Imagistics Reports 1Q Earnings: Increases 2002 Earnings Outlook
Press release from the issuing company
TRUMBULL, Conn.--May 8, 2002--Imagistics International Inc. today announced first quarter earnings of $4 million, or 19 cents per diluted share, compared with earnings of $9 million, or 47 cents per share for the first quarter of 2001.
Total revenues for the first quarter increased three percent to $155 million. The increase in revenue is attributable to the addition of sales to Pitney Bowes Canada which has been operating under a reseller agreement since the Imagistics spin-off from Pitney Bowes. Excluding the impact of the reseller agreement, total revenues were flat with the prior year.
Marc C. Breslawsky, Imagistics Chairman and Chief Executive Officer, said, "Our results for the first full quarter as an independent company are an early indication of our ability to successfully deliver improving results as we move forward on the execution of our strategic business model. It is our intent to continue to expand our large national account presence in a manner that increases profitability, allows us to invest in the company's future, and creates shareholder value."
Total sales of equipment and supplies increased five percent to $76 million. Excluding the impact of sales to Pitney Bowes Canada, total sales declined one percent versus the prior year as copier sales increased three percent and facsimile sales declined six percent.
Rental revenue in the first quarter declined one percent to $57 million. Rental revenue from the copier product line increased seven percent in the first quarter, reflecting the shift in the copier product marketing focus toward large national accounts and increased unit placements for higher-end digital products. Rental revenue from the facsimile product line declined five percent in the first quarter reflecting primarily lower pricing on a relatively flat installed base.
First quarter support services revenue from service contracts increased three percent reflecting both higher copier equipment sales and improved contract pricing.
The sales gross margin declined 1.8 percentage points compared with the first quarter of 2001 reflecting a higher mix of sale revenue to Pitney Bowes Canada which is at lower gross margins. Excluding sales to Pitney Bowes Canada, the sales gross margin improved 0.4 percentage points. The improvement was primarily attributable to a more disciplined focus on improving profit margins and lower product costs.
The rental gross margin improvement of 0.9 percentage points compared with the first quarter of 2001 was primarily attributable to the disciplined focus on improving profit margins partially offset by an increase in the mix of copier rentals which have a lower gross margin than facsimile rentals.
Selling, service and administrative expenses in the first quarter were 49 percent of revenues compared with 43 percent of revenues in the first quarter of 2001 primarily reflecting increased finance and administrative expenses associated with becoming an independent public company and the investment in Enterprise Resource Planning (ERP) technology designed to improve operational efficiency and deliver higher levels of customer service and support.
Outlook for 2002 and Beyond
"Our goal is to be the preeminent independent provider of enterprise office imaging and document solutions," said Breslawsky, "and the market opportunities for Imagistics products and solutions both in the U.S. and elsewhere are significant. Our `best of breed' product sourcing strategy, combined with an established, highly respected direct sales and service network throughout the U.S. and U.K. provides an unparalleled opportunity to satisfy our customers' document and imaging requirements," continued Breslawsky. "We will be initiating a major brand awareness advertising campaign soon."
Joseph D. Skrzypczak, Chief Financial Officer, added, "We have a strong, well-capitalized balance sheet with improving credit metrics. Our strong positive cash flow has enabled us to continue to reduce our debt from $117 million at December 31 to $100 million at March 31 while simultaneously improving our cash position. Our strong cash generation has allowed us to pay down debt while at the same time initiate a $30 million stock buy-back program and invest in our ERP project."
Added Breslawsky, "Our focus for the balance of the year will be on continuing to improve the profitability of our revenue generation. At this point we are increasing our outlook for 2002 earnings. Our 2002 outlook is for a modest revenue decline on a comparable basis and we expect to improve diluted earnings per share to the 76-80 cents per share range with excellent earnings per share growth in 2003 and beyond. We are confident in our products and solutions, our people, and our ability to generate significant shareholder value."
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