Presstek Reports Improved 2010 Third Quarter Operating Profits
HUDSON, NH—11/08/2010—Presstek, Inc. (NASDAQ: PRST), a leading supplier of digital offset printing solutions to the printing and communications industries, today reported financial and operating results for the third quarter ended October 2, 2010. In the quarter, the Company reported total revenue of $31.4 million, a decline of 5% from the amount reported in the third quarter of 2009, and adjusted EBITDA of $1.3 million, an improvement of $2.4 million when compared to the prior year third quarter. (See "Information Regarding Non-GAAP Measures")
The Company also reported that it has received the initial order for its new 75DI digital offset press. The 75DI press, which has been engineered to produce pages at a cost of below a penny per page, had a very successful North American debut at the Graph Expo tradeshow in Chicago, receiving considerable interest from customers and accolades from the industry.
In the third quarter of 2010 the Company had an operating loss of $1.3 million, a $4.8 million improvement from the loss in the 2009 third quarter. Excluding a one-time inventory-related charge of $2.7 million in the third quarter of 2009, operating income improved by $2.1 million from 2009 levels. During the third quarter of 2010, the Company incurred a net loss from continuing operations of $1.5 million, or $0.04 per share, compared to a net loss from continuing operations of $6.6 million, or $0.18 per share, in the third quarter of 2009. (See "Information Regarding Non-GAAP Measures")
"We are extremely pleased with the success of our 75DI press at Graph Expo," said Presstek Chairman, President and Chief Executive Officer, Jeff Jacobson. "This is exciting not only because of the interest generated for all of our products at that show, but also because of the way the 75DI is elevating the perception of Presstek within the graphics industry. We have long believed that the 75DI with its revolutionary 6-minute job-to-job turnaround, high quality output and expanded sheet size fits perfectly within our up-market strategy. It was extremely gratifying to see that play out with high profile customers and industry experts at Graph Expo."
Third Quarter 2010 Financial Results Total revenue in the third quarter of 2010 was $31.4 million, a decrease of $1.6 million from the third quarter of 2009. On a sequential quarter basis, total revenue remained relatively stable.
-- Equipment revenue increased 31%, or $1.1 million, to $4.8 million in the third quarter of 2010, compared with the same period last year. The increase versus the prior year's quarter is due primarily to an increase in DI press revenue of $0.7 million. The DI increase is caused by a favorable shift in product mix with increased sales of 52DI units.
-- Consumables revenue totaled $20.6 million in the third quarter of 2010, compared with $22.2 million for the same period last year primarily due to reductions in "traditional" product categories of $1.4 million and in legacy Anthem CTP plates of $0.3 million. This more than offset increases in the open format CTP plates of Aeon and Aurora Pro, which increased 48% from the prior year quarter. Year-to-date the Company has closed on approximately 60 new CTP plate accounts that should equate to an annual run-rate of approximately $2.8 million of new thermal CTP plate sales.
-- Service revenue declined approximately 16 percent to $6.1 million in the third quarter of 2010 compared to the year ago quarter. This drop is 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 2010 was 32.8% compared to 23.3% in the third quarter of 2009. The improvement versus the third quarter of 2009 was due primarily to the impact of the $2.7 million inventory-related charge taken in the third quarter of 2009, favorable manufacturing productivity and a favorable mix of DI equipment sales, partially offset by lower service margins and a lower mix of higher margin consumables.
Third quarter 2010 operating expenses of $11.7 million represented a reduction of $2.2 million, or 16%, from the third quarter of 2009. Excluding the impact of restructuring charges in each period, operating expenses declined by $1.6 million. The decline in operating expenses was primarily related to reduced payroll costs and professional service fees; partially offset by increased non-cash stock compensation expenses.
Debt net of cash totaled $6.9 million at the end of the third quarter, a reduction of $9.4 million versus the third quarter of 2009 and a reduction of $1.9 million from the end of the 2010 second quarter. The primary cause of the decrease from the prior year level was the proceeds received from the sale of the Company's Lasertel subsidiary in the first quarter of 2010.
"We continued to see sluggish sales results in the third quarter as the increase in our equipment revenue was more than offset by declines in our 'traditional' consumables and service revenue," said Presstek Executive Vice President and Chief Financial Officer, Jeff Cook. "A contributing factor to our overall consumables decline is a shift in buying patterns within the distributor channel, which negatively impacted the current quarter. Despite continued market softness we have maintained our positive adjusted EBITDA levels for the fourth consecutive quarter and reduced our debt net of cash position in the quarter by $1.9 million, to a relatively low $6.9 million."
"The Graph Expo tradeshow re-affirmed the confidence we have in our strategic direction," commented Jacobson. "As we established our strategy three years ago we envisioned that the 75DI would be the linchpin for our up-market strategy, serving as the spark for DI growth and providing the up-market customer contact to drive our new CTP products. The excitement around this product at Graph Expo confirmed our expectations. We had customers come to see the 75DI that have not done business with Presstek in the past and we had customers come that haven't looked at DI technology in years. They came to see the 75DI but stayed to see the rest of the portfolio after they were reintroduced to the new and improved DI technology. We have the products and resources in place to drive our strategy and we are confident that as the economy improves, our expanded portfolio and channel reach will result in increased sales and provide increased profitability with our streamlined cost structure."
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 operating expenses excluding special charges; operating loss excluding special charges; adjusted EBITDA; net loss from continuing operations excluding special charges; working capital excluding short-term debt; 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.
Conference Call and Webcast Information Management will discuss Presstek's third quarter 2010 results in a conference call on Monday, November 8, 2010 at 10:30 a.m. Eastern Time. Conference call information is below:
Conference Call Access: Domestic Dial In: (866) 713-8563
International Dial In: (617) 597-5311 Passcode: 79439258
In addition, for those unable to participate at the time of the call, a rebroadcast will be available following the call from Monday, November 8, 2010 at 1:30 PM Eastern Time until Monday, November 15, 2010 at 11:59 PM Eastern Time.
Rebroadcast Access: Domestic Dial In: (888) 286-8010 International Dial In: (617) 801-6888 Passcode: 15689384
An archived webcast of this conference call will also be available on the "Investor Events Calendar" page of the Company's web site, www.presstek.com.
About Presstek: Presstek, Inc. is a leading supplier of digital offset printing solutions to the printing and communications industries. Presstek's DI(R) 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. Visit www.presstek.com or call +1.603.595.7000 for more information.