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Baldwin announces return to profitability in Q3

Friday, May 14, 2010

Press release from the issuing company

Shelton, Conn. – Baldwin Technology Company, Inc., a global leader in process automation technology for the printing industry, today reported financial results for its fiscal third quarter ended March 31, 2010.

Highlights

Financial
- Third quarter EBITDA of $1,271,000 and net income of $133,000
- Orders up 19% and sales up 9.5% compared to the third quarter of prior year
- Sequential (current quarter versus prior quarter) increase in orders of 6%

Sales & Marketing
- Received first combination order of cloth and brush cleaning systems in Belgium
- Secured additional retrofit orders in China for combination cloth and brush cleaning systems
- Won orders from OEMs and end users for Cobra Spray Dampening systems in China and India

Third Quarter Fiscal 2010 Financial Results
The Company reported net sales of $39.5 million for the third quarter, a 1.9% improvement over net sales of $38.8 million in the previous quarter, and an increase of $3.4 million or 9.5% over net sales of $36.1 million for the third quarter of the prior fiscal year. Currency effects increased sales by $2.3 million, or 6.3% from the same quarter of the prior year.

Net income for the third quarter was $0.1 million or $0.01 per diluted share, compared to a net loss of $13.4 million or $0.88 per diluted share for the comparable quarter of the prior year.

Cash flow from operations in the quarter was ($0.6) million compared to $2.7 million in the third quarter of the prior year.

Orders for the quarter were approximately $36.4 million, compared to $30.5 million in the third quarter of the prior year, an increase of 19%. Backlog as of March 31, 2010 was $30.2 million compared to $33.4 million at December 31, 2009.

Please refer to the schedule following the reported GAAP results which shows a reconciliation of these GAAP results to non-GAAP adjusted results, and the notes below explaining management's reasons for providing certain non-GAAP financial measures.

Introducing New Consumables
During the next few weeks, Baldwin will be introducing an innovative new line of consumables called CleanPac cleaning cloths, for use in either dry or pre-soaked versions for cleaning hands and various items in the pressroom, including blankets, cylinders and other parts of printing presses.

Trade Shows
In a continuation of the "Just Ask" marketing program, Baldwin will be presenting an extensive product portfolio that improves productivity and reduces process costs for the sheet-fed, commercial web, flexo corrugated packaging, newspaper and semi-commercial market sectors at IPEX 2010. This Birmingham U.K. exhibition occurs every four years and will be held this year from May 18 to 25 and draws attendees from around the globe. In March, the Company participated in the Printing South China Exhibition, and in June, Baldwin will be showing products at the Expoprint Latin America 2010 exhibition in Brazil.

Significant Announcements
Baldwin Secures Large Order for Newspaper Press Equipment (May 10, 2010)
Baldwin Wins Additional Retrofit Orders (May 11, 2010)
Baldwin Demonstrates Global Leadership in Process Improvement Technology Driving Press Room Savings at IPEX 2010 (March 10, 2010)

Comments
President and CEO Karl S. Puehringer said, "Our tight cost controls, as evidenced by continued operating expense reduction, helped return Baldwin to profitability this quarter. We also made solid progress in the execution of our strategy by focusing on opportunities on the installed base, leveraging our technology in emerging countries and further enhancing our business with press room consumables. We received several orders this quarter in China and India for the new Cobra Spray Dampening system, which was developed for production and sale to both OEMs and end users in those local markets. We also secured retrofit orders in China for combination brush and cloth cleaning systems. We are continuing the expansion of our European consumables sales network as we introduce new high performance Prepac cleaning consumables. Our parts and consumables business has grown and although a recovery in new web press shipments will take longer due to longer lead times, there are first signs of recovery in the sheet fed printing market."

"Going forward, we are focused on new uses for our technology. I am pleased about an increasing demand for our consumables, primarily driven through our environmentally friendly product offerings and an overall trend in the industry towards shorter runs that require more cleaning. As highlighted above, we are introducing a new consumable, the CleanPac cleaning cloths. We are also pursuing several global projects for supply chain management and standardization and global procurement to reduce material costs. As a market leader, Baldwin offers a complete spectrum of products, related consumables and services through a well established global network in all major markets for print," Puehringer concluded.

Vice President and CFO John P. Jordan said, "Cash flow from operations during the quarter was slightly less than break even, which was attributable to timing of customer deposits (decreased by $2.5 million). The controllable components of working capital, on the other hand, contributed $0.9 million to operating cash flow."

"Total debt at March 31, 2010 of $18.7 million is $1.3 million less than at December 31, 2009 and $9.2 million less than at 2009 fiscal year end, resulting primarily from the application of the patent infringement suit settlement proceeds received during the second quarter. The Company has met its EBITDA and liquidity covenants under the Credit Agreement Amendment completed July 31, 2009, but the currency-adjusted net sales for the three months ended April 30, 2010 were less than the amount required under the Agreement. The banks agreed to waive that breach."

"Operating expenses for the quarter of $11.0 million were $0.6 million lower than third quarter fiscal 2009 operating expenses of $11.6 million after adjusting for a nonrecurring charge in 2009. Excluding the unfavorable currency effect, operating expenses were $1.2 million or 10% lower than prior year adjusted operating expenses. The current year quarter results reflect the full benefit of restructuring and cost reductions that were started during the second and third quarters of fiscal year 2009. Year to date operating expenses were $7.1 million (18%) less than prior year, excluding the unfavorable currency effect and adjusted for a non-recurring charge."

"The Company is well positioned to leverage its lower cost structure to deliver higher margins from any additional business that should emanate from a recovery when the world's economies and demand for print equipment recover from the recent economic contraction. We will continue our diligence in managing costs to maintain profitable operations," Jordan concluded.

 

 

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