Exhibit 99.1
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[PARAGON LOGO] NEWS
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FOR: PARAGON TECHNOLOGIES, INC.
CONTACTS: Len Yurkovic, Acting CEO
610-252-3205
610-252-3102 (Fax)
www.ptgamex.com
PARAGON TECHNOLOGIES REPORTS PROFITABLE 2006 FOURTH QUARTER
AND INCREASED YEAR-END RESULTS
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EASTON, PA -- March 13, 2007 -- Paragon Technologies, Inc. (AMEX:PTG), a leading
supplier of "smart" material handling systems and "software-driven" warehouse
and distribution center solutions reported another profitable quarter, an
expanding order rate, and increased earnings from operations for the year ended
December 31, 2006.
In making the announcement, Len Yurkovic, Paragon's Acting CEO, commented, "The
results for the fourth quarter of 2006 mark the twelfth consecutive quarter of
profitability for Paragon as we continue to deliver technological advancements
that enable our customers to be more productive." Yurkovic noted, "While a lower
order entry rate experienced during the third quarter of 2006 impacted our
revenues in the short-term, orders rebounded significantly in the fourth
quarter. The Company's reported net sales will generally lag the new order rate
by approximately six months. Orders awarded to the Company during the fourth
quarter of 2006 jumped to $4.6 million as compared to $2.2 million received
during the same period last year. In fact, the order entry rate for the first
quarter of 2007 has already surpassed the level of orders received during the
fourth quarter of 2006. The pending orders that we previously reported to you
have now materialized, and it is very rewarding to see the results of our
broadened sales and marketing initiatives. The strong balance sheet and high
liquidity provide an excellent foundation for future growth in sales and
profitability."
The attached Summary Financial Information for the Fourth Quarter and Year Ended
December 31, 2006 and 2005 depicts financial data for continuing operations as
well as the discontinued operations of Ermanco as a result of the completion of
the August 5, 2005 sale of substantially all of the assets and liabilities of
Ermanco.
Fourth Quarter Results
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The decrease in sales for the fourth quarter ended December 31, 2006 was
associated with a smaller backlog of orders entering the fourth quarter of 2006
when compared to the backlog of orders entering the fourth quarter of 2005,
along with progress made on contracts received prior to the start of the fourth
quarter of 2005 in accordance with contract completion requirements. During the
quarter, the Company increased its product development costs with efforts
primarily aimed at voice-directed replenishment and DISPEN-SI-MATIC(R) software
enhancements.
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We Build Productivity [SI SYSTEMS LOGO]
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PARAGON TECHNOLOGIES, INC. o 600 Kuebler Road o Easton, PA 18040-9201
o 610.252.3205 o Fax 610.252.3102
www.ptgamex.com
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Reductions in selling, general and administrative costs, along with favorable
tax adjustments, offset the impact on the earnings for the quarter by $231,000
when compared to the fourth quarter of 2005.
Twelve Months Results
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Net income for 2006 was $468,000 or $0.14 basic earnings per share, compared to
net income of $1,198,000 or $0.29 basic earnings per share in 2005. Net income
for 2005 included income from discontinued operations of $990,000 from Ermanco.
Contributing to income from continuing operations for 2006 as compared to 2005
was an increase during 2006 in sales and gross profit of $1,112,000 and
$760,000, respectively, and an increase of $203,000 in interest income
attributable to the higher level of funds available for investment as a result
of the cash proceeds from the sale of substantially all of the assets and
liabilities of Ermanco and the increased level of interest rates earned on funds
available for investment.
The increase in sales was associated with a larger backlog of orders entering
fiscal 2006 when compared to the backlog of orders entering fiscal 2005 and
progress made on contracts received during 2006. Orders for the year ended
December 31, 2006 totaled $16.8 million as compared to $18.1 million in 2005,
while the backlog of orders at December totaled $5.9 million as compared to $6.9
million at the end of 2005.
Development efforts during 2006 include warehouse and machine-control software
and hardware enhancements and organic development on the widely accepted
LO-TOW(R) ergonomic capability. The Company continues to focus on sophisticated
software development to satisfy the strong market need for warehouse management
software.
The Company ended 2006 with a current ratio of 3.81, while working capital
approximates $12.1 million.
During 2006, the Company repurchased 679,219 shares of common stock at a
weighted average cost, including brokerage commissions, of $7.57 per share. Cash
expenditures for the stock repurchases during that same period were $5,142,898.
Since the inception of the Company's existing stock repurchase program in August
of 2004, the Company repurchased 1,538,019 shares of common stock at a weighted
average cost, including brokerage commissions, of $8.81 per share as of December
31, 2006. Cash expenditures for the stock repurchases since the inception of the
program were $13,549,411 as of December 31, 2006.
The Company is currently exploring various business strategies designed to
enhance shareholder value. The Company is continuing to evaluate and actively
explore a range of possible options, including transactions intended to provide
liquidity and maximize stockholder value, and consideration of the acquisition
of complementary assets and/or businesses.
The Company will host a conference call to discuss these results on Tuesday,
March 13, 2007 at 11:00 a.m. ET. To participate in the call, please dial
1-877-766-2147 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.
Paragon's SI Systems' Order Fulfillment and Production & Assembly technologies
drive productivity at Fortune 1000 companies and the United States Government.
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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. SI Systems'
Production & Assembly and Order Fulfillment branded technologies and material
handling solutions address unit assembly in manufacturing operations and order
fulfillment applications. One of the top material handling systems suppliers
worldwide, SI Systems leading clients have included the United States Postal
Service, BMG, Peterbilt, Honda, CVS Pharmacy, Maybelline, and Walgreens.
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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. The forward-looking statements contained in this press release may
become outdated over time. Paragon does not assume any responsibility for
updating any forward-looking statements. Furthermore, achievement of the
objectives of the Company is subject to certain risks, including, but not
limited to, those risks outlined in Paragon's filings with the Securities and
Exchange Commission, including its annual report on Form 10-K for the year ended
December 31, 2005 and the most recent quarterly report on Form 10-Q for the
quarter ended September 30, 2006.
This press release and prior releases are available at www.ptgamex.com.
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Paragon Technologies, Inc.
Summary Financial Information
Selected Financial Data -- Balance Sheets (UNAUDITED)
(In Thousands, Except Ratio Information)
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December 31, 2006 December 31, 2005
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Cash and cash equivalents........................ $ 2,447 687
Short-term investments........................... 9,625 16,710
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Total cash and cash equivalents
and short-term investments.................. $ 12,072 17,397
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Trade receivables................................ $ 2,557 2,029
Inventories...................................... $ 469 344
Current assets................................... $ 16,370 22,134
Current liabilities.............................. 4,296 5,337
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Working capital............................... $ 12,074 16,797
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Current ratio.................................... 3.81 4.15
Total assets..................................... $ 16,752 22,596
Total stockholders' equity....................... $ 12,428 17,066
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Paragon Technologies, Inc.
Summary Financial Information
Selected Financial Data -- Statements of Operations (UNAUDITED)
(In Thousands, Except Per Share Information)
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Fourth Quarter Ended Year Ended
December 31, December 31,
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2006 2005 2006 2005
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Net sales............................. $ 3,536 4,980 17,788 16,676
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Income from continuing
operations before income taxes...... $ 37 277 449 301
Income tax expense (benefit).......... (20) 84 (19) 93
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Income from continuing
operations.......................... 57 193 468 208
Income (loss) from discontinued
operations, net of income taxes..... - (39) - 990
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Net income ........................... $ 57 154 468 1,198
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Basic earnings per share:
Income from continuing
operations.......................... $ .02 .05 .14 05
Income (loss) from discontinued
operations.......................... - (.01) - .24
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Net income............................ $ .02 .04 .14 .29
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Diluted earnings per share:
Income from continuing
operations.......................... $ .02 .05 .14 .05
Income (loss) from discontinued
operations.......................... - (.01) - .24
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Net income ........................... $ .02 .04 .14 .29
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Paragon Technologies, Inc.
Supplemental Financial Information
Reconciliation of Income From Continuing Operations to
EBITDA From Continuing Operations (UNAUDITED)
(In Thousands)
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Fourth Quarter Ended Year Ended
December 31, December 31,
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2006 2005 2006 2005
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Income from continuing
operations.......................... $ 57 193 468 208
Add: Income tax expense (benefit)..... (20) 84 (19) 93
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Income from continuing
operations before income taxes...... 37 277 449 301
Add: Interest expense................. - - 1 1
Add: Depreciation and
amortization expense................ 31 24 104 90
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EBITDA from continuing
operations.......................... $ 68 301 554 392
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