Gross margin was 38.7% for the first quarter, down from 40.0% in the same period one year ago due to lower volumes and product mix, partially offset by a stronger Euro and a lower inventory provision. Gross margin during the first quarter of fiscal 2006 was comparable to the fourth quarter of fiscal 2005.
“Although we were disappointed with the slowdown in sales for our core business, we were very encouraged by the progress we made in our growing RFID segment”
Operating expenses in the quarter were $12.2 million, down from $12.5 million in the year ago fiscal period. A reduction of $0.3 million in the company's allowance for doubtful accounts requirement was offset by severance costs of $0.3 million.
The quarter includes income tax benefits and refunds of $0.1 million generated from foreign net operating losses.
The company ended the first fiscal quarter of 2006 with cash and short-term investments of $44.3 million, up $5.3 million compared with the first quarter of fiscal 2005. Interest income increased $0.2 million compared with the year ago quarter due to higher cash and short-term investment balances and higher interest rates. During the current quarter, the company declared and paid $0.5 million for its second quarterly cash dividend of $0.07 per share, an increase of $0.02 per share.
"Although we were disappointed with the slowdown in sales for our core business, we were very encouraged by the progress we made in our growing RFID segment," said Robert Kleist, President and CEO of Printronix. "This quarter we achieved $943 thousand in RFID printer sales, the highest in our history, which we believe is indicative of the tangible traction we are gaining in the early deployment of RFID. In addition, we also recently announced strategic RFID partnerships with IBM and Microsoft, two key leaders and developers in the RFID space. We also made strategic progress within our core line matrix business, including the renewal of our longstanding agreement with IBM, in connection with the introduction of new line matrix printers for both IBM and Printronix. We continue to believe that our strong balance sheet and core business in line matrix and high-performance thermal printers coupled with our new opportunities within RFID position us well for future growth."
There will be an earnings conference call at 11:00 a.m. PT (2:00 p.m. ET) on July 29, 2005. The call will be broadcast live over the Internet and will be hosted by Robert Kleist, President and CEO, and George Harwood, Senior Vice President and CFO. To access the live audio webcast, go to the Printronix web site at www.printronix.com and select the conference call link to register.
Except for historical information, this press release contains "forward-looking statements" about Printronix, within the meaning of the Private Securities Litigation Reform Act of 1995. Terms such as "objectives," "believes," "expects," "plans," "intends," "should," "estimates," "anticipates," "forecasts," "projections," and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including: adverse business conditions and a failure to achieve growth in the computer peripheral industry and in the economy in general; the ability of the company to achieve growth in the Asia Pacific market; adverse political and economic events in the company's markets; a worsening of the global economy due to general conditions; a worsening of the global economy resulting from terrorist attacks or risk of war; a worsening of the global economy resulting from a resurgence of SARS (Severe Acute Respiratory Syndrome); the ability of the company to maintain its production capability in its Singapore plant or obtain product from its Asia Pacific suppliers should a resurgence of SARS occur; the ability of the company to hold or increase market share with respect to line matrix printers; the ability of the company to successfully compete against entrenched competition in the thermal printer market; the ability of the company to adapt to changes in requirements for radio frequency identification ("RFID") products by Wal-Mart and/or the Department of Defense and others; the ability of the company to attract and to retain key personnel; the ability of the company's customers to achieve their sales projections, upon which the company has in part based its sales and marketing plans; the ability of the company to retain its customer base and channel; the ability of the company to compete against alternate technologies for applications in its markets; and the ability of the company to continue to develop and market new and innovative products superior to those of the competition and to keep pace with technological change. The company does not undertake to publicly update or revise any of its forward-looking statements, even if experience or new information shows that the indicated results or events will not be realized.
About Printronix, Inc.
Since 1974, Printronix, Inc. (NASDAQ:PTNX) has created innovative printing solutions for the industrial marketplace and supply chain. The company is the worldwide market leader in enterprise solutions for line matrix printing and has earned an outstanding reputation for its high-performance thermal and fanfold laser printing solutions. Printronix also has become an established leader in pioneering technologies, including radio frequency identification (RFID) printing, bar code compliance and networked printer management. Printronix is headquartered in Irvine, California. For company information, see www.printronix.com.
Printronix, Inc., and Subsidiaries
Consolidated Statements of Operations (Unaudited)
(Dollars in Thousands, Except
Share and Per Share Data)
Three Months Ended
--------------------------------
6/24/05 3/25/05 6/25/04
---------- ---------- ----------
Revenue $31,787 $32,697 $33,278
Cost of sales 19,478 20,041 19,968
---------- ---------- ----------
Gross margin 12,309 12,656 13,310
Engineering and development 3,868 3,711 3,998
Sales and marketing 6,116 6,190 6,280
General and administrative 2,250 2,127 2,183
---------- ---------- ----------
Total operating expenses 12,234 12,028 12,461
Income from operations 75 628 849
Interest and other (income) expense,
net (205) (2) 62
---------- ---------- ----------
Income before taxes 280 630 787
Provision (benefit) for income taxes 70 (34) 338
---------- ---------- ----------
Net income $210 $664 $449
========== ========== ==========
Net Income Per Share:
-------------------------------------
Basic $0.03 $0.10 $0.07
Diluted $0.03 $0.10 $0.07
Shares Used in Computing Net Income
Per Share:
-------------------------------------
Basic 6,492,516 6,429,487 6,280,643
Diluted 6,636,244 6,613,757 6,446,960
Gross margin % 38.7% 38.7% 40.0%
Operating expenses % 38.5% 36.8% 37.4%
Income from operations % 0.2% 1.9% 2.6%
Net income % 0.7% 2.0% 1.3%
Consolidated Balance Sheets (Unaudited)
----------------------------------------------------------------------
(Dollars in Thousands)
6/24/05 3/25/05 6/25/04
---------- ---------- ----------
Assets
-------------------------------------
Cash and cash equivalents $27,656 $35,405 $38,974
Short-term investments 16,600 9,500 --
Accounts receivable, net 17,104 18,207 17,354
Inventory, net 13,991 13,093 13,312
Other current assets 5,044 4,381 6,762
Property, plant and equipment, net 33,108 32,926 34,651
Other long-term assets 2,061 1,954 1,216
---------- ---------- ----------
Total assets $115,564 $115,466 $112,269
========== ========== ==========
Liabilities and Stockholders' Equity
-------------------------------------
Current portion of long-term debt $700 $700 $700
Accounts payable 7,623 7,162 7,623
Other current liabilities 11,603 12,404 11,595
Other long-term liabilities 16,051 16,044 15,828
Stockholders' equity 79,587 79,156 76,523
---------- ---------- ----------
Total liabilities and
stockholders' equity $115,564 $115,466 $112,269
========== ========== ==========
Printronix, Inc., and Subsidiaries
Sales Classification (Unaudited)
Sales by Geographic
Region
-----------------------
------------------- -------------------
Three Months Ended Percent of Total
Sales
------------------- -------------------
June 24, June 25, Percent June 24, June 25,
2005 2004 Change 2005 2004
--------- --------- ----------------- ---------
($ in thousands)
Americas $16,186 $14,916 8.5% 50.9% 44.8%
EMEA 10,417 12,714 (18.1)% 32.8% 38.1%
Asia Pacific 5,184 5,648 (8.2)% 16.3% 17.1%
--------- --------- --------- ---------
$31,787 $33,278 (4.5)% 100.0% 100.0%
========= ========= ========= =========
Sales by Product
Technology
-----------------------
------------------- -------------------
Three Months Ended Percent of Total
Sales
------------------- -------------------
June 24, June 25, Percent June 24, June 25,
2005 2004 Change 2005 2004
--------- --------- ----------------- ---------
($ in thousands)
Line matrix $22,204 $24,004 (7.5)% 69.9% 72.1%
Thermal(a) 6,147 5,338 15.2% 19.3% 16.2%
Laser 2,799 3,337 (16.1)% 8.8% 9.9%
Verification products 637 599 6.3% 2.0% 1.8%
--------- --------- --------- ---------
$31,787 $33,278 (4.5)% 100.0% 100.0%
========= ========= ========= =========
(a)RFID $943 $159 493.1% 3.0% 0.5%
========= ========= ========= =========
Sales by Channel
-----------------------
------------------- -------------------
Three Months Ended Percent of Total
Sales
------------------- -------------------
June 24, June 25, Percent June 24, June 25,
2005 2004 Change 2005 2004
--------- --------- ----------------- ---------
($ in thousands)
OEM $9,492 $10,517 (9.7)% 29.9% 31.5%
Distribution 20,824 20,258 2.8% 65.5% 61.0%
Direct 1,471 2,503 (41.2)% 4.6% 7.5%
--------- --------- --------- ---------
$31,787 $33,278 (4.5)% 100.0% 100.0%
========= ========= ========= =========
Sales by Customer
-----------------------
------------------- -------------------
Three Months Ended Percent of Total
Sales
------------------- -------------------
June 24, June 25, Percent June 24, June 25,
2005 2004 Change 2005 2004
--------- --------- ----------------- ---------
($ in thousands)
Largest customer - IBM $7,640 $7,222 5.8% 24.0% 21.6%
Second largest customer 2,596 2,585 0.4% 8.2% 7.8%
Top ten customers 16,076 17,528 (8.3)% 50.6% 52.6%
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