Presstek Reports Record Consumable Sales, Net Income Slips Slightly
Press release from the issuing company
HUDSON, N.H., July 29 -- Presstek, a leading provider of direct digital imaging technology, today announced financial results for the second quarter ended July 3, 2004.
Presstek's President and Chief Executive Officer Edward J. Marino said, "This is the eighth consecutive profitable quarter for the company, with strong cash flows. Growth of 66% in our New Technology consumable products from the same period last year drove consumable sales to record levels at $14.1 million. In addition, the company has a very healthy equipment backlog of approximately $11.0 million, $9.0 million of which is shippable in the third quarter of 2004. This is the highest equipment backlog Presstek has had since the start of our transformation more than two years ago."
Marino continued, "Framing the second quarter results were investments in the company's future through additional Drupa-related marketing and product development expenses. In addition, we also experienced the traditional reduction in customer equipment spending in advance of the Drupa trade show. Viewed in light of the above, we are very pleased with the quarter's results."
The company reported consolidated net income for the second quarter of 2004 of $1.4 million, or $0.04 per basic and diluted share, compared to consolidated net income of $1.8 million, or $0.05 per basic and diluted share, for the corresponding period in the prior year, and consolidated net income of $1.9 million, or $0.06 per basic and $0.05 per diluted share, in the first quarter of 2004. As planned, second quarter 2004 consolidated net income included expenses of $450,000 related to the Drupa trade show held in May. Second quarter 2003 net income included special charges of $550,000 related to the company's workforce reduction in April 2003.
The company reported consolidated revenue of $22.7 million in the second quarter of 2004, compared to $22.5 million in the same period a year ago, and $23.3 million in the first quarter of 2004. Consumable revenue for the second quarter of 2004 was a record $14.1 million, compared to $13.6 million in the corresponding period in the prior year, and $13.0 million in the first quarter of 2004. Equipment revenue for the second quarter of 2004 totaled $8.1 million, compared to $8.0 million in the same period a year ago, and $9.7 million in the previous quarter.
Chief Financial Officer Moosa E. Moosa said, "As expected, revenue from Presstek's New Technology Business, which consists of all business other than the Quickmaster DI platform products, was down slightly from the first quarter of 2004 as the result of the traditional pre-Drupa slowdown in equipment spending, but up 15% from the corresponding quarter in the prior year. New Technology equipment revenue for the second quarter of 2004 was down 3% compared to the same period last year, and down 19% from the prior quarter. The pre-Drupa slowdown did not affect New Technology consumable revenue, however, which was up significantly at 66% compared to the same period last year, and up 14% compared to the first quarter of 2004."
Moosa continued, "The company furthered its objectives at its Lasertel subsidiary in the second quarter of 2004 by increasing external sales, growing its customer base and by narrowing its operating loss."
Lasertel recorded $573,000 in revenue from sales to external commercial customers in the second quarter of 2004, up from $328,000 in the second quarter of 2003, and up from $540,000 in the previous quarter. The company reported an operating loss of $944,000 at Lasertel in the second quarter of 2004, compared to an operating loss of $1.2 million in the same period a year ago, and an operating loss of $1.4 million in the first quarter of 2004. The operating loss for the same period last year included $79,000 in special charges related to the workforce reduction in April 2003.
Consolidated gross margins for the second quarter of 2004 were 40%, compared to 43% in the second quarter of 2003, and 38% in the first quarter of 2004. This was primarily the result of product mix and increased contributions from Lasertel.
Operating expenses (being the sum of research & development and sales, general & administrative expenses) were $7.6 million in the second quarter of 2004, up from $7.2 million in the same period last year, and $7.1 million in the first quarter of 2004. The current quarter includes the $450,000 expense related to the Drupa trade show.
Commenting on the balance sheet, Moosa said, "Our cash position continues to be very strong, ending the year at $34.2 million. The company generated $3.6 million in cash from earnings and depreciation & amortization in the second quarter of 2004. Total debt at the end of the quarter was down $536,000 from the previous quarter."
Marino concluded, "As we have described in the past, Presstek has put all of the elements in place for the next phase of our transformation. We believe the company will begin to show both organic and strategic growth in the second half of 2004. Our business fundamentals are sound and our strong backlog gives us a good platform for organic growth in our core businesses. With our pending acquisition of Precision Lithograining and our proposed acquisition of A.B.Dick, we are preparing to expand the company's served markets and business prospects through strategic growth. Presstek's management team is ready for these changes and looks forward to the next several quarters with anticipation."
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