Imagistics International Reports Record Q415 Feb, 2005
Imagistics International Reports Record Q4
Imagistics International Inc. announced a 21 percent increase in diluted earnings per share to $0.40 for the fourth quarter of 2004 compared with $0.33 for the fourth quarter of 2003. Net income grew by 21 percent over the same period to $6.7 million from $5.5 million last year. Total revenue for the fourth quarter decreased 6 percent to $146.1 million. Revenue is generated from three business lines: core copier/MFP, facsimile and sales to Pitney Bowes of Canada under a reseller agreement. For the quarter, copier/MFP revenue increased 5 percent to $104.3 million, facsimile revenue declined 19 percent to $39.7 million and sales to PB Canada decreased 72 percent to $2.1 million compared with the prior year's fourth quarter. Excluding sales to PB Canada, total revenue for the fourth quarter was $144.0 million, down 3 percent compared to the previous year.
For the full year 2004, total revenue was $609.1 million, down 2 percent from 2003. Revenue excluding sales to PB Canada increased slightly. For the full year 2004, diluted earnings per share grew 24 percent to $1.48, compared to $1.19 in 2003.
Marc C. Breslawsky, Imagistics Chairman and Chief Executive Officer, said, "2004 was a strong year for Imagistics. For 2004, core copier/MFP revenues grew a strong 9 percent and revenue excluding PB Canada was up slightly, demonstrating our continuing success transitioning from facsimile to copier/MFP. In fact, copier/MFP revenue in the fourth quarter 2004 was 71 percent of total revenue, up from 57 percent at the spinoff in December 2001. Although our sales to PB Canada have declined significantly, those sales are at low margins and the decline had no material impact on our profitability.
"For the fourth quarter 2004, we continued our track record of delivering strong earnings every quarter since the spin off of Imagistics over three years ago. Again, our management team executed well and delivered on our commitments. Coming off a strong 2004, we are establishing guidance for 2005, targeting earnings per share in the $1.85 to $1.90 range. Our previous guidance for EPS growth was 20+ percent.
"As the market is transitioning to color in the workplace, we are very excited about our new products. Just a few days ago we introduced the cm3530 and cm4530 color-capable multifunctional devices. These networked MFPs offer high quality 35 and 45 page-per-minute black and white with 11 page-per-minute on-demand full color. With a full suite of functions including printing, copying, scanning and faxing, these products broaden our color-capable offerings and continue our strategy of merging powerful scanning, email and file management capabilities to provide seamless paths between hard copy and digital formats for fast and easy document management and distribution. The launch of new color products is an integral part of our strategy, as color MFPs provide higher value recurring revenue and profit streams for pages and aftermarket color supplies, compared to monochrome. Our plans include refreshing the entire upper end of our product line in 2005, more than doubling the pace of product introductions of last year."
Imagistics President and Chief Operating Officer, Joseph Skrzypczak added, "Our strategic thrust is to continue the growth of copier/MFP, focusing on rentals to increase our recurring revenue stream, while maintaining gross margins and reducing operating expenses. Sales, service and administrative expenses were running high in 2004 due to the ERP implementation and we believe they peaked in the third quarter 2004. On a year-over-year basis, fourth quarter 2004 SS&A expenses were essentially flat. The reduction of bonus and certain benefit accruals in the fourth quarter 2004 were offset by higher sales compensation, direct distribution, ERP related and bad debt expenses. Compared with the third quarter 2004, we were pleased that ERP-related salaries and consulting fees declined and we expect that ongoing SS&A expenses will continue to decline in 2005, with further reductions in ERP-related consulting and administrative support expenses. We are in the final phase of the ERP implementation, which we expect will be completed in 2005.
"We made progress reducing our accounts receivable balance at year end 2004, which decreased sequentially by $5.4 million or 5 percent. We expect further improvement in our accounts receivable balance in 2005 as we continue to resolve the backlog of outstanding issues."
Outlook for 2005
Mr. Breslawsky stated, "2005 is shaping up to be another exciting year for Imagistics. We have plans to refresh much of our product line, including the introduction of more affordable color MFPs. We anticipate that productivity will improve across all business functions. We believe that 2005 will show some top line growth, as we are at the inflection point where increases in copier/MFP product line revenue are expected to exceed the decline in facsimile revenue. Core copier/MFP continues to grow at a healthy pace, while fax has become a smaller part of our revenue portfolio. In fact, 2004 marked the first year since we began reporting that copier/MFP revenue growth exceeded the fax revenue decline. We are focused on completing our ERP implementation and reducing our operating expenses to more normal levels. We are coming off a strong 2004 and as a result, are targeting EPS growth in the $1.85 to $1.90 range for 2005."