SOURCE: Presstek, Inc.

Presstek

March 14, 2011 07:00 ET

Presstek Reports Fiscal 2010 Profit Improvements and Third 75DI Order

GREENWICH, CT--(Marketwire - March 14, 2011) - Presstek, Inc. (NASDAQ: PRST)

  • $38.6 million improvement in net income for 2010
  • $5.6 million improvement in full year adjusted EBITDA
  • Growth consumables increase 4% in 2010
  • Debt net of cash of $6.1 million, a $0.8 million reduction in the fourth quarter of 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 fourth quarter and fiscal year ended January 1, 2011. In the quarter, the Company reported total revenue of $31.1 million, a decline of 7% from the amount reported in the fourth quarter of 2009, and adjusted EBITDA of $0.6 million, a reduction of $0.5 million when compared to the prior year fourth quarter. For fiscal 2010, the Company reported total revenue of $128.6 million, a decline of 4% from 2009, and adjusted EBITDA of $4.0 million, a $5.6 million improvement from the prior year. The Company also reported a 50% reduction in debt net of cash in 2010. (See "Information Regarding Non-GAAP Measures")

During the fourth quarter of 2010 the Company recorded two significant non-cash charges, a $1.9 million expense related to a single customer bad debt reserve and a $2.7 million valuation allowance against certain deferred tax assets outside the United States. Although reserved in the fourth quarter, the benefits of these deferred tax assets remain available to offset the Company's future income tax liabilities. Presstek anticipates implementing tax planning strategies which management believes will make possible the reversal of some or all of this allowance in future periods. 

Including these non-cash charges the Company had an operating loss of $3.4 million in the fourth quarter of 2010 versus an operating loss of $0.7 million in the 2009 fourth quarter. The majority of the increased operating loss in the fourth quarter of 2010 relates to the $1.9 million customer bad debt reserve referenced above with the remainder relating primarily to a $0.8 million increase in non-cash equity-based compensation charges. For fiscal 2010 the Company had a full year operating loss of $6.8 million, an improvement of $24.6 million from the $31.4 million operating loss in 2009. The 2009 results include a $19.1 million charge for the write-off of goodwill. Excluding the goodwill write-off in 2009 and the customer bad debt reserve in 2010, operating loss improved by $7.4 million during fiscal 2010. (See "Information Regarding Non-GAAP Measures")

Inclusive of the non-cash charges referenced above the Company incurred a net loss from continuing operations during the fourth quarter of 2010 of $6.7 million, or $0.18 per share, compared to a net loss from continuing operations of $1.5 million, or $0.04 per share, in the fourth quarter of 2009. The Company's 2010 net loss from continuing operations was $10.6 million, or $0.29 per share, compared to a net loss from continuing operations of $49.1 million, or $1.34 per share, in 2009. The 2009 results included special charges for the write-off of goodwill and deferred tax assets of $19.1 million and $16.8 million, respectively. Excluding the non-cash charges for 2009 and 2010, net loss from continuing operations improved by $7.3 million versus 2009. (See "Information Regarding Non-GAAP Measures")

"2010 was again a difficult year in our industry but I was pleased with our ability to not only continue to generate positive quarterly adjusted EBITDA but to increase it by $5.6 million on a full year basis compared to 2009," said Presstek Chairman, President and Chief Executive Officer, Jeff Jacobson. "Additionally, in 2010 we reduced our debt net of cash by $6.0 million against a backdrop of a 4% decline in overall revenues. We also successfully introduced our 75DI digital offset press to the market. We believe that the 75DI with its 6-minute job-to-job turnaround, high quality output and expanded sheet size will be a key driver to our growth strategy and the initial market reception supports this belief. In addition to the two North American orders that were previously announced, we are pleased to announce that we have now received our first international order for the 75DI. In the brief time since introducing this dynamic product we have received three orders and are continuing to work with many other customers on potential deals."

Fourth Quarter 2010 Financial Results 
Total revenue in the fourth quarter of 2010 was $31.1 million, essentially flat from the previous quarter and a decrease of $2.4 million from the fourth quarter of 2009. 

  • Equipment revenue decreased $0.3 million, to $5.5 million in the fourth quarter of 2010, compared with the same period last year. The slight decrease versus the prior year's quarter is due primarily to an unfavorable shift in product mix. 

  • Consumables revenue totaled $19.5 million in the fourth quarter of 2010, compared with $20.6 million for the same period last year, as increases in CTP plates of 10% from the prior year quarter were more than offset by reductions in "traditional" product categories. 

  • Service revenue declined approximately 15 percent to $6.0 million in the fourth quarter of 2010 compared to the year ago quarter. This drop is primarily due to the continued erosion of the analog service base, lower installation revenue and a general trend by customers to delay service calls and maintenance to save money in a difficult economy. 

Gross margin percent for the fourth quarter of 2010 was 31.9% compared to 33.9% in the fourth quarter of 2009. The reduction versus the fourth quarter of 2009 was due primarily to lower service margins and a lower mix of higher margin consumables. 

Excluding the $1.9 million non-cash charge in the fourth quarter of 2010 for a customer bad debt reserve, operating expenses declined by $0.6 million, or 5%, from the fourth quarter of 2009. The decline in operating expenses was primarily related to reduced payroll costs, professional service fees and restructuring charges, partially offset by increased non-cash equity-based compensation expenses.

2010 Financial Results 
Total revenue in 2010 was $128.6 million, a decrease of 4% or $5.9 million from 2009. In 2010 equipment revenue increased 9% to $21.4 million compared with last year. Consumables revenue totaled $82.3 million in fiscal 2010, compared with $85.7 million for the prior year. Revenue in our "growth" consumables, DI and CTP plates, increased by 4% from the prior year but this increase was more than offset by reductions in "traditional" product categories. Service revenue declined approximately 14 percent to $24.9 million in 2010 compared to the prior year due to the factors noted in the fourth quarter discussion above. 

Gross margin percent for 2010 was 32.6% compared to 31.4% in 2009. The improvement versus 2009 was due primarily to increased manufacturing efficiencies.

Fiscal 2010 operating expenses of $48.7 million represented a reduction of $24.9 million from the prior year. Excluding the impact of the one-time write-off of goodwill in the second quarter of 2009 and the customer bad debt reserve in the fourth quarter of 2010, operating expenses declined by $7.7 million, or 14%. The decline in operating expenses was primarily related to reduced payroll costs and professional service fees, partially offset by increased non-cash equity-based compensation expenses.

Debt net of cash totaled $6.1 million at the end of the year, a reduction of $6.0 million versus 2009 and a reduction of $0.8 million from the end of the 2010 third quarter. The primary cause of the full year reduction was the net cash proceeds received from the sale of the Company's non-core Lasertel subsidiary and the improvement from the third quarter was primarily due to net cash provided by operations in the fourth quarter of 2010.

"Despite the impact of the economy we have maintained our positive adjusted EBITDA levels for the fifth consecutive quarter and during fiscal 2010 reduced our debt net of cash position by $6.0 million, a 50% reduction from 2009," said Presstek Executive Vice President and Chief Financial Officer, Jeff Cook. "We expect first quarter 2011 revenue and adjusted EBITDA to be within the range of our fourth quarter 2010 results. Additionally, we believe that with changes in international tax planning strategies, we could be in a position to reverse the fourth quarter 2010 valuation allowance against deferred tax assets in future periods."

"While our revenue did not rise to the level we would have liked in 2010, the year was filled with many achievements for Presstek," commented Jacobson. "Now that 2010 is behind us we can look back at the many accomplishments we have had. During 2010 we:

  • successfully sold our Lasertel business;
  • entered into a new credit facility with PNC Bank;
  • reduced our debt net of cash to $6.1 million (a 50% reduction);
  • completed development and introduced our 75DI digital offset press; and
  • posted positive adjusted EBITDA in every quarter of the year.

We feel we have accomplished much this year in a very difficult economy and in particular a difficult one for our industry, and with the addition of the 75DI to our product portfolio we feel confident in our ability to grow this business."

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; working capital excluding debt; adjusted operating loss; adjusted net loss from continuing operations; adjusted operating expenses; 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 fourth quarter 2010 results in a conference call on Monday, March 14, 2011 at 10:30 a.m. Eastern Time. Conference call information is below:

Conference Call Access:
Domestic Dial In: (866) 356-3377
International Dial In: (617) 597-5392
Passcode: 92699835

In addition, for those unable to participate at the time of the call, a rebroadcast will be available following the call from Monday, March 14, 2011 at 1:30 PM Eastern Time until Monday, March 21, 2011 at 11:59 PM Eastern Time.

Rebroadcast Access:
Domestic Dial In: (888) 286-8010
International Dial In: (617) 801-6888
Passcode: 26739530

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 expected revenue and adjusted EBITDA results for the first quarter of 2011, the Company's implementation of certain tax strategies, the Company's strategy and the ability of the Company to execute the strategy with its product portfolio, the prospects for the success of the Company's recently introduced 75DI® press, the ability of the Company to achieve positive adjusted EBITDA in the future and the ability of the Company to achieve its stated objectives. 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 DI® presses, and resulting revenue and adjusted EBITDA, the ability of the Company to achieve sales and performance levels sufficient to meet its expected first quarter 2011 revenue and adjusted EBITDA results, the ability of the Company to successfully implement the necessary aspects of its tax strategy to enable it to re-establish the deferred tax assets that were reserved in the fourth quarter of 2010, the ability of the Company to successfully expand into new territories, 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 other risks and uncertainties detailed in the Company's 2009 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. 

   
   
PRESSTEK, INC.  
CONSOLIDATED BALANCE SHEETS  
(in thousands)  
(Unaudited)  
   
  January 1,     January 2,  
  2011     2010  
ASSETS              
  Current assets              
    Cash and cash equivalents $ 4,165     $ 5,843  
    Accounts receivable, net   19,223       22,605  
    Inventories   29,143       30,378  
    Assets of discontinued operations   -       12,624  
    Deferred income taxes   -       243  
    Other current assets   1,609       2,598  
        Total current assets   54,140       74,291  
                 
  Property, plant and equipment, net   21,156       24,307  
  Intangible assets, net   4,748       4,316  
  Deferred income taxes   4       1,140  
  Other noncurrent assets   1,053       481  
                 
        Total assets $ 81,101     $ 104,535  
               
LIABILITIES AND STOCKHOLDERS' EQUITY              
  Current liabilities              
    Line of credit $ 10,252     $ 17,910  
    Accounts payable   9,733       9,887  
    Accrued expenses   6,624       8,049  
    Deferred revenue   5,219       6,497  
    Liabilities of discontinued operations   -       5,203  
        Total current liabilities   31,828       47,546  
                   
  Other long-term liabilities   95       141  
                   
        Total liabilities   31,923       47,687  
                   
  Stockholders' equity              
    Preferred stock   -       -  
    Common stock   369       368  
    Additional paid-in capital   122,664       120,005  
    Accumulated other comprehensive loss   (3,517 )     (3,810 )
    Accumulated deficit   (70,338 )     (59,715 )
        Total stockholders' equity   49,178       56,848  
                   
        Total liabilities and stockholders' equity $ 81,101     $ 104,535  
                       
   
PRESSTEK, INC.  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(in thousands, except per-share data)  
(Unaudited)  
   
  Three months ended     Twelve months ended  
  January 1,     January 2,     January 1,     January 2,  
  2011     2010     2011     2010  
Revenue                              
  Equipment $ 5,523     $ 5,819     $ 21,413     $ 19,646  
  Consumables   19,493       20,571       82,300       85,741  
  Service and parts   6,049       7,092       24,864       29,071  
    Total revenue   31,065       33,482       128,577       134,458  
                               
Cost of revenue                              
  Equipment   5,612       5,901       21,924       23,916  
  Consumables   10,832       11,162       44,920       46,765  
  Service and parts   4,718       5,057       19,835       21,585  
    Total cost of revenue   21,162       22,120       86,679       92,266  
                               
Gross profit   9,903       11,362       41,898       42,192  
                               
Operating expenses                              
  Research and development   1,098       1,172       4,305       4,975  
  Sales, marketing and customer support   5,196       5,442       21,562       24,967  
  General and administrative   6,756       4,673       21,468       21,912  
  Amortization of intangible assets   188       214       805       926  
  Restructuring and other charges   103       522       564       1,684  
  Goodwill impairment   -       -       -       19,114  
    Total operating expenses   13,341       12,023       48,704       73,578  
                               
Loss from operations   (3,438 )     (661 )     (6,806 )     (31,386 )
Interest and other expense, net   (396 )     (858 )     (1,244 )     (1,389 )
                               
Loss from continuing operations before income taxes   (3,834 )     (1,519 )     (8,050 )     (32,775 )
Provision (benefit) for income taxes   2,834       (32 )     2,503       16,334  
                               
Loss from continuing operations   (6,668 )     (1,487 )     (10,553 )     (49,109 )
Gain (loss) from discontinued operations, net of income taxes   -       219       (70 )     (740 )
                               
Net loss $ (6,668 )   $ (1,268 )   $ (10,623 )   $ (49,849 )
                               
                               
Loss per share - basic                              
  Loss from continuing operations $ (0.18 )   $ (0.04 )   $ (0.29 )   $ (1.34 )
  Income (loss) from discontinued operations   -       0.01       (0.00 )     (0.02 )
  $ (0.18 )   $ (0.03 )   $ (0.29 )   $ (1.36 )
Loss per share - diluted                              
  Loss from continuing operations $ (0.18 )   $ (0.04 )   $ (0.29 )   $ (1.34 )
  Income (loss) from discontinued operations   -       0.01       (0.00 )     (0.02 )
  $ (0.18 )   $ (0.03 )   $ (0.29 )   $ (1.36 )
Weighted average shares outstanding                              
  Weighted average shares outstanding - basic   36,920       36,827       36,898       36,744  
  Dilutive effect of stock options   -       -       -       -  
  Weighted average shares outstanding - diluted   36,920       36,827       36,898       36,744  
                               
   
PRESSTEK, INC.  
SUPPLEMENTAL FINANCIAL INFORMATION  
$000's  
(Unaudited)  
   
    Q4 2009     Q3 2010     Q4 2010  
Key Units                        
    DI Presses (Excludes QMDI)     15       11       14  
    CTP Platesetters (Excludes DPM)     10       13       15  
                         
Product Revenue - Growth Portfolio                        
    DI Presses (Excludes QMDI)   $ 5,634     $ 3,632     $ 4,174  
    Presstek Branded DI Plates     4,022       4,323       4,054  
    Total DI Revenue     9,656       7,955       8,228  
                         
    Thermal CTP Platesetters (Excludes DPM)     578       712       991  
    Thermal CTP Plates     3,523       3,613       3,858  
    Total CTP Revenue     4,101       4,325       4,849  
                         
                         
    Total Product Revenue - Growth     13,757       12,279       13,076  
                         
Product Revenue - Traditional Portfolio                        
    QMDI Platform     3,155       2,989       2,770  
    Polyester CTP Platform     2,896       3,019       2,662  
    Other DI Plates     1,521       997       1,169  
    Conventional/Other     5,825       6,339       5,696  
    Total Product Revenue - Traditional     13,397       13,343       12,296  
                         
  Gross Product Revenue     27,154       25,623       25,373  
                         
    Installation Transfer     (764 )     (278 )     (357 )
                         
  Net Product Revenue     26,390       25,344       25,016  
                         
  Service Revenue     7,092       6,070       6,049  
                         
Total Revenue   $ 33,482     $ 31,414     $ 31,065  
                         
Gross Product Revenue Components %                        
  Growth     50.7 %     47.9 %     51.5 %
  Traditional     49.3 %     52.1 %     48.5 %
                         
Geographic Revenues (Origination)                        
  North America   $ 26,436     $ 24,165     $ 22,695  
  Europe     7,046       7,249       8,370  
  Consolidated   $ 33,482     $ 31,414     $ 31,065  
                         
Gross Margin                        
  Equipment     -1.4 %     -4.3 %     -1.6 %
  Consumables     45.7 %     45.9 %     44.4 %
  Service     28.7 %     17.4 %     22.0 %
  Consolidated     33.9 %     32.8 %     31.9 %
                         
Operating Expenses excluding Special Charges                        
    Total Operating Expenses   $ 12,023     $ 11,652     $ 13,341  
    less: Restructuring and Other Charges     522       412       103  
  Operating Expenses excluding Special Charges (a)   $ 11,501     $ 11,240     $ 13,238  
   
   
   
PRESSTEK, INC.  
SUPPLEMENTAL FINANCIAL INFORMATION  
$000's  
(Unaudited)  
                   
    Q4 2009     Q3 2010     Q4 2010  
Adjusted EBITDA                        
  Net income (loss) from continuing operations   $ (1,487 )   $ (1,496 )   $ (6,668 )
    Add back:                        
      Interest     459       248       250  
      Tax charge (benefit)     (32 )     158       2,834  
      Depreciation and amortization     1,173       1,261       1,020  
      Impairment / Other non-cash charges     124       -       1,935  
      Non cash portion of equity compensation     351       719       1,156  
      Restructuring and other charges     522       412       103  
  Adjusted EBITDA (a)   $ 1,110     $ 1,302     $ 630  
                         
Working Capital                        
  Total current assets   $ 61,667     $ 58,206     $ 54,140  
  Current liabilities     42,343       32,573       31,828  
    Working capital     19,324       25,633       22,312  
    Add back short-term debt                        
      Current portion of long-term debt     -       -       -  
      Line of credit     17,910       9,424       10,252  
      Working capital excluding debt (a)   $ 37,234     $ 35,057     $ 32,564  
                         
Debt net of cash                        
    Current portion of long-term debt   $ -     $ -     $ -  
    Line of credit     17,910       9,424       10,252  
      Total debt     17,910       9,424       10,252  
    Cash     5,843       2,549       4,165  
      Debt net of cash   $ 12,067     $ 6,875     $ 6,087  
                         
Days Sales Outstanding     59       65       61  
                         
Days Inventory Outstanding     84       87       87  
                         
Capital Expenditures   $ 51     $ 124     $ 41  
                         
Employees     527       501       503  
                         

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.

   
   
   
PRESSTEK, INC.  
Reconciliation of GAAP amounts to Non-GAAP amounts  
(Dollar amounts in thousands)  
             
    Fiscal year ended  
    January 1, 2011     January 2, 2010  
                 
Operating Loss   $ (6,806 )   $ (31,386 )
Add Back:                
  Goodwill impairment             19,114  
  Customer bad debt charge     1,935          
                 
Adjusted operating loss   $ (4,871 )   $ (12,272 )
                 
                 
Loss from continuing operations   $ (10,553 )   $ (49,109 )
Add Back:                
  Goodwill impairment             19,114  
  Customer bad debt charge     1,935          
  Valuation allowance on deferred tax assets     2,707       16,800  
                 
Adjusted loss from continuing operations   $ (5,911 )   $ (13,195 )
                 
Operating Expenses   $ 48,704     $ 73,578  
Less:                
  Goodwill impairment             19,114  
  Customer bad debt charge     1,935          
                 
Adjusted operating expenses   $ 46,769     $ 54,464  
                 
                 
Loss from continuing operations   $ (10,553 )   $ (49,109 )
Add back:                
  Interest     1,049       1,116  
  Tax charge (benefit)     2,503       16,334  
  Depreciation and amortization     4,841       4,745  
  Impairment / Other non-cash charges     1,935       21,938  
  Non cash portion of equity compensation     3,662       1,702  
  Restructuring and other charges     564       1,684  
                 
Adjusted EBITDA   $ 4,001     $ (1,590 )
                 
                 

Contact Information

  • CONTACTS:
    Investor Relations
    Tim McCauley
    Director of Financial Reporting & Investor Relations
    (203) 769-8054
    Email Contact

    Trade Relations
    Brian Wolfenden
    Director of Marketing Communications
    (603) 594-8585, ext. 3435
    Email Contact