Presstek Reports Improved Sequential First Quarter 2011 Revenue and Profit
Gross margin percent for the first quarter of 2011 was 31.2% compared to 33.0% in the first quarter of 2010. The reduction versus the first quarter of 2010 was due primarily to lower service and equipment margins. The Company implemented cost reduction actions in the Service business during the first quarter of 2011 in response to lower Service margins.
Operating expenses declined by $0.5 million, or 4.2%, from the first quarter of 2010. Excluding special charges of $0.3 million, operating expenses were down 6.8% on a year-over-year basis. The decline in operating expenses was primarily related to reduced payroll costs, professional service fees, and equity-based compensation. The Company incurred restructuring expenses of $0.3 million during the first quarter of 2011 related to cost actions taken to reduce future annual operating expenses and Service business costs aggregating approximately $1.3 million.
As the Company expected, debt net of cash increased during the first quarter of 2011, ending at $8.8 million compared to $6.1 million at the end of fiscal 2010. The primary causes of the increase were cash expenditures incurred with the introduction of the new 75DI press, pre-payment of certain annual operating expenses in the normal course of business, and higher receivables resulting from stronger March sales.
"Despite the continued impact of a soft economy and bad weather across much of the U.S. during the first quarter, we are pleased that our results exceeded our expectations," said Presstek Executive Vice President and Chief Financial Officer Jeff Cook. "In addition, we have seen an increased level of equipment sales activity during the early part of the second quarter of 2011, and expect to report both sequential and year-over-year equipment revenue growth for the quarter. (See "Information Regarding Non-GAAP Measures")
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; 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.