Presstek Reports Q2 Profit, Consumable sales way up
Press release from the issuing company
HUDSON, N.H., July 24 -- Presstek, Inc., a leading provider of direct digital imaging technology, today announced financial results for the second quarter ended June 28, 2003.
The company reported net income for the second quarter of 2003 of $1.8 million, or $0.05 per diluted share, compared to a net loss of $11.5 million, or $0.34 per diluted share, for the corresponding period in the prior year, and net income of $1.8 million, or $0.05 per diluted share, in the first quarter of 2003. Excluding special charges of $550,000 related to the company's workforce reduction announced in April 2003, the company's net income would have been $2.4 million, or $0.07 per diluted share, for the second quarter of 2003. The second quarter 2002 net loss included $10.7 million in inventory write-downs and other charges due to discontinued programs and special charges related to the repositioning activities, facilities consolidation and workforce reduction implemented by the company in June 2002. Revenue for the second quarter ended June 28, 2003 was $22.5 million, up 17% from $19.3 million in the same period a year ago, and flat from $22.4 million in the first quarter of 2003.
Presstek reported net income of $3.6 million for the first six months of 2003, or $0.11 per diluted share, compared to a net loss $11.3 million, or $0.33 per diluted share, for the same period last year. Net income for the first six months of 2003 includes the $550,000 in special charges mentioned above. The net loss for the first six months of 2002 includes $10.7 million in inventory write-downs and other charges mentioned above. Revenue for the six months ended June 28, 2003 increased 12% to $45.0 million, compared to $40.1 million in the first half of 2002.
Consumable revenue for the second quarter of 2003 was $13.6 million, compared to $12.1 million in the corresponding period in the prior year, and $13.6 million in the first quarter of 2003. Equipment revenue for the second quarter of 2003 totaled $7.7 million, up 20% from $6.4 million in the same period a year ago, and flat from the previous quarter.
Presstek's President and Chief Executive Officer Edward J. Marino said, "This quarter's results demonstrate the company's underlying strength and balance in its operations. While we anticipated a significant shortfall in equipment revenue in the second quarter due to the previously announced decrease in kit sales to Heidelberg, we were able to overcome the shortfall primarily with an increase in press sales from our new alliance with KPG and our ongoing efforts with KBA. With regard to our CTP business, we set another record for CTP sales in the second quarter. Unit sales of our CTP systems were up sequentially over the first quarter of 2003, and up 46% over the second quarter of 2002. As for consumables, sales of our Anthem plate again exceeded our expectations for the quarter, and were up 27% over the first quarter of 2003, and up 78% over the same period last year. These results are particularly encouraging as we are still facing weakness in both capital equipment spending and the printing industry."
Results for the second quarter of 2003 include an operating loss of $1.0 million before inter-company charges at the company's Lasertel subsidiary, compared to an operating loss of $2.6 million before inter-company charges in the corresponding quarter in the prior year. The $1.0 million Lasertel loss for the current quarter includes $79,000 in special charges related to the workforce reduction announced in April. The $2.6 million Lasertel loss for the corresponding quarter in the prior year includes $763,000 in inventory write- downs and special charges related to discontinued programs in June 2002. Lasertel reported an operating loss before inter-company charges of $1.1 million in the first quarter of 2003. Lasertel recorded $328,000 in revenue from sales to external commercial customers in the second quarter of 2003, up from $275,000 in the first quarter of 2003. Lasertel did not record any sales to external commercial customers in the second quarter of 2002.
Gross margins for the second quarter of 2003 were 43%, compared to 18% in the second quarter of 2002, and 42% in the first quarter of 2003. Gross margins for the quarter were favorably impacted primarily by lower warranty costs and unfavorably impacted by the mix of products sold. In the corresponding period a year ago, gross margins were significantly impacted by a $4.7 million charge (or 24 percentage points) related to inventory write- downs and other charges due to discontinued programs.
Operating expenses (being the sum of research & development and sales, general & administrative expenses) were $7.2 million in the second quarter of 2003, down from $8.7 million in the same period last year, and $7.5 million in the first quarter of 2003.
Chief Financial Officer Moosa E. Moosa said, "The results for this quarter include special charges of $550,000 related to severance costs associated with the workforce reductions completed in April of this year. The streamlining of our operations favorably impacted us in the current quarter by approximately $500,000 and is expected to produce a total cost savings of approximately $750,000 per quarter. We anticipate that we will continue to add resources in the marketing and sales areas, but believe that these additional costs will have a minimal effect on our ongoing cost structure."
Commenting on the balance sheet, Moosa said, "Our cash position continues to be very strong. During the second quarter, the company generated $3.5 million in cash from operations. Cash and cash equivalents at the end of the quarter were $23.1 million, compared to $20.6 million at the end of the first quarter of 2003. Total debt at the end of the quarter was down $790,000 from the previous quarter."
Marino concluded, "We are pleased with our second quarter results. We believe that our business fundamentals are very strong, and that our marketing initiatives are beginning to show results. Our repositioning efforts are largely behind us and the Presstek management team is successfully leading the company through a business transformation. The strength of our business fundamentals positions us well and we plan to enter the next stage of the transformation, which is the strategic growth phase."
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