PARAGON TECHNOLOGIES REPORTS PROFITABLE FIRST QUARTER RESULTS AND A 53% INCREASE IN BACKLOG OF ORDERS

- - - - -

Paragon Bolsters Backlog of Orders as It Marks Its Fifth Consecutive Quarter of Profitability

EASTON, PA — May 12, 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 first quarter ended March 31, 2005.

 

First Quarter Results

During the first quarter of 2005, the Company received orders totaling approximately $16.2 million, and finished the first quarter of 2005 with a backlog of orders of approximately $17.1 million, versus an $11.2 million backlog of orders at the end of the fourth quarter of 2004. 

 

Sales for the first quarter of 2005 were approximately $10.3 million compared to sales of approximately $10.6 million in the first quarter of 2004.  Net earnings for the first quarter of 2005 were $194,000 or $.05 basic earnings per share, compared to net earnings of $341,000 or $.08 basic earnings per share in the first quarter of 2004.  Earnings before interest expense, income taxes, depreciation and amortization expense (“EBITDA”) for the first quarter of 2005 were $421,000 compared to $682,000 for the first quarter of 2004. 

 

The decrease in net earnings was due to an increase in selling, general and administrative expenses for the first quarter of 2005 when compared to the first quarter of 2004.  The increase in selling, general and administrative expenses was primarily attributable to the addition of resources aimed at expanding the customer base, and an increase in marketing and consulting expenses associated with trade shows, product promotion, and marketing research.

The Company ended the first quarter with a strong Balance Sheet.  As of March 31, 2005, the current ratio remains strong at 2.02, while working capital approximates $7.1 million. 

 

Len Yurkovic, Paragon’s President and Chief Executive Officer, commented, “The results for the first quarter of 2005 mark the fifth consecutive quarter of profitability for Paragon.  We are pleased with our strong balance sheet.  Also, we are delighted with the 92% increase in the level of orders at $16.2 million received during the first quarter of 2005 as compared to $8.5 million of orders received during the first quarter of 2004.  This has led to the highest level of backlog that we have seen in several years.  Paragon expects this positive trend to continue in the second quarter of 2005.  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.  Our focus remains clear: sell new advanced applications and optimization solutions to our traditional client base to upgrade their systems and provide smart information versus primarily mechanical applications, while aggressively pursuing opportunities where our automation expertise is exactly what our customers want.  There is a genuine demand for automation solutions that increase productivity and quality, and Paragon has gained the reputation and has the capability to fill that need.” 

 

The Company will host a conference call to discuss these results on Thursday, May 12, 2005 at 11:00 a.m. EDT.  To participate in the call, please dial 800-895-1713 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 Technologies, Inc.

Consolidated Balance Sheets

Selected Financial Data

(In Thousands, Except Ratio Information)

Paragon Technologies, Inc.

Consolidated Statements of Operations

Selected Financial Data

(In Thousands, Except Per Share Information)

Paragon Technologies, Inc.

Supplemental Financial Information

Reconciliation of Net Earnings to EBITDA

(In Thousands)