Presstek Making Cuts in Order to Return to Positive EarningsNovember 14, 2011
Profit Improvement Actions
The company announced that a major profit improvement initiative, launched in the third quarter of 2011, is expected to provide $11.2 million in 2012 savings. Although second half 2011 earnings will see some improvement from these actions, the majority of the benefits will be realized beginning in the first quarter of 2012.
“We started taking major cost reduction actions during the third quarter of this year to right-size our business to current economic conditions, and this work has continued into the fourth quarter,” said Presstek Chairman, President and CEO Jeff Jacobson. “Our goal is to return Presstek to positive adjusted EBITDA beginning in the first quarter of 2012. In total, we expect to reduce our annualized expenses by $11.2 million.
“The vast majority of these actions will be completed by year-end 2011, and are expected to provide the company with significantly improved fiscal performance in 2012. While we are making significant cuts in spending in order to put the company on more stable footing going forward, we are not sacrificing our strategic focus on growing our CtP plate and DI portfolio offerings in larger commercial, in-plant, packaging and digital printing operations.”
Third Quarter 2011 financial results
In the quarter, Presstek reported total revenue of $26.9 million, a decline of 14.4 percent from the third quarter of 2010, which was impacted, as expected, by general global economic weakness. Including a $1.4 million reserve against European accounts receivable and $0.4 million in special charges, the company had an operating loss of $4.7 million in the quarter, compared to an operating loss of $1.3 million reported in the 2010 third quarter. Excluding these two items, the operating loss would have been $2.9 million.
The decrease from the prior year quarter was driven by lower gross margins resulting from the impact of lower factory production volume and an unfavorable mix in both equipment and consumables revenue. During the third quarter of 2011, the company incurred a net loss from continuing operations of $5.4 million, including $0.4 million of foreign exchange losses. This compared to a net loss from continuing operations of $1.5 million in the third quarter of 2010.
“As expected, our third quarter revenue was negatively impacted by global economic conditions. Smaller printers were hit especially hard by these issues, and they are a large portion of our customer base,” said Jacobson. “We continue to be encouraged by a strong pipeline of new opportunities, but customers of all sizes are delaying important investment decisions and conserving cash.