Baldwin Technology Company, Inc. (NYSE Amex:BLD), a global
leader in process automation technology for the printing industry,
today reported its financial results for the company�s fiscal third
quarter ended March 31, 2009.
Highlights
- Year to date adjusted
(non-GAAP) net income per share was $0.04 -- reported loss of
($0.77)
- Adjusted (non-GAAP) net loss
per share was ($0.10) in the quarter -- reported loss of
($0.88)
- Reduced operating expenses
(adjusted for one-time charges) in the quarter by $4.3 million or
27% compared to the comparable period of the prior year
- Cash generated from operating
activities in the quarter and fiscal year to date $2.8
million
- Completed the implementation
of additional restructuring initiatives including facility
consolidation, capacity adjustments and closure of offices
- Received positive final
decision from the German Supreme Court in a patent dispute against
a German competitor
- Extended credit agreement
waiver through July 31, 2009
Third Quarter and Year to Date FY2009 Results
The company reported third quarter FY2009 net sales of $36.1
million, compared to $59.2 million for the third quarter last year.
Currency translation negatively impacted sales by $3.9 million for
the quarter.
Reported net loss for the quarter was ($13.4) million or ($0.88)
per diluted share compared to net income of $2.0 million, or $0.13
per diluted share for the comparable period of the prior year.
Net sales for the nine months ended March 31, 2009 were $138.3
million compared to $171.1 million in the prior year period.
Currency translation negatively impacted sales by $3.3 million for
the nine month period. The net loss for the nine months was ($11.8)
million or ($0.77) per diluted share, compared to net income of
$3.3 million, or $0.21 per diluted share for the comparable period
in the prior year.
The results of the quarter were negatively impacted by a
goodwill impairment charge in the amount of $5.7 million, a
restructuring charge of $4.1 million, an inventory write-off of
$4.2 million and a write-off of accounts receivable in the amount
of $0.5 million for a customer who is in Chapter 11
reorganization.
Adjusted for the non-cash charges mentioned above, the company
reported a net loss of ($1.5) million or ($0.10) per basic and
diluted share for the quarter compared to net income of $2.0
million or $0.13 per basic and diluted share in the prior year�s
third quarter. For the nine months ended March 31, 2009, adjusted
net income was $0.6 million or $0.04 per basic and diluted share
compared to net income of $4.0 million or $0.25 per basic and
diluted share for the comparable prior year period. Please refer to
the attached schedule, �Pro-forma non-GAAP Statements of
Operations,� for a reconciliation of GAAP results to adjusted
results.
Backlog at the end of the quarter was $39.8 million, compared to
a backlog of $48.2 million at the beginning of the fiscal year, and
$45.3 million on December 31, 2008.
Restructuring Initiatives
As a result of the company�s cost reduction initiatives,
operating expenses during the third quarter of FY2009 were reduced
by $4.3 million (adjusted for one-time charges) or 27% versus the
comparable quarter in the prior year. Approximately $1.1 million of
the reduction was due to currency translation. During the third
quarter, the company completed the consolidation of its production
operations formerly located in Egelsbach, Germany, into its
Friedberg facility. The company also closed its sales and service
office in Italy, and made additional capacity adjustments in the
U.S., Germany, Sweden, Japan and the UK.
As announced on April 22, 2009, the German Federal Supreme Court
issued a favorable decision upholding the validity of a Baldwin
patent that had been challenged by a competitor. Baldwin had
previously prevailed in an infringement action on that patent and
expects to win when the appeal to that action is heard next year.
Baldwin intends to pursue its Euro 32.7 million ($46 million) claim
for damages.
Credit Facility Agreement
Due to the restructuring and other adjustments recorded during
the third quarter, the company was not in compliance with certain
provisions of its credit agreement. The company has entered into an
Amended and Restated
Modification and Limited Waiver Agreement with Bank of America
and the other lenders whereby the banks have agreed to a waiver of
the non-compliance through July 31, 2009. The company is continuing
discussions with its banks and expects to have a restructured
credit agreement in place by July 31, 2009.
Comments
President and CEO, Karl S. Puehringer, commented: �We have
responded quickly and aggressively to this challenging market
environment by adjusting our capacities and successfully
implementing several restructuring initiatives. Although we had a
loss in the third quarter, we mitigated the impact of a
significantly reduced market demand by adjusting our cost
structures globally. In addition, we continue to focus on
opportunities in emerging countries, and on leveraging our global
brand and our exceptionally strong global footprint through
alliances and the close business relationships we have with OEM
press manufacturers.�
Vice President and CFO, John P. Jordan, noted: �The reduction of
accounts receivable associated with the lower sales levels was a
major contributor to reduced working capital and operating cash
flow. But we also continue our aggressive management of the
components of working capital to generate positive cash flow from
operations, resulting in an increase in our cash balance of $5.4
million from June 30, 2008. The additional provision for
obsolescence in inventory resulted primarily from a change in the
business model in the United States. The $5.7 million impairment
charge was due to the recent macro economic conditions and
diminished stock market valuation of the company. Long-term debt
has been reclassified as short term on the balance sheet until an
amended credit agreement is in place. We believe we have a good
working relationship with our lenders, and we are discussing
provisions of a permanent amendment with them. We expect to have
that amendment in place by July 31.�
FY 2009 Q3 Earnings Conference Call Scheduled for
Monday
Baldwin will host a conference call on Monday, May 18th at 11:00
AM Eastern Time to review the financial results and conduct a
question-and-answer session. To participate, call (800) 935-5014
any time after 10:55 AM Eastern Time. The number for local and
international calls is (212) 231-2902. The passcode is �Baldwin Q3
earnings release.� Interested parties may also listen to a webcast
of the call on the company�s website,
http://www.baldwintech.com.
A replay of the call will be available from one hour after the
call through May 25 at 6:30 PM Eastern Time by calling (800)
633-8625 or toll (402) 977-9141 and entering reservation #21422237.
A webcast will also be available on the company�s website for 90
days after the call.
About Baldwin
Baldwin Technology Company, Inc. is a leading international
supplier of process automation equipment for the printing and
publishing industries. Baldwin offers its customers a broad range
of market-leading technologies, products and systems that enhance
the quality of printed products and improve the economic and
environmental efficiency of printing presses. Headquartered in
Shelton, Connecticut, the company has operations strategically
located in the major print markets and distributes its products via
a global sales and service infrastructure. Baldwin�s technology and
products include cleaning systems, fluid management and ink control
systems, web press protection systems and drying systems and the
related consumables. For more information, visit
http://www.baldwintech.com
Information for investors, including an investment profile about
Baldwin is available at www.hawkassociates.com/profile/bld.cfm.
Investors may contact Julie Marshall or Frank Hawkins, Hawk
Associates, at (305) 451-1888, e-mail: baldwin@hawkassociates.com.
An online investor kit including press releases, current price
quotes, stock charts and other valuable information for investors
is available at http://www.hawkassociates.com.
Forward-Looking Statements
In this press release, the use of the words �expect,� �will,�
�may,� �would,� �could,� �should,� �project,� �projected,�
�positioned� or similar expressions is intended to identify
forward-looking statements that represent the company�s current
judgment about possible future events. The company believes these
judgments are reasonable, but these statements are not guarantees
of any events or financial results, and actual results may differ
materially due to a variety of important factors. Such factors
might include, among others, the company�s ability to negotiate an
amendment to its credit agreement; the company�s ability to comply
with the requirements of its credit agreement; the availability of
funding under that credit agreement; the company�s ability to
maintain adequate liquidity and financing sources and an
appropriate level of debt; changes in general economic conditions
which could affect customer payment practices or capital spending;
the impact of changes in general economic conditions on the
company�s customers; changes in demand for the company�s products;
significant changes in the competitive environment and the effect
of competition on the company�s markets, including on the company�s
pricing policies, financing sources and an appropriate level of
debt. Other factors include, but are not limited to, those detailed
in the company�s periodic filings with the Securities and Exchange
Commission.
�
Baldwin Technology Company,
Inc.
Condensed Consolidated Statements
of Operations
(Unaudited, in thousands, except
per share data)
�
Quarter ended March 31,
2009
�
2008
Net sales
$
36,087
$ 59,200 Cost of goods sold 25,816 40,709 Inventory reserve
adjustment �
4,250 � �
--- � Gross profit
6,021 18,491 Operating expenses 12,099 15,910 Restructuring 4,066
--- Impairment �
5,658 � �
--- �
Operating (loss) income (15,802 ) 2,581 Interest expense 438 846
Interest (income) (10 ) (25 ) Other expense (income), net �
311 � �
(17 ) (Loss) income
before income taxes (16,541 ) 1,777 Provision (benefit) for income
taxes �
(3,094 ) �
(219
) Net (loss) income �
(13,447
) �
1,996 � Net income (loss) per share �
basic
$ (0.88 )
$ 0.13 � Net income (loss) per share �
diluted
$ (0.88 )
$ 0.13 � Weighted average shares
outstanding � basic �
15,344 � �
15,496 �
Weighted average shares outstanding � diluted �
15,344
� �
15,671 � �
Nine Months ended March 31,
2009
2008
Net sales $ 138,283 $ 171,060 Cost of goods sold 96,304 117,355
Inventory reserve adjustment �
4,250 � �
--- � Gross profit 37,729 53,705 Operating expenses
39,996 45,540 Restructuring 4,747 960 Impairment �
5,658 � �
--- � Operating (loss) income
(12,672 ) 7,205 Interest expense 1,688 2,410 Interest (income) (28
) (162 ) Other expense (income), net �
(938
) �
28 � (Loss) income before income
taxes (13,394 ) 4,929 Provision for income taxes �
(1,620 ) �
1,630 � Net
(loss) income �
(11,774 ) �
3,299 � Net (loss) income per share � basic
$ (0.77 ) $
0.21 � Net (loss) income per share � diluted
$ (0.77 ) $
0.21 � Weighted average shares outstanding � basic �
15,319 � �
15,473 � Weighted average
shares outstanding � diluted �
15,319 � �
15,803 � � �
Baldwin Technology Company,
Inc.
Condensed Consolidated Balance
Sheets
(In thousands, unaudited)
� March 31, June 30, Assets
2009 2008
Cash and equivalents $ 14,748 $ 9,333 Trade receivables 30,883
49,565 Inventory 21,836 31,804 Prepaid expenses and other �
9,820 �
8,513 Total current assets 77,287
99,215 � Property, plant and equipment 5,024 6,159 Intangible
assets 31,678 39,700 Other assets �
14,032 �
14,584 Total assets �
128,021 �
159,658 � Liabilities Loans payable $ 4,042 $ 3,767
Current portion of long-term debt 23,984 3,472 Other current
liabilities �
43,003 �
60,884 Total
current liabilities 71,029 68,123 � Long-term debt -- 17,963 �
Other long-term liabilities �
11,755 �
11,959 � Total liabilities 82,784 98,045 �
Shareholders� equity �
45,237 �
61,613 �
Total liabilities and shareholders� equity
$
128,021 $ 159,658 � �
Baldwin Technology Company,
Inc.
Condensed Consolidated Statements
of Cash Flows
(In thousands, unaudited)
�
�
For the nine months ended March 31,
2009
�
2008
Net cash provided by operating activities $ 2,764 $ (2,912 ) � Net
cash (used for) investing activities (1,721 ) (2,992 ) � Net cash
(used) provided by financing activities 4,964 (3,931 ) � Effects of
exchange rate changes �
(592 ) �
1,146 � Net (decrease) increase in cash and cash
equivalents 5,415 (8,689 ) Cash and cash equivalents at beginning
of period �
9,333 � �
16,034 � Cash and
cash equivalents at end of period �
14,748 � �
7,345 � �
In addition to reporting financial results in accordance with
accounting principles generally accepted in the United States
(�GAAP�), the company is providing operating results adjusted for
certain items including asset impairment, write-down of inventory
and accounts receivable, and restructuring charges. These non-GAAP
measures are provided to enhance the user�s overall understanding
of the company�s current financial performance. Specifically, the
company believes the non-GAAP results provide useful information to
both management and investors by excluding certain items that may
not be indicative of the company�s core operating results. These
measures should be considered in addition to results prepared in
accordance with GAAP, but are not a substitute for or superior to
GAAP results.
� � �
Pro-forma (non-GAAP) Statements of
Operations
(Unaudited, in thousands, except
per share data)
�
Quarter ended March 31, 2009
As Reported Adjustments As
Adjusted Net sales
$
36,087
-- $ 36,087 Cost of goods sold 25,816 -- 25,816 Inventory reserve
adjustment �
4,250 � �
4,250 � �
-- � Gross profit 6,021 (4,250 ) 10,271 Operating
expenses 12,099
465
(1)
11,634 Restructuring 4,066 4,066 -- Impairment �
5,658
� �
5,658 � �
-- � 21,823 10,189 11,634
Operating (loss) income �
(15,802 ) �
(14,439 ) �
(1,363 ) Other
(income) expense, net �
739 � �
-- � �
739 � Loss before income taxes (16,541 ) (14,439 )
(2,102 ) Provision (benefit) for income taxes �
(3,094
) �
(2,482
)(2)
�
(612 ) Net loss �
(13,447
) �
(11,957 ) �
(1,490 ) � Net loss per share: Basic and
Diluted $ (0.88 ) $ (0.78 ) $ (0.10 ) Weighted average shares
outstanding: Basic and Diluted 15,344 15,344 15,344 �
Quarter ended March 31, 2008
As Reported Adjustments As
Adjusted Net sales $ 59,200 -- $ 59,200 Cost of goods sold �
40,709 � �
-- � �
40,709 �
Gross profit 18,491 -- 18,491 Operating expenses 15,910 -- 15,910
Restructuring �
-- � �
-- � �
-- � 15,910 -- 15,910 Operating income �
2,581 � �
-- � �
2,581 �
Other (income) expense, net �
804 � �
--
� �
804 � Income before income taxes 1,777 -- 1,777
Provision (benefit) for income taxes �
(219
) �
-- � �
(219
) Net income �
1,966 � �
--
� �
1,966 � � Net income per share: Basic and Diluted
$ 0.13 $ -- $ 0.13 Weighted average shares outstanding: Basic
15,496 15,496 15,496 Diluted 15,671 15,671 15,671 �
(1) represents write-off of account receivable from a customer
who filed for bankruptcy protection.
(2) adjustment to tax provision reflects no benefit on
impairment of goodwill as it is not deductible for tax
purposes.
� � �
Nine months ended March 31,
2009
As Reported Adjustments As
Adjusted Net sales $ 138,283
--
$ 138,283 Cost of goods sold 96,304 -- 96,304 Inventory reserve
adjustment �
4,250 � �
4,250 � �
-- Gross profit 37,729 (4,250 ) 41,979 Operating
expenses 39,996
465
(1)
39,531 Restructuring 4,747 4,747 -- Impairment �
5,658
� �
5,658 � �
-- �
50,401 �
�
10,870 � �
39,531 Operating (loss)
income �
(12,672 ) �
(15,120 ) �
2,448 Other (income) expense, net �
722 �
�
-- � �
722 (Loss) income before income
taxes (13,394 ) (15,120 ) 1,726 Provision (benefit) for income
taxes �
(1,620 ) �
(2,738
)(2)
�
1,118 Net (loss) income �
(11,774 ) �
(12,382 ) �
608 �
Net income (loss) per share: Basic
and Diluted
�
$
(0.77
)
$
(0.81
)
$
0.04
Weighted average shares outstanding: Basic and Diluted 15,319
15,319 15,319 � �
Nine months ended March 31,
2008
As Reported Adjustments As
Adjusted Net sales $ 171,060 -- $ 171,060 Cost of goods sold
�
117,355 � �
-- � �
117,355
Gross profit 53,705 -- 53,705 Operating expenses 45,540 -- 45,540
Restructuring �
960 � �
960 � �
-- 46,500 960 45,540 Operating income 7,205 (960 )
8,165 Other (income) expense, net �
2,276 � �
-- � �
2,276 Income before income taxes
4,929 (960 ) 5,889 Provision (benefit) for income taxes �
1,630 � �
(276 ) �
1,906 Net
income �
3,299 � �
(684 ) �
3,983 � Net income per share � Basic and Diluted $
0.21 $ (0.04 ) $ 0.25 Weighted average shares outstanding: Basic
15,473 15,473 15,473 Diluted 15,803 15,803 15,803 �
(1) represents write-off of account receivable from a customer
who filed for bankruptcy protection.
(2) adjustment to tax provision reflects no benefit on
impairment of goodwill as it is not deductible for tax
purposes.
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