Exhibit 99.1
Imagistics International Reports Fourth Quarter Earnings
TRUMBULL, Conn.--(BUSINESS WIRE)--Feb. 19, 2004--Imagistics
International Inc. (NYSE:IGI)
-- Earnings per share of $0.33, up 50% over last year
-- Full year 2003 earnings per share of $1.19, up 38% over prior
year
-- Fourth quarter copier/MFP revenue up 7%
-- 2004 EPS guidance set at $1.45; up 22% over 2003 level
Imagistics International Inc. (NYSE:IGI) today announced a 50
percent increase in diluted earnings per share to $0.33 for the fourth
quarter of 2003 compared with $0.22 for the fourth quarter of 2002.
The First Call median estimate was $0.30. For the full year 2003,
diluted earnings per share were $1.19 compared with $0.86 for 2002, an
increase of 38%. Fourth quarter net income increased by 37 percent
over the same period to $5.5 million from $4.1 million last year. For
the year 2003, net income was $20.5 million, an increase of 24 percent
over the previous year's net income of $16.4 million.
Marc C. Breslawsky, Imagistics Chairman and Chief Executive
Officer, said, "Once again, we are very proud to deliver this
quarter's results. This is our eighth straight quarter of
year-over-year growth in copier/MFP (multifunctional product) revenue
as we continue to benefit from our best of breed strategy. Both sales
and rentals of our copier/MFP products showed healthy increases of 6%
and 8%, respectively. In fact, as of the end of the fourth quarter,
copier/MFP revenue represented more than two thirds of our total
revenue vs. only 56% in the year 2000."
Mr. Breslawsky added, "The engines of this growth continue to be
increasing print volumes overall and especially strong color
placements. This quarter, color revenue was more than double the level
of a year ago to where it now represents over 13% of our copier
equipment sales. Also, keep in mind that we are moving more and more
toward plug-and-play type installations with easy connectivity
embedded in all of our new products, both color and black-and-white.
We believe that these connected office solutions, which offer clear
productivity gains to our customers, have become for us an important
driver of increasing volumes of distributed printing on our MFPs.
These connected solutions can serve as the hub for an entire office's
document needs by replacing older and less efficient desktop-based
print technologies. It is this customer-centric, value added approach
that has gained us the awards and recognition we have received this
year. We were awarded #1 Copier/Multifunction Product in Overall
Customer Satisfaction Among Business Users* in a tie and received top
scores in both product and service in the J. D. Power and Associates
2003 Copier Customer Satisfaction Study(SM). We also received the 2003
Most Outstanding Multifunctional Product Line of the Year award by
Buyers Laboratory Inc."
Fourth Quarter Results
Copier/MFP revenue rose 7 percent for the fourth quarter.
Copier/MFP sales increased 6 percent, a rate that would have been
higher without lower sales related to Pitney Bowes Canada ("PB
Canada"), which had been operating under a reseller agreement since
the Imagistics spin-off from Pitney Bowes. The sales increase reflects
a significant improvement in demand for color products and for
mid-market digital black-and-white multifunctional products
accompanied by an associated increase in supplies. Rental revenue from
the copier/MFP product line increased 8 percent in the fourth quarter,
primarily as a result of an increase in page volumes.
Facsimile revenue declined 18 percent in the fourth quarter.
Facsimile sales declined 26 percent. The pronounced decline in both
equipment and supplies sales reflects the anticipated industry-wide
reduction in facsimile usage and the replacement of standalone
facsimile equipment with up-segment copier/MFPs. Rental revenue from
the facsimile product line declined 12 percent in the fourth quarter
reflecting a continuation of the decline in the installed base coupled
with lower per unit pricing in new placements and renewals.
Total revenue for the fourth quarter decreased 3 percent to $155.8
million. Excluding the decline in revenue attributable to sales to PB
Canada, total revenues declined less than two percent. Total sales of
equipment and supplies decreased 5 percent to $79.8 million (2 percent
excluding PB Canada) while total rental revenue declined 3 percent to
$54.8 million. Support services revenue from service contracts
increased 6 percent to $21.2 million.
The sales gross margin of 41.0 percent increased 4.8 percentage
points primarily due to lower product costs, lower inventory
obsolescence charges and a relative shift away from lower margin
business in PB Canada, where sales declined 22 percent. The rental
gross margin of 70.0 percent improved 4.7 percentage points compared
with the fourth quarter last year. This improved rental gross margin
was primarily attributable to the continuing trends of lower product
costs and of replacing older rental contracts with new contracts
having disciplined profitability standards for both pricing and terms
and conditions. Rental margin improvements were partially offset by
the continuing shift in product revenue mix toward lower margin
copier/MFP products away from the facsimile line.
Selling, service and administrative expenses of $81.2 million in
the fourth quarter increased 3 percent from the prior year. SS&A
represented 52.1% of total revenue this quarter compared with 49.2% in
the prior year. The increase was primarily the result of the
anticipated higher percentage of ERP outlays that were expensed as
well as higher related administrative expenses. The increase was
partially offset by lower service expenses as the company continues to
improve the efficiency of its service operations, reduced employee
benefit expenses and lower advertising expenses.
Joseph D. Skrzypczak, Chief Financial Officer, said, "The company
has been engaged in an enterprise-wide ERP project. In the fourth
quarter, we successfully transitioned off of the legacy system that we
inherited from Pitney Bowes. As would be expected in any large project
of this kind, we are now engaged in a period of stabilization and
cleanup that we anticipate will be completed during the first half of
this year. Beginning in 2004, Imagistics will begin to enjoy the
longer term benefits of the elimination of duplicative IT costs, a
substantial reduction in the future level of ERP spending and, perhaps
most importantly, all the efficiencies of a fully integrated system
tailored to our own needs for managing our business. In the short
term, we have experienced two negatives affecting our working capital
requirements. First, we experienced a significant decrease of $9.8
million in advance billings during the fourth quarter as we
rescheduled our facsimile product line billings to coincide with our
copier/MFP billings. Second, as we had planned for, during the early
stages of the transition our accounts receivable increased as we
temporarily suspended our invoicing during conversion to the new
system."
Mr. Skrzypczak added, "As a result of both of these effects, for
the fourth quarter, we used $1.3 million of cash for operations, but
given our financial strength we were still able to invest $9.3 million
in capital expenditures, primarily for replenishing our rental asset
base. We have maintained a very strong balance sheet. Total debt as of
the end of the year was $63.4 million, or 19% of total capitalization,
down from 22% last year-end. We also maintained a healthy cash balance
of $22.9 million. In the quarter, we continued to execute our stock
buyback program, albeit at a reduced pace, repurchasing 64 thousand
shares for a total value of $2.2 million. Since the beginning of the
stock buyback program last year, we repurchased 3.2 million shares or
16 percent of the shares that were outstanding when Imagistics was
spun off in December 2001."
Outlook for 2004
Mr. Breslawsky stated, "Based on continued confidence in our
ability to successfully execute our business plan and on the strength
of our existing base of recurring revenue, we are providing guidance
for 2004 of $1.45 earnings per diluted share, exceeding the current
First Call median estimate by $0.04 per share. This target represents
a 22% increase over 2003 earnings. We are proud of our products and
services and the organization we are building to deliver them to our
customers. We remain committed to our business and the goals we have
set forth, and we look forward to reporting to you again on our
progress over the periods ahead."
Conference Call
Imagistics International will be holding an earnings conference
call with Marc Breslawsky, Chairman and Chief Executive Officer, and
Joseph Skrzypczak, Chief Financial Officer, on Thursday, February 19,
at 11:00 a.m. (Eastern Time). The conference will be available by
audio webcast at our investor website, www.IGIinvestor.com, where it
will also be archived.
About Imagistics International Inc.
Imagistics International Inc. (NYSE:IGI) is a large direct sales,
service and marketing organization offering document imaging
solutions, including high performance, leading edge copier/MFPs and
facsimile machines to Fortune 1000 companies and other organizations.
Its direct sales and service network is located throughout the United
States and the United Kingdom. Imagistics International is a member of
the S&P SmallCap 600 Index and the Russell 2000 Index(R) and is
headquartered in Trumbull, Connecticut. For additional information
about Imagistics International, please visit www.imagistics.com and
www.IGIinvestor.com.
The statements contained in this news release that are not purely
historical are forward-looking statements, within the meaning of the
Private Securities Litigation Reform Act of 1995, that are based on
management's beliefs, certain assumptions and current expectations.
These statements may be identified by their use of forward-looking
terminology such as the words "expects," "projects," "anticipates,"
"intends" and other similar words. Such forward-looking statements
involve risks and uncertainties that could cause actual results to
differ materially from those projected. These risks and uncertainties
include, but are not limited to, general economic, business and market
conditions, competitive pricing pressures, timely development and
acceptance of new products, our reliance on third party suppliers,
potential disruptions affecting the international shipment of goods,
potential disruptions in implementing information technology systems,
our ability to create brand recognition under our new name and
currency and interest rate fluctuations. For a more complete
discussion of certain of the risks and uncertainties that could cause
actual results to differ from those contained in the forward-looking
statements, see "Risk Factors" in the Imagistics 2002 Form 10-K and
other SEC filings. The forward-looking statements contained in this
news release are made as of the date hereof, and we do not undertake
any obligation to update any forward-looking statements, whether as a
result of future events, new information or otherwise.
*J.D. Power and Associates 2003 Copier Customer Satisfaction
Study(SM). Study based on responses from 2963 small, medium and large
business users in the first 18 months of copier ownership.
Imagistics International Inc.
Consolidated Statements of Operations
Three months ended Year ended
December 31, December 31,
---------------------- ----------------------
(in millions, except per B / B /
share amounts) 2003 2002 (W) 2003 2002 (W)
- ----------------------------------------------------------------------
Revenue
Sales $79.8 $83.7 (5%) $316.0 $314.9 -
Rentals 54.8 56.7 (3%) 222.2 232.2 (4%)
Support services 21.2 20.0 6% 84.0 82.8 1%
- ----------------------------------------------------------------------
Total revenue 155.8 160.4 (3%) 622.2 629.9 (1%)
Costs and expenses
Cost of sales 47.0 53.3 12% 192.8 198.5 3%
Cost of rentals 16.5 19.7 16% 72.3 84.1 14%
Selling, service and
administration 81.2 78.9 (3%) 312.7 311.9 -
- ----------------------------------------------------------------------
Operating income 11.1 8.5 31% 44.4 35.4 25%
Interest expense, net 0.9 1.7 45% 8.4 8.1 (4%)
- ----------------------------------------------------------------------
Income before income
taxes 10.2 6.8 50% 36.0 27.3 32%
Provision for income
taxes 4.7 2.7 (69%) 15.5 10.9 (42%)
- ----------------------------------------------------------------------
Net income $5.5 $4.1 37% $20.5 $16.4 24%
======================================================================
Calculation of earnings
per share
Income available to
common shareholders $5.5 $4.1 37% $20.5 $16.4 24%
Basic average shares
outstanding 16.232 17.524 7% 16.711 18.632 10%
Diluted average shares
outstanding 16.876 18.262 8% 17.230 19.134 10%
- ----------------------------------------------------------------------
Basic earnings per
share $0.34 $0.23 48% $1.22 $0.88 39%
Diluted earnings per
share $0.33 $0.22 50% $1.19 $0.86 38%
======================================================================
Certain previously reported amounts have been reclassified to conform
to the current year presentation.
Imagistics International Inc.
Condensed Consolidated Balance Sheets
December 31,
(in millions) 2003 2002
- ----------------------------------------------------------------------
Cash $22.9 $31.3
Accounts receivable, net 107.7 84.2
Accrued billings 20.9 22.4
Inventories 86.1 100.5
Other current assets 29.0 25.6
- ----------------------------------------------------------------------
Total current assets 266.6 264.0
Property, plant and equipment, net 53.2 43.8
Rental assets, net 67.2 93.9
Other assets 59.7 59.5
- ----------------------------------------------------------------------
Total assets $446.7 $461.2
======================================================================
Current portion of long-term debt $0.5 $0.7
Accounts payable and accrued liabilities 79.3 73.9
Advance billings 16.3 27.2
- ----------------------------------------------------------------------
Total current liabilities 96.1 101.8
Long-term debt 62.9 73.4
Other liabilities 20.3 21.8
- ----------------------------------------------------------------------
Total liabilities 179.3 197.0
Stockholders' equity 267.4 264.2
- ----------------------------------------------------------------------
Total liabilities and stockholders' equity $446.7 $461.2
======================================================================
Shares outstanding (in thousands) 16,774 17,877
Memo: Total debt $63.4 $74.1
======== =======
Certain previously reported amounts have been reclassified to conform
to the current year presentation.
Imagistics International Inc.
Condensed Consolidated Statements of Cash Flows
Year ended
December 31,
-------------
(in millions) 2003 2002
- ----------------------------------------------------------------------
Cash flows from operating activities:
Net income $20.5 $16.4
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 74.5 81.6
Provision for bad debt 6.7 4.9
Reserve for obsolete inventory 7.5 15.1
Deferred taxes on income (0.9) 0.5
Change in assets and liabilities, net of acquisitions:
Accounts receivable (29.5) 16.9
Accrued billings 1.6 (1.0)
Inventories 12.5 2.9
Other currents assets and prepayments 0.3 (1.2)
Accounts payable and accrued liabilities (3.5) 22.8
Advance billings (11.1) (2.1)
Other, net 4.5 1.7
- ----------------------------------------------------------------------
Net cash provided by operating activities 83.1 158.5
- ----------------------------------------------------------------------
Cash flows from investing activities:
Expenditures for rental equipment assets (34.9) (48.1)
Expenditures for property, plant and equipment (16.1) (18.5)
Acquisitions, net of cash acquired (4.1) -
- ----------------------------------------------------------------------
Net cash used in investing activities (55.1) (66.6)
- ----------------------------------------------------------------------
Cash flows from financing activities:
Purchases of treasury stock (28.4) (36.5)
Net repayments under Term Loan
and Revolving Credit Facility (10.7) (42.9)
Exercises of stock options, including purchases
under employee stock purchase plan 2.7 -
- ----------------------------------------------------------------------
Net cash used in financing activities (36.4) (79.4)
- ----------------------------------------------------------------------
(Decrease) increase in cash (8.4) 12.5
Cash at beginning of period 31.3 18.8
- ----------------------------------------------------------------------
Cash at end of period $22.9 $31.3
======================================================================
Certain previously reported amounts have been reclassified to conform
to the current year presentation.
Imagistics International Inc.
Supplemental Data Schedules
(Unaudited)
Three months ended Year ended
December 31, December 31,
--------------------- --------------------
(in millions) B / B /
2003 2002 (W) 2003 2002 (W)
- ----------------------------------------------------------------------
Revenue
Sales excluding Pitney
Bowes Canada $72.3 $74.0 (2%) $287.1 $287.1 -
Sales to Pitney Bowes
Canada 7.5 9.7 (22%) 28.9 27.8 4%
- ----------------------------------------------------------------------
Total sales 79.8 83.7 (5%) 316.0 314.9 -
Rentals 54.8 56.7 (3%) 222.2 232.2 (4%)
Support services 21.2 20.0 6% 84.0 82.8 2%
- ----------------------------------------------------------------------
Total revenue $155.8 $160.4 (3%) $622.2 $629.9 (1%)
======================================================================
Revenue
Revenue excluding Pitney
Bowes Canada $148.3 $150.7 (2%) $593.3 $602.1 (2%)
Sales to Pitney Bowes
Canada 7.5 9.7 (22%) 28.9 27.8 4%
- ----------------------------------------------------------------------
Total revenue $155.8 $160.4 (3%) $622.2 $629.9 (1%)
======================================================================
Certain previously reported amounts have been reclassified to conform
to the current year presentation.
Although sales, excluding sales to Pitney Bowes Canada, represents
a non-GAAP financial measure, management considers this to be
meaningful to investors as sales to Pitney Bowes Canada under a
reseller arrangement are at margins significantly below the margins on
sales to our direct customers. We expect to maintain a reseller
arrangement with Pitney Bowes Canada, however, we are unable to
predict the future level of sales to Pitney Bowes Canada. We also
believe it is useful to analyze sales excluding sales to Pitney Bowes
Canada in order to better evaluate the effectiveness of our direct
sales and marketing initiatives and our pricing policies.
Three months ended Year ended
December 31, December 31,
--------------------- --------------------
(in millions) B / B /
2003 2002 (W) 2003 2002 (W)
- ----------------------------------------------------------------------
Free cash flow
Net cash provided by
operating activities $(1.3) $26.2 (105%) $83.1 $158.5 (48%)
Capital expenditures 9.3 13.0 29% 51.0 66.6 23%
- ----------------------------------------------------------------------
Free cash flow $(10.6) $13.2 (180%) $32.1 $91.9 (65%)
======================================================================
Although free cash flow represents a non-GAAP financial measure,
management believes this measure is meaningful to investors in
evaluating our ability to meet our future debt requirements, to fund
capital expenditures and working capital requirements.
CONTACT: Imagistics International Inc.
Timothy J. Klahs, 203-365-2361
timothy.klahs@imagistics.com