Baldwin (BLD) Announces Second Quarter FY2011 Results

SHELTON, Conn.–(BUSINESS WIRE)– 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 fiscal second quarter ended December 31, 2010.

Highlights

• Orders increased 28% year-over-year, including acquired UV products
• Sales up 8.9% year-over-year
• Margins increased quarter-over-quarter
• Mark T. Becker elected President & CEO effective October 1, 2010

Second Quarter Fiscal 2011 Financial Results

The Company reported net sales of $42.2 million for the second quarter, an 8.9% increase over net sales of $38.8 million for the second quarter of the prior fiscal year. Currency translation had virtually no impact on sales for the quarter. Sales from the entities acquired on June 30, 2010 contributed $4.1 million.

Net loss for the second quarter was $0.6 million or $0.04 per diluted share, compared to net loss of $0.4 million or $0.03 per diluted share for the comparable quarter in the prior year. Net loss after adjusting for the net of tax effect of restructuring expenses in the current quarter was $0.3 million, or $0.02 per diluted share.

EBITDA after adjustment for restructuring costs recorded during the quarter was $0.7 million, essentially equal to the EBITDA for the same quarter of the prior year. Cash flow from operations in the quarter was $1 million compared to $10.8 million in the second quarter of the prior year. Cash flow in the prior year quarter included $9.6 million proceeds from settlement of a patent infringement lawsuit.

Orders for the quarter were approximately $44.0 million, compared to $34.3 million for the second quarter of the prior year and $40 million for the prior quarter, an increase of 28% over the same quarter in the prior year and 10% over the prior quarter. Backlog at December 31, 2010 was $33.6 million compared to $31.8 million at September 30, 2010 and $29.9 million at June 30, 2010. Acquired entities contributed $5.4 million of orders for the quarter and comprised $4.2 million of the backlog at December 31, 2010.

Please refer to the attached schedule, “Non-GAAP Statements of Operations,” for a reconciliation of GAAP results to adjusted results.

Recent Press Releases

• Baldwin in Compliance with NYSE Amex Listing Standards (December 14, 2010)
• Baldwin Secures Over $4 million of New Orders in U.S. (December 8, 2010)
• Baldwin Elects Paul J. Griswold as a Director (November 17, 2010)

Additional details, copies of these releases and other news are available at www.baldwintech.com.

Comments

President and CEO Mark T. Becker said, “Our order trends for both core and new UV products continue to improve. Year to date, orders exceeded those received during the comparable six-month period last year by 23%. Sales also improved during the first half of fiscal 2011 driven by strength in the Americas in equipment and the acquired UV products, which helped offset weakness in other parts of the world. Year to date sales in the core business has not yet recovered to prior year levels due to timing delays between when orders are received and when they are recorded as sales. The recent increased order activity is expected to have a favorable impact on our fiscal fourth quarter and fiscal 2012 sales.

“We have just completed a functional reorganization of the Company which will enable a consolidation of facilities and adjustment of headcount consistent with the current revenue level. We will be presenting a restructuring plan to the Board of Directors next week for implementation during the third quarter. The restructuring undertaken in the second quarter was a small first step in that larger overall plan. The resulting leaner organization will reposition the Company for profitability and improved cash flow and will also position us to refinance our credit facilities prior to the end of their terms,” Becker concluded.

Vice President and CFO John P. Jordan added, “Our ongoing margin initiatives (global sourcing, manufacturing in lower cost countries and standardization of components and controls), combined with increased sales over the prior quarter and the influence of the higher-margin UV business, helped increase margins from 28.1% in the prior quarter to 29.5% in the current quarter. We anticipate that these initiatives will continue to contribute to margin growth.

“Aggressive execution of our inventory reduction initiatives eliminated $1.3 million of inventory (net of foreign exchange impact) during the current quarter. Our new global organization structure and ongoing focus on working capital management are expected to contribute to cash flow in future quarters.

“The debt due under the existing Bank of America credit agreement has been classified as current due to its maturity within one year. The Company met its credit agreement covenant targets during the second quarter, and we anticipate a continuing ability to comply with the covenants and to refinance the Company’s credit facilities during 2011. Our internal cash-generating capability is expected to provide adequate liquidity to carry out our operating and restructuring plans,” Jordan concluded.

Non-GAAP Financial Measures

This release contains 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.

Conference Call and Webcast

The Company will host a conference call to discuss the financial results and business outlook today at 11:00 AM Eastern Time. Call in information is below:

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=163363.

Leading the call will be Baldwin President and CEO Mark T. Becker and Vice President and CFO John P. Jordan.

About Baldwin

Baldwin Technology Company, Inc. is a leading international supplier of process automation equipment and related consumables for the printing, publishing and packaging industries. Baldwin offers its customers a broad range of market-leading technologies, products and systems that enhance the quality of printed products and improve the economic and environmental efficiency of the printing process. Headquartered in Shelton, Connecticut, the Company has operations strategically located in the major print media markets and distributes its products via a global sales and service infrastructure. Baldwin’s technology and products include cleaning systems, fluid management and ink control systems, web press protection systems and drying and curing systems and related consumables. For more information, visit http://www.baldwintech.com.

A profile for investors is available at www.hawkassociates.com/profile/bld.cfm. An online investor kit including press releases, current price quotes, stock charts and other valuable information for investors is available at http://www.hawkassociates.com. To receive free e-mail notification of future releases for Baldwin, sign up at www.hawkassociates.com/about/alert/.

Cautionary Statement

Certain statements contained in this News Release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding expected revenue, gross margins, operating income (loss), EBITDA, asset impairments, expectations concerning the reductions of costs, the level of customer demand and the ability of the Company to achieve its stated objectives. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward- looking statements. Such factors include, but are not limited to: the severity and length of the current economic downturn, the impact of the economic downturn on the availability of credit for the Company’s customers, the ability of the Company to maintain ongoing compliance with the terms of its amended credit agreement, market acceptance of and demand for the Company’s products and resulting revenue, the ability of the Company to successfully expand into new territories, the ability of the Company to meet its stated financial and operational objectives, the Company’s dependence on its partners (both manufacturing and distribution), and other risks and uncertainties detailed in the Company’s periodic filings with the Securities and Exchange Commission. The words “looking forward,” “looking ahead, ” “believe(s),” “should,” “may,” “expect(s),” “anticipate(s),” “project(s),” ” likely,” “opportunity,” and similar expressions, among others, identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. The Company undertakes no obligation to update any forward-looking statements contained in this news release.

⁽¹⁾ Restructuring, Cost of good sold, Gross profit, Operating expenses, Legal Settlement, Operating (loss) income, Income (loss) before income taxes, Provision for income taxes, Net income (loss) and Net income (loss) per share, as adjusted, as well as EBITDA (earnings before interest, taxes, depreciation and amortization) and Net Debt are not measures of performance under accounting principles generally accepted in the United States of America (“GAAP”) and should not be considered alternatives for, or in isolation from, the financial information prepared and presented in accordance with GAAP. Baldwin’s management believes that EBITDA and Net Debt and the other non-GAAP measures listed above provide meaningful supplemental information regarding Baldwin’s current financial performance and prospects for the future. Baldwin believes that both management and investors benefit from referring to these non-GAAP measures in assessing the performance of Baldwin’s ongoing operations and liquidity, and when planning and forecasting future periods. These non-GAAP measures also facilitate management’s internal comparisons to Baldwin’s historical operating results and liquidity. Our presentations of these measures, however, may not be comparable to similarly titled measures used by other companies.

Baldwin Technology Company, Inc.
Helen Oster, 203-402-1004
hposter@baldwintech.com