June 2008 Interview with: Baldwin Technology Company, Inc. (BLD-AMEX), President and CEO, Karl S. Puehringer - featuring: their process automation technology for the printing and publishing industry.
|Baldwin Technology Company, Inc. (BLD-AMEX)|
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For The Last 90 Years, Baldwin Technology
Has Been Focused On The Offset Printing Press Technology, Applying Products
And services that improve and automate the printing process
Baldwin Technology Company, Inc. is a leading
global supplier of process automation technology for the printing and
publishing industry. 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
printing presses. Headquartered in Shelton, Connecticut, the Company has
sales and service centers, product development and manufacturing operations
in the Americas, Asia and Europe. Baldwin’s technology and products include
cleaning systems, fluid management and ink control systems, web press
protection systems and drying systems. With a widely recognized reputation
for advanced pressroom technology, Baldwin has more than 100 patents as well
as several GATF Intertech awards and Fogra certifications.
Mr. Puehringer: “I joined Baldwin almost seven years ago in November 2001. A lot of things have changed during that period. First of all, we improved our operational efficiency. We reduced the number of our manufacturing facilities globally. For example, here in the United States, we had three different locations where we manufactured our products. Now we have consolidated them all at one location close to Kansas City.
We have also outsourced some of the added value within our group. For example, we outsourced the sheet-metal manufacturing and outsourced machined parts. Baldwin also opened two facilities in emerging countries, one in India and one in China. Additionally we implemented strategic sourcing capabilities on a global basis. Overall, our manufacturing footprint and the supply chain reaching the Baldwin group, has significantly changed.”
CEOCFO: Tell us about your main products; who is using them and the industry that you participate in?
Mr. Puehringer: “We are focused 100% on the global printing industry, an industry that generates approximately revenues of $610 billion annually. Baldwin focuses on offset printing press technology, which is the largest segment within this industry. We develop and supply products and services that improve and automate the printing process. That is really what Baldwin has been focusing on for the last 90 years. A printing press consists of many rotating cylinders which need to be cleaned periodically. In the past, that cleaning was performed manually by the press operator; now with our equipment, we have automated the cleaning process. Approximately 50% of our customer base is comprised of the OEM press manufacturers. They develop and manufacture the printing presses. Approximately 60% of the presses in the world come from Germany, and the second largest supply of presses comes from Japan. Both the German and the Japanese press manufacturers are our customers, which is why we established a subsidiary in Japan 40 years ago and a subsidiary in Germany 37 years ago. Because of this, we are considered a local partner for our customers in those countries.”
CEOCFO: Tell us about competitive landscape?
Mr. Puehringer: “Baldwin is a leading supplier in the segment of process automation. This segment, as we define it, is approximately $1.2 billion US on the global basis and with our revenues in the vicinity of $230 million, we command almost a 20% market share. Most of our competitors are smaller local and/or one product line focused specialized suppliers, serving local market needs. There is also competition for print that comes mainly from alternative media such as the Internet and TV. Based on the dynamics we recently have observed, we expect further consolidation among suppliers and Baldwin wants to participate in and will play an active role in that consolidation.”
CEOCFO: Have you done many acquisitions to date?
Mr. Puehringer: “Yes, we did two important acquisitions during the last two years. We bought one competitor called Oxy Dry Corporation. They supplied an alternative technology to the cleaning process on printing presses and we acquired them in November 2006. In April 2007 we acquired Hildebrand Systeme. They developed a technology to clean the paper web before it enters the printing press. That technology keeps the press and the press room cleaner as it removes paper lint from the surface before it gets into the air. Baldwin and Hildebrand had successfully introduced this new technology through an exclusive alliance we signed in 2005. That successful partnership resulted in the acquisition in 2007.”
CEOCFO: Do you develop much technology and is there much change in the industry?
Mr. Puehringer: “There is a fair amount of new technology being introduced. First of all, there is a lot of application engineering involved. Printing presses are getting wider and faster and they are using different type of inks and different types of chemicals in the printing process. Those dynamics require continuous application engineering and adaptation of our own technology. The faster a printing press is running, the more demands there are on the cleaning process and we need to adjust and engineer our products to always offer the appropriate application and service. That’s one dynamic.
Secondly, we constantly develop related consumables to address the increasing demand for low volatile organic compound (VOC) cleaning applications and to adjust for newly introduced inks and chemicals in the process. Baldwin is a technology leader in this field.”
CEOCFO: What’s the financial picture like for Baldwin?
Mr. Puehringer: “Baldwin is a financially solid company. Despite a recent slowdown in the market for printing equipment over the last couple of months, we have been able to further grow our market position. We just recently announced our 3rd Quarter earnings for Fiscal 2008 (our fiscal year ends in June). We have been able to grow our top line organically by three percent even before the positive impact of our recent acquisitions. We have also reported solid earnings. We are proud of what we have been able to achieve over the last couple of years.”
CEOCFO: You also just did a stock re-purchasing?
Mr. Puehringer: “Yes. We have been in the market. We evaluate that from time to time and if we find it appropriate then the company engages in repurchasing shares of its stock. In fact, Baldwin re-purchased some stock last quarter. “
CEOCFO: Have you been affected by the weak US dollar or the changing of some of the currencies?
Mr. Puehringer: ”Our customers are especially affected by this. There is a fair degree of competition between German press manufacturers and the Japanese press manufacturers. Because of the strength of the Euro compared to the Dollar and the dynamics between the Yen and the Euro, the Japanese press manufacturers have gained competitive advantage and are picking up market share. That creates a dynamic in the market among our customers, which also impacts Baldwin. Secondly, with the help of our US-based manufacturing facility, we are now taking advantage of the weaker US dollar by sourcing one of our product lines for Europe from the US. In that respect we are able to take advantage of changes in the currency relations between the Dollar, Euro and the Yen. Those are really the three main currencies we are looking at.”
CEOCFO: What’s ahead for Baldwin?
Mr. Puehringer: “We stay focused on our core competence and our mission, which is to provide value to our customers in the printing industry, both to the OEM press manufacturers as well as to printers and publishers. We provide value by further increasing the productivity of print, the quality of print and reducing the environmental impact of print. Our products are very much geared to do exactly that. With the support from our cleaning technology, printers can significantly reduce the waste of print. That means they need less paper, they waste less ink, they need less chemicals in order to produce a finished good. That is very much in line with the expectations to make print greener than what it is today. We also have related consumables as it relates to the cleaning process. Those related consumables have a very low VOC content. That’s another important component for Baldwin’s future. The third component relates to the dynamics in the print market on a global basis. We observe a continuing shift in the demand for printing equipment from the developed countries to the emerging countries. Increased literacy rates and needs from a growing middle-class in China, India, Brazil, and Russia, to name the biggest contributing countries, create new demands for print related goods and services. To benefit from those demands, we continue to promote our products and services in those regions. Additionally, printers in those countries don’t have the degree of automation of their installed base you normally see in developed regions. That creates opportunities for us to upgrade their installed base. That is exactly what a Baldwin can offer and what Baldwin is focused on.”
CEOCFO: “Sum it up for potential investors; why should they be interested and what might they miss that really needs to be understood?
“Baldwin is a truly global supplier in a very significant industry, being
the print industry. We are present in all major markets for print. We’ve
been in North America for 90 years, in Japan for 40 years and in Germany for
almost 40 years. That gives us leverage for current and future alliances and
it gives us leverage for technology that we have acquired and we might
acquire in the future. We are focusing on further leveraging our good brand
name, our good reputation and our global presence in those markets. Our
global presence also means that we have established interfaces with all
major OEM press manufacturers and with major printers and publishers
worldwide. Baldwin has successfully completed the integration of two recent
acquisitions, and we are constantly evaluating new opportunities. Despite a
recent weakness in the press manufacturing market, we have made progress
over the last one and a half years and we will focus on continuing to
leverage those strengths going forward.”
“Our global presence also means that we have established interfaces with all major OEM press manufacturers and with major printers and publishers worldwide.” - Karl S. Puehringer
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