PARAGON
TECHNOLOGIES REPORTS FOURTH QUARTER AND YEAR-END RESULTS
- - - - -
EASTON, PA — March 15, 2005 -- Paragon Technologies, Inc. (AMEX:PTG), a leading supplier of “smart” material handling solutions, including systems, technologies, products and
services, today announced results for the fourth quarter and year ended
December 31, 2004.
Fourth
Quarter Results
Sales for the fourth quarter
of 2004 were approximately $11.3 million compared to sales of approximately $9.0
million in the fourth quarter of 2003. Net earnings for the fourth quarter of
2004 were $538,000 or $.13 basic earnings per share, compared to a net loss of
$(255,000) or $(.06) basic loss per share in the fourth quarter of 2003. Excluding
severance costs and interest expense of $52,000, the fourth quarter 2004 net
earnings were $570,000 or $.13 basic earnings per share. Primarily excluding
settlement and legal costs and severance charges, net of the restructuring
credit, the Company posted net earnings of $197,000 or $.05 basic earnings per
share in the fourth quarter of 2003. Earnings before interest expense, income
taxes, depreciation and amortization expense (“EBITDA”) for the fourth quarter
of 2004 were approximately $768,000 compared to $(319,000) for the fourth
quarter of 2003.
Contributing
to the pre-tax loss for the fourth quarter of 2003 were severance charges of
$293,000, net of a $94,000 restructuring credit, and settlement and legal costs
of $355,000 associated with an action against the Company by a competitor
relating to the Company’s intellectual property.
Full Year Results
Sales for fiscal 2004 rose to
$42.3 million compared to sales of $37.3 million for fiscal 2003. Net earnings
for fiscal 2004 were $1,473,000 or $.34 basic earnings per share, compared to
net earnings of $3,785,000 or $.89 basic earnings per share for fiscal 2003. Excluding
severance costs and interest expense of $167,000, the Company’s net earnings
for 2004 were $1,584,000 or $.37 basic earnings per share. Excluding the gain
on the sale of SI/BAKER, equity in income and royalty income from the Company’s
former SI/BAKER joint venture, the gain on the sale of the Easton, PA facility, settlement and legal costs, severance charges, net of restructuring credits,
and interest expense, the Company’s net earnings for 2003 were $998,000 or $.23
basic earnings per share. EBITDA for fiscal 2004 was $2.7 million compared to
$7.4 million for fiscal 2003.
Contributing
to pre-tax earnings for fiscal 2003 was income of $4,901,000 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 $256,000, royalty income from the
SI/BAKER joint venture of $226,000, 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 restructuring credits of $264,000 pertaining
to the final settlement of remaining pension obligations associated with the
Company’s terminated pension plan and the reversal of a previously established
severance accrual that was no longer required. Partially offsetting the
favorable impact of the aforementioned items were severance charges of
$387,000, settlement and legal costs of $1,375,000 associated with an action
against the Company by a competitor relating to the Company’s intellectual
property, and interest expense of $676,000.
During fiscal
2004, the Company received orders totaling approximately $42.9 million, and
finished the year ended December 31, 2004 with a backlog of orders of
approximately $11.2 million, versus a $10.5 million backlog of orders at the
end of the fourth quarter of 2003.
The Company
ended the year with a strong Balance Sheet. As of December 31, 2004, the current
ratio remains strong at 2.00, while working capital approximates $6.9 million.
Len Yurkovic,
Paragon’s President and Chief Executive Officer, commented, “The results for
fiscal 2004 are very gratifying. We are pleased with our strong balance
sheet. We are also pleased with the increase in the level of orders at $42.9
million received during fiscal 2004 as compared to $40.9 million of orders
received during fiscal 2003. We have made significant sales and marketing
investments, which are resulting in strong quoting and closing activity in the
targeted sectors of the large automated material handling marketplace.”
The Company will
host a conference call to discuss these results on Tuesday, March 15, 2005 at
11:00 a.m. ET. To participate in the call, please dial 800-862-9098 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.
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 risks and uncertainties associated with Paragon's restructuring,
including the failure to achieve anticipated operating savings, and the possibility
that the restructuring charges will be greater than anticipated; (2) 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;
or (3) if the factors on which Paragon's conclusions are based do not conform
to its expectations.
Paragon
Technologies, Inc.
Consolidated
Balance Sheets
Selected Financial
Data
(In
Thousands, Except Ratio Information)
|
|
December 31, 2004
|
December 31, 2003
|
|
Cash and cash equivalents...............................................
|
$ 3,602
|
5,591
|
|
Trade receivables, net........................................................
|
$ 5,756
|
5,277
|
|
Inventories...........................................................................
|
$ 1,616
|
1,191
|
|
Current assets.......................................................................
|
$ 13,802
|
14,691
|
|
Current liabilities..................................................................
|
6,908
|
9,554
|
|
Working capital.................................................................
|
$ 6,894
|
5,137
|
|
Current ratio.........................................................................
|
2.00
|
1.54
|
|
Total assets..........................................................................
|
$ 32,705
|
33,774
|
|
Total stockholders’ equity.................................................
|
$ 23,308
|
22,061
|
Paragon Technologies, Inc.
Consolidated
Statements of Operations
Selected Financial
Data
(In
Thousands, Except Per Share Information)
|
|
Fourth
Quarter Ended
December
31,
|
Year
Ended
December
31,
|
|
|
2004
|
2003
|
2004
|
2003
|
|
Net sales.................................................
|
$ 11,287
|
9,006
|
42,255
|
37,295
|
|
Pre-tax earnings (loss) (See
Note 1).....
|
$ 649
|
(377)
|
2,216
|
6,209
|
|
Income tax expense (benefit)............
|
111
|
(122)
|
743
|
2,424
|
|
Net earnings (loss)................................
|
$ 538
|
(255)
|
1,473
|
3,785
|
|
Basic earnings (loss) per
share......
|
$ .13
|
(.06)
|
.34
|
.89
|
|
Diluted earnings (loss) per
share...
|
$ .12
|
(.06)
|
.34
|
.87
|
Paragon Technologies, Inc.
Supplemental
Financial Information
Reconciliation of
Net Earnings to EBITDA
(In
Thousands)
|
|
Fourth
Quarter Ended
December
31,
|
Year
Ended
December
31,
|
|
|
2004
|
2003
|
2004
|
2003
|
|
Net earnings (loss)..................................
|
$ 538
|
(255)
|
1,473
|
3,785
|
|
Add: Income tax expense (benefit)...
|
111
|
(122)
|
743
|
2,424
|
|
Earnings (loss) before income taxes...
|
649
|
(377)
|
2,216
|
6,209
|
|
Add: Interest expense..........................
|
4
|
1
|
4
|
676
|
|
Add: Depreciation and amortization
expense.....................................
|
115
|
57
|
441
|
472
|
|
EBITDA...................................................
|
$ 768
|
(319)
|
2,661
|
7,357
|
Note
1: The following table
depicts selected financial data that impacted net earnings for the periods
indicated (dollars in thousands, except per share information):
|
|
|
Fourth Quarter
Ended
December 31,
|
Year Ended
December 31,
|
|
|
|
2004
|
2003
|
2004
|
2003
|
|
|
|
|
|
|
|
|
Pre-tax earnings (loss).......................................
|
|
$ 649
|
(377)
|
2,216
|
6,209
|
|
|
|
|
|
|
|
|
Selected financial data impacting
pre-tax earnings (loss):
|
|
|
|
|
|
|
Gain (loss) on sale of SI/BAKER joint
venture..............................................................
|
|
-
|
(18)
|
-
|
4,901
|
|
|
Gain on the sale of Easton,
PA facility.........................................................
|
|
-
|
-
|
-
|
1,363
|
|
Restructuring credit from settlement
of pension obligations and reversal of
previously established severance
accrual..............................................................
|
|
-
|
94
|
-
|
264
|
|
Equity in income of joint venture...................
|
|
-
|
-
|
-
|
256
|
|
Royalty income from joint venture................
|
|
-
|
-
|
-
|
226
|
|
Severance costs..................................................
|
|
(48)
|
(387)
|
(163)
|
(387)
|
|
Interest expense.................................................
|
|
(4)
|
(1)
|
(4)
|
(676)
|
|
Settlement and legal costs associated
with an action asserted against the
Company by a competitor relating
to the Company’s intellectual
property............................................................
|
|
-
|
(355)
|
-
|
(1,375))
|
|
|
Total of selected financial data
impacting pre-tax earnings (loss)...............
|
|
(52)
|
(667)
|
(167)
|
4,572
|
|
Pre-tax earnings adjusted
for the impact of the selected
financial data..................................................
|
|
701
|
290
|
2,383
|
1,637
|
|
Income tax expense..........................................
|
|
131
|
93
|
799
|
639
|
|
Net earnings adjusted........................................
|
|
$ 570
|
197
|
1,584
|
998
|
|
Basic earnings per share —
adjusted............................................................
|
|
$ .13
|
.05
|
.37
|
.23
|
|
Diluted earnings per share —
adjusted............................................................
|
|
$ .13
|
.04
|
.36
|
.23
|
|
|
|
|
|
|
|
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