Baldwin Technology Company, Inc., a global leader in process automation technology for the printing industry, reported its financial results for the Company’s second quarter ended December 31, 2011.
Second Quarter Fiscal Year 2012 Financial Results
The Company reported second quarter net sales of $39.3 million from continuing operations, a decrease of $2.0 million, or 4.8%, from net sales from continuing operations of $41.3 million for the second quarter of the prior year. Currency translation had a $0.6 million favorable impact on sales in the current quarter.
Orders in the 2012 second fiscal quarter were approximately $37.6 million, a decrease of 11.9% compared to orders in the second quarter of fiscal year 2011. Currency translation had a $0.1 million favorable impact on orders in the quarter. Backlog as of December 31, 2011 was $34.6 million compared to $33.3 million a year earlier, an increase of 3.7%, and $36.2 million at September 30, 2011, a decrease of 4.6%.
Gross margin in the second quarter of fiscal year 2012 decreased to 25.9% compared to 30.6% in the prior year primarily due to a realignment of certain global engineering costs of approximately $1.4 million. Excluding the impact of the realignment of these costs, gross margin in the second quarter of fiscal year 2012 was 29.5%. Additionally, margins for the 2012 second 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 fiscal year 2011.
Operating expenses, including restructuring charges, as a percentage of sales, were 29.8% in the second quarter of fiscal 2012 compared to 30.7% in the prior year quarter. Currency translation had a $0.2 million unfavorable impact in the current quarter. Operating expenses after adjusting for non-routine expenses as shown in the attached schedule, and the impact of the realignment of certain engineering costs, were 29.1% of net sales in the second quarter of fiscal year 2012 compared to 29.6% in the same period of the prior year.
The Company recorded a valuation allowance of approximately $4.2 million in the second quarter of fiscal 2012 against deferred tax assets primarily in the U.S. The valuation allowance was recorded based on the Company’s ongoing assessment of the potential realization of its deferred tax assets.
Net loss from continuing operations for the second quarter of fiscal year 2012 was $7.9 million or $0.50 per diluted share, compared to net income of $0.4 million or $0.02 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 $0.6 million for the fiscal second quarter of 2012 compared to adjusted EBITDA of $1.2 million for the same quarter of 2011.
Cash used in operations in the second quarter of fiscal year 2012 was $0.4 million compared to a source of cash of $0.9 million in the second quarter of the prior year. The Company had $0.5 million in cash restructuring payments in the second quarter of fiscal year 2012 compared to $0.3 million in the same quarter of 2011.
The Company is undergoing an interim analysis of its goodwill carrying value. As of the date of this release, the Company has not yet completed its analysis; however, the Company has determined that there is likelihood that some or all of the goodwill in its reporting units may be impaired. The potential non-cash impairment loss, if any, will be between $0 and $19.3 million and will be recorded in the third quarter of 2012.