PARAGON TECHNOLOGIES REPORTS 2002 FIRST QUARTER RESULTS
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Earnings Up Over Prior Year

EASTON, PA — May 15, 2002 -- Paragon Technologies, Inc. (AMEX: PTG), a leading provider of “smart” material handling solutions, including systems, technologies, products and services, today announced results for the first quarter ended March 31, 2002.

Net earnings for the first quarter of 2002 rose to $343,000, or $0.08 basic earnings per share, compared with net earnings of $126,000, or $.03 basic earnings per share in the first quarter of 2001 despite lower sales of $10.8 million versus $13.9 million in the first quarter of 2001. Gross profit percentage improved to 26.9% from the prior year first quarter gross profit percentage of 25.8%. EBITDA for the first quarter of 2002 was approximately $1.0 million, compared with EBITDA of $0.86 million for the first quarter of 2001.

According to Bill Johnson, President and Chief Executive Officer, "The first quarter of 2002 was marked by a strong emphasis on targeting promising market segments." These efforts yielded positive results in an otherwise challenging quarter for many capital goods suppliers. Contributing to pre-tax earnings for the first quarter of 2002 was other income from the licensing of real property of $150,000 and a gain on the sale of excess fixed assets of $108,000, and the application of a recent accounting pronouncement, whereby goodwill is no longer amortized, thereby resulting in an increase to pre-tax earnings of $117,000. The backlog of orders was approximately $13.0 million at the end of the first quarter, versus $13.3 million at the end of the fourth quarter of 2001.

Johnson further commented, "Our profitable first quarter results mark the third consecutive quarter of profitability since the Company restructured its business operations in the second quarter of 2001. In addition to the factors noted above, the first quarter results reflect the cost savings attributable to the Company's restructuring of its business operations in the prior fiscal year and continued emphasis on cost reduction. Paragon's tightly focused marketing and sales strategies remain key revenue drivers for the Company. Our brands have seen positive customer interest in new projects as evidenced by first quarter orders associated with projects, such as the Harley-Davidson and ongoing automated pharmacy systems."

"The development of new proprietary technology is underway, aimed at expanding our product offerings and increasing market share while meeting our customers' diverse needs. We also continue to monitor our cost structure to make improvements and analyze all of the Company's assets to generate income and promote cash flow as evidenced by nearly $500,000 generated from excess, non-strategic assets in the first quarter. We believe that by improving our cost structure and expanding our client base, Paragon will be well positioned to achieve increased profitability and enhance shareholder value as economic conditions improve."

The Company will host a conference call to discuss these results on Wednesday, May 15, 2002 at 11:00 a.m. EDT. To participate in the call, please dial 888-273-9890 and ask for the Paragon Technologies teleconference. Simultaneous with the conference call, an audio web cast of the call will be available via a link on the Paragon website, www.paragontechnologiesinc.com.

 

About Paragon Technologies

Paragon Technologies is a leader in integrating materials 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. Paragon Technologies' Quality Management System at its Easton, Pennsylvania location is certified to the ISO 9001 standard. The scope of the Quality Management System governs the design, manufacture, assembly, installation, and servicing of automated materials handling and distribution systems. One of the top materials handling systems suppliers worldwide, Paragon's leading clients include the United States Postal Service, General Motors, IBM, BMG, Daimler Chrysler, Johnson & Johnson, Ford, Peterbilt, Harley-Davidson, Walgreens, and Clark Equipment.

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Certain statements contained herein are not based on historical fact and are to be viewed as "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words or phrases used in this News Release denoting the anticipated results of future events, such as " believe," "affords us," "grow," "will be," "will spur additional opportunities," and similar expressions that denote optimism and uncertainty, are intended to identify such forward-looking statements. SI Handling's actual results, performance, or achievements could differ materially from the results expressed in, or implied by, such "forward-looking statements" if the factors on which their conclusions are based do not conform to their expectations.

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Paragon Technologies, Inc.

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