Presstek's Results Boost And Outlook For Growth

Presstek has reported fourth quarter and full year results for 2006 with consolidated revenue for the year of US$265.7 million, compared to US$259.1 million in 2005.

Presstek has reported fourth quarter and full year results for 2006 with consolidated revenue for the year of US$265.7 million, compared to US$259.1 million in 2005.

The fourth quarter of 2006 showed revenue of US$66.1 million, compared to US$65.8 million in the same quarter of the previous year.

In terms of the outlook for the business, Presstek said it expects total revenue to grow by at least five per cent from 2006, with digital equipment and consumables expected to grow by at least 15 per cent.

The company also expects operating margin to grow to approximately five per cent of revenue, on a full-year basis.

Due to seasonality, for the first quarter of this year, Presstek anticipates total revenue in the range of US$63 million - US$65 million.

The company also expects to again report positive operating income in the quarter.

Presstek said that results for the fourth quarter of 2006 reflected three unusual items, which affected GAAP results.

Firstly, net income was affected by Presstek treating the shutdown of the Precision Analogue newspaper plate business as a discontinued operation.

Net income in the fourth quarter included a US$2.4 million loss from the discontinued Precision Analogue operations.

Secondly, special charges included the expensing of the Precision Analogue goodwill, amounting to US$2.6 million.

Special charges also included the expensing of US$2.2 million of previously capitalised legal costs related to patent defence in litigation that Presstek had brought against a competitor.

That action was prompted by a determination that the company made in December, that the merits of its legal action had increased and that the likelihood of settlement had changed, added the company.

Thirdly, net income from continuing operations was affected by income tax accounting.

Due to Presstek's recent track record of profitability and the company's expectation of future profitability, it has reversed its deferred tax asset reserves, which resulted in an income tax benefit in the quarter of SU$10.7 million.

Revenue for the fourth quarter of 2006 was made up of a consolidated equipment revenue of US$25.8 million, compared to US$24.4 million in the same quarter of 2005, whilst consolidated consumable revenue of US$30.0 million, compared to US$29.7 million in the same quarter of the previous year.

Presstek said that digital equipment and consumables revenue was US$44.9 million, compared to US$38.6 million in the same quarter of 2005, whilst consolidated service revenue of US$10.3 million, compared to SU$11.7 million the equivalent quarter of the previous year.

Net income in the fourth quarter was US$4.6 million or US$0.13 per diluted share, compared to US$2.4 million or US$0.07 per share in the same quarter last year and a net loss of $423,000 or ($0.01) per share in Q3.

For the full-year 2006, net income was $9.7 million, or $0.27 per share, compared to $6.1 million or $0.17 in 2005.

Excluding special charges, operating income in the fourth quarter of 2006 was US$1.9 million, compared to Us$3.2 million in the same quarter of 2005 and US$72,000 in the third quarter.

Presstek's president and chief executive officer, Edward J Marino, said: "Our execution started to show the improvements we anticipated in the fourth quarter.

That quarter's revenue was up eight per cent from the previous quarter and was our best sequential gain in a year.

In addition, our revenue mix was of a higher, more favourable quality and contained a heavier mix of digital products than in prior quarters." He added: "Our operating income for the fourth quarter was US$1.9 million, achieving our target of positive operating profit.

This level of profit is in the right direction but still far below our potential.

Whilst there are additional improvements we can make, we believe that with highlights such as record DI equipment sales, we have entered 2007 with a healthy foundation we can expand upon." In the quarter, equipment and service gross margins improved, whilst consumables margins held flat, despite addressing quality issues.

Gross margins benefited from reduced expenses arising from cost reductions implemented in the quarter.

Operating expenses were also reduced by US$0.5 million in the quarter, despite costs associated with the Graph Expo trade show.

Debt-net-of-cash in the fourth quarter was US$28.1 million, down from US$29.9 million in the same quarter last year, but up from US$26.9 million in the third quarter, due to funding the shutdown of the Precision Analogue operations.

Back to top