DELPHAX TECHS : Delphax Technologies Announces Results for Fiscal 2008 Third Quarter
08/14/2008| 08:00am US/Eastern
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MINNEAPOLIS, Aug. 14 /PRNewswire-FirstCall/ -- Delphax Technologies Inc.
(Pink Sheets: DLPX), a global provider of high-speed digital printing systems,
today reported net sales of $9.6 million for the third quarter ended June 30,
2008, compared with $10.7 million in the same period a year earlier.
Including a charge of $1.9 million for a previously disclosed workforce
reduction and an inventory valuation adjustment of $2.0 million, the fiscal
2008 third-quarter net loss was $4.9 million, or $0.75 per share, compared
with a net loss of $372,000, or $0.06 per share, for the third quarter of
fiscal 2007.
For the nine months ended June 30, 2008, net sales were $29.5 million,
compared with $33.7 million for the same period of 2007. The net loss was
$7.1 million, or $1.09 per share, compared with $387,000, or $0.06 per share,
a year earlier.
"Our results for the third quarter were in line with the actions we
announced in May to clear the way for a return to profitability in our fiscal
fourth quarter," said Dieter Schilling, president and chief executive officer.
"Despite a less than robust operating environment, we believe we are on track
to accomplish that objective."
During the third quarter, Delphax restructured its approach to marketing
its CR Series roll-fed presses, reducing overall investment in the product and
initiating a related workforce reduction.
"It was essential for us to reestablish a balance between the cost of
developing a new and potentially profitable growth strategy on one hand and an
ongoing opportunity to pursue the full potential of our established and
fundamentally profitable core business on the other," Schilling said. "We
believe we made that adjustment in the third quarter, intensifying our focus
on the security printing industry, without sacrificing the long-term potential
of our newer CR Series product line.
"The CR Series remains an important part of our product set, offering
industry-leading speed and productivity advantages in a number of commercial
printing applications. We were pleased with the response to a month-long
series of individual performance demonstrations conducted at our headquarters
in Minnesota during the third quarter. Approximately 50 representatives of
printing and publishing companies from throughout North America accepted
invitations to in-depth introductions to our top-of-the-line 500-feet-per-
minute CR 2200. In this more economical and highly focused approach to
marketing, we worked closely with industry finishing partners to demonstrate a
complete in-line production system, often providing customized solutions to
fit visitors' specific needs."
Fiscal 2008 third-quarter sales of maintenance, spares and supplies were
$9.5 million, compared with $10.3 million for the third quarter of fiscal
2007. Equipment sales were $171,000, down from $366,000 a year earlier.
Gross margin for the third quarter of fiscal 2008 was $331,000, or 3
percent of net sales, down from $3.4 million, or 32 percent of net sales, for
the third quarter a year earlier. The gross margin for the third quarter of
fiscal 2008 was affected by the inventory valuation charge of $2.0 million.
Fiscal 2008 third-quarter operating expenses were $4.8 million, which
included the restructuring charge of $1.9 million related to the workforce
reduction, compared with $3.3 million for the third quarter of fiscal 2007.
The company said it continues to project a return to profitability in the
fourth quarter on the strength of improved equipment sales and reduced
operating expenses. It expects to recognize revenue from the previously
reported sale of a CR Series press in Europe and from the installation and
upgrade of another CR Series press in South Africa. Much of the $1.5 million
sales backlog reported earlier has been shipped -- primarily equipment related
to the security printing industry -- with most of that revenue expected to be
recognized in the fourth quarter.
Finally, the company noted that on Aug. 7, 2008, Harland Clarke Corp.,
Delphax's largest customer, acquired the interests of Wells Fargo Bank,
National Association and Wells Fargo Financial Corporation Canada
(collectively, "Wells Fargo"), Delphax's senior lenders under the company's
senior credit facilities. Harland Clarke is now the senior lender under the
senior credit agreements that formerly were with Wells Fargo.
Delphax Technologies Inc. will discuss its fiscal 2008 third quarter
results in a conference call for investors and analysts next Tuesday, Aug. 19,
at 10:30 a.m. Central Time. To participate in the conference call, please
call 1-800-218-8862 shortly before 10:30 a.m. Central Time and ask for the
DELPHAX conference call. The third-quarter conference call will also be
webcast. To listen only, log on to
http://w.on24.com/r.htm?e=115751&s=1&k=865990E96E63C2C48733133D6D569EF9. To
listen to a taped replay of the conference, call 1-800-405-2236 and enter the
pass code 11118152#. The replay will be available beginning at 12:30 p.m.
Central Time Aug. 19 and will remain active through Aug. 26, 2008.
About Delphax Technologies Inc.
Delphax Technologies Inc. is a global leader in the design, manufacture
and delivery of advanced digital print production systems based on its
patented electron-beam imaging (EBI) technology. Delphax digital presses
deliver industry-leading throughput for both roll-fed and cut-sheet printing
environments. These products are extremely versatile and handle a wide range
of substrates from ultra lightweight paper to heavy stock. Delphax provides
digital printing solutions to publishers, direct mailers and other printers
that require systems capable of supporting a wide range of commercial printing
applications. The company also licenses and manufactures EBI technology for
OEM partners that create differentiated product solutions for additional
markets. There are currently installations using Delphax EBI technology in
more than 50 countries worldwide. The company is headquartered in
Minneapolis, with subsidiary offices in Canada, the United Kingdom and France.
The company's common stock is currently quoted over the counter under the
symbol DLPX.PK. Additional information is available on the company's website
at http://www.delphax.com.
Statements made in this news release concerning the company's or
management's expectations about future results or events are "forward-looking
statements." Such statements are necessarily subject to risks and
uncertainties that could cause actual results to vary materially from stated
expectations. Additional information concerning the factors that could cause
actual results to differ materially from the company's current expectations is
contained in the company's periodic filings with the Securities and Exchange
Commission.
More - Financials Follow
DELPHAX TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
2008 2007 2008 2007
Sales:
Maintenance, spares and supplies $9,468 $10,293 $29,080 $32,020
Printing equipment 171 366 402 1,635
NET SALES 9,639 10,659 29,482 33,655
Cost of sales 9,308 7,256 23,867 23,723
GROSS PROFIT 331 3,403 5,615 9,932
Operating expenses:
Selling, general and administrative 2,083 2,347 6,608 6,728
Research and development 809 905 2,739 2,597
Restructuring costs 1,883 - 2,065 -
OPERATING EXPENSES 4,775 3,252 11,412 9,325
(LOSS) INCOME FROM OPERATIONS (4,444) 151 (5,797) 607
Net interest expense 494 418 1,365 1,068
Foreign currency exchange (gain) loss (20) 97 (68) (88)
LOSS BEFORE INCOME TAXES (4,918) (364) (7,094) (373)
Income tax expense - 8 - 14
NET LOSS $(4,918) $(372) $(7,094) $(387)
Loss per common share
Loss per common share,
basic and diluted $(0.75) $(0.06) $(1.09) $(0.06)
Weighted average number of shares
outstanding during the period,
basic and diluted 6,530 6,461 6,530 6,452
DELPHAX TECHNOLOGIES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
June 30, September 30,
2008 2007
ASSETS
Cash and cash equivalents $689 $549
Accounts receivable, net 6,338 7,177
Inventory 12,204 13,725
Other current assets 1,483 1,281
Total current assets 20,714 22,732
Fixed assets, net 1,680 1,351
Other non-current assets 1,592 1,513
Total assets $23,986 $25,596
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued expenses $8,443 $6,478
Current portion of debt 335 235
Total current liabilities 8,778 6,713
Long-term portion of debt 12,598 9,223
Total liabilities 21,376 15,936
Shareholders' equity 2,610 9,660
Total liabilities and
shareholders' equity $23,986 $25,596
DELPHAX TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Nine Months Ended
June 30,
2008 2007
OPERATING ACTIVITIES
Net loss $(7,094) $(387)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 325 460
Loss on disposal of equipment and fixtures - 7
Non-cash interest on subordinated debt 254 373
Stock-based compensation 115 111
Other 115 (34)
Changes in operating assets and liabilities:
Accounts receivable 839 (1,084)
Inventory 1,521 1,687
Other current assets (202) (621)
Current liabilities 1,924 (1,780)
NET CASH USED IN OPERATING ACTIVITIES (2,203) (1,268)
INVESTING ACTIVITIES
Purchase of equipment and fixtures (85) (54)
NET CASH USED IN INVESTING ACTIVITIES (85) (54)
FINANCING ACTIVITIES
Issuance of subordinated debt - 900
Borrowing (payment) on bank credit facilities, net 2,800 (200)
Debt financing costs (196) -
Checks written in excess of cash balances - 513
Principal payments on capital lease obligations (93) (97)
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,511 1,116
EFFECT OF EXCHANGE RATE CHANGES ON CASH (83) 157
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 140 (49)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 549 582
CASH AND CASH EQUIVALENTS, END OF PERIOD $689 $533
SOURCE Delphax Technologies
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