The manufacturer and marketer of high tech digital imaging solutions for the graphic arts market, announced that its consolidated revenue was $64.8 million for the third quarter, but there was a net loss of $423,000, or $0.01 per diluted share.
Presstek CEO Edward Marino says the decline was due to execution failures and other considerations that centred on several issues that arose during the
quarter.
These included quality issues impacting CTP equipment and consumables sales, weaker than expected sales in North America “and from our OEM partners, as well as a larger than expected decline in our analogue business.”
Executive vice president Moosa E. Moosa added: “North American revenue was down 10% from a year ago, and down 14% from the previous quarter. Presstek Europe revenue was up 11% from a year ago, and down 18% from the previous quarter.
“Operationally, gross margin for the quarter was 27.4%, down from 30.3% a year ago and down from 28.4% in the previous quarter. Gross margins were unfavourably impacted by CtP quality related issues and an unfavourable product mix. We estimate that the overall impact of the quality issues on our third quarter results was approximately $1 million.”
Marino says: “While we are very disappointed with these results and the issues that created them, we are taking swift and decisive actions to correct them and we are making good progress.”
These include leadership changes and improved quality processes in manufacturing; product portfolio changes, cost reductions, price adjustments and improved business practices in our analogue consumables and service business; and improving profitability through further workforce reductions and a general realignment of overall costs.
“We have gotten our arms around the CTP quality issues and expect production to be back on track by the end of 2006. Our slowdown in North America appears to have been largely a result of customers waiting for Graph Expo, which took place last week, where we generated over 500 qualified sales leads and got customer commitments for 14 DI units.
“On the analogue front we are implementing new business practices to increase profitability and improve service levels.”
Financial Results were:
•Consolidated revenue of $64.8 million, compared to $64.7 in Q3 of 2005;
•Consolidated equipment revenue of $20.8 million, compared to $18.2
•million in Q3 of 2005;
•Consolidated consumable revenue of $33.1 million, compared to $35.0
•million in Q3 of 2005;
•Consolidated service revenue of $10.8 million, compared to $11.5
•million in Q3 of 2005;
•Digital products made up 72% of product revenue compared with 65% in Q3
•of last year;
•External revenue from the company’s Lasertel subsidiary of $1.8 million, up 73% from $1.0 million in Q3 of 2005.
