costs associated with the workforce reduction. The streamlining, which is expected to be complete by mid-May, is expected to produce an annualized cost savings of approximately $4.0 million going forward.
Marino stated, "Presstek needs to improve the value proposition to our customers and to invest more in developing our marketing channels. We plan to increase investment in our marketing efforts in order to build our marketing and distribution capabilities. We must also invest in our customers by lowering the cost of ownership of our products. We cannot, however, compromise our financial commitments to achieve these goals. Consequently, we must prepare the company for these changes, and that is what we are doing. We believe we have found a way to streamline the business that is both positive and constructive, in the sense that it is not expected to jeopardize our effectiveness. We believe these investments will serve to strengthen company in the long run."
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