Exhibit 99.1
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[PARAGON LETTERHEAD] News
FOR: PARAGON TECHNOLOGIES, INC.
CONTACTS: Len Yurkovic, President and CEO
610-252-3205
610-252-3102 (Fax)
www.paragontechnologiesinc.com
PARAGON TECHNOLOGIES REPORTS PROFITABLE
2003 THIRD QUARTER AND NINE MONTHS RESULTS
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Paragon Eliminates Long-Term Debt and Strengthens Its Balance Sheet as It Marks
Its Fourth Consecutive Quarter of Profitability
EASTON, PA -- November 13, 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 third
quarter and nine months ended September 30, 2003.
Net earnings for the third quarter of 2003 rose to $2,412,000 or $.56 basic
earnings per share, compared to a net loss of $(402,000) or $(.09) basic loss
per share in the third quarter of 2002. Earnings before interest, taxes,
depreciation, and amortization ("EBITDA") for the third quarter of 2003 were
approximately $4.4 million compared to $(236,000) for the third quarter of 2002.
Sales for the third quarter of 2003 were approximately $8.7 million compared to
sales of approximately $9.0 million in the third quarter of 2002.
Sales for the first nine months of 2003 were $28.3 million compared to $29.7
million in the first nine months of 2002. Net earnings for the first nine months
of 2003 were $4,041,000 or $.95 basic earnings per share, compared to net
earnings of $64,000 or $.02 basic earnings per share for the first nine months
of 2002. EBITDA for the first nine months of 2003 was $7.7 million compared to
$1.4 million for the first nine months of 2002.
During the first nine months of 2003, the Company received orders totaling
approximately $29.5 million, and finished the third quarter ended September 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 $8.2 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 nine months of 2003 was other
income of $4,919,000 from the sale of the Company's ownership interest in the
SI/BAKER joint venture for $5,600,000, 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. Partially offsetting the favorable
impact of the aforementioned items was the accrual of $1,020,000 for potential
defense costs to vigorously defend the charges asserted by a competitor relating
to the Company's intellectual property. Contributing to pre-tax earnings for the
first nine months 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 $94,000.
Partially offsetting the favorable impact of the aforementioned items during
2002 were severance charges of $170,000.
The Company continues to strengthen its Balance Sheet. During the third quarter
of 2003, the Company prepaid $1.7 million of its bank debt and $2.0 million of
its subordinated debt, thereby eliminating the Company's outstanding long-term
debt. The current ratio remains strong at 1.53, while working capital
approximates $5.3 million. The Company's tangible net worth rose to $4.6
million, versus tangible net worth of $172,000 at the end of the fourth quarter
of 2002.
Len Yurkovic, Paragon's President and Chief Executive Officer, commented, "Our
profitable third quarter results mark the fourth consecutive quarter of
profitability. The results for the nine months of the year and the third quarter
are very gratifying. We are pleased with the increase in the level of orders at
$29.5 million received during the first nine months of 2003 as compared to $26.2
million of orders received during the first nine months 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 our business as we explore all strategic alternatives
available to the Company, with a primary objective of enhancement of shareholder
value."
The Company will host a conference call to discuss these results on Thursday,
November 13, 2003 at 11:00 a.m. ET. To participate in the call, please dial
800-362-0574 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
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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 factors over which
Paragon has no control, including the strength of domestic and foreign
economies, sales growth, competition, and certain cost increases; (2) the amount
of defense costs and the results of pending litigation related to Paragon's
intellectual property; and (3) 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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September 30, 2003 December 31, 2002
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Cash and cash equivalents............................... $ 7,145 5,385
Restricted cash......................................... - 865
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Total cash and cash equivalents and restricted cash... $ 7,145 6,250
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Trade receivables, net.................................. $ 4,569 4,285
Inventories............................................. $ 1,073 1,375
Current assets.......................................... $ 15,135 15,444
Current liabilities..................................... 9,871 9,472
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Working capital....................................... $ 5,264 5,972
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Total assets............................................ $ 34,228 36,703
Total long-term debt.................................... $ - 7,263
Total stockholders' equity.............................. $ 22,225 17,829
Less: Goodwill......................................... 17,657 17,657
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Tangible Net Worth.................................... $ 4,568 172
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Paragon Technologies, Inc.
Consolidated Statements of Operations
Selected Financial Data
(In Thousands, Except Per Share Information)
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Third Quarter Ended Nine Months Ended
September 30, September 30,
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2003 2002 2003 2002
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Net sales.............................. $ 8,742 9,010 28,289 29,670
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Pre-tax earnings (loss) (See Note 1)... $ 3,912 (669) 6,586 105
Income tax expense (benefit)........... 1,500 (267) 2,545 41
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Net earnings (loss).................... $ 2,412 (402) 4,041 64
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Basic earnings (loss) per share........ $ .56 (.09) .95 .02
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Diluted earnings (loss) per share...... $ .55 (.09) .93 .01
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Paragon Technologies, Inc.
Supplemental Financial Information
Reconciliation of Net Earnings (Loss) to EBITDA
(In Thousands)
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Third Quarter Ended Nine Months Ended
September 30, September 30,
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2003 2002 2003 2002
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Net earnings (loss).................... $ 2,412 (402) 4,041 64
Add: Income tax expense (benefit).... 1,500 (267) 2,545 41
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Earnings (loss) before income taxes.... 3,912 (669) 6,586 105
Add: Interest expense................ 306 265 675 803
Add: Depreciation and amortization
expense....................... 132 168 415 488
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EBITDA $ 4,350 (236) 7,676 1,396
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PARAGON TECHNOLOGIES Page 5
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Note 1: The following table depicts selected financial data that contributed
to pre-tax earnings (loss) for the periods indicated (dollars in
thousands):
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Third Quarter Ended Nine Months Ended
September 30, September 30,
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2003 2002 2003 2002
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Gain on the sale of SI/BAKER........... $ 4,919 - 4,919 -
Gain on the sale of Easton,
PA facility.......................... - - 1,363 -
Restructuring credit from settlement
of pension obligations............... - - 170 -
Accrual for potential defense
costs to vigorously defend
charges asserted by a competitor
relating to the Company's
intellectual property................ (1,020) - (1,020) -
Other income from the short-term
licensing of real property........... - - - 300
Gain on the sale of excess
fixed assets......................... - - - 94
Severance charges...................... - (170) - (170)
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Total of selected financial data
impacting pre-tax earnings (loss)... $ 3,899 (170) 5,432 224
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