Imagistics International Reports Decreased Revenues for the First Quarter11 May, 2005
Imagistics International Reports Decreased Revenues for the First Quarter
Imagistics International Inc. announced total revenue for the first quarter of 2005 decreased 10 percent to $142.1 million. Revenue is generated from three business lines: copier/MFP (multifunctional products), facsimile, and sales to PB Canada under a reseller agreement.
For the quarter, copier/MFP revenue increased 6 percent to $103.8 million, facsimile revenue declined 28 percent to $36.2 million, and sales to PB Canada decreased 79 percent to $2.1 million compared with the prior year's first quarter. The large decline in facsimile revenue this quarter was exacerbated by a strong first quarter of 2004. As reported last year, a large sale of facsimile equipment occurred in the first quarter of 2004, and as a result, that quarter was the only one since the spin-off to show a sequential increase in facsimile revenue. Additionally, continuing the trend experienced throughout 2004, revenue from Pitney Bowes Canada ("PB Canada") was down sharply. Excluding sales to PB Canada, total revenue for the first quarter was $140.0 million, down 6 percent compared with the same period in the previous year.
Marc C. Breslawsky, Imagistics Chairman and Chief Executive Officer, said, "Our focus continues to be on transforming Imagistics into a copier/MFP business and creating a more customer focused, performance driven company. First quarter 2005 results were disappointing, as facsimile revenue declined faster than the 20 percent we originally expected. In the first quarter 2005 facsimile represented only 26 percent of our revenue portfolio. Although our copier/MFP revenue continued to grow in a market that has been generally soft, the revenue and margin impact of this growth clearly did not offset the impact of the decline we experienced in facsimile. Gross margins associated with facsimile are greater than copier/MFP by approximately 14 percentage points. As the decline in facsimile revenue continues and our product mix becomes more heavily skewed to copier/MFPs, there is a resulting impact on the company's overall gross margin. Gross margins for copier/MFP products and facsimile products are expected to remain at their respective current levels.
"In the first quarter of 2005, the company took additional actions to reduce selling, service and administrative expenses, and I am pleased to report that those expenses were reduced by 6 percent in the first quarter of 2005 compared with the prior year, excluding the charges for restructuring and severance. We are affirming our previous annual guidance of $1.61-$1.66 per share for 2005."
Imagistics President and Chief Operating Officer, Joseph Skrzypczak added, "As planned, this is the year that we expect to begin reducing selling, service and administrative expenses and complete the implementation of the ERP system. In addition to the 6 percent year-over-year decline in selling, service and administrative expenses in the first quarter of 2005 after adjusting for the restructuring and severance charges, we also reduced our accounts receivable balance by 6 percent sequentially. Beyond the expected expense reduction from completing the ERP implementation, we took the additional cost reduction actions announced last month, including closing the National Remanufacturing Center and reducing headcount by 100 employees across the organization. As previously announced, we expect further expense reductions this year.
"We are on track with our new product introductions for 2005 and continue to be excited about the potential of our color products. While our installed base of color copier/MFPs is relatively small, in the first quarter of 2005 color enabled copier/MFP installs gained momentum, and were up over 200 percent year-over-year and increased more than 50 percent sequentially. In our 31 to 69 page-per-minute copier/MFP product line, over 20 percent of our placements were color units in the first quarter of 2005."
The company expects the copier/MFP revenue growth rate for the balance of 2005 to remain in the mid single digit percent range, similar to that experienced in the first quarter of 2005. Facsimile revenue is estimated to decline at an annual rate in the mid-to-high twenty percent range for the remainder of 2005.