Business News
Presstek Announces Fourth Quarter 2007 Financial Results
Thursday 03. April 2008 - Presstek, Inc. (NASDAQ:PRST) today reported a net loss from continuing operations in fourth quarter 2007 of ($2.8) million, or ($.08) per share, versus net income from continuing operations of $7.5 million, or $.21 per share in the fourth quarter of 2006. 2006 operating results include a tax benefit of $10.7 million related to the reversal of certain deferred tax asset reserves.
Fourth quarter 2007 results include pre-tax charges of $1.2 million primarily due to severance related to organizational changes made in support of the company’s previously announced Business Improvement Plan (“BIP”), and $1.5 million of professional fees and other adjustments related primarily to previously announced reviews of inventory, receivables and European operations conducted during the fourth quarter of 2007. In addition, fourth quarter 2007 results include $1.4 million of accruals related to legal matters. Fourth quarter 2006 operating results included pre-tax charges of $5.7 million related primarily to the expensing of goodwill related to the company’s discontinued analog plate business, Precision Lithograining, and the expensing of previously capitalized legal costs.
“We have made significant, tangible progress on the BIP we announced on October 25, 2007,” commented Presstek President and Chief Executive Officer Jeff Jacobson. “We have reduced headcount by 10% since the second quarter of 2007 which exceeded our 9% goal, consolidated distribution centers, and reduced costs. Our focus on cash has also been effective, and the company has reduced debt net of cash by $14.8 million, or 40%, since its peak at the end of the first quarter 2007. When compared to the fourth quarter of 2006, our annuity growth portfolio businesses, consumables and services, increased 35% in the current quarter and sales of our 52DI(R) presses almost doubled. Consumables sales increases were driven by a 36% increase in DI plate sales and a 16% increase in CTP plate sales. Our consolidated gross margin improved significantly in the quarter, and service margins were particularly strong versus the previous three quarters. We are driving our operations to a leaner business model with a higher concentration of sales in our annuity growth portfolio that can deliver long term sustainable growth.”
In the fourth quarter of 2007, consolidated revenue from continuing operations was $61.3 million, a decrease of $4.7 million, or 7% from the fourth quarter of 2006. Gains in growth portfolio sales were more than offset by declines in sales of the company’s traditional products. Revenue from the company’s growth product portfolio comprised 53% of total revenue in the fourth quarter of 2007 versus 47% of total revenue in the same quarter last year.
Consolidated gross margins in the fourth quarter of 2007 were 30.7% versus 29.3% a year ago. Operating expenses were $22.4 million in the quarter versus $23.2 million in 2006. Fourth quarter 2007 operating expense includes $1.2 million in pre-tax charges primarily due to severance related to organizational changes made in support of the company’s BIP, as well as $3.4 million of accounting and legal fees primarily related to the review of inventory, receivables, and European Operations, as well as accruals related to certain legal matters. Fourth quarter 2006 operating expense of $23.2 million included pre-tax charges of $5.7 million due primarily to the expensing of goodwill related to the company’s discontinued analog plate business, Precision Lithograining, and the expensing of previously capitalized legal costs. Excluding these charges, operating expense levels in the fourth quarter of 2007 were slightly higher ($0.3 million) than 2006 levels. Earnings before interest, taxes, depreciation and amortization in the fourth quarter of 2007, adjusted for special charges and one time costs, was $4.2 million, and debt net of cash was $22.3 million as of December 29, 2007.
Presstek’s Lasertel operation recorded external sales of $2.4 million for the fourth quarter of 2007, a 30% increase from the same quarter last year. Lasertel recorded an operating loss in Q4 of ($0.9) million.
First Quarter 2008 Commentary
In the first quarter of 2008, the company expects positive adjusted EBITDA from continuing operations and continued progress at reducing costs and expenses as a result of its BIP program execution. The company expects revenue in the first quarter of 2008 to be as much as 20% below prior year levels driven primarily by an approximately $8 million reduction in European revenues. The decline in European revenues, in comparison to a particularly strong first quarter 2007 performance, is largely due to the disruption in the company’s European operations related to recently completed business reviews, as well as tightened commercial terms. In addition, challenging U.S. economic conditions and customer anticipation of a major industry convention in Germany in May 2008 are also expected to have a negative impact on first quarter 2008 revenue.
Information Regarding Non-GAAP Measures
In the fourth quarter of 2007, in addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the company provides non-GAAP financial measures, including debt net of cash, which is defined as debt minus 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.