Business News
Presstek Reports Third Quarter 2007 Financial Results
Friday 25. January 2008 - Presstek, Inc. (NASDAQ:PRST) today reported results for the third quarter of 2007. The net loss from continuing operations for the third quarter was $3.6 million, or $.10 per share.
This compares to a net loss of $40,000, or $.00 per share, in the third quarter of last year. The third quarter 2007 loss includes a pre-tax impact of $6.3 million in charges primarily related to previously disclosed reviews of inventory and receivables conducted by the company.
Consolidated revenue from continuing operations was $59.6 million, down $1.8 million from the same quarter last year. As a result of the previously disclosed review of European business and revenue recognition practices, the company identified certain revenue transactions totaling $1.5 million that were incorrectly recorded in prior quarters, and were reversed in the third quarter of 2007. Absent this adjustment, third quarter revenue was essentially flat from the prior year.
Presstek President and Chief Executive Officer Jeff Jacobson said, “As you know, we have experienced some temporary disruptions to our business over the past several months related to an extensive worldwide review of inventory and receivables, as well as certain European business processes and revenue recognition practices. As reported in our December 19, 2007 press release, these disruptions have negatively impacted our third quarter results and will also impact our fourth quarter results to a lesser extent. Our Business Improvement Plan which we announced on October 25, 2007 is well underway and on track and, based upon actions already taken, we now expect we will exceed our previously announced 9% reduction in headcount. We are looking forward to a much improved 2008.”
The company reported that debt net of cash was $30.0 million as of September 29, 2007, down $2.7 million from the end of the second quarter and down $7.0 million, or 19%, from the high point at the end of first quarter 2007. “I am pleased with our improving cash position and note that this trend has continued through the fourth quarter of 2007,” said Jacobson. “This strong focus on cash will provide us with the liquidity we need to grow our business. We have been saying all along that it is our goal to drive operational excellence and we are starting to see positive results.”
Revenue from the company’s growth product portfolio, which includes the 34DI and 52DI digital offset solutions, Lasertel operations, and the Presstek family of chemistry-free computer-to-plate (CTP) solutions, comprised 50% of total revenue in the third quarter of 2007 (excluding the adjustment for prior period transactions noted above), up from 41% of total revenue in the same quarter last year. Revenue from the growth product portfolio was up 22% over the prior year period, led by a 24% increase in DI press sales.
Consolidated gross margin was $14.8 million in the third quarter, or 24.8% of revenue. This includes $4.0 million of charges primarily related to inventory, including $2.7 million of excess and obsolete, as well as physical inventory charges of $0.4 million. The excess and obsolete reserve increase covers various product areas, and was necessitated by certain product strategy and methodology changes. Excluding these charges, gross margin would have been 31.5%, up from 29.4% in Q3 of last year.
Operating expenses in the third quarter totaled $21.1 million, including charges of $2.2 million related to increased receivable reserves and legal and professional accruals. Also included were $0.4 million of restructuring charges related primarily to the company’s Canadian operation.
Presstek’s Lasertel operation recorded external sales of $2.0 million for the third quarter of 2007, up from $1.8 million in the same quarter last year. Lasertel recorded an operating loss in Q3 of $1.4 million, driven by increased receivable reserves, physical inventory adjustments, and a change in inventory accounting practices.
Additionally, the company plans to report in its September 29, 2007 Form 10-Q that management identified material weaknesses in internal control over financial reporting related to revenue recognition, as well as account reconciliation processes in the company’s European operation. Presstek has initiated actions to remediate these material weaknesses.
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.