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 fiscal year and fourth quarter ended June 30, 2009.
Fourth quarter reported net income per share was $0.02
Fourth quarter sequential revenue improvement of 10%
Full year adjusted (non-GAAP) net income per share was $0.07 – reported loss of $0.74 per share
Total year cash flow from operations was $2.6 million
Restructuring and cost reduction actions eliminated annualized costs of over $24 million going forward
Backlog continues to strengthen into fiscal year 2010
Credit agreement amended through November 2011
Formed new alliances with Tolerans, Q.I. Press Controls and Betz
Fourth Quarter and Fiscal Year 2009 Financial Results
The Company reported fourth quarter net sales of $39.5 million, a decrease of $25.8 million, or 39% from net sales of $65.3 million for the fourth quarter of the prior year. Currency effects negatively impacted sales by $3.2 million, or 5%. Fourth quarter sales represented a 10% sequential increase over third quarter sales of $36.1 million.
Net sales for the fiscal year ended June 30, 2009 were $177.8 million compared to net sales of $236.3 million for the year ended June 30, 2008, a decrease of $58.5 million, or 25%. Currency effects accounted for $6.5 million of the decrease, or 3%.
Fourth quarter net income was $0.4 million or $0.02 per diluted share compared to net income of $3.1 million or $0.20 per diluted share for the comparable quarter in the prior year. Net income for the quarter ended June 30, 2008 included a release of deferred tax asset valuation allowance of $0.4 million, which favorably impacted the tax provision and net income by the same amounts.
Net loss for the fiscal year 2009 was $11.4 million or $0.74 per diluted share compared to $6.5 million net income or $0.41 per diluted share for the prior year. Current year results reflect charges of $15.1 million recorded during second and third quarters for restructuring ($4.7 million), goodwill impairments ($5.7 million), provision for additional inventory reserves ($4.2 million) and an additional reserve of accounts receivable ($0.5 million). Adjusted for those certain charges, the Company recorded net income of $1 million, or $0.07 per diluted share for the year.
Adjusted EBITDA, which the Company defines as earnings (loss) before interest, taxes, depreciation, amortization, restructuring and other nonrecurring expenses, as shown in the attached schedule, was $1.3 million for the FY 2009 fourth quarter, compared to $4.9 million in the same quarter 2008, and $6.9 million and $15.1 million for the full years 2009 and 2008, respectively.
Cash flow from operations was $2.6 million and $7.6 million in FY2009 and FY2008, respectively.
Orders for the fiscal fourth quarter were approximately $40 million, a decrease of 21% over orders of $50.4 million during the fourth quarter of fiscal year 2008. Orders for the year were $169.7 million, a 27% decrease from prior year orders of $231.9 million. Backlog as of June 30, 2009 was $40.1 million compared to $48.2 million a year earlier.
Please refer to the attached schedule, "Pro-forma non-GAAP Statements of Operations," for a reconciliation of GAAP results to adjusted results.
Update on Restructuring
The Company has completed the restructurings initiated during the second and third quarters with an expected annualized cost reduction of over $24 million.
Credit Facility Amendment
On July 31, 2009, Baldwin successfully concluded the amendment to its credit agreement with Bank of America as the lead bank. The amendment reduced the total revolving loan commitment from $35 to $25 million, established interest and fee margins and modified covenant targets and certain other provisions through November 21, 2011, the original termination date of the credit agreement. The new facility provides the liquidity required to execute the Company's operating plan.
At Print 2009 in September, Baldwin will introduce the new Protech PCS flexo plate cleaning system, FusionFLEX blanket cleaning and LithoSpray Cobra spray dampening systems. In addition, with its alliance partners Betz GmbH and Tolerans AB, Baldwin will showcase the ColorPump for UV inks and the S60 Speedliner ribbon and cylinder stitchers. New performance-optimizing PREPAC blanket cleaning consumables and Oxy-Dry anti-offset powders will also be released for the first time at Print 2009.
Recent Significant Announcements
Baldwin Secures $2.2M in Press Equipment Orders (June 8, 2009)
Baldwin Signs Agreement with Q.I. Press Controls for Exclusive Representation in Japan (July 16, 2009)
Baldwin Selected for Middle East Upgrade Project (July 30, 2009) (July 30, 2009)
Additional details, copies of these releases and other news can be found at www.baldwintech.com.
President and CEO Karl S. Puehringer said, "We have successfully navigated our way during one of the most difficult periods in our history. Our Company is financially healthy and cash flow positive. Although the financial results for the year and the fourth quarter represented year-over-year decreases in revenue and net income, we believe the sequential improvements from the third quarter to the fourth quarter are encouraging and reflect the benefits from the actions we took during 2009. In fact, we have seen an improvement in our order backlog to $44.6 million as of last week. .
"The global financial crisis has had a negative impact on the leading press manufacturers who suffered significant declines in new orders. Our global revenue decreased as a result of that impact on our major OEM customers, as well as our printer and publisher customers. However, our decisive action in anticipation of the global recession reduced our global work force by 18% and will eliminate sufficient costs to position us to be profitable and cash flow positive during the economic contraction. Our fourth quarter profitability is an indication that the actions taken during the second and third quarters were effective in addressing the operational challenges imposed by the severe global economic contraction. Although we recorded a net loss for the year, when adjusted for nonrecurring charges, we were able to generate a net profit of $1 million, or $0.07 per share.
"As the economy improves, we will be able to leverage our reduced cost structure for improved profitability. Notwithstanding the challenges of recent economic events, we continue expanding our alliance relationships and initiatives including our new agreements with Tolerans, a Swedish-based world leader of in-line stitching, Q.I. Press Controls, a Dutch-based world leader in automatic press control systems, and Betz, a German-based global leader for ink supply equipment. These additional products complement our existing range of products and strengthen our global position as a one-stop source for printing process automation. We are also taking advantage of the growth opportunities in emerging markets and food blends," Puehringer said.
Vice President and CFO John P. Jordan said, "As we faced declining revenues during the fiscal year, we focused on managing working capital, adjusting our costs to the reduced revenue structure and ensuring the viability of our credit facility. We successfully renegotiated our debt agreement with our banking partners, which reflects their confidence in our business model and in our ability to implement the Company's operating plan. The agreement provides us with adequate liquidity to carry out our plans and execute on our goals.
"Again, we were cash flow positive for the fiscal year, and we are encouraged by the sequential quarterly improvements in net income and order backlog. Close to 50% of our sales derive from the recurring revenue product lines of consumables, spare parts, service and food blends. The high proportion of these recurring revenues ensures us of a more uniform revenue stream," Jordan said.
Information Regarding Non-GAAP Measures
In addition to reporting financial results in accordance with accounting principles generally accepted in the United States ("GAAP"), the Company is providing operating results adjusted for certain items including asset impairment, write-downs of inventory and accounts receivable, and restructuring charges. These non-GAAP measures are provided to enhance the overall understanding of the Company's current financial performance. Specifically, the Company believes the non-GAAP results provide useful information to both management and investors by excluding certain items that may not be indicative of the Company's core operating results. These measures should be considered in addition to results prepared in accordance with GAAP, but are not a substitute for or superior to GAAP results.
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=148665.
Leading the call will be Baldwin President and CEO Karl S. Puehringer and Vice President and CFO John P. Jordan.
The company's financial statements are available at: http://www.hawkassociates.com
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