Baldwin Q4 Sales up 38%, Restructuring Plans Completed
Wednesday, August 24, 2011
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 its financial results for the Company's fourth quarter and fiscal year ended June 30, 2011.
- 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.
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