Quipp Reports Q4 and 2005 Earnings

By: E&P Staff Miami-based post-press equipment manufacturer Quipp Inc. today reported consolidated financial results for the fourth quarter and 12 months ended Dec. 31, 2005. Results include operations of Newstec, Inc. beginning on Aug. 10, 2005, when Quipp acquired Newstec.

During the fourth quarter, Quipp had a net loss of $473,000 compared with net income of $273,000 in the same period a year ago. Quipp attributed the decline to "a relatively weak backlog of both Quipp and Newstec orders that were scheduled for shipment in the fourth quarter, costs associated with the start of the integration of Newstec operations from Walpole, Mass., to Miami, and an increase in amortization of intangible assets related to Newstec's acquisition.

Quipp also noted that its Miami plant was shut down for eight days after Hurricane Wilma, resulting in added maintenance costs and production start-up inefficiencies. Revenues for the fourth quarter amounted to $4,999,000, reflecting a 21% decline from the $6,296,000 reported in the last quarter of 2004.

For the full year, Quipp generated net income of $254,000 compared with $486,000 during the prior year. Revenues for 2005 increased by 4% to $25,783,000 from $24,690,000 in 2004.

Quipp President and CEO Michael Kady said in a statement that "because of the light production requirements that we experienced in both our Miami and Walpole facilities in the fourth quarter, we decided to accelerate our consolidation of Quipp and Newstec operations. Therefore, costs associated with the integration of operations that were incurred in the fourth quarter exceeded our original expectations, and additional costs of consolidation will be incurred in the first quarter of 2006. Nevertheless, by beginning the consolidation in the fourth quarter, the benefits of integration will be realized earlier than originally expected."

Although "a strong influx of new orders during the fourth quarter of 2005 resulted in a reasonably healthy backlog as we entered the new year," Kady said he expects first-quarter 2006 demand to soften until after next month's Nexpo trade show. Also, some fourth-quarter bookings "reflected accelerated ordering" to avoid Jan. 1 price increases. In any event, the backlog "is almost $5 million higher than at the end of 2004," Kady said.

The Company's balance of cash and marketable securities increased to $5,865,000 at December 31, 2005 from $5,166,000 at September 30, 2005. These balances are lower than the December 31, 2004 balance of $8,739,000, reflecting the expenditure of $4,477,000 in connection with the acquisition of
Newstec in August 2005.

Quipp's board of directors declared a dividend of $.05 per share payable on June 1, 2006 to shareholders of record on May 1, 2006.