Presstek Reports Strong 2003 Results: New Technology Business Yields 40% Growth
Press release from the issuing company
HUDSON, N.H., Feb. 26 -- Presstek, Inc., a leading provider of direct digital imaging technology, today announced financial results for the fourth quarter and fiscal year ended January 3, 2004.
Full Year 2003 Results
Revenue for the fiscal year ended January 3, 2004 was $87.2 million, compared to $83.5 million in fiscal year 2002. Presstek reported net income for the year of $8.1 million, or $0.24 per basic and diluted share, compared to a net loss of $8.3 million, or $0.24 per basic and diluted share for the same period in the previous year. Net income for fiscal 2003 included $1.4 million, or $0.04 per basic and diluted share, from the favorable adjustment resulting from the settlement of a lawsuit that had been pending against Delta V, a business Presstek discontinued in 1999. The net loss for 2002 included special charges and inventory write-downs due to discontinued programs. Excluding those special charges and inventory write-downs, the company would have recorded net income of $1.4 million, or $0.04 per basic and diluted share in 2002.
"2003 was a groundbreaking year for Presstek," said Presstek President and Chief Executive Officer Edward J. Marino. "In 2003, we had to overcome a $10.8 million reduction in revenue from Quickmaster DI platform sales. We did that and more. So while overall revenue grew by only 5% in 2003, this does not tell the whole story. In fact, Presstek's New Technology Business, which consists essentially of all business other than the Quickmaster DI platform, grew by more than 40% in 2003. Clearly, the seeds that we planted almost two years ago are bearing fruit."
Marino continued, "In 2003, we demonstrated the ability to grow our New Technology Business - a business that represents a significant part of our growth opportunity for the future - at a rapid rate. This signals to us that the transformation we began almost two years ago is well underway. We believe this very positive event provides Presstek better balance, greater independence and more control. While this transformation is far from complete, we believe we are well positioned for future growth."
Equipment revenue for fiscal year 2003 was $29.1 million, up from $24.2 million a year ago. Consumable revenue for fiscal year 2003 was $51.8 million, compared to $53.2 million in fiscal 2002. The increase in equipment revenue results primarily from sales of Ryobi DI platform presses, and record sales of Presstek's Dimension CTP series of platesetters. The decrease in consumable sales is primarily the result of Heidelberg's ongoing inventory realignment from Presstek's branded consumable to the new OEM plate manufactured by Presstek for Heidelberg. The decrease in consumable sales to Heidelberg was substantially offset by record sales of Presstek's Anthem plate and Ryobi DI press consumables.
Results for fiscal year 2003 include a net loss of $5.6 million at the company's Lasertel subsidiary, which includes inter-company interest of $1.6 million. This is a 43% improvement over its net loss of $9.8 million in fiscal year 2002, which included inter-company interest of $1.4 million. Lasertel recorded $1.7 million in revenue from sales to external commercial customers in fiscal year 2003. Lasertel's revenue from sales to external commercial customers in fiscal year 2002 was not material.
Chief Financial Officer Moosa E. Moosa said, "Presstek's balance sheet continues to improve. We generated $16.5 million in cash from operations in 2003, excluding payments for special charges and program terminations, and closed the year with cash and cash equivalents of $28.2 million, compared to $17.6 million at the same time last year. Total debt at the end of the year was down $2.2 million from the end of 2002. We believe this solid footing positions us well for the next stage of growth."
Fourth Quarter Results
Revenue for the fourth quarter ended January 3, 2004 was $22.5 million, compared to $19.8 million in the third quarter of fiscal 2003, and $22.4 million in the fourth quarter a year ago. The company reported income from continuing operations for the fourth quarter of 2003 of $2.0 million, or $0.06 per basic and diluted share. This compares to fourth quarter 2002 income from continuing operations of $2.4 million, or $0.07 per basic and diluted share in the fourth quarter of 2002 (or income from continuing operations of $1.4 million, and $0.04 per basic and diluted share excluding a $1.0 million reversal of a special reserve). Presstek had income from continuing operations of $2.4 million or $0.07 per diluted share in the third quarter of fiscal 2003 (or income from continuing operations of $1.0 million or $0.03 per diluted share excluding a favorable adjustment resulting from the settlement of a lawsuit).
Equipment revenue for the fourth quarter was $8.3 million, up 32% from $6.3 million in the previous quarter, and up 15% from $7.2 million in the fourth quarter a year ago. Consumable revenue for the fourth quarter of 2003 was $12.4 million, up slightly from $12.2 million in the third quarter of 2003, and down from $13.5 million in the fourth quarter of 2002.
Results for the fourth quarter of 2003 include a net loss of $1.2 million at the company's Lasertel subsidiary, which includes inter-company interest of $414,000. This is an improvement of 43% over its net loss of $2.1 million in the fourth quarter of 2002, which included inter-company interest of $342,000. Lasertel recorded a record $722,000 in revenue from sales to external commercial customers in the fourth quarter of 2003, up 76% from $410,000 in the third quarter of 2003. Lasertel's revenue from sales to external commercial customers in the fourth quarter of 2002 was not material.
Moosa said, "We are delighted with the performance at Lasertel. They have gained significant revenue traction and made strong productivity gains. In addition, at the current level of negative operating income before inter- company interest, Lasertel is generating positive operating cash. We expect these positive trends to continue."
Gross margins for the fourth quarter of 2003 were 41%, compared to 39% in the prior quarter. Despite the shift to a less favorable product mix, gross margins were favorably impacted by the reduction in warranty charges in the Dimension product line.
Operating expenses (being the sum of research & development and sales, general & administrative) were $7.4 million in the fourth quarter of 2003, compared to $7.1 million in the same period last year, and $6.6 million in the previous quarter. The year-over-year increase is primarily the result of the addition of resources to Presstek's sales & marketing and customer support efforts, as well as the 14-week quarter versus the usual 13-week quarter. These increases were somewhat offset by reduced expenses in the areas of general & administrative and research & product development.
During the quarter, the company generated $1.7 million in cash from operations, or $3.2 million excluding a $1.5 million scheduled special charge disbursement. Cash and cash equivalents at the end of the quarter were $28.2 million, up from $26.7 million at the end of the third quarter of 2003.
Moosa concluded, "There were a significant number of milestones achieved in the fourth quarter of 2003. We shipped a record 50 Dimension CTP systems and a combined 30 units of Ryobi DI platform imaging kits and presses. We achieved record sales of both our Anthem and Ryobi DI consumables. In addition, our Lasertel subsidiary crossed the $700,000 mark for external customer sales. These factors, together with other important changes that took place in 2003, make us very optimistic about Presstek's future."
"We are looking forward to showcasing our new look, new products and new technology at drupa 2004 in May," said Marino. "We believe the new products and technologies to be introduced at drupa, as well as our other leading innovations on exhibit at the show, deliver the digital solutions for faster turnaround, high quality, flexibility and low cost of operation that is necessary for success in today's print market. We believe the market will see at drupa 2004 that Presstek truly delivers "A Smarter Way to Print".
"We are very excited about the introduction of our new corporate identity and logo today," said Marino. "To us, the new logo symbolizes a Presstek that is fundamentally different from what it was in the past. It embodies a new Presstek - one that is ready, financially and strategically, for tomorrow's opportunities."
WhatTheyThink is the global printing industry's leading independent media organization with both print and digital offerings, including WhatTheyThink.com, PrintingNews.com and WhatTheyThink magazine versioned with a Printing News and Wide-Format & Signage edition. Our mission is to provide cogent news and analysis about trends, technologies, operations, and events in all the markets that comprise today’s printing and sign industries including commercial, in-plant, mailing, finishing, sign, display, textile, industrial, finishing, labels, packaging, marketing technology, software and workflow.