Imagistics marks record year
By:Alice Tessier February 28, 2003
When a Connecticut company had the honor of ringing the bell on the New
York Stock Exchange earlier this month, its chief financial officer-Joseph
Skrzypczak of Bethel-had more than one reason to be delighted.
Imagistics International, Inc. (NYSE:IGI) was only a year old, but its
earnings for its first full year of operation had increased 31 percent,
significantly reduced its debt and repurchased a large portion of its
stock.
The company, which is headquartered in Trumbull and has its international
overseas base in Harlow, England, is a large direct sales, service and
marketing organization. It offers high-performance, leading-edge copiers,
multifunctional products and facsimile machines to Fortune 1000 companies
and other customers.
The independent public company was listed on the New York Stock Exchange
Dec. 3, 2001.
"Ringing the closing bell Feb. 6 was an anniversary, ceremonial event,"
said Mr. Skrzypczak. "We're proud to be part of the New York Stock
Exchange-we view it as a big plus-and it was nice to have our management
team up there. Some 13 million people see you for 10 seconds. It was a lot
of fun."
The company exceeded all expectations in its first year of operation,
according to its CFO.
"Anyone who bought the stock when it was $12 would find it trading close to
$20 today," he said in a recent interview. "You would have made over a 60
percent return."
Marc Breslawsky, the company's chairman and chief executive officer, said
in a year-end report, "We have achieved our 2002 objective of enhancing the
fundamentals of the business, including improving profitability and
strengthening the balance sheet. We started the year with an earnings
outlook and then exceeded it, despite a sluggish economy."
Imagistics is a spin-off from Pitney Bowes, a Stamford-based company that
is a global provider of integrated mail and document management systems.
"Pitney Bowes had an office products division and a direct sales and
service organization," said Mr. Skrzypczak, who had started with that
company in 1981 and then went on to Dictaphone in Stratford in 1995. He
became chief operating officer of Dictaphone and was part of the team that
sold that company in 2000.
After Pitney Bowes decided to spin off its office products division,
Imagistics was established.
"Mark and I knew we had to run this company for profit," said Mr.
Skrzypczak, who holds a bachelor's degree in accounting from Fordham
University and is a certified public accountant in New York. The Bethel
resident, who is originally from Portchester, N.Y., moved to town in 1983,
and he and his wife, Janis, who has served in the community as president of
the Bethel High School PTSO and a middle school mentor, have three
children: Eric, Katie and Scott.
"One key factor of the company's success is its ability to generate strong
cash flow," Imagistics' CFO said. "In our first full year, we generated
free cash flow of $92 million. It enabled us to reduce our total debt [of
$150 million] by $43 million, buy back 1.9 million shares of stock for a
total value of $37 million, and increase our cash balance by $12 million."
Free cash flow is how much cash is generated in one, he explained.
"True cash generation-that's how we like to measure our success, not
earnings per share," Mr. Skrzypczak said. "That generates a lot of
interest-a lot of investors are interested in a very cash-oriented company.
It makes you stronger to avoid a buyout."
As for Imagistics, he said, "We ended the year with a cash balance of $31
million and a debt to total capitalization ratio of 22 percent.
"Most companies are considered very good if their capitalization ratio is
under 30 percent," the CFO explained. "It's what people look at to
determine the strength of a company. We've surpassed that."
Mr. Skrzypczak noted that what Imagistics has to offer-for sale or
rental-are "best of breed," or top-performing, products that are made by
many other companies.
"We sell and we service, so what we're interested in offering is the best
we can get to our customers," the CFO said. "What's great about being an
independent distributor and having best of breed leverage is that we don't
have to take just what one company has to offer but can always choose
what's the best quality from what's available from many sources. We have
thorough testing labs to help us choose which ones we want to distribute."
Mr. Skrzypczak noted that Imagistics has launched a major brand-awareness
campaign, which includes television and print advertisements, but its
products cannot be found on the shelves of such office supply stores as
Staples and Office Max.
"Our customer market is Fortune 1000 companies," he said, stressing the
importance of the company's new mega-center for distribution in Columbus,
Ohio, which was built to improve "both customer service and operational
effectiveness."
Imagistics offers copiers and facsimile equipment but is increasingly
focusing on sophisticated multifunctional products.
"Our focus is on large national accounts and higher-end digital products,"
the CFO said, noting that facsimiles will be "less and less of our
business" because, "since the advent of e-mail, people are sending
attachments instead" to convey information.
Imagistics' next-generation digital color, high-speed multifunctional
systems were "designed to provide users with the ease and efficiency of
scanning, printing and
copying documents in everyday color, offering increased speeds, higher
volume ceilings and a number of performance improvements while actually
lowering the cost of digital color technology to customers," said Mr.
Breslawsky in his year-end statement.
Mr. Skrzypczak noted that while Imagistics sells and leases its products,
future sales are hard to estimate when preparing an annual marketing plan
whereas rentals, which are under contract, are more predictable.
"Our rental assets enables us to maintain recurring revenue," he said.
Another Imagistics' strength, the CFO said, is that "we know customer
service. We buy and provide-sell or rent-quality products to our customers
and service our products. There's money to be made in this business."
The company has 1,000 direct sales and 1,500 service representatives, he
noted.
This is an exciting growth period for Imagistics, according to Mr.
Skrzypczak, who declined to disclose the company's five-year plan other
than to say, "We're looking at growing the business and growing it
profitably.
"We could expand to other products and to other markets," Imagistics' CFO
said, adding that his family is "content" to remain in Bethel.
"We thought Bethel was a great little town when we moved here, and we have
loved it here since," Mr. Skrzypczak said.
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