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 fourth
quarter and fiscal year ended June 30, 2011.
Highlights
- Sales for the fourth quarter of fiscal
2011 up 38% to $43.2 million compared to the fourth quarter of the
prior year and up 19% compared to fiscal 2011 prior quarter
- Sales for the fiscal year up 16% to
$160.9 million compared to prior year
- Strong order flow continues with orders
up 29% in the fourth quarter of fiscal 2011 compared to the fourth
quarter of the prior year
- Announced restructuring plans
completed; $5.0 million in year-over-year cost savings expected in
fiscal 2012
Fourth Quarter and Fiscal Year 2011 Financial Results
The Company reported fourth quarter net sales of $43.2 million
from continuing operations, an increase of $11.8 million, or 38%,
from net sales of $31.4 million for the fourth quarter of the prior
year. The graphic arts UV curing business, acquired on June 30,
2010, accounted for $3.5 million of the increase and currency
translation had a $3.8 million favorable impact on sales in the
quarter.
Net sales from continuing operations for the fiscal year ended
June 30, 2011 were $160.9 compared to net sales of $138.6 million
for the year ended June 30, 2010, an increase of $22.3 million, or
16%. The acquired graphic arts UV curing business accounted for
$17.0 million of the increase and currency translation had a $4.5
million favorable impact on sales in the 2011 fiscal year.
Orders in the fiscal fourth quarter were approximately $42.0
million, an increase of 29% over orders in the fourth quarter of
fiscal year 2010. Orders for the year were $169.7 million, an
increase of 23% over prior year orders of $137.6 million. Backlog
as of June 30, 2011 was $36.6 million compared to $33.9 million a
year earlier.
The Company believes that the improved orders trend will
continue into fiscal year 2012 as both retrofit equipment sales
sold direct to commercial printers and broader distribution of its
consumables products are expected to increase. The Company also
anticipates that its advanced UV drying technology will afford it
additional opportunities for revenue growth in fiscal year 2012, as
evidenced by the announcement earlier this month of a first order
for $750 thousand to install UV dryers onto two newspaper presses
in Australia.
Gross margin decreased to 29.2% compared to 29.8% in the prior
year. Margins for the 2011 fiscal year were negatively impacted
primarily by a non-cash inventory write-down of $1.0 million in the
fiscal fourth quarter. Excluding the impact of the non-cash
write-down of inventory, gross margin was flat. The Company’s
ongoing margin initiatives, global sourcing, manufacturing in lower
cost countries and standardization of components and controls,
combined with higher margins from the UV curing business, helped
offset the negative impact from lower equipment sales outside of
the Americas in the first nine-months of fiscal year 2011. The
Company expects that these initiatives, coupled with the expected
increases in sales of both equipment and consumables in fiscal year
2012, will contribute to margin growth. Additionally, the Company
anticipates 2012 margin expansion of approximately $2 million as a
result of year-over-year cost savings from the restructuring
actions completed in 2011.
Operating expenses, as a percentage of sales, improved to 31.4%
compared to 32.6% in the prior year. Operating expenses, as a
percentage of sales, after adjusting for non-routine expenses, as
shown in the attached schedule, improved to 30.0% of net sales in
fiscal year 2011 compared to 31.5% in the prior year. The Company
anticipates that operating expenses, as a percentage of sales, will
continue to improve as it leverages higher volume on fixed costs.
The Company anticipates approximately $3 million of additional
year-over-year cost savings in operating expenses in its fiscal
year 2012 from the restructuring actions completed in 2011.
The Company recorded a valuation allowance of approximately $8.0
million in the fiscal fourth quarter against deferred tax assets in
Germany, Japan and the U.S. of $1.0 million, $4.5 million and $2.5
million, respectively. The valuation allowance was recorded based
on the Company’s assessment of the likelihood that some portion of
the deferred tax assets will not be realized.
Net income (loss) from continuing operations for the fourth
quarter was $(8.7) million or $(0.55) per diluted share, compared
to net income from continuing operations of $0.3 million or $0.02
per diluted share for the comparable quarter in the prior year.
Results for the prior fiscal year fourth quarter included a bargain
purchase gain of $3.0 million related to the acquisition of the
graphic arts UV curing business.
Net income (loss) from continuing operations for fiscal year
2011 was $(12.1) million or $(0.78) per diluted share compared to
net income from continuing operations of $3.5 million or $0.23 per
diluted share for the prior year. Results for the prior fiscal year
included a gain of $9.3 million in connection with a legal
settlement and a bargain purchase gain of $3.0 million related to
the acquisition of the graphic arts UV curing business.
Adjusted EBITDA, which excludes non-routine expenses, as shown
in the attached schedule, was a loss of $0.3 million for the fiscal
fourth quarter of 2011 compared to a loss of $1.3 million for the
same quarter of 2010. Adjusted EBITDA for fiscal year 2011 was $1.6
million compared to a loss of $0.3 million for the prior year.
Please refer to the schedule following the reported GAAP results
which shows a reconciliation of GAAP results to non-GAAP adjusted
results, and the notes below explaining management’s reasons for
providing certain non-GAAP financial measures.
Credit Facility Amendment
The Company is in the process of refinancing its global debt
facility and anticipates concluding a refinancing prior to
expiration of its current credit agreement in November 2011.
Recent Press Releases
- Baldwin Secures First Newspaper UV
Dryer Order Creating New Growth Opportunities
Additional details, copies of this release and other news are
available on the Company’s web site at www.baldwintech.com.
Comments
President and CEO Mark T. Becker said, “As expected, we see
strong order flow achieved over the past few quarters now
translating to solid revenue growth. The increase in sales in the
quarter came primarily from the equipment side of the business,
which saw a 40% increase compared to the prior quarter. We are
optimistic that Baldwin equipment sales to OEMs are growing due to
pent up global market demand for new presses, and sales of retrofit
equipment direct to printers are increasing as customers realize
strong ROI potential for strategic investments across their
presses. Additionally, our consumables products had another solid
quarter. We believe that we have significant upside opportunities
in consumables as we focus on expanding this product line.”
Becker added, “The restructuring actions taken during fiscal
year 2011, as part of our strategic plan to better leverage our
global platform and optimize our performance, were substantially
completed during the fourth quarter. We expect year-over-year
savings of approximately $5.0 million from these restructuring
initiatives to carry into fiscal year 2012.”
“When I took over as CEO in October, in addition to driving
revenue growth, we implemented wide-sweeping organizational and
operational changes to position the Company to return to
sustainable profitability. I also recognized that these changes
would be costly in the short term. Following a strategic plan to
drive value creation, the Company initiated numerous changes
including improvements in our global organization structure, supply
chain, how we go to market, and broader development of our core
equipment technologies that have applications outside of
traditional print markets to drive diversification of our sales
base. In addition, we further right-sized our Company and completed
previously announced restructuring plans by consolidating
facilities, reducing headcount, selling our non-core,
non-contributing food business and rationalizing products, markets
and customers.”
“The transition has been challenging and unfortunately was
temporarily side-tracked by an accounting restatement caused by an
issue identified in our Japan subsidiary which occurred in fiscal
2010. However, we are excited about prospects for Fiscal 2012, our
return to profitability and increasing shareholder value going
forward," concluded Becker.
Vice President and CFO Ivan R. Habibe said, “The Company is on
path to refinance its global credit facility before maturity in
November 2011. During the last quarter we have engaged an
investment bank, Bryant Park Capital, to assist us in the
refinancing and are making good progress. We have had significant
interest from lenders and expect to continue to receive term
sheets, which we will be negotiating over the coming weeks.”
Habibe added, “As to the Company’s internal controls, we believe
that we have taken the necessary actions to remediate the material
weakness that existed at the end of fiscal year ended June 30, 2010
at our operations in Japan.”
Non-GAAP Financial Measures
This release provides GAAP and 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 its financial
results and business outlook today at 11 AM Eastern Time. Call in
information is below:
Conference Call Access:Domestic: (877)
272-4214International: (706) 679-9611Passcode: 13460
Rebroadcast Access:Domestic: (855)
859-2056International: (404) 537-3406
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=165563
Leading the call will be Baldwin President and CEO Mark T.
Becker and Vice President and CFO Ivan R. Habibe.
About Baldwin
Baldwin Technology Company, Inc. is a leading international
supplier of process automation equipment and related consumables
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. 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 related
consumables. For more information, visit
http://www.baldwintech.com
A profile for investors can be accessed 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 Company’s ability to
successfully refinance the amended Credit Agreement which matures
on November 21, 2011, the severity and length of the current
economic downturn, the impact of the economic downturn on the
availability of credit for the Company and 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 Balance
Sheets
(Unaudited, in thousands)
Assets
June
30,2011
June
30,2010(1)
Cash and equivalents $ 15,814 $ 15,710 Trade receivables 30,579
24,370 Inventory 20,629 20,237 Prepaid expenses and other 7,195
6,225 Assets of discontinued operations -- 981 Total
current assets 74,217 67,523 Property, plant and equipment 4,308
5,369 Intangible assets 30,653 29,460 Other assets 9,944 16,028
Assets of discontinued operations -- 2,475 Total
assets $ 119,122 $ 120,855 Liabilities Loans payable $ 4,965
$ 4,525 Current portion of long-term debt 16,571 389 Other current
liabilities 41,959 34,434 Liabilities of discontinued operations
-- 853 Total current liabilities 63,495 40,201
Long-term debt 2,677 16,066 Other long-term liabilities
10,259 13,990 Total liabilities 76,431 70,257
Shareholders’ equity 42,691 50,598 Total
liabilities and shareholders’ equity $ 119,122 $ 120,855
(1) Certain items from FY2010 have been reclassified to conform
to current year presentation. Baldwin Technology Company, Inc.
Baldwin Technology Company,
Inc.
Condensed Consolidated Statements of
Operations(Unaudited, in thousands, except per share
data)
Quarter endedJune
30, 2011
Quarter endedJune
30, 2010
Net sales $ 43,194 $ 31,404 Cost of goods sold 31,605
22,318 Gross profit 11,589 9,086
Operating expenses 13,406 11,443 Restructuring 244
540 Operating (loss)
(2,061 ) (2,897 ) Interest expense, net 442
432 Gain on bargain purchase -- 2,960 Other (income) expense, net
(85 ) 139 Loss from
continuing operations before income taxes (2,418 )
(508 ) Provision (benefit) for income taxes 6,248
(808 ) (Loss) income from continuing operations
(8,666 ) 300 Income (loss) from discontinued operations, net of tax
(541 ) (38 ) Net (loss) income $ (9,207 ) $ 262
Basic: (Loss) income per share from continuing operations $
(0.55 ) $ 0.02 (Loss) income per share from discontinued operations
$ (0.04 ) $ 0.00 Net (loss) income per share $ (0.59 ) $
0.02 Diluted: (Loss) income per share from continuing
operations $ (0.55 ) $ 0.02 (Loss) income per share from
discontinued operations $ (0.04 ) $ 0.00 Net (loss) income
per share $ (0.59 ) $ 0.02 Weighted average shares
outstanding – Basic 15,662 15,477
Weighted average shares outstanding – Diluted 15,662
15,524
Baldwin Technology Company,
Inc.
Condensed Consolidated Statements of
Operations
(Unaudited, in thousands, except per
share data)
Year endedJune 30,
2011
Year endedJune 30,
2010
Net sales $ 160,899 $ 138,599 Cost of goods sold 113,856
97,228 Gross profit 47,043
41,371 Operating expenses 50,466 45,150 Restructuring 2,966
540 Legal settlement gain, net -- 9,266
Operating (loss) income (6,389 ) 4,947
Interest expense, net 2,133 3,058 Gain on bargain purchase -- 2,960
Other expense (income), net 112 406 (Loss)
income from continuing operations before income taxes (8,634
) 4,443 Provision for income taxes 3,508
937 (Loss) income from continuing operations (12,142
) 3,506 (Loss) income from discontinued operations, net of tax
(2,463 ) 371 Net (loss) income $ (14,605 ) $ 3,877
Basic: (Loss) income per share from continuing operations $
(0.78 ) $ 0.23 (Loss) income per share from discontinued operations
$ (0.16 ) $ 0.02 Net (loss) income per share $ (0.94 ) $ 0.25
Diluted: (Loss) income per share from continuing operations
$ (0.78 ) $ 0.23 (Loss) income per share from discontinued
operations $ (0.16 ) $ 0.02 Net (loss) income per share $ (0.94 ) $
0.25 Weighted average shares outstanding – Basic
15,619 15,477 Weighted average shares outstanding –
Diluted 15,619 15,524
Baldwin Technology Company,
Inc.
Reconciliation of GAAP Results to
Adjusted non-GAAP Results
And other non-GAAP financial
measures
(Unaudited, in thousands)
EBITDA and
Adjusted EBITDA Calculation(1)
Quarter EndedJune
30, 2011
Quarter EndedJune
30, 2010
Net income (loss) from continuing operations (8,666 ) 300 Add back:
Provision (benefit) for income taxes 6,248 (808 ) Interest, net 442
432 Depreciation and amortization 786 633 EBITDA
(1,190 ) 557 Adjustments: Restructuring charges 244 540 Gain
on bargain purchase --- (2,960 ) Other non-routine items 597
(a) 583 (b) Adjusted EBITDA (349 ) (1,280 ) (a)
Adjustment primarily represents costs incurred in connection with
the Japan investigation (b) Adjustment represents acquisition
closing costs of $332 and bank amendment fees of $251
EBITDA and
Adjusted EBITDA Calculation(1)
Year Ended
June 30,
2011
Year Ended
June 30,
2010
Net income (loss) from continuing operations (12,142) 3,506 Add
back: Provision for income taxes 3,508 937 Interest, net 2,133
3,058 Depreciation and amortization 2,730 2,432 EBITDA (3,771)
9,933 Adjustments: Restructuring charges 2,966 540 Former CEO and
CFO termination charges 1,006 --- Inventory step up 243 --- Legal
settlement gain --- (9,266) Gain on bargain purchase --- (2,960)
Other non-routine items 1,190 (a) 1,494 (b) Adjusted EBITDA 1,634
(259) (a) Adjustment primarily represents costs incurred in
connection with the Japan investigation, certain consulting fees
and other non-routine charges (b) Adjustment represents non-routine
charges for special investigation costs of $911, acquisition
closing costs of $332 and bank amendment fees of $251
Net Debt
Calculation (1)
Jun 30,
2011
Jun 30,
2010
Loans payable $ 4,965 $ 4,525 Current portion of long-term debt
16,571 389 Long-term debt 2,677 16,066 Total Debt
24,213 20,890 Cash 15,814 15,710 Net debt $ 8,399 $
5,270
(1) 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,
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. Refer also to the section entitled “Non-GAAP
Financial Measures” above.
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