PARAGON TECHNOLOGIES REPORTS PROFITABLE
THIRD QUARTER AND NINE MONTH RESULTS
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EASTON, PA — November 10, 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 third quarter and nine months ended September 30,
2005.
During the third quarter of 2005, the Company’s continuing
operations received orders totaling approximately $6.0 million, and finished
the third quarter of 2005 with a backlog of orders of approximately $9.7
million, a 24% increase over the $7.8 million backlog of orders at the end of
the second quarter of 2005. Sales for the third quarter of 2005 rose 32% to
approximately $4.1 million when compared to sales of approximately $3.1 million
in the third quarter of 2004.
For the nine month period ended September 30, 2005, the Company’s continuing operations booked orders totaling approximately $15.8
million, a 70% increase when compared to the $9.3 million of orders received
during the first nine months of 2004. Sales for the first nine months of 2005
rose 37% to $11.7 million when compared to sales of $8.5 million for the first
nine months of 2004.
As previously reported, upon receiving stockholder
approval at a Special Meeting of Stockholders held on August 3, 2005, the closing of the sale of substantially all of the assets and liabilities of Ermanco
occurred on August 5, 2005. Per the terms of the Asset Purchase Agreement, the
buyer paid the Company cash in the amount of approximately $23.0 million at
closing. The Company obtained cash consideration of $21,555,000, net of
transactions costs of $1,033,000 and a $467,000 working capital adjustment in
connection with the sale of the assets and liabilities of Ermanco, thereby
resulting in a pre-tax loss for financial statement purposes on the sale of
approximately $978,000 as recorded in Income from discontinued operations, net
of income taxes, for the nine months ended September 30, 2005. The cash
consideration received
by the Company is subject to an accounts receivable
adjustment based on collections of outstanding accounts receivable after August 5, 2005.
The Company ended the third quarter with a strong balance
sheet. As of September 30, 2005, the current ratio remains strong at 3.53,
while working capital approximates $20.7 million. During the three and nine
months ended September 30, 2005, cash expenditures for stock repurchases
totaled approximately $4.0 million.
Income from continuing
operations for the third quarter of 2005 was $61,000 or $.01 basic earnings per
share, compared to income from continuing operations of $45,000 or $.01 basic
earnings per share in the third quarter of 2004. Net income for the third
quarter of 2005 was $141,000 or $.03 basic earnings per share, compared to net
income of $465,000 or $.11 basic earnings per share in the third quarter of
2004. Unfavorably impacting net income for the third quarter of 2005 by
$288,000 was the third quarter loss on the sale of substantially all of the
assets and liabilities of Ermanco which primarily represented transaction costs
associated with professional fees. Earnings before interest expense, income
taxes, depreciation and amortization expense (“EBITDA”) from continuing
operations for the third quarter of 2005 was $124,000 compared to $101,000 for
the third quarter of 2004.
Income from continuing operations for the first nine
months of 2005 was $15,000 or $.00 basic earnings per share, compared to a loss
from continuing operations of $71,000 or $.02 basic loss per share for the
first nine months of 2004. Net income for the first nine months of 2005 was $1,044,000
or $.25 basic earnings per share, compared to net income of $935,000 or $.22
basic earnings per share for the first nine months of 2004. Earnings before
interest expense, income taxes, depreciation and amortization expense (“EBITDA”)
from continuing operations for the first nine months of 2005 was $91,000 compared
to a loss of $36,000 for the first nine months of 2004.
The increase in sales and gross profit on sales of
$3,176,000 and $270,000, respectively, for the first nine months of 2005 was
associated with a larger backlog of orders entering fiscal 2005 when compared
to the backlog of orders entering fiscal 2004. Also, contributing to the
increase in sales was progress made on contracts received prior to the start of
the year and during the first half of 2005 in accordance with contract
completion requirements. Offsetting the favorable impact of the aforementioned
increase in sales and gross profit on sales was an increase of $419,000 in
selling, general and administrative expenses, primarily attributable to the
addition of resources aimed at expanding the customer base and an increase in
salaries and fringe benefits, an increase in expenses related to the Company’s
enhanced revenue performance, and expenses associated with consulting and
marketing services primarily associated with product promotion, marketing
research, and participation in trade shows primarily during the first half of
fiscal 2005.
Len Yurkovic, Paragon’s President and Chief Executive
Officer, commented, “The results for the third quarter of 2005 mark the seventh
consecutive quarter of profitability for Paragon. We are extremely proud to be
reporting an increase in the rate of new orders from continuing operations
along with a growing backlog of orders, and also a very strong balance sheet.
Our quoting activity remains strong and we continue to make investments in
sales and marketing as we target active sectors of the material handling
marketplace. Particularly active sectors include health and beauty aids, the
entertainment industry, and vehicle assembly markets.”
The Company is currently exploring various business
strategies designed to enhance the value of the Company’s assets for its
stockholders. The Company is continuing to evaluate and actively explore a
range of possible options, including transactions intended to maximize
stockholder value, and consider the acquisition of complementary assets and/or
businesses.
The Company will host a conference call to discuss these
results on Thursday, November 10, 2005 at 11:00 a.m. EST. 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.
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
handling and order fulfillment applications. One of the top material handling
systems suppliers worldwide, SI Systems leading clients have included the
United States Postal Service, General Motors, Ford, Peterbilt, Harley-Davidson,
and Walgreens.
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