Strategy Comes Off With Record Presstek Profits

Presstek achieved record first quarter consolidated revenue of US$70.6 million for the first quarter of 2006 and a record operating profit of US$3.9 million.

Presstek achieved record first quarter consolidated revenue of US$70.6 million for the first quarter of 2006 and a record operating profit of US$3.9 million.

Presstek president and chief executive officer Edward J Marino, said: "We are off to a strong start in 2006.

This is the first quarter where we realised the full effect of the series of strategic moves we initiated at the end of 2004.

They included the acquisition of key assets and their subsequent integration, as well as our efforts to strengthen channels to market, rationalise product lines, build competencies and order priorities around growth in our digital product lines." He added: "Presstek has emerged as a new company performing with a common purpose, completely integrated and in control of the commercialisation of our technology in to products and the delivery of our products to customers." Marino continued: "In addition to record consolidated revenue, Presstek achieved record revenue in several important categories in the quarter, including total digital sales, digital equipment sales and digital consumable sales.

Our digital business has grown to almost two-thirds of our revenue and is beginning to push our top line as anticipated.

The penetration of Presstek technology, especially the Direct Imaging press line, continued to be a key driver of our business performance in the first quarter.

This performance, along with the response of customers at Ipex 2006, clearly demonstrates our strong leadership n the industry's transformation to digital technology." The record revenue compared to the US$69.3 million revenue in the previous quarter, whilst consolidated consumable revenue was up fvei per cent to US$34.8 million from US$33.2 million in the previous quarter, led by strong digital consumable sales, said the company.

The consolidated net income of US$2.7 million, or US$0.08 per basic and diluted share, compared to fourth quarter 2005 consolidated net income of US$2.4 million, or US$0.07 per basic and diluted share.

The record US$3.9 million operating profit was up 18 per cent from the US$3.3 million in the previous quarter, whilst there was a record EBITDA of US$6.4 million, compared to US$6.2 million in the fourth quarter of 2005.

The company's executive vice president and chief financial officer, Moosa E Moosa, said: "Our European operations made good progress in the first quarter of 2006.

Revenue from our Presstek Europe business was a record US $12.8 million in the first quarter of 2006, up five per cent from the previous quarter." Commenting on the company's Lasertel division's results, Moosa said: "Lasertel reported external sales of US$1.2 million in the first quarter of 2006, compared to US$0.7 million in the same quarter last year.

Looking forward, Lasertel has a solid backlog for the second quarter and was recently awarded a US government defence contract, which is expected to result in additional revenue for Lasertel in 2006 for contracted development work and for production laser diode components in 2007." Moosa continued: "We delivered a solid first quarter, established a number of records and achieved a number of significant operational milestones that will have a positive impact on our business going forward.

We have successfully shifted our business model from an OEM model to a direct sales model and as a result we are now in more control of the delivery of our technology to the customer." He explained: "During the quarter we anticipated the impending change-over to our new Anthempro plate and began to manage down inventory of the Anthem plate.

We also reduced other inventory during the quarter as a result of our inventory reduction programme.

As a result of these changes, production levels were down, resulting in lower manufacturing overhead absorption, which in turn had an impact on our gross margin percentage.

We are pleased to say, however, that first quarter operating margin as a percentage of sales was 5.5 per cent, compared to 4.7 per cent last quarter and 3.1 per cent a year ago.

We believe the company is well positioned to fully exploit its infrastructure as it grows its top line." And he continued: "Our EBITDA performance was strong at a record US$6.4 million, up three per cent from the prior quarter and 31 per cent from the same quarter last year.

First quarter operating income was up by 18 per cent, led by growth in revenue and a very strong operating performance, setting a new record for the company.

Net income was up by 13 per cent from the fourth quarter of 2005." Commenting on the balance sheet, Moosa said: "Accounts receivable were up US$3.8 million due primarily to our shift from an OEM model to a direct sales model and the timing of equipment funding from our vendor leasing partners.

Debt-net-of-cash at the end of the quarter continues to be strong at US$28.8 million, down from US$29.9 million at the end of 2005." He concluded: "We delivered solid financial results in the first quarter of 2006 and made significant strides toward our goals of reducing inventory and improving our operating results.

We expect to see continued progress in these areas as we move forward this year." He said that the first quarter of 2006 produced increased revenue and earnings exceeding the company's traditionally strong fourth quarter.

Presstek increased the penetration of its digital technology products, driving strong equipment and consumable sales.

He said that Presstek sold over 200 units of its manufactured digital equipment in the first quarter, which represents digital unit growth of more than eight per cent on a sequential quarter basis, and more than 30 per cent when compared to the first quarter of last year.

Marino continued: "We made productivity gains in the quarter, reducing inventory and operating expenses considerably.

We made progress in building our presence in Europe, including the opening of our new European Business Centre and we had a strong showing at Ipex 2006.

We anticipate continued solid business performance in 2006 and believe that our new products, strengthening market position and solid financial results will make for an exciting year.".

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