Presstek Announces $11.2 Million in Profit Improvement ActionsNovember 14, 2011
“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.
“During the quarter we recorded our third 75DI sale, the first one in our Asia Pacific Region, and expect to complete installations on two additional units in the fourth quarter. In addition, I am excited to see our open platform CtP plate sales gain traction, as evidenced by a sales increase of 51 percent in the quarter versus the prior year quarter.”
Total revenue in the third quarter of 2011 was $26.9 million, down $4.5 million from the third quarter of 2010.
• Equipment revenue was $3.4 million in the third quarter of 2011, a decrease of $1.4 million compared with the same period last year. The decrease was driven by lower volumes of both DI and CtP unit sales.
• Consumables revenue totaled $18.2 million in the third quarter of 2011, compared with $20.6 million for the same period last year. The decrease, primarily in the U.S., was driven by lower customer consumption due to economic conditions. However, sales of open platform CtP plates increased 51 percent on a year over year basis.
• Service revenue was $5.3 million in the third quarter of 2011, a decline of $0.8 million compared to the year-ago quarter. This decline was primarily due to the continued erosion of the analog service base and a general trend by customers to delay service calls and maintenance to save money in a difficult economy.
Gross margin percent for the third quarter of 2011 was 27.1 percent compared to 32.8 percent in the third quarter of 2010. The reduction vs. the third quarter of 2010 was due primarily to unfavorable product mix in equipment and consumables, lower factory volumes, the impact of a strengthening yen on DI press purchases, and general inflation on raw materials and freight cost.
Operating expenses were $12.0 million in the third quarter, and include the impact of a $1.4 million increase to European distributor receivable reserves. Excluding these reserve increases, adjusted operating expenses declined by $1.1 million, or 9.4 percent from the third quarter of 2010. The decline in adjusted operating expenses was primarily related to lower equity-based compensation, lower commission expenses and the initial benefits of cost reduction actions. (See “Information Regarding Non-GAAP Measures”)
Debt net of cash increased $0.7 million during the third quarter of 2011 compared with the second quarter of 2011, ending at $9.8 million. “Strong cash management continues to be our focus across the company and despite the lower earnings, debt net of cash was better than expected,” said Presstek Executive Vice President and Chief Financial Officer Jeff Cook.
The company expects fourth quarter 2011 revenue and gross margin dollars to remain relatively stable on a sequential basis, as a seasonal drop in consumables along with the impact on margins of continued low factory volume levels is expected to be offset by higher equipment revenue at improved margins. In addition, the company expects to report special charges in the fourth quarter in the range of $1.0 million to $1.3 million primarily for employee severance costs associated with the profit improvement actions. Debt net of cash is expected to increase sequentially by approximately $1.0 million to $2.0 million.
Estimated Form 10-Q filing
The company is currently completing its analysis of critical accounting estimates related to long-lived assets. As a result, the company will be filing a Notice of Late Filing on Form 12b-25 with respect to the Quarterly Financial Report on Form 10-Q. The company currently anticipates filing the Form 10-Q within the five-day period afforded by the Rule.
Information Regarding Non-GAAP Measures
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the company provides non-GAAP financial measures, including adjusted EBITDA; debt net of cash; and other GAAP measures adjusted for certain charges, which the company believes are useful to help investors better understand its past financial performance and prospects for the future. 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.
Presstek Inc. is a leading supplier of digital offset printing solutions to the printing and communications industries. Presstek’s DI digital offset solutions bridge the gap between toner and conventional offset printing, enabling printers to cost effectively meet increasing customer demand for high quality, short run color printing with a fast turnaround time while providing improved profit margins. The company’s CTP portfolio ranges from two-page to eight-page systems, many of which are fully automated. These systems support Presstek’s line of chemistry-free plates as well as Aeon, a no preheat thermal plate which offers run lengths up to one million impressions. Presstek also offers a range of workflow solutions, pressroom supplies, and reliable service. Presstek is well positioned to support print environments of any size on a worldwide basis.