Presstek Reports Strong Q3 Results: Revenue Up 51%
Press release from the issuing company
HUDSON, N.H., Oct. 28 -- Presstek, Inc., a leading provider of direct digital imaging technology, today announced financial results for the third quarter ended October 2, 2004.
Presstek's President and Chief Executive Officer Edward J. Marino said, "We are very pleased with our third quarter of 2004 performance. We reported strong results in our core businesses, and were successful in making our acquisition of Precision Lithograining Corp. accretive within the first sixty days under Presstek's ownership. These third quarter 2004 achievements resulted in Presstek recording its highest level of quarterly revenues ever."
The company reported consolidated revenue for the third quarter ended October 2, 2004 of $29.8 million, up 51% compared to $19.8 million in the same period a year ago, and up 31% from $22.7 million in the second quarter of 2004. Consolidated revenue includes $3.1 million in revenue from Presstek's newly acquired subsidiary, Precision Lithograining Company ("PLC"), which closed on July 30, 2004.
Consolidated consumable revenue for the third quarter of 2004 was $17.1 million, which included $3.1 million from PLC, up 41% from $12.2 million in the third quarter of 2003, and up 21% from our $14.1 million record in the prior quarter. Consolidated equipment revenue including related royalties was $12.2 million, up 82% from $6.7 million in the same period a year ago, and up 49% from $8.2 million in the previous quarter.
Commenting on the company's revenue, Marino said, "The significant rise in equipment sales bodes very well for future consumable sales because as the installed base of consumable burning engines increases so does the use of Presstek's consumable products."
Chief Financial Officer Moosa E. Moosa commented, "Revenue from Presstek's New Technology Business, which consists of all Presstek business other than the Quickmaster DI platform products and PLC conventional plates, increased significantly in the third quarter of 2004, up 26% from the second quarter of 2004, and up 56% from the corresponding quarter in the prior year. New Technology equipment revenue for the third quarter of 2004 was up 70% compared to the same period last year, and up 50% from the second quarter of 2004. New Technology consumable revenue was up 37% compared to the same period last year, and down slightly compared to the second quarter of 2004."
The company reported consolidated net income of $2.7 million, or $0.08 per basic and diluted share, in the third quarter of 2004, compared to net income of $1.4 million, or $0.04 per basic and diluted share, in the second quarter of 2004 and $2.4 million, or $0.07 per basic and diluted share, for the corresponding period in the prior year. Third quarter 2003 net income included $1.4 million in income from discontinued operations. Income from continuing operations in the third quarter of 2003 was $1.0 million, or $0.03 per basic and diluted share.
Lasertel recorded $775,000 from sales to external commercial customers in the third quarter of 2004, up 89% from $410,000 in the same period a year ago, and up 35% from $573,000 in the prior quarter. Lasertel reported an operating loss of $720,000 in the third quarter of 2004, compared to $832,000 in the same period a year ago, and $945,000 in the prior quarter.
Presstek's newest subsidiary, Precision Lithograining Corp., recorded $3.1 million from sales to external customers and operating income of $230,000 in the third quarter of 2004.
Marino said, "We are very pleased with the progress at PLC since closing the acquisition at the end of July. We would like to recognize the hard work of the members of Presstek and PLC's management and staff who helped to make PLC accretive to earnings within the first sixty days of ownership."
Consolidated gross margins for the third quarter of 2004 were 34%, compared to 39% for the third quarter of 2003 and 40% in the prior quarter. The decrease in gross margin percentage from the prior quarter is primarily due to product mix and the inclusion of the lower margin business from PLC.
Operating expenses (being the sum of research & development and sales, general & administrative) were $7.2 million in the third quarter of 2004, up from $6.6 million in the same period last year, and down from $7.6 million in the prior quarter. The current quarter includes $337,000 in additional operating expenses related to the inclusion of PLC since the acquisition.
Commenting on the balance sheet Chief Financial Officer Moosa E. Moosa said, "Our cash balance at the end of the quarter was $16.8 million. The decrease from last quarter reflects: (a) the purchase of PLC; (b) loans advanced to AB Dick under the debtor-in-possession financing; and (c) increased working capital required to grow the business. In addition, the company's balance sheet reflects approximately $6.0 million of intangible assets associated with the acquisition of PLC, of which $4.3 million represents goodwill. This is based upon the preliminary purchase price allocation which will be finalized in the near future. The company generated $4.9 million in cash from earnings and depreciation and amortization in the third quarter of 2004. Total debt at the end of the quarter was down $536,000 from the previous quarter."
Marino concluded, "We have committed ourselves to delivering a strong second half of 2004 and are pleased with the third quarter's contribution to that commitment. During the quarter we also made solid progress in the initial stages of our growth phase. Successful showings at both the drupa trade show in May and at the Graph Expo show in early October have resulted in increased interest and demand for our equipment, particularly the new DI press models, which we anticipate will result in improving consumable sales going forward. In addition, PLC generated over $3.0 million in revenue within the first sixty days under Presstek's ownership. We also saw continued strong growth in external sales at our Lasertel operation under its new president Mark McElhinney, and are confident in his abilities to grow Lasertel's customer base and product line. While there is a lot to do ahead of us, we believe we have made excellent progress in building a platform for sustained growth at Presstek."
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