HUDSON, N.H., May 10 -- Presstek, Inc., the leading manufacturer and marketer of high tech digital imaging solutions for the graphic arts and laser imaging markets, today reported results for the first quarter of 2007. Consolidated revenue from continuing operations for the first quarter of 2007 was $65.2 million, compared to $67.3 million in the same quarter last year, and $66.1 million in Q4 of 2006.
Presstek's Chairman of the Board John W. Dreyer said, "Presstek had a good start to 2007 and reached our key objectives, although our bottom line results were clouded by unusual events. Overall revenue was slightly above the high end of our guidance. We were on plan with positive operating income excluding unanticipated incremental and other charges in the quarter. With fifteen 52DI units sold in Q1, our new technology equipment and consumables growth were highlights in the quarter that demonstrate that our model is working well, and we expect to see continuing growth over the course of the year."
Revenue for the first quarter of 2007 was made up of the following components:
-- Consolidated equipment revenue of $25.1 million, compared to $23.6 million in the same quarter last year;
-- Consolidated consumable revenue of $30.1 million, compared to $31.5 million in the same quarter last year;
-- Digital equipment and new technology consumables revenue of $32.9 million, compared to $29.0 million in the same quarter last year;
-- Consolidated service revenue of $9.9 million, compared to $12.2 million the same quarter last year.
Gross margin of 28.4% in Q1 was impacted negatively by an incremental charge of $420,000 in freight costs resulting from a refinement in freight cost estimates. Excluding the impact of these charges, gross margin would have been 29.1%, compared to 30.9% and 29.3% reported in Q1 and Q4 of last year, respectively.
Operating loss for the first quarter was $286,000 which includes $335,000 in special charges and $1.0 million in incremental charges, including the freight costs as well as incremental audit and legal costs related to the company's delayed Form 10-K filing. Excluding these incremental and special charges, operating income would have been $1.1 million. On this same basis, operating income would have been $4.1 million in the same quarter last year, and $1.9 million in Q4 of 2006. The decrease in operating income from a year ago was expected, and is a result of transitioning segments of our business, such as our services, toward a higher growth digital model.
Presstek's Lasertel operation generated external sales of $1.7 million for the first quarter of 2007, compared to $1.2 million in the same quarter last year and $1.9 million in Q4 of 2006. Operating loss for the quarter in the Lasertel segment was $236,000, an improvement of $595.000 over Q1 of 2006.
Including incremental and other charges, net loss from continuing operations for the first quarter was $866,000 or $0.03 loss per share. This compares to net income of $3.0 million or $0.09 per share in the same quarter last year and $7.5 million, or $0.21 per share in Q4, when we recorded a benefit of $11.2 million from the reversal of a valuation allowance against certain deferred tax assets. Excluding incremental costs and special charges, EBITDA from continuing operations was $3.4 million, compared to $6.4 million in the same quarter a year ago and $4.4 million in Q4.
The numbers presented above represent the results of continuing operations and include non-GAAP measures. A full reconciliation of GAAP to non-GAAP measures is provided in the financial tables below. Supplemental Financial Information has been provided with this release to provide additional details on the company's performance.
Cash and equivalents at the end of Q1 were $5.7 million, down from $9.4 million at the end of 2006. Debt net of cash was $37.1 million, up $9 million from the end of Q4. The increase in net debt was used to help build our equipment inventory for anticipated demand and to finance revenue growth in our international business.
Dreyer concluded, "Our strategy remains clear - to lead the industry's digital transformation. Our growing number of satisfied customers are benefiting from our technology-based business solutions with improved business performance and capabilities. With the constructive changes we are bringing to the industry, we are increasing our footprint in the marketplace with equipment installations and the flow of profitable consumable sales. The success Presstek is seeing with the 52DI further solidifies our market position and offers customers more choices in improving their business."
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