Exhibit 99.1
Imagistics International Reports Solid
Second Quarter 2005 Results
TRUMBULL, Conn.--(BUSINESS WIRE)--Aug. 4, 2005--Imagistics
International Inc. (NYSE:IGI):
-- EPS of $0.41, up 24%, after previously announced severance
charge of $0.02
-- Copier/MFP revenue up 6%; facsimile revenue down 24%
-- Selling, service and administrative expenses reduced by $7.2
million
-- Affirming 2005 guidance
Imagistics International Inc. (NYSE: IGI) today announced second
quarter of 2005 diluted earnings per share of $0.41, up 24 percent,
and net income of $6.7 million, up 19 percent. This compares with
second quarter 2004 diluted earnings per share of $0.33 and net income
of $5.6 million. All prior periods have been restated for the
expensing of stock options, which was adopted effective January 1,
2005.
Total revenue for the second quarter of 2005 decreased 4 percent
to $145.7 million. Revenue is generated from three business lines:
copier/MFP (multifunctional products), facsimile, and sales to PB
Canada under a reseller agreement. For the quarter, copier/MFP revenue
increased 6 percent to $109.8 million, facsimile revenue declined 24
percent to $34.7 million, and sales to PB Canada decreased 25 percent
to $1.2 million, compared with the prior year's second quarter.
Marc C. Breslawsky, Imagistics Chairman and Chief Executive
Officer, said, "We are pleased with our performance in the second
quarter of 2005 with strong EPS growth, as the cost reduction actions
we took earlier this year have greatly improved results. Our key
financial metrics were very good in the second quarter of 2005 --
copier/MFP revenue grew 6 percent, we maintained a high level of
recurring revenue, selling, service and administrative expenses were
significantly reduced, and facsimile revenue continued its expected
rate of decline.
"We are back on track - delivering results, growing our core
copier/MFP business, and strengthening our product, distribution and
service capabilities. We affirm our earnings per share guidance for
2005."
Imagistics President and Chief Operating Officer, Joseph
Skrzypczak, commented, "Diluted EPS of $0.41 in the second quarter of
2005 was up 24 percent, compared with $0.33 in the second quarter last
year, on an as reported basis. The second quarter of 2005 included a
severance charge of $0.02 per share, excluding that, normalized
diluted EPS was $0.43. The second quarter of 2004 included a benefit
from an insurance recovery of $0.05, excluding that, normalized
diluted EPS was $0.28. On a normalized basis, diluted EPS of $0.43 in
the second quarter of 2005 was up 54 percent compared with $0.28 in
the second quarter of 2004.
"In the second quarter of 2005, we generated strong cash from
operations of $29.6 million, which we used to invest in our rental
asset base, acquire two copier dealerships, and repurchase 653,000
Imagistics shares. We accomplished all of this while increasing debt
by only $1.4 million from the first quarter of 2005, and maintaining
debt as a percentage of total capital at a conservative 23 percent.
"Our collection efforts continue to show good results. Days sales
outstanding improved to 61 days in the second quarter of 2005,
compared with 63 days in the first quarter of 2005 and 65 days in the
fourth quarter of 2004."
Mr. Skrzypczak added, "We continue to strengthen our product line.
To date, we introduced more products in the first half of 2005 than in
all of 2004. We are excited about the potential of the im3511 and
im4511 products introduced in May, and we have more new products in
the pipeline - both color and black and white. Color enabled products
continue to be an important component of our strategy. Color
copier/MFP placements continued strong in the second quarter of 2005,
and were up over 200 percent year-over-year and increased nearly 20
percent sequentially.
"The ERP implementation is also winding down. In the second
quarter of 2005, total direct ERP-related expenditures, including
those that were capitalized, were approximately $1 million. We
continue to expect that we will complete the ERP implementation this
year."
Results for the Second Quarter of 2005
Revenue
Total copier/MFP revenue of $109.8 million increased 6 percent for
the second quarter 2005, compared with the prior year. Copier/MFP
sales of $60.0 million increased 7 percent in the second quarter 2005
due to continued unit volume growth, including strong demand for color
copier/MFP products, and growth in aftermarket supplies. Rental
revenue from the copier/MFP product line of $28.3 million grew 3
percent in the second quarter, compared to the prior year, and 3
percent sequentially. Year-over-year copier/MFP rental growth
continued to be impacted by the expiration of certain contracts with
the Federal government that were not renewed. The company expects that
year-over-year copier/MFP rental growth will continue to be modest in
the third quarter of 2005, but will significantly improve in the
fourth quarter of 2005 due to a strong level of recent business
activity and the aforementioned U.S government contracts which are
expected to have less of a negative year-over-year impact. Copier/MFP
support services revenue of $21.5 million grew 5 percent in the second
quarter of 2005.
Total facsimile revenue of $34.7 million was down 24 percent in
the second quarter of 2005. Facsimile sales of $15.1 million declined
13 percent, reflecting lower supply sales primarily due to the
continuing industry-wide reduction in facsimile usage, partially
offset by a large rental to sale conversion of facsimile equipment in
the second quarter of 2005. Rental revenue from the facsimile product
line of $17.9 million declined 33 percent in the second quarter of
2005, reflecting the decline in the rental installed base due in part
to the impact of rental to sale conversions and lower per unit
pricing. Support services revenue from facsimile of $1.7 million
declined 7 percent in the second quarter of 2005. Facsimile revenue
represented 24 percent of total revenue for the company in the second
quarter of 2005.
Sales to PB Canada of $1.2 million were down $0.4 million or 25
percent in the second quarter of 2005. Sales to PB Canada are at low
margins, so the decline in revenue had little impact on profitability.
Gross Margins
The sales gross margin was 44.3 percent, up 0.7 percentage points
compared with the second quarter of 2004. The improvement in the sales
gross margin was due to a large rental to sale conversion of facsimile
equipment and lower inventory obsolescence charges, partially offset
by lower margin from certain competitively bid large sales
transactions and the continuing shift in product mix away from the
higher margin facsimile product line toward the lower margin
copier/MFP product line.
The rental gross margin was 68.3 percent, down 3.4 percentage
points compared with the second quarter last year. This lower rental
gross margin was primarily the result of the continuing shift in
product revenue mix from facsimile to copier/MFP.
Expenses
Selling, service and administrative ("SS&A") expenses in the
second quarter of 2005 were $75.9 million, down 9 percent compared
with the second quarter of 2004, on an as reported basis. Selling,
service and administrative expenses in the second quarter of 2005
included a previously announced severance charge of $0.6 million, or
$0.02 per share. Excluding that charge, SS&A expenses were $75.3
million in the second quarter of 2005. As previously disclosed,
selling, service and administrative expenses in the second quarter of
2004 included an insurance recovery of $1.4 million, or $0.05 per
share, for business interruption claims related to the World Trade
Center. Excluding that adjustment, SS&A expenses were $84.5 million in
that period. Comparing year-over-year SS&A expenses, excluding the
aforementioned severance charge and the insurance recovery, SS&A
expenses in the second quarter of 2005 were down $9.2 million or 11
percent.
The reduction in SS&A expenses in the second quarter of 2005 was
the result of lower compensation and benefit expenses and lower
ERP-implementation and related administrative support costs. This was
partially offset by the absence of the previously mentioned insurance
recovery received in the second quarter of 2004 and higher operating
expenses associated with direct distribution expansion.
Interest expense of $1.2 million increased by $0.3 million in the
second quarter 2005 compared to the prior year, due to a higher level
of debt and higher interest rates.
Results for the First Six Months of 2005
For the first six months of 2005, total revenue decreased 7
percent to $287.8 million. Copier/MFP revenue grew 6 percent,
facsimile revenue declined 26 percent and sales to PB Canada declined
72 percent, compared to the first half of 2004. Net income declined 24
percent to $8.2 million.
Diluted EPS of $0.50 in the first six months of 2005 was down 21
percent, compared with $0.63 in the first six months of last year, on
an as reported basis. The first six months of 2005 included
restructuring and severance charges totaling $0.14 per share,
excluding that, normalized diluted EPS was $0.64. The first six months
of 2004 included a benefit from an insurance recovery of $0.05 per
share, excluding that, normalized diluted EPS was $0.58. On a
normalized basis, diluted EPS for the first six months of 2005 of
$0.64 was up 10 percent compared with $0.58 for the first six months
of 2004.
Outlook
The company affirms its 2005 guidance of $1.58-$1.63 per share.
That guidance, as previously announced, reflects the restatements for
the expensing of stock options, and charges for restructuring and
severance.
Conference Call
Imagistics International will hold a conference call with Marc
Breslawsky, Chairman and Chief Executive Officer, Joseph Skrzypczak,
President and Chief Operating Officer, and Timothy Coyne, Chief
Financial Officer, on Thursday, August 4, 2005 at 11:00 a.m. (Eastern
Time) to discuss results. 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 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, and in parts of Canada. 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 in implementing information technology systems,
including the recent ERP implementation, potential disruptions
affecting the international shipment of goods, our ability to create
brand recognition 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 2004
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.
Imagistics International Inc.
Consolidated Statements of Income
(Unaudited)
Three months ended Six months ended
June 30, June 30,
------------------------- -------------------------
(in millions,
except per share
amounts) 2005 2004 B/(W) 2005 2004 B/(W)
- ------------------------------------------- -------------------------
Revenue
Sales $ 76.3 $ 75.2 1% $ 149.2 $ 157.7 (5%)
Rentals 46.2 54.2 (15%) 93.8 108.6 (14%)
Support services 23.2 22.1 4% 44.8 43.5 3%
- ------------------------------------------- -------------------------
Total revenue 145.7 151.5 (4%) 287.8 309.8 (7%)
Costs and
expenses
Cost of sales 42.5 42.4 - 84.8 91.3 7%
Cost of rentals 14.6 15.3 4% 28.9 31.1 7%
Selling, service
and administrative
expenses 75.9 83.1 9% 157.7 166.7 5%
- ------------------------------------------- -------------------------
Operating income 12.7 10.7 19% 16.4 20.7 (21%)
Interest
expense, net 1.2 0.9 (30%) 2.3 1.8 (25%)
- ------------------------------------------- -------------------------
Income before
income taxes 11.5 9.8 18% 14.1 18.9 (25%)
Provision for
income taxes 4.8 4.2 (16%) 5.9 8.1 27%
- ------------------------------------------- -------------------------
Net income $ 6.7 $ 5.6 19% $ 8.2 $ 10.8 (24%)
=========================================== =========================
Calculation of earnings per share
Income available
to common
shareholders $ 6.7 $ 5.6 19% $ 8.2 $ 10.8 (24%)
Basic average
shares
outstanding 16.048 16.249 1% 16.038 16.331 2%
Diluted average
shares
outstanding 16.398 16.951 3% 16.419 17.035 4%
- ------------------------------------------- ------------------------
Basic earnings
per share $ 0.42 $ 0.35 20% $ 0.51 $ 0.66 (23%)
Diluted earnings
per share $ 0.41 $ 0.33 24% $ 0.50 $ 0.63 (21%)
=========================================== =========================
The Company adopted SFAS No. 123(R), "Share-Based Payment," as of
January 1, 2005. Accordingly, certain previously reported amounts have
been restated to conform to the current year presentation.
Imagistics International Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
June 30, March 31, December 31,
(in millions) 2005 2005 2004
- ----------------------------------------------------------------------
Cash $ 11.4 $ 13.4 $ 12.8
Accounts receivable, net 99.3 99.7 105.7
Accrued billings 28.4 30.8 29.0
Inventories 82.7 89.0 94.7
Other current assets 28.8 28.9 31.4
- ----------------------------------------------------------------------
Total current assets 250.6 261.8 273.6
Property, plant and equipment,
net 58.5 59.5 60.3
Rental assets, net 59.0 60.1 62.8
Other assets 73.8 70.3 70.8
- ----------------------------------------------------------------------
Total assets $ 441.9 $ 451.7 $ 467.5
======================================================================
Current portion of long-term
debt $ 0.5 $ 0.5 $ 0.5
Accounts payable and accrued
liabilities 57.6 56.9 80.3
Advance billings 13.9 14.3 14.8
- ----------------------------------------------------------------------
Total current liabilities 72.0 71.7 95.6
Long-term debt 80.6 79.2 70.4
Other liabilities 15.3 17.6 18.2
- ----------------------------------------------------------------------
Total liabilities 167.9 168.5 184.2
Stockholders' equity 274.0 283.2 283.3
- ----------------------------------------------------------------------
Total liabilities and
stockholders' equity $ 441.9 $ 451.7 $ 467.5
======================================================================
Shares outstanding
(in thousands) 15,733 16,316 16,305
============ ============ ============
Memo: Total debt $ 81.1 $ 79.7 $ 70.9
============ ============ ============
The Company adopted SFAS No. 123(R), "Share-Based Payment," as of
January 1, 2005. Accordingly, certain previously reported amounts have
been restated to conform to the current year presentation.
Imagistics International Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three months Six months
ended ended
June 30, June 30,
----------------- -----------------
(in millions) 2005 2004 2005 2004
- ---------------------------------------------------- -----------------
Cash flows from operating
activities:
Net income $ 6.7 $ 5.6 $ 8.2 $ 10.8
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 14.8 16.2 29.9 32.8
Provision for bad debt 2.1 4.0 4.1 6.4
Reserve for inventory
obsolescence (0.1) 1.1 1.2 2.5
Share-based compensation expense 0.6 1.2 2.4 2.7
Excess tax benefits from share-
based compensation (0.1) (0.2) (0.6) (0.7)
Deferred taxes on income (2.3) (0.4) 0.7 (3.3)
Non-cash restructuring
impairment charges - - 0.5 -
Change in assets and
liabilities, net of
acquisitions:
Accounts receivable (0.4) (3.6) 3.6 (17.3)
Accrued billings 2.4 (2.5) 0.6 (3.8)
Inventories 6.9 2.0 12.5 3.5
Other currents assets and
prepayments 0.6 1.0 1.2 (0.1)
Accounts payable and accrued
liabilities (1.5) 6.7 (25.7) (6.4)
Advance billings (0.5) (0.9) (1.1) (2.2)
Other, net 0.4 (0.9) (1.9) -
- ---------------------------------------------------- -----------------
Net cash provided by operating
activities 29.6 29.3 35.6 24.9
- ---------------------------------------------------- -----------------
Cash flows from investing
activities:
Expenditures for rental
equipment assets (10.8) (11.5) (20.2) (21.3)
Expenditures for property, plant
and equipment (1.0) (3.9) (3.1) (6.7)
Acquisitions, net of cash
acquired (4.4) (6.0) (4.4) (9.7)
- ---------------------------------------------------- -----------------
Net cash used in investing
activities (16.2) (21.4) (27.7) (37.7)
- ---------------------------------------------------- -----------------
Cash flows from financing
activities:
Purchases of treasury stock (17.7) (6.0) (22.3) (12.3)
Net borrowings (repayments)
under Term Loan and Revolving
Credit Facility 1.4 (5.1) 10.2 9.7
Exercises of stock options,
including purchases under
employee stock purchase plan 1.2 1.3 2.8 2.4
Excess tax benefits from share-
based compensation 0.1 0.2 0.6 0.7
- ---------------------------------------------------- -----------------
Net cash (used in) provided by
financing activities (15.0) (9.6) (8.7) 0.5
- ---------------------------------------------------- -----------------
Effect of exchange rates on cash (0.4) (0.1) (0.6) 0.1
Decrease in cash (2.0) (1.8) (1.4) (12.2)
Cash at beginning of period 13.4 12.5 12.8 22.9
- ---------------------------------------------------- -----------------
Cash at end of period $ 11.4 $ 10.7 $ 11.4 $ 10.7
==================================================== =================
The Company adopted SFAS No. 123(R), "Share-Based Payment," as of
January 1, 2005. Accordingly, certain previously reported amounts have
been restated to conform to the current year presentation.
Certain previously reported amounts have been reclassified to conform
to the current year presentation.
Imagistics International Inc.
Supplemental Data Schedules
Revenue
(Unaudited)
Three months ended Six months ended
June 30, June 30,
----------------------------- -----------------------------
(in
millions) 2005 2004 2005 2004
- ---------------------------------------- -----------------------------
Growth Growth Growth Growth
Revenue Rate Revenue Rate Revenue Rate Revenue Rate
----------------------------- -----------------------------
Sales
Copier/MFP
products $ 60.0 7% $ 56.3 12% $116.3 7% $108.4 14%
Facsimile
products 15.1 (13%) 17.3 (22%) 29.6 (21%) 37.6 (14%)
Pitney
Bowes of
Canada 1.2 (25%) 1.6 (75%) 3.3 (72%) 11.7 (7%)
- ---------------------------------------- -----------------------------
Total
sales 76.3 1% 75.2 (5%) 149.2 (5%) 157.7 4%
Rentals
Copier/MFP
products 28.3 3% 27.4 9% 55.8 4% 53.5 8%
Facsimile
products 17.9 (33%) 26.8 (14%) 38.0 (31%) 55.1 (13%)
- ---------------------------------------- -----------------------------
Total
rentals 46.2 (15%) 54.2 (3%) 93.8 (14%) 108.6 (4%)
Support
services
Copier/MFP
products 21.5 5% 20.3 8% 41.5 4% 39.9 7%
Facsimile
products 1.7 (7%) 1.8 (14%) 3.3 (7%) 3.6 (18%)
- ---------------------------------------- -----------------------------
Total
support
services 23.2 4% 22.1 6% 44.8 3% 43.5 4%
- ---------------------------------------- -----------------------------
Total
revenue $145.7 (4%) $151.5 (3%) $287.8 (7%) $309.8 1%
======================================== =============================
Revenue
Copier/MFP
products $109.8 6% $104.0 10% $213.6 6% $201.8 11%
Facsimile
products 34.7 (24%) 45.9 (17%) 70.9 (26%) 96.3 (14%)
- ---------------------------------------- -----------------------------
Revenue
excluding
Pitney
Bowes of
Canada 144.5 (4%) 149.9 - 284.5 (5%) 298.1 1%
Pitney
Bowes of
Canada 1.2 (25%) 1.6 (75%) 3.3 (72%) 11.7 (7%)
- ---------------------------------------- -----------------------------
Total
revenue $145.7 (4%) $151.5 (3%) $287.8 (7%) $309.8 1%
======================================== =============================
Although revenue, excluding sales to Pitney Bowes of Canada,
represents a non-GAAP financial measure, management considers this to
be meaningful to investors as sales to Pitney Bowes of Canada under a
reseller agreement are at margins significantly below the margins on
sales to our direct customers. We expect to maintain a reseller
agreement with Pitney Bowes of Canada, however, we are unable to
predict the future level of sales to Pitney Bowes of Canada. We also
believe it is useful to analyze revenue excluding sales to Pitney
Bowes of Canada in order to better evaluate the effectiveness of our
direct sales and marketing initiatives and our pricing policies.
Imagistics International Inc.
Supplemental Data Schedules
EBITDA
(Unaudited)
Three months ended Six months ended
June 30, June 30,
----------------------- -----------------------
(in millions) 2005 2004 B/(W) 2005 2004 B/(W)
- ---------------------------------------------- -----------------------
EBITDA
Net income $ 6.7 $ 5.6 19% $ 8.2 $ 10.8 (24%)
Interest expense, net 1.2 0.9 (30%) 2.3 1.8 (25%)
Provision for income
taxes 4.8 4.2 (16%) 5.9 8.1 27%
- ---------------------------------------------- -----------------------
EBIT 12.7 10.7 19% 16.4 20.7 (21%)
Depreciation and
amortization 14.8 16.2 8% 29.9 32.8 9%
- ---------------------------------------------- -----------------------
EBITDA $ 27.5 $ 26.9 3% $ 46.3 $ 53.5 (13%)
============================================== =======================
The Company adopted SFAS No. 123(R), "Share-Based Payment," as of
January 1, 2005. Accordingly, certain previously reported amounts have
been restated to conform to the current year presentation.
Free Cash Flow
(Unaudited)
Three months ended Six months ended
June 30, June 30,
---------------------- ----------------------
(in millions) 2005 2004 B/(W) 2005 2004 B/(W)
- ---------------------------------------------- -----------------------
Free cash flow
Net cash provided by
operating activities $ 29.6 $ 29.3 1% $ 35.6 $ 24.9 43%
Expenditures for
rental equipment
assets (10.8) (11.5) 6% (20.2) (21.3) 5%
Expenditures for
property, plant and
equipment (1.0) (3.9) 75% (3.1) (6.7) 54%
Effect of exchange
rates on cash (0.4) (0.1) (a) (0.6) 0.1 (a)
- ---------------------------------------------- -----------------------
Free cash flow $ 17.4 $ 13.8 27% $ 11.7 $ (3.0) (a)
============================================== =======================
(a) Not meaningful
The Company adopted SFAS No. 123(R), "Share-Based Payment," as of
January 1, 2005. Accordingly, certain previously reported amounts have
been restated to conform to the current year presentation.
Certain previously reported amounts have been reclassified to conform
to the current year presentation.
Free cash flow is useful to management and the Company's investors in
measuring the cash generated by the Company that is available to be
used to repurchase stock, repay debt obligations and invest in future
growth through new business development activities or acquisitions.
Free Cash Flow should not be construed as a substitute in measuring
operating results or liquidity. Such metric may not be comparable to
similarly titled measures used by other companies and is not a
measurement recognized under generally accepted accounting principles.
A reconciliation of Free Cash Flow to the appropriate measure
recognized under generally accepted accounting principles (Net Cash
Provided by Operating Activities) is presented above.
EBITDA is defined as net income plus interest and other income, taxes,
depreciation and amortization. These measures are used by management
and by the Company's investors to evaluate the performance of our
business. However this measure is not a substitute for or superior to
net income prepared in accordance with generally accepted accounting
principles. A reconciliation of EBITDA to net income prepared in
accordance with generally accepted accounting principles is presented
above.
Although normalized diluted EPS represents a non-GAAP financial
measure, management believes this measure is meaningful to evaluate
the performance of the Company on a comparable basis.
CONTACT: Imagistics International Inc.
Jim Magrone, 203-365-2361
jmagrone@imagistics.com