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.ptgamex.com
PARAGON TECHNOLOGIES REPORTS PROFITABLE THIRD QUARTER
AND NINE MONTHS RESULTS AND A 21% INCREASE IN BACKLOG OF ORDERS
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EASTON, PA -- November 11, 2004 -- 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, 2004.
Third Quarter Results
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During the third quarter of 2004, the Company received orders totaling
approximately $12.8 million, and finished the quarter with a backlog of orders
of approximately $11.9 million, a 21% increase over the $9.8 million backlog of
orders at the end of the second quarter of 2004.
Sales for the third quarter of 2004 were approximately $10.8 million compared to
sales of approximately $8.7 million in the third quarter of 2003. Net earnings
for the third quarter of 2004 were $465,000 or $.11 basic earnings per share,
compared to net earnings of $2,412,000 or $.56 basic earnings per share in the
third quarter of 2003. The third quarter 2003 net earnings were $158,000 or $.04
basic earnings per share, excluding the gain on the sale of the Company's
ownership interest in the SI/BAKER joint venture, equity in income and royalty
income from the Company's former SI/BAKER joint venture, the accrual of
potential defense costs to defend charges asserted against the Company by a
competitor relating to the Company's intellectual property, and interest
expense. Earnings before interest, taxes, depreciation, and amortization
("EBITDA") for the third quarter of 2004 were $887,000 compared to approximately
$4.35 million for the third quarter of 2003.
Contributing to pre-tax earnings for the third quarter of 2003 was a gain of
$4,919,000 from the sale of the Company's ownership interest in the SI/BAKER
joint venture for $5,600,000, equity in income of the SI/BAKER joint venture of
$5,000, and royalty income from the SI/BAKER
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600 Kuebler Road o Easton, PA 18040-9295
Tel: 610-252-3205 o Fax: 610-252-3102
www.ptgamex.com
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PARAGON TECHNOLOGIES Page 2
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joint venture of $58,000, which the Company sold in September 2003. Partially
offsetting the favorable impact of the aforementioned items were the accrual of
potential defense costs of $1,020,000 to defend charges asserted against the
Company by a competitor relating to the Company's intellectual property, and
interest expense of $306,000 on senior and subordinated debt, which was repaid
in September 2003.
First Nine Months Results
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Sales for the first nine months of 2004 rose to $31.0 million compared to sales
of $28.3 million in the first nine months of 2003. Net earnings for the first
nine months of 2004 were $935,000 or $.22 basic earnings per share, compared to
net earnings of $4,041,000 or $.95 basic earnings per share in the first nine
months of 2003. The first nine months of 2004 net earnings were $1,004,000 or
$.23 basic earnings per share, excluding severance costs. The first nine months
of 2003 net earnings were $826,000 or $.19 basic earnings per share, excluding
the gain on the sale of the Company's ownership interest in the SI/BAKER joint
venture, the gain on the sale of the Company's Easton, Pennsylvania facility,
the restructuring credit from the settlement of pension obligations, equity in
income and royalty income from the Company's former SI/BAKER joint venture, the
accrual of potential defense costs to defend charges asserted against the
Company by a competitor relating to the Company's intellectual property, and
interest expense. Earnings before interest, taxes, depreciation, and
amortization ("EBITDA") for the first nine months of 2004 were approximately
$1.9 million compared to approximately $7.7 million for the first nine months of
2003.
Contributing to pre-tax earnings for the first nine months of 2003 was a gain of
$1,363,000 on the sale of the Company's Easton, Pennsylvania facility for cash
proceeds of $2,925,000 and leaseback of 25,000 square feet of office space, a
gain of $4,919,000 from the sale of the Company's ownership interest in the
SI/BAKER joint venture for $5,600,000, a restructuring credit of $170,000
pertaining to the final settlement of remaining pension obligations associated
with the Company's terminated pension plan, equity in income of the SI/BAKER
joint venture of $256,000, and royalty income from the SI/BAKER joint venture of
$226,000, which the Company sold in September 2003. Partially offsetting the
favorable impact of the aforementioned items was the accrual of potential
defense costs of $1,020,000 to defend charges asserted against the Company by a
competitor relating to the Company's intellectual property, and interest expense
of $675,000 on senior and subordinated debt, which was repaid in September 2003.
The Company continues to maintain a strong Balance Sheet. At September 30, 2004,
the current ratio remains strong at 1.73, while working capital approximates
$6.2 million.
Len Yurkovic, Paragon's President and Chief Executive Officer, commented, "The
increase in third quarter 2004 orders has led to one of the strongest levels of
backlog that we have seen for quite some time. The operating results for the
third quarter and nine months of the year are very gratifying. Our third quarter
results mark the third consecutive quarter of profitability.
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We are pleased with our improved earnings and our strong balance sheet. The
Company's quoting activity continues to be robust, and maintaining an aggressive
selling focus on promising market segments is a prime objective. Our brands have
seen positive customer interest as evidenced by third quarter orders. Also,
during the third quarter of 2004, the Company instituted a stock repurchase
program."
The Company will host a conference call to discuss these results on Thursday,
November 11, 2004 at 11:00 a.m. ET. To participate in the call, please dial
800-895-1549 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.ptgamex.com.
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 have included the United States
Postal Service, General Motors, IBM, BMG, DaimlerChrysler, 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, review of strategic alternatives, and other
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; and (2) 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.ptgamex.com.
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PARAGON TECHNOLOGIES Page 4
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Paragon Technologies, Inc.
Consolidated Balance Sheets
Selected Financial Data
(In Thousands, Except Ratio Information)
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September 30, 2004 December 31, 2003
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Cash and cash equivalents............................... $ 3,733 5,591
Trade receivables, net.................................. $ 7,140 5,277
Inventories............................................. $ 1,819 1,191
Current assets.......................................... $ 14,685 14,691
Current liabilities..................................... 8,481 9,646
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Working capital....................................... $ 6,204 5,045
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Current ratio........................................... 1.73 1.52
Total assets............................................ $ 33,655 33,774
Total stockholders' equity.............................. $ 22,761 21,969
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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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2004 2003 2004 2003
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Net sales........................ $ 10,754 8,742 30,968 28,289
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Pre-tax earnings (See Note 1).... $ 775 3,912 1,567 6,586
Income tax expense............... 310 1,500 632 2,545
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Net earnings..................... $ 465 2,412 935 4,041
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Basic earnings per share......... $ .11 .56 .22 .95
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Diluted earnings per share....... $ .11 .55 .21 .93
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Paragon Technologies, Inc.
Supplemental Financial Information
Reconciliation of Net Earnings to EBITDA
(In Thousands)
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Third Quarter Ended Nine Months Ended
September 30, September 30,
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2004 2003 2004 2003
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Net earnings.......................... $ 465 2,412 935 4,041
Add: Income tax expense............. 310 1,500 632 2,545
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Earnings before income taxes.......... 775 3,912 1,567 6,586
Add: Interest expense............... - 306 - 675
Add: Depreciation and amortization
expense...................... 112 132 326 415
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EBITDA $ 887 4,350 1,893 7,676
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Note 1: The following table depicts selected financial data that impacted
net earnings for the periods indicated (dollars in thousands, except
per share information):
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Third Quarter Ended Nine Months Ended
September 30, September 30,
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2004 2003 2004 2003
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Pre-tax earnings............................ $ 775 3,912 1,567 6,586
Selected financial data impacting
pre-tax earnings:
Gain on sale of SI/BAKER joint
venture................................... - 4,919 - 4,919
Gain on the sale of Easton,
PA facility............................... - - - 1,363
Restructuring credit from settlement
of pension obligations.................... - - - 170
Equity in income of joint venture........... - 5 - 256
Royalty income from joint venture........... - 58 - 226
Severance costs............................. - - (115) -
Interest expense............................ - (306) - (675)
Accrual of potential defense costs to defend
charges asserted against the Company
by a competitor relating to the
Company's intellectual property........... - (1,020) - (1,020)
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Total of selected financial data
impacting pre-tax earnings............... - 3,656 (115) 5,239
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Pre-tax earnings adjusted
for the impact of the selected
financial data............................ 775 256 1,682 1,347
Income tax expense.......................... 310 98 678 521
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Net earnings adjusted....................... $ 465 158 1,004 826
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Basic earnings per share --
adjusted.................................. $ .11 .04 .23 .19
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Diluted earnings per share --
adjusted.................................. $ .11 .04 .23 .19
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