PARAGON TECHNOLOGIES REPORTS PROFITABLE 2003 SECOND QUARTER AND SIX MONTHS RESULTS

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Paragon Continues to Reduce Bank Debt and Strengthen Its Balance Sheet as It Marks Its Third Consecutive Quarter of Profitability

 

EASTON, PA — August 14, 2003 -- Paragon Technologies, Inc. (AMEX: PTG), a leading supplier of “smart” material handling solutions, including systems, technologies, products and services, today announced results for the second quarter and six months ended June 30, 2003.
 

Net earnings for the second quarter of 2003 rose to $617,000 or $.14 basic earnings per share, compared to net earnings of $123,000 or $.03 basic earnings per share in the second quarter of 2002.  Earnings before interest, taxes, depreciation, and amortization (“EBITDA”) for the second quarter of 2003 were approximately $1.28 million compared to $627,000 for the second quarter of 2002.  Sales for the second quarter of 2003 were approximately $11.0 million compared to sales of approximately $9.9 million in the second quarter of 2002.
 

Sales for the first half of 2003 were $19.55 million compared to $20.66 million in the first half of 2002.  Net earnings for the first half of 2003 were $1.63 million or $0.38 basic earnings per share, compared to net earnings of $466,000 or $0.11 basic earnings per share for the first half of 2002.  EBITDA for the first half of 2003 was $3.3 million compared to $1.6 million for the first half of 2002.
 

During the first half of 2003, the Company received orders totaling approximately $20.06 million, and finished the second quarter ended June 30, 2003 with a backlog of orders of approximately $7.4 million, versus a $6.9 million backlog of orders at the end of the fourth quarter of 2002.
 

Contributing to pre-tax earnings for the first half of 2003 was other 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 a restructuring credit of $170,000 pertaining to the final settlement of remaining pension obligations associated with the Company’s terminated pension plan.  Contributing to pre-tax earnings for the first half of 2002 was other income from the short-term licensing of real property of $300,000 and a gain on the sale of excess fixed assets of $108,000.
 

The Company continues to strengthen its Balance Sheet.  During the second quarter of 2003, the Company prepaid $2.0 million of its bank debt and $1.0 million of its subordinated debt, and also received a $1.0 million cash dividend from its SI/BAKER joint venture.  The $1.0 million cash dividend was recorded as a reduction in the investment in the SI/BAKER joint venture.  The current ratio remains strong at 1.52, while working capital approximates $5.0 million.
 

Subsequent to the end of the second quarter, Paragon prepaid $500,000 of its bank debt, which currently stands at approximately $1.2 million, and $500,000 of its subordinated debt, which currently stands at $1.5 million.
 

Bill Johnson, Paragon’s President and Chief Executive Officer, commented, “Our profitable second quarter results mark the third consecutive quarter of profitability.  The results for the first half of the year and the second quarter are very gratifying.  We are pleased with the increase in the level of orders at $20.06 million received during the first half of 2003 as compared to $18.9 million of orders received during the first half of 2002.  We continue to target active sectors of the marketplace.  Our quoting activity remains strong and maintaining an aggressive selling focus is a prime objective.  We continue to make investments in product development and sales and marketing as we strive to enhance shareholder value.”
 

The Company will host a conference call to discuss these results on Thursday, August 14, 2003 at 10:30 a.m. ET.  To participate in the call, please dial 800-362-0571 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.paragontechnologiesinc.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.

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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.

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