Presstek Targets $20 million in Annual Operating Profit Improvements from Business Improvement Plan
Press release from the issuing company
HUDSON, N.H., Oct. 25 2007 -- Presstek, Inc., the leading manufacturer and marketer of digital offset printing business solutions, today announced a business improvement plan targeting $20 million of annual operating profit improvements. The plan involves virtually every aspect of the business and includes creating greater efficiencies, productivity enhancements, right-sizing of operating expenses, and optimization of resources. The company has also identified additional potential cash flow improvements of $25 million, primarily through working capital reductions and the proposed sale of selected real estate assets.
Presstek's President and Chief Executive Officer, Jeff Jacobson said, "We have developed a pathway to achieve, over the next 18 to 24 months, a goal in the range of 10% operating profit. The cash generated through these improvements will allow us to invest in our strategic vision while enabling us to achieve sustained profitability for years to come."
Although Presstek expects to receive the full annualized benefit of these actions by 2009, a significant portion of it will be recognized during 2008. The company is targeting operating profits, as a percent of revenue, in the range of 6% - 8% during 2008, and 9% to 11% for 2009. These numbers do not include the impact of expected restructuring costs of approximately $4.0 million, other one-time expenses of approximately $0.5 million, and stock- based compensation expense which the company is unable to estimate at this time. The company anticipates that approximately two-thirds of the restructuring costs will be incurred in 2007, with the balance expected to be incurred in 2008. The other one-time expenses are expected to be incurred in 2008.
Jeff Cook, Presstek's Senior Vice President and Chief Financial Officer said, "The Business Improvement Plan is a detailed program designed to significantly improve profitability, strengthen our balance sheet and improve cash flow. We have already started to implement many of the actions in the program, and we are committed to achieving these goals."
Gross margin improvements of $10 million include manufacturing productivity improvements; procurement savings; service business rationalization; and improved recovery of raw material increases. Operating expense reductions of $10 million constitute the remainder of the profit improvements. The program will result in a net employment reduction of approximately 9%, including attrition. Operating expense reductions will also include the centralization in Des Plaines, Illinois of product warehousing and distribution activities for North America; improved productivity and rationalization of sales activities; lower general and administrative costs; and the consolidation of certain customer care activities into the company's Hudson, New Hampshire operation.
Presstek also announced plans for its growth platform. The company will focus on a two tiered channel strategy allowing it to enhance its offerings to its core customer base of small and mid size printers, while expanding to larger printers that will consume an even greater amount of consumables. In addition, the company will focus heavily on growing its international business, with particular emphasis on Europe, as well as growth opportunities and initiatives in both the Direct Imaging (DI) and Computer to Plate (CtP) product areas. Mr. Jacobson added, "Our vision is to build a product portfolio whereby Presstek will provide high quality fully integrated digital solutions and services in order to form all-encompassing relationships with our customers." The company also plans to enhance its partnerships, which not only allows it to fulfill this vision, but also provides its partners with access to Presstek's unique channel.
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