Exhibit 99.1
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[PARAGON LETTERHEAD] News
FOR: PARAGON TECHNOLOGIES, INC.
CONTACTS: Bill Johnson, CEO
610-252-3205
610-252-3102 (Fax)
www.paragontechnologiesinc.com
PARAGON TECHNOLOGIES REPORTS PROFITABLE
2003 SECOND QUARTER AND SIX MONTHS RESULTS
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Paragon Continues to Reduce Bank Debt and Strengthen Its Balance Sheet as It
Marks Its Third Consecutive Quarter of Profitability
EASTON, PA -- August 14, 2003 -- Paragon Technologies, Inc. (AMEX: PTG), a
leading supplier of "smart" material handling solutions, including systems,
technologies, products and services, today announced results for the second
quarter and six months ended June 30, 2003.
Net earnings for the second quarter of 2003 rose to $617,000 or $.14 basic
earnings per share, compared to net earnings of $123,000 or $.03 basic earnings
per share in the second quarter of 2002. Earnings before interest, taxes,
depreciation, and amortization ("EBITDA") for the second quarter of 2003 were
approximately $1.28 million compared to $627,000 for the second quarter of 2002.
Sales for the second quarter of 2003 were approximately $11.0 million compared
to sales of approximately $9.9 million in the second quarter of 2002.
Sales for the first half of 2003 were $19.55 million compared to $20.66 million
in the first half of 2002. Net earnings for the first half of 2003 were $1.63
million or $0.38 basic earnings per share, compared to net earnings of $466,000
or $0.11 basic earnings per share for the first half of 2002. EBITDA for the
first half of 2003 was $3.3 million compared to $1.6 million for the first half
of 2002.
During the first half of 2003, the Company received orders totaling
approximately $20.06 million, and finished the second quarter ended June 30,
2003 with a backlog of orders of
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600 Kuebler Road o Easton, PA 18040-9295
Tel: 610-252-3205 o Fax: 610-252-3102
info@paragontechnologiesinc.com
PARAGON TECHNOLOGIES Page 2
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approximately $7.4 million, versus a $6.9 million backlog of orders at the end
of the fourth quarter of 2002.
Contributing to pre-tax earnings for the first half of 2003 was other income of
$1,363,000 from the sale of the Company's Easton, Pennsylvania facility for
$2,925,000 and leaseback of 25,000 square feet of office space, and a
restructuring credit of $170,000 pertaining to the final settlement of remaining
pension obligations associated with the Company's terminated pension plan.
Contributing to pre-tax earnings for the first half of 2002 was other income
from the short-term licensing of real property of $300,000 and a gain on the
sale of excess fixed assets of $108,000.
The Company continues to strengthen its Balance Sheet. During the second quarter
of 2003, the Company prepaid $2.0 million of its bank debt and $1.0 million of
its subordinated debt, and also received a $1.0 million cash dividend from its
SI/BAKER joint venture. The $1.0 million cash dividend was recorded as a
reduction in the investment in the SI/BAKER joint venture. The current ratio
remains strong at 1.52, while working capital approximates $5.0 million.
Subsequent to the end of the second quarter, Paragon prepaid $500,000 of its
bank debt, which currently stands at approximately $1.2 million, and $500,000 of
its subordinated debt, which currently stands at $1.5 million.
Bill Johnson, Paragon's President and Chief Executive Officer, commented, "Our
profitable second quarter results mark the third consecutive quarter of
profitability. The results for the first half of the year and the second quarter
are very gratifying. We are pleased with the increase in the level of orders at
$20.06 million received during the first half of 2003 as compared to $18.9
million of orders received during the first half of 2002. We continue to target
active sectors of the marketplace. Our quoting activity remains strong and
maintaining an aggressive selling focus is a prime objective. We continue to
make investments in product development and sales and marketing as we strive to
enhance shareholder value."
The Company will host a conference call to discuss these results on Thursday,
August 14, 2003 at 10:30 a.m. ET. To participate in the call, please dial
800-362-0571 and ask for the Paragon Technologies teleconference. Simultaneous
with the conference call, an audio webcast of the call will be available via a
link on the Paragon website, www.paragontechnologiesinc.com.
PARAGON TECHNOLOGIES Page 3
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About Paragon Technologies
Paragon Technologies is a leader in integrating material handling systems and
creating automated solutions for material flow applications. Ermanco's branded
conveyor technologies and material handling solutions address the needs of the
distribution, assembly, and manufacturing marketplace. SI Systems' branded
technologies and material handling solutions address unit assembly handling and
order fulfillment applications. One of the top material handling systems
suppliers worldwide, Paragon's leading clients include the United States Postal
Service, General Motors, IBM, BMG, DaimlerChrysler, Johnson & Johnson, Ford,
Peterbilt, Harley-Davidson, Walgreens, and Clark Equipment.
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Cautionary Statement. Certain statements contained herein are not based on
historical fact and are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 and the Securities and Exchange
Commission rules, regulations and releases. Paragon intends that such
forward-looking statements be subject to the safe harbors created hereby. Among
other things, the forward-looking statements regard Paragon's earnings,
liquidity, financial condition, and certain operational matters. Words or
phrases denoting the anticipated results of future events, such as "anticipate,"
"does not anticipate," "should help to," "believe," "estimate," "is positioned,"
"expects," "may," "will," "is expected," "should," "continue," and similar
expressions that denote uncertainty, are intended to identify such
forward-looking statements. Paragon's actual results, performance, or
achievements could differ materially from the results expressed in, or implied
by, such "forward-looking statements:" (1) as a result of risks and
uncertainties associated with Paragon's restructuring, including the failure to
achieve anticipated operating savings, and the possibility that the
restructuring charges will be greater than anticipated; (2) as a result of
factors over which Paragon has no control, including the strength of domestic
and foreign economies, sales growth, competition, and certain cost increases;
(3) the results of pending litigation related to our intellectual property; and
(4) if the factors on which Paragon's conclusions are based do not conform to
its expectations.
This press release and prior releases are available at
www.paragontechnologiesinc.com.
PARAGON TECHNOLOGIES Page 4
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Paragon Technologies, Inc.
Consolidated Balance Sheets
Selected Financial Data
(In Thousands)
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June 30, 2003 December 31, 2002
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Cash and cash equivalents............................... $ 4,501 5,385
Restricted cash......................................... - 865
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Total cash and cash equivalents and restricted cash... $ 4,501 6,250
Trade receivables, net.................................. $ 5,855 4,285
Inventories............................................. $ 1,512 1,375
Current assets.......................................... $ 14,584 15,444
Current liabilities..................................... 9,621 9,472
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Working capital....................................... $ 4,963 5,972
Total assets............................................ $ 34,369 36,703
Total long-term debt.................................... $ 2,575 7,263
Total stockholders' equity.............................. $ 19,605 17,829
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Paragon Technologies, Inc.
Consolidated Statements of Operations
Selected Financial Data
(In Thousands, Except Per Share Information)
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Second Quarter Ended Six Months Ended
June 30, June 30,
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2003 2002 2003 2002
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Net sales.............................. $ 10,983 9,908 19,547 20,660
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Pre-tax earnings....................... $ 995 201 2,673 774
Income tax expense..................... 378 78 1,045 308
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Net earnings........................... $ 617 123 1,628 466
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Basic earnings per share............... $ .14 .03 .38 .11
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Diluted earnings per share............. $ .14 .03 .38 .11
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Paragon Technologies, Inc.
Supplemental Financial Information
Reconciliation of Net Earnings to EBITDA
(In Thousands)
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Second Quarter Ended Six Months Ended
June 30, June 30,
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2003 2002 2003 2002
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Net earnings........................... $ 617 123 1,628 466
Add: Income tax expense.............. 378 78 1,045 308
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Earnings before income taxes........... 995 201 2,673 774
Add: Interest expense................ 151 266 369 538
Add: Depreciation and amortization
expense....................... 136 160 283 320
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EBITDA $ 1,282 627 3,325 1,632
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