Attached files
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| 8-K - FORM 8-K - PRESSTEK INC /DE/ | form8k.htm |
NEWS RELEASE
FOR IMMEDIATE RELEASE Exhibit 99.1
CONTACTS:
Investor Relations Trade Relations
203-769-8056 Brian Wolfenden
Investorrelations@presstek.com Director of Marketing Communications
(603) 594-8585, ext. 3435
bwolfenden@presstek.com
PRESSTEK ANNOUNCES $11.2 MILLION IN PROFIT IMPROVEMENT ACTIONS AND EXPECTS RETURN TO POSITIVE ADJUSTED EBITDA IN 2012
Greenwich, CT – November 14, 2011 – Presstek, Inc. (NASDAQ: PRST), a leading supplier of digital offset printing solutions to the printing and communications industries, today announced $11.2 million in annualized profit improvement actions and expects to return to positive adjusted EBITDA in the first quarter of 2012. The Company also reported financial and operating results for the third quarter ended October 1, 2011. (See "Information Regarding Non-GAAP Measures”)
Profit Improvement Actions
The Company announced today that a major profit improvement initiative, launched in the third quarter of 2011, is expected to provide $11.2M 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 Chief Executive Officer, 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, the Company reported total revenue of $26.9 million, a decline of 14.4% 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 third quarter of 2011 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, or $0.15 per share including $0.4 million of foreign exchange losses. This compared to a net loss from continuing operations of $1.5 million, or $0.04 per share, 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 Presstek Chairman, President and Chief Executive Officer, Jeff 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% 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.
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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.
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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% on a year over year basis.
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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.
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Gross margin percent for the third quarter of 2011 was 27.1 % compared to 32.8% in the third quarter of 2010. The reduction versus 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% 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. (See "Information Regarding Non-GAAP Measures”)
Outlook
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. (See “Information Regarding Non-GAAP Measures”)
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.
Conference Call and Webcast Information
Management will discuss Presstek's third quarter 2011 results in a conference call on Monday, November 14, 2011 at 10:30 a.m. Eastern Time. Conference call information is below:
Conference Call Access:
Domestic Dial In: (866) 700-6979
International Dial In: (617) 213-8836
Passcode: 19751350
In addition, for those unable to participate at the time of the call, a rebroadcast will be available following the call from Monday, November 14, 2011 at 1:30 PM Eastern Time until Monday, November 21, 2011 at 11:59 PM Eastern Time.
Rebroadcast Access:
Domestic Dial In: (888) 286-8010
International Dial In: (617) 801-6888
Passcode: 84089838
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® 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.
DI is a registered trademark of Presstek, Inc.
“Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:
Certain statements contained in this News Release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the expected savings to be realized from the profit improvement initiative; the company’s expectation to return to positive adjusted EBITDA beginning in the first quarter of 2012; the expected fourth quarter financial performance levels; the company’s expectation for the level of debt net of cash during the fourth quarter; and the level of special charges expected in the fourth quarter associated with the profit improvement actions. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to: the severity and length of the current economic downturn, the impact of the economic downturn on the availability of credit for the Company’s customers, market acceptance of and demand for the Company's products, particularly the 75DI® press, the Company’s ability to execute its profit improvement initiatives and the cost of those initiatives, the resulting debt levels after taking into account the Company’s investment in its current product portfolio (particularly the 75DI), the ability of the Company to meet its stated financial and operational objectives, the Company's dependence on its partners (both manufacturing and distribution) and factors that influence the performance of these partners, and other risks and uncertainties detailed in the Company's 2010 Annual Report on Form 10-K and the Company's other reports on file with the Securities and Exchange Commission. The words "looking forward," "looking ahead," "believe(s)," "should," "may," "expect(s)," "anticipate(s)," "project(s)," "likely," "opportunity," expressions of optimism concerning future events or results, and similar expressions, among others, identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. The Company undertakes no obligation to update any forward-looking statements contained in this news release.
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PRESSTEK, INC.
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CONSOLIDATED STATEMENTS OF OPERATIONS
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(in thousands, except per-share data)
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(Unaudited)
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Three months ended
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Nine months ended
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October 1,
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October 2,
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October 1,
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October 2,
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2011
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2010
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2011
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2010
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Revenue
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Equipment
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$ | 3,396 | $ | 4,760 | $ | 14,744 | $ | 15,890 | ||||||||
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Consumables
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18,214 | 20,584 | 58,201 | 62,807 | ||||||||||||
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Service and parts
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5,290 | 6,070 | 17,231 | 18,815 | ||||||||||||
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Total revenue
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26,900 | 31,414 | 90,176 | 97,512 | ||||||||||||
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Cost of revenue
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Equipment
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4,422 | 4,965 | 16,254 | 16,312 | ||||||||||||
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Consumables
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11,078 | 11,127 | 32,693 | 34,088 | ||||||||||||
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Service and parts
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4,115 | 5,016 | 14,040 | 15,117 | ||||||||||||
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Total cost of revenue
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19,615 | 21,108 | 62,987 | 65,517 | ||||||||||||
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Gross profit
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7,285 | 10,306 | 27,189 | 31,995 | ||||||||||||
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Operating expenses
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Research and development
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1,194 | 1,154 | 3,379 | 3,207 | ||||||||||||
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Sales, marketing and customer support
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5,028 | 5,302 | 15,901 | 16,366 | ||||||||||||
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General and administrative
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5,063 | 4,580 | 13,517 | 14,712 | ||||||||||||
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Amortization of intangible assets
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256 | 204 | 667 | 617 | ||||||||||||
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Restructuring and other charges
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413 | 412 | 777 | 461 | ||||||||||||
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Total operating expenses
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11,954 | 11,652 | 34,241 | 35,363 | ||||||||||||
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Loss from operations
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(4,669 | ) | (1,346 | ) | (7,052 | ) | (3,368 | ) | ||||||||
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Interest and other expense, net
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(696 | ) | 8 | (1,370 | ) | (848 | ) | |||||||||
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Loss from continuing operations before income taxes
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(5,365 | ) | (1,338 | ) | (8,422 | ) | (4,216 | ) | ||||||||
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Provision(benefit) for income taxes
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50 | 158 | 231 | (331 | ) | |||||||||||
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Loss from continuing operations
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(5,415 | ) | (1,496 | ) | (8,653 | ) | (3,885 | ) | ||||||||
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Loss from discontinued operations, net of income taxes
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- | - | - | (70 | ) | |||||||||||
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Net loss
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$ | (5,415 | ) | $ | (1,496 | ) | $ | (8,653 | ) | $ | (3,955 | ) | ||||
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Loss per share - basic and diluted
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Loss from continuing operations
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$ | (0.15 | ) | $ | (0.04 | ) | $ | (0.23 | ) | $ | (0.11 | ) | ||||
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Weighted average shares outstanding
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Weighted average shares outstanding - basic and diluted
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37,229 | 36,908 | 37,274 | 36,877 | ||||||||||||
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PRESSTEK, INC.
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CONSOLIDATED BALANCE SHEETS
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(in thousands)
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(Unaudited)
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October 1,
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January 1,
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2011
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2011
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ASSETS
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Current assets
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Cash and cash equivalents
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$ | 3,293 | $ | 4,165 | ||||
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Accounts receivable, net
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15,808 | 18,647 | ||||||
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Inventories
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27,382 | 29,143 | ||||||
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Other current assets
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2,563 | 1,609 | ||||||
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Total current assets
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49,046 | 53,564 | ||||||
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Property, plant and equipment, net
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19,191 | 21,156 | ||||||
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Intangible assets, net
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5,158 | 4,748 | ||||||
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Other noncurrent assets
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1,021 | 1,057 | ||||||
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Total assets
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$ | 74,416 | $ | 80,525 | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities
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Line of credit
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$ | 13,130 | $ | 10,252 | ||||
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Accounts payable
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8,345 | 9,733 | ||||||
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Accrued expenses
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4,964 | 6,624 | ||||||
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Deferred revenue
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5,128 | 4,643 | ||||||
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Total current liabilities
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31,567 | 31,252 | ||||||
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Other long-term liabilities
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50 | 95 | ||||||
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Total liabilities
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31,617 | 31,347 | ||||||
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Stockholders' equity
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Preferred stock
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- | - | ||||||
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Common stock
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373 | 369 | ||||||
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Additional paid-in capital
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124,761 | 122,664 | ||||||
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Accumulated other comprehensive loss
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(3,344 | ) | (3,517 | ) | ||||
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Accumulated deficit
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(78,991 | ) | (70,338 | ) | ||||
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Total stockholders' equity
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42,799 | 49,178 | ||||||
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Total liabilities and stockholders' equity
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$ | 74,416 | $ | 80,525 | ||||
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PRESSTEK, INC.
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SUPPLEMENTAL FINANCIAL INFORMATION
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$000's
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(Unaudited)
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| Q3 2010 | Q2 2011 | Q3 2011 | ||||||||||
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Key Units
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DI Presses (Excludes QMDI)
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11 | 13 | 7 | |||||||||
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CTP Platesetters (Excludes DPM)
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13 | 12 | 8 | |||||||||
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Product Revenue - Growth Portfolio
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DI Presses (Excludes QMDI)
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$ | 3,632 | $ | 5,167 | $ | 2,573 | ||||||
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Presstek Branded DI Plates
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4,323 | 4,088 | 3,670 | |||||||||
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Total DI Revenue
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7,955 | 9,255 | 6,243 | |||||||||
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Thermal CTP Platesetters (Excludes DPM)
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712 | 716 | 447 | |||||||||
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Thermal CTP Plates
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3,613 | 3,740 | 3,613 | |||||||||
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Total CTP Revenue
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4,325 | 4,456 | 4,060 | |||||||||
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Total Product Revenue - Growth
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12,279 | 13,711 | 10,303 | |||||||||
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Product Revenue - Traditional Portfolio
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QMDI Platform
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2,989 | 2,369 | 1,879 | |||||||||
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Polyester CTP Platform
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3,019 | 2,709 | 2,483 | |||||||||
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Other DI Plates
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997 | 1,090 | 1,033 | |||||||||
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Conventional/Other
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6,339 | 5,929 | 6,034 | |||||||||
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Total Product Revenue - Traditional
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13,343 | 12,098 | 11,429 | |||||||||
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Gross Product Revenue
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25,623 | 25,809 | 21,732 | |||||||||
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Installation Transfer
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(278 | ) | (327 | ) | (122 | ) | ||||||
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Net Product Revenue
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25,344 | 25,482 | 21,610 | |||||||||
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Service Revenue
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6,070 | 5,913 | 5,290 | |||||||||
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Total Revenue
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$ | 31,414 | $ | 31,395 | $ | 26,900 | ||||||
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Gross Product Revenue Components %
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Growth
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47.9 | % | 53.1 | % | 47.4 | % | ||||||
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Traditional
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52.1 | % | 46.9 | % | 52.6 | % | ||||||
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Geographic Revenues (Origination)
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North America
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$ | 24,165 | $ | 25,059 | $ | 20,366 | ||||||
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Europe
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7,249 | 6,335 | 6,535 | |||||||||
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Consolidated
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$ | 31,414 | $ | 31,395 | $ | 26,900 | ||||||
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Gross Margin
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Equipment
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-4.3 | % | -0.6 | % | -30.2 | % | ||||||
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Consumables
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45.9 | % | 46.1 | % | 39.2 | % | ||||||
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Service
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17.4 | % | 19.1 | % | 22.2 | % | ||||||
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Consolidated
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32.8 | % | 31.7 | % | 27.1 | % | ||||||
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Operating Expenses excluding Special Charges
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Total Operating Expenses
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$ | 11,652 | $ | 11,112 | $ | 11,954 | ||||||
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less: Restructuring and Other Charges
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412 | 48 | 413 | |||||||||
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less: Goodwill Impairment
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0 | 0 | 0 | |||||||||
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Operating Expenses excluding Special Charges (a)
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$ | 11,240 | $ | 11,064 | $ | 11,541 | ||||||
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Adjusted EBITDA
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Net income (loss) from continuing operations
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$ | (1,496 | ) | $ | (1,698 | ) | $ | (5,415 | ) | |||
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Add back:
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Interest
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248 | 281 | 293 | |||||||||
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Tax charge (benefit)
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158 | 183 | 50 | |||||||||
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Depreciation and amortization
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1,261 | 1,215 | 1,263 | |||||||||
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Impairment / Other non-cash charges
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- | - | 1,399 | |||||||||
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Non cash portion of equity compensation
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719 | 373 | 242 | |||||||||
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Restructuring and other charges
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412 | 48 | 413 | |||||||||
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Adjusted EBITDA (a)
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$ | 1,302 | $ | 402 | $ | (1,755 | ) | |||||
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Working Capital
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Total current assets
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$ | 58,206 | $ | 54,389 | $ | 49,046 | ||||||
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Current liabilities
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32,573 | 32,454 | 31,567 | |||||||||
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Working capital
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25,633 | 21,935 | 17,479 | |||||||||
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Add back short-term debt
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Current portion of long-term debt
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- | - | - | |||||||||
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Line of credit
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9,424 | 12,897 | 13,130 | |||||||||
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Working capital excluding debt (a)
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$ | 35,057 | $ | 34,832 | $ | 30,609 | ||||||
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Debt net of cash
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Current portion of long-term debt
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$ | - | $ | - | $ | - | ||||||
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Line of credit
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9,424 | 12,897 | 13,130 | |||||||||
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Total debt
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9,424 | 12,897 | 13,130 | |||||||||
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Cash
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2,549 | 3,720 | 3,293 | |||||||||
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Debt net of cash
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$ | 6,875 | $ | 9,177 | $ | 9,837 | ||||||
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Days Sales Outstanding
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65 | 50 | 47 | |||||||||
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Days Inventory Outstanding
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87 | 83 | 95 | |||||||||
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Capital Expenditures
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$ | 124 | $ | 95 | $ | 74 | ||||||
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Employees
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501 | 485 | 459 |
a. Operating expenses excluding special charges, Adjusted EBITDA [earnings before interest, taxes, depreciation, amortization and restructuring and other non-recurring charges (credits)]; and Working capital excluding debt are not measures of performance under accounting principles generally accepted in the United States of America ("GAAP") and should not be considered alternatives for, or in isolation from, the financial information prepared and presented in accordance with GAAP. Presstek's management believes that Adjusted EBITDA and Operating expenses excluding special charges provide meaningful supplemental information regarding Presstek's current financial performance and prospects for the future. Presstek's management believes that Working capital excluding debt, provides meaningful supplemental information regarding Presstek's ability to meet its current liability obligations. Presstek believes that both management and investors benefit from referring to these non-GAAP measures in assessing the performance of Presstek's ongoing operations and liquidity, and when planning and forecasting future periods. These non-GAAP measures also facilitate management's internal comparisons to Presstek's historical operating results and liquidity. Our presentations of these measures, however, may not be comparable to similarly titled measures used by other companies. Reconciliations of these measures to GAAP are included in the tables above.
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PRESSTEK, INC.
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Reconciliation of GAAP amounts to Non-GAAP amounts
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(Dollar amounts in thousands)
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Three months ended
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October 1, 2011
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October 2, 2010
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Operating Expenses
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$ | 11,954 | $ | 11,652 | ||||
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Add Back:
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Reserve adjustment
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(1,399 | ) | ||||||
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Operating loss excluding reserve adjustment
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$ | 10,555 | $ | 11,652 | ||||