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
second quarter ended December 31, 2010.
Highlights
- Orders increased 28% year-over-year,
including acquired UV products
- Sales up 8.9% year-over-year
- Margins increased
quarter-over-quarter
- Mark T. Becker elected President &
CEO effective October 1, 2010
Second Quarter Fiscal 2011 Financial Results
The Company reported net sales of $42.2 million for the second
quarter, an 8.9% increase over net sales of $38.8 million for the
second quarter of the prior fiscal year. Currency translation had
virtually no impact on sales for the quarter. Sales from the
entities acquired on June 30, 2010 contributed $4.1 million.
Net loss for the second quarter was $0.6 million or $0.04 per
diluted share, compared to net loss of $0.4 million or $0.03 per
diluted share for the comparable quarter in the prior year. Net
loss after adjusting for the net of tax effect of restructuring
expenses in the current quarter was $0.3 million, or $0.02 per
diluted share.
EBITDA after adjustment for restructuring costs recorded during
the quarter was $0.7 million, essentially equal to the EBITDA for
the same quarter of the prior year. Cash flow from operations in
the quarter was $1 million compared to $10.8 million in the second
quarter of the prior year. Cash flow in the prior year quarter
included $9.6 million proceeds from settlement of a patent
infringement lawsuit.
Orders for the quarter were approximately $44.0 million,
compared to $34.3 million for the second quarter of the prior year
and $40 million for the prior quarter, an increase of 28% over the
same quarter in the prior year and 10% over the prior quarter.
Backlog at December 31, 2010 was $33.6 million compared to $31.8
million at September 30, 2010 and $29.9 million at June 30, 2010.
Acquired entities contributed $5.4 million of orders for the
quarter and comprised $4.2 million of the backlog at December 31,
2010.
Please refer to the attached schedule, “Non-GAAP Statements of
Operations,” for a reconciliation of GAAP results to adjusted
results.
Recent Press Releases
- Baldwin in Compliance with NYSE Amex
Listing Standards (December 14, 2010)
- Baldwin Secures Over $4 million of New
Orders in U.S. (December 8, 2010)
- Baldwin Elects Paul J. Griswold as a
Director (November 17, 2010)
Additional details, copies of these releases and other news are
available at www.baldwintech.com.
Comments
President and CEO Mark T. Becker said, “Our order trends for
both core and new UV products continue to improve. Year to date,
orders exceeded those received during the comparable six-month
period last year by 23%. Sales also improved during the first half
of fiscal 2011 driven by strength in the Americas in equipment and
the acquired UV products, which helped offset weakness in other
parts of the world. Year to date sales in the core business has not
yet recovered to prior year levels due to timing delays between
when orders are received and when they are recorded as sales. The
recent increased order activity is expected to have a favorable
impact on our fiscal fourth quarter and fiscal 2012 sales.
“We have just completed a functional reorganization of the
Company which will enable a consolidation of facilities and
adjustment of headcount consistent with the current revenue level.
We will be presenting a restructuring plan to the Board of
Directors next week for implementation during the third quarter.
The restructuring undertaken in the second quarter was a small
first step in that larger overall plan. The resulting leaner
organization will reposition the Company for profitability and
improved cash flow and will also position us to refinance our
credit facilities prior to the end of their terms,” Becker
concluded.
Vice President and CFO John P. Jordan added, “Our ongoing margin
initiatives (global sourcing, manufacturing in lower cost countries
and standardization of components and controls), combined with
increased sales over the prior quarter and the influence of the
higher-margin UV business, helped increase margins from 28.1% in
the prior quarter to 29.5% in the current quarter. We anticipate
that these initiatives will continue to contribute to margin
growth.
“Aggressive execution of our inventory reduction initiatives
eliminated $1.3 million of inventory (net of foreign exchange
impact) during the current quarter. Our new global organization
structure and ongoing focus on working capital management are
expected to contribute to cash flow in future quarters.
“The debt due under the existing Bank of America credit
agreement has been classified as current due to its maturity within
one year. The Company met its credit agreement covenant targets
during the second quarter, and we anticipate a continuing ability
to comply with the covenants and to refinance the Company’s credit
facilities during 2011. Our internal cash-generating capability is
expected to provide adequate liquidity to carry out our operating
and restructuring plans,” Jordan concluded.
Non-GAAP Financial Measures
This release contains non-GAAP financial measures. For purposes
of Regulation G, a non-GAAP financial measure is a numerical
measure of a company’s historical or future financial performance,
financial position or cash flows that excludes amounts, or is
subject to adjustments that have the effect of excluding amounts,
that are included in the most directly comparable measure
calculated and presented in accordance with GAAP in the statements
of income, balance sheets, or statements of cash flows of the
Company; or includes amounts, or is subject to adjustments that
have the effect of including amounts, that are excluded from the
most directly comparable measure so calculated and presented.
Pursuant to the requirements of Regulation G, the Company has
provided reconciliations of each of the non-GAAP financial measures
contained herein to the most directly comparable GAAP financial
measures. These non-GAAP measures are provided because management
of the Company uses these financials measures as an indicator of
business performance in maintaining and evaluating the Company’s
on-going financial results and trends. The Company believes that
both management and investors benefit from referring to these
non-GAAP measures in assessing the performance of the Company’s
ongoing operations and liquidity and when planning and forecasting
future periods. These non-GAAP measures also facilitate
management’s internal comparisons to the Company’s historical
operating results and liquidity.
Conference Call and Webcast
The Company will host a conference call to
discuss the financial results and business outlook today at 11:00
AM Eastern Time. Call in information is below:
Conference Call Access:
Domestic: 888-972-6405 International: 210-234-0045 Passcode:
Baldwin Q2
Rebroadcast Access:
Domestic: 866-420-4824 International: 203-369-0786
An archived webcast of the conference call will also be
available on the Company’s web site http://www.baldwintech.com or
http://www.investorcalendar.com/IC/CEPage.asp?ID=163363.
Leading the call will be Baldwin President and CEO Mark T.
Becker and Vice President and CFO John P. Jordan.
About Baldwin
Baldwin Technology Company, Inc. is a leading international
supplier of process automation equipment and related consumables
for the printing, publishing and packaging 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 the
printing process. Headquartered in Shelton, Connecticut, the
Company has operations strategically located in the major print
media 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 and curing systems and related
consumables. For more information, visit
http://www.baldwintech.com.
A profile for investors is available at
www.hawkassociates.com/profile/bld.cfm. 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. To receive free e-mail notification
of future releases for Baldwin, sign up at
www.hawkassociates.com/about/alert/.
Cautionary Statement
Certain statements contained in this News Release constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995, including statements
regarding expected revenue, gross margins, operating income (loss),
EBITDA, asset impairments, expectations concerning the reductions
of costs, the level of customer demand and the ability of the
Company to achieve its stated objectives. Such forward-looking
statements involve a number of known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially
different from any future results, performance or achievements
expressed or implied by such forward- looking statements. Such
factors include, but are not limited to: the severity and length of
the current economic downturn, the impact of the economic downturn
on the availability of credit for the Company's customers, the
ability of the Company to maintain ongoing compliance with the
terms of its amended credit agreement, market acceptance of and
demand for the Company's products and resulting revenue, the
ability of the Company to successfully expand into new territories,
the ability of the Company to meet its stated financial and
operational objectives, the Company's dependence on its partners
(both manufacturing and distribution), and other risks and
uncertainties detailed in the Company's periodic filings with the
Securities and Exchange Commission. The words "looking forward,"
"looking ahead, " "believe(s)," "should," "may," "expect(s),"
"anticipate(s)," "project(s)," " likely," "opportunity," and
similar expressions, among others, identify forward-looking
statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date
the statement was made. The Company undertakes no obligation to
update any forward-looking statements contained in this news
release.
Baldwin Technology Company, Inc.
Condensed Consolidated Statements of
Operations
(Unaudited, in thousands, except per share
data)
Quarter ended December 31,
2010
2009 Net sales $ 42,203 $ 38,751 Cost of goods
sold
29,764 27,093
Gross profit 12,439 11,658 Operating expenses 12,502 11,551
Restructuring
455 --
Operating (loss) income (518 ) 107 Interest expense, net 495
485 Other (income) expense, net
(24
) 26 Loss before income
taxes (989 ) (404 ) (Benefit) provision for income taxes
(371 ) 12 Net
loss
$ (618 ) $
(416 ) Net loss per share – basic and
diluted
$ (0.04 )
$ (0.03 ) Weighted average
shares outstanding – basic
15,604
15,461 Weighted average shares outstanding –
diluted
15,604
15,461 Six Months ended
December 31, 2010
2009 Net sales $ 80,654 $ 74,925 Cost of goods
sold
57,402 52,847
Gross profit 23,252 22,078 Operating expenses 25,708 23,581
Restructuring 647 -- Legal settlement (income), net of expenses
-- (9,266
) Operating (loss) income (3,103 ) 7,763 Interest
expense, net 1,035 2,200 Other income, net
148
202 (Loss) income before income
taxes (4,286 ) 5,361 (Benefit) provision for income taxes
(2,556 ) 1,879
Net (loss) income
$ (1,730 )
$ 3,482 Net income per share –
basic and diluted
$ (0.11 )
$ 0.23 Weighted average shares
outstanding – basic
15,586
15,421 Weighted average shares outstanding –
diluted
15,586
15,472
Condensed Consolidated Balance Sheets
(in thousands)
Dec. 31, 2010 June 30, 2010
Assets
(unaudited) (audited) Cash and
equivalents $ 15,554 $ 15,710 Trade receivables 31,636 28,668
Inventory 21,379 20,839 Prepaid expenses and other
5,903 6,261 Total current assets
74,472 71,478 Property, plant and equipment 5,649 6,095 Intangible
assets 31,954 31,201 Other assets
16,000
13,722 Total assets
$
128,075 $ 122,496
Liabilities Loans payable $ 6,156 $ 4,525 Current portion of
long-term debt 16,095 389 Other current liabilities
36,660 37,340 Total current
liabilities 58,911 42,254 Long-term debt 2,132 16,066 Other
long-term liabilities
12,070
12,427 Total liabilities
73,113
70,747 Shareholders’ equity
54,962 51,749 Total liabilities
and shareholders’ equity
$ 128,075
$ 122,496
Baldwin Technology Company, Inc.
Reconciliation of GAAP Results to Adjusted
Results
(Unaudited, in thousands, except per share
data)
Quarter ended
December 31, 2010 As Reported
Adjustments As Adjusted
Restructuring
$
455
$ (455
)(a)
$
--
(1)
Operating loss (518 ) 455 (63 )(1) Loss before income taxes (989 )
455 (534 )(1) Provision for income taxes (371 ) 152 (219 )(1)
Net loss
$ (618 )
$ 303 $ (315
)(1)
Net loss per share:
($0.04 ) $ 0.02
($0.02
)(1)
Basic and Diluted
(a) Adjustment represents restructuring
charges for the three month period.
EBITDA
Calculation (1)
As
Reported
Adjustments
As
Adjusted
Net (loss) income
$
(618
)
$ 303 $ (315 ) Add back: (Benefit) provision for income
taxes (371 ) 152 (219 ) Interest, net 495 -- 495 Depreciation and
amortization
786 --
786 EBITDA
$
292 $ 455
$ 747
Quarter ended
December 31, 2009
EBITDA
Calculation (1)
As
Reported
Net loss
$ (416
) Add back: Provision for income taxes
12
Interest, net
485
Depreciation and amortization
672
EBITDA
753
Six months ended
December 31, 2010
As
Reported
Adjustments
As
Adjusted
Cost of goods sold
$ 57,402 $ (243
)(a)
$
57,159
(1)
Gross profit 23,252 243
23,495
(1)
Operating expenses 25,708 (878 )(b)
24,830
(1)
Restructuring 647 (647 )(c)
--
(1)
Operating (loss) income (3,103 ) 1,768 (1,335 )(1) Interest
expense, net 1,035 (118 )(d)
917
(1)
(Loss) income before income taxes (4,286 ) 1,886 (2,400 )(1)
(Benefit) provision for income taxes (2,556 ) 646 (1,910 )(1)
Net loss
$ (1,730 )
$ 1,240 $ (490
)(1) Net loss per share: Basic and
Diluted ($0.11 )
$0.08
($0.03
)(1)
(a) Adjustment represents step up charge
associated with Nordson acquisition.
(b) Adjustment represents non-routine
termination costs for former CEO.
(c) Adjustment represents restructuring
charges for the six month period.
(d) Adjustment represents non-routine
charges for financing agreement changes.
EBITDA
Calculation (1)
As
Reported
Adjustments
As
Adjusted
Net loss
$
(1,730
)
$ 1,240 $ (490 ) Add back:
(Benefit) provision for income taxes
(2,556 ) 646 (1,910 ) Interest, net 1,035 (118 ) 917 Depreciation
and amortization
1,450
-- 1,450 EBITDA
$ (1,801 ) $
1,768 $ (33
)
Six months ended
December 31, 2009
As
Reported
Adjustments
As
Adjusted
Operating expenses
$
23,581
$
911
(e)
$
22,670
(1)
Legal settlement (income), net of expense (9,266 )
(9,266)
(f)
--
(1)
Operating income (loss) 7,763 8,355
(592)
(1)
Interest expense, net 2,200
1,183
(g)
1,017
(1)
Income (loss) before income taxes 5,361 7,172
(1,811)
(1)
Provision (benefit) for income taxes 1,879 1,883
(4)
(1)
Net income (loss)
$ 3,482
$ 5,289 $
(1,807)
(1)
Net income (loss) per share:
Basic and Diluted
$ 0.23 $ 0.34 $
(0.12)
(1)
(e) Adjustment represents non-routine
charges for special investigation costs.
(f) Adjustment represents non-routine
income associated with a legal settlement, net of expenses.
(g) Adjustment represents non-routine
charges for debt financing costs.
EBITDA
Calculation (1)
As
Reported
Adjustments
As
Adjusted
Net income (loss)
3,482
5,289 (1,807 ) Add back:
Provision for income taxes
1,879 1,883 (4 ) Interest, net 2,200 1,183 1,017 Depreciation and
amortization
1,331
1,331 EBITDA
8,892
8,355 537
Net Debt
Calculation (1)
Dec 31,
2010
Sept 30,
2010
June 30,
2010
Loans payable
$
6,156
$ 5,391 $ 4,525 Current portion of long-term debt 16,095 389 389
Long-term debt
2,132 17,877
16,066 Total Debt 24,383 23,657 20,980 Cash
15,554 13,891
15,710 Net debt
$ 8,829
$ 9,766 $ 5,270
(1) Restructuring, Cost of good sold, Gross profit, Operating
expenses, Legal Settlement, Operating (loss) income, Income (loss)
before income taxes, Provision for income taxes, Net income (loss)
and Net income (loss) per share, as adjusted, as well as EBITDA
(earnings before interest, taxes, depreciation and amortization)
and Net Debt are not measures of performance under accounting
principles generally accepted in the United States of America
("GAAP") and should not be considered alternatives for, or in
isolation from, the financial information prepared and presented in
accordance with GAAP. Baldwin’s management believes that EBITDA and
Net Debt and the other non-GAAP measures listed above provide
meaningful supplemental information regarding Baldwin’s current
financial performance and prospects for the future. Baldwin
believes that both management and investors benefit from referring
to these non-GAAP measures in assessing the performance of
Baldwin’s ongoing operations and liquidity, and when planning and
forecasting future periods. These non-GAAP measures also facilitate
management's internal comparisons to Baldwin’s historical operating
results and liquidity. Our presentations of these measures,
however, may not be comparable to similarly titled measures used by
other companies.
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