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 first quarter ended September 30, 2011.
First Quarter Fiscal Year 2012 Financial Results
The Company reported first quarter net sales of $35.9 million from continuing operations, a decrease of $4.1 million, or 10%, from net sales of $40.0 million for the first quarter of the prior year. Currency translation had a $2.3 million favorable impact on sales in the quarter. Sales were negatively impacted by temporary delays in production and timing of certain deliveries.
Orders in the fiscal first quarter were approximately $36.8 million, a decrease of 5% compared to orders in the first quarter of fiscal year 2011. Currency translation had a $1.3 million favorable impact on orders in the quarter. Backlog as of September 30, 2011 was $36.2 million compared to $31.9 million a year earlier, an increase of 14%.
Gross margin in the first quarter of fiscal year 2012 decreased to 24.8% compared to 30.9% in the prior year primarily due to a realignment of certain global engineering and product management costs of approximately $1.3 million. Excluding the impact of the realignment of these costs, gross margin in the first quarter of fiscal year 2012 was 28.5%. Effective July 1, 2011, as a result of organizational changes that more closely align certain engineering functions with specific products and production, the Company started recording the related engineering and product management costs as cost of goods sold, whereas in prior periods these costs were properly recorded as operating expenses. Additionally, margins for the 2012 first fiscal quarter were negatively impacted by lower volume on fixed overhead. The negative impact on gross margin from the cost realignment and lower volume was partially offset by cost savings from the restructuring actions completed in the fiscal year 2011.
Operating expenses, as a percentage of sales was 29.1% in the first quarter of fiscal 2012 compared to 32.7% in the prior year quarter. Currency translation had a $0.5 million unfavorable impact. Operating expenses after adjusting for non-routine expenses as shown in the attached schedule, and the impact of the realignment of certain engineering and product management costs, was 32.8% of net sales in the first quarter of fiscal year 2012 compared to 30.1% in the same period of the prior year.
Net loss from continuing operations for the first quarter of fiscal year 2012 was $2.7 million or $0.17 per diluted share, compared to $1.0 million or $0.06 per diluted share for the comparable quarter in the prior year.
Adjusted EBITDA, which excludes non-routine expenses, as shown in the attached schedule, was a loss of $0.9 million for the fiscal first quarter of 2012 compared to EBITDA of $1.0 million for the same quarter of 2011.
Cash used in operations in the first quarter of fiscal year 2012 was $1.9 million compared to $4.0 million in the first quarter of the prior year. The Company had $1.1 million in cash restructuring payments in the first quarter of fiscal year 2012 compared to $0.2 million in the same quarter of 2011.
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
As previously reported, on October 13, 2011, the Company entered into an amendment to its credit agreement which extended the term of the loan to July 2, 2012 and established new covenant targets for the remainder of the term of the agreement. The Company is in full compliance with the credit agreement covenants, as amended.
President and CEO Mark T. Becker said, “Lower sales levels in our fiscal first quarter compared to the same quarter last year reflect both timing issues of orders received (which will now be recognized in the second quarter) and general economic weakness experienced in Japan as earthquake recovery continues, and in the U.S. and Europe during recent national budget and political turmoil. While our backlog of $36 million is up 14% from prior year and we expect positive revenue trends, we remain cautious as we watch customer economic confidence which drives the timing of their major capital project orders. Our focus remains on driving higher margin consumable sales and growing revenue from press retrofit projects.”
Vice President and CFO Ivan R. Habibe said, “We continue to be on track in the realization of our $5 million restructuring savings in fiscal year 2012 from programs announced and completed in 2011 with the related restructuring cash payments to be substantially completed by December 2011. The savings have been somewhat masked by the current volume shortfall but we are poised to show improvements in gross margins and lower operating costs.”
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.