Baldwin Reports 20% Revenue Drop
Friday, February 13, 2009
Press release from the issuing companySHELTON, Conn.-- Baldwin Technology Company, Inc. a global leader in process automation technology for the printing industry, today reported net sales for the company’s second fiscal quarter ended Dec. 31, 2008 of $46.3 million, compared with $57.9 million in last year’s second quarter. Currency translation negatively impacted sales by $2.5 million for the quarter.
Company net income for the quarter rose to $0.5 million, or $0.03 per diluted share, an improvement over net income of $0.3 million or $0.02 per diluted share a year ago.
Net sales for the six months ended December 31, 2008 were $102.2 million, compared to $111.9 million in the comparable period last year. Currency translation increased sales by $0.6 million for the six-month period ended December 31, 2008.
Net income for the six months was $1.7 million, or $0.11 per diluted share, compared to $1.3 million, or $0.08 per diluted share in the prior year.
The order backlog at December 31, 2008 was $45.3 million, compared to a backlog of $48.2 million at the beginning of the fiscal year, and $52.3 million on September 30, 2008.
President and CEO Karl S. Puehringer said, “The global economic climate deteriorated significantly in the fourth quarter of calendar 2008. Early in the quarter, the major OEM press manufacturers reported considerable weakness in orders and sales, particularly for commercial presses. At that time, we quickly initiated reductions in our cost structure to counter the anticipated slowdown in sales to OEM manufacturers. Since the market for print has continued to deteriorate, we have stepped up our cost reduction initiatives and recorded an additional $3 million restructuring charge in January. The steps being implemented during the third fiscal quarter are aggressive and comprehensive, and the fourth quarter will reflect the full impact of the savings. As previously reported, the company expects to obtain an annualized benefit of approximately $12 million from all cost reduction initiatives.”
“Although we experienced a 20% drop in revenue in second quarter, 2009 versus second quarter, 2008, these measures position us to maintain a solid financial position in this challenging market environment and helped us produce a small increase in net income in the second quarter.”
“As we have discussed previously, our sales to OEMs are balanced with our sales to end user printers and publishers. As a result, although our results are impacted by the slowdown in OEM sales, demand for our line of consumables has been steady, sales of retrofits and upgrades of existing printing equipment have helped offset the weakness in sales in the original equipment space, and new strategic alliances are adding value to our core business. We have also realigned resources to benefit from emerging opportunities in food packaging as well as graphic arts pressroom consumables.”
“Our goals in this environment are clear. We will protect the fundamental financial health of our company through cost reductions and other steps, even as we strengthen our market position through alliances and consolidations to more efficiently utilize our facilities and assets. Ultimately, we believe that this will leave us in a stronger competitive and financial position, which should benefit our shareholders and employees.”
John Jordan, Vice President and CFO, noted, “As a result of our cost-cutting measures early in the quarter, our gross margin for the quarter improved slightly from the prior year to 31.1% from 31.0%. We also were able to decrease our operating expenses by $2.5 million compared to the second quarter of FY’08. However, this was not sufficient to offset a $3.6 million decline in gross profit due to lower sales, but income in the quarter was favorably impacted by a one-time foreign exchange gain of $0.8 million.”
“The company had a positive cash flow from operations of $2.1 million in the second quarter, compared to $6.1 million negative cash flow from operations for the second quarter of 2008. This reflects the actions we have taken to manage our working capital, decreasing trade receivables and inventory. While our long-term debt increased during the quarter we recorded a drop in current liabilities and an increase in our cash position. Our balance sheet remains strong.”
“As a result of the continued market volatility and the company’s decreased market capitalization, the company is undergoing an interim analysis of its $26.5 million goodwill carrying value as required by Statement of Financial Accounting Standards No. 142 Goodwill and Other Intangible Assets. Although the analysis is incomplete and the company is currently unable to determine whether there will be an impairment charge, the company may be required to record a non-cash goodwill impairment charge during third quarter 2009. The amount of that charge will be determined by, among other factors, the number of operating units on which goodwill is considered to be impaired.”
“Additionally, the restructuring charge to be recorded during the third quarter will cause the company’s trailing twelve month reported EBITDA to decrease to a level lower than the minimum level required by the company’s credit agreement with Bank of America as lead bank. As a result, the company has been conducting discussions with its banks to amend the credit agreement. The company fully expects to have a restructured credit agreement in place before the end of the third quarter.”
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