BaldwinSensor Company

Introduction

• Baldwin Sensor Company:– Founded in 2015– In the last five years has cumulative profits of over

$18,000,000 and stock price has more than doubled

– Market share has increased– Customer satisfaction has significantly risen– Turnover rate has fallen

Baldwin Backbone

• Company Vision Statement:– To serve our customers better than the

competition, and to preserve our integrity as we become a leader in the sensor industry.

Meet the Baldwin Executives

• Randy Gold, Chief Marketing Officer• Hannah Wagner, Chief Human Resource

Officer• Trav Foster, Chief Financial Officer

• Each executive will talk about their area of expertise, and then we will enter into a time of question and answer

Strategy: Overview

• Increase awareness and accessibility quickly• Specifically marketing each product• Higher automation levels reducing material

and labor cost• Lower prices on our products• TQM Investments• Adapting to mistakes made in year 1

Higher Automation

Traditional Low End

• Automation level of 7.5• Plans of extending to 8.5• Production cost of $13• Selling for $25• $12 profit on every item sold• 2,591,000 sold this year

• Automation level of 10• Production cost of $6.34• Selling for $16.75• $10 profit on every item sold• 3,569,000 sold this year

Higher Automation Versus Lower Automation

Traditional

Example Company: Eerie

• Automation level of 5• Production cost of $15.36• $2 more expensive than

our product

Low End• Automation level of 8• Production cost of $9.50• $3 more expensive than

our product

Adapting to Mistakes

• What happened exactly in year 1 R&D• Adapting from the early year 1 mistake in R&D• Catching up products from TQM investments• (R&D) Concurrent Engineering & Quality Function

Deployment Effort • Dominate early strategy helped cope with R&D error• Able to recover from a $45,000,000 emergency loan in year 4• Turnaround with a profit of $18,000,000 in year 5• The future of Baldwin is bright

Products

• Baker (Traditional)

• Bead (Low End)

• Bold (Performance)

• Buddy (Size)

Actual and Potential % of Total Market Share (2020)

Traditional Low Performance Size

Actual 22.6% 23.0% 27.3% 22.8%

Potential 20.9% 21.6% 29.3% 22.8%

Awareness/ Promotion

• Since the beginning, we have kept our promotional budget around roughly $1,700,000 for each product.

• The Sales budgets are roughly $2,750,000 for each product.

• Customer Awareness: > 83%• Customer Accessibility: > 82%

Marketing and Sales Plans

• Advertising specific to the target market for each product– For example, Baker and Bead customers respond better to Print

Media, Direct Mail, and some Trade Shows, while Buddy and Bold customers respond better to Web Media and Email

Human Resources

• Aim to maximize recruitment spending and training hours – We spend approximately $5,000,000 on Recruiting and

Train each employee for 80 hours

• We focus on high caliber in order to have a higher productivity and the lowest turnover possible– Turnover Rate: 6.7%– Productivity (2020): 116.7%– Projected (2021): 120.3%

• Benefits

Key Ratios

2015 2016 2017 2018 2019 2020Contribution Margin 28.3% 29.8% 38.5% 35.5% 40.9% 43.3%Net Margin % 11.9% 5.1% 10.4% 12.5% 22.1% 26.8%Profit Margin % 4.1% -1.4% 0.4% -5.2% 3.4% 9.1%Asset Turnover 1.05 0.97 0.84 0.86 1.00 1.18ROA 4.35% -1.33% 0.36% -4.52% 3.43% 10.70%ROE 8.74% -3.35% 1.11% -18.44% 11.04% 26.67%ROS 4.14% -1.38% 0.43% -5.23% 3.43% 9.10%Operating CF 17,282$ 15,354$ 24,179$ 22,488$ 30,505$ 41,931$ Operating CF/Debt 0.36 0.20 0.22 0.16 0.27 0.42 Free CF 17,282$ 43,354$ 56,979$ 45,888$ 17,486$ 50,931$ Current Ratio 3.09 2.10 1.41 0.92 2.23 4.38Quick Ratio 13.31 7.66 3.88 2.20 4.70 9.19Working Capital 13,775$ 15,980$ 13,245$ (5,251)$ 33,794$ 54,041$ Days of Working Capital 49.74 44.99 39.15 9.19 32.01 81.04Financial Leverage 1.82 -1.95 13.92 -0.38 2.49 1.40Debt equity 1.01 1.51 2.03 3.08 2.22 1.49EPS $2.09 -$0.79 $0.27 -$3.76 $2.53 $8.14EBIT 11,996.00$ 5,003.00$ 12,862.00$ 4,821.00$ 21,813.00$ 39,457.00$ Times Interest Earned 2.21 0.66 1.08 0.27 1.67 3.52

Key Financial RatiosFuture Stock Projections:

2021: $87.142022: $114.042023: $137.96

Balance Sheet

2015 2016 2017 2018 2019 2020 2021 2022 2023Cash $3,434 $6,776 $0 $0 $14,477 $32,634 $35,941 $23,113 $39,157Accounts Recievable $8,307 $9,920 $11,197 $13,047 $13,375 $16,258 $18,183 $20,336 $22,744Inventory $8,617 $13,787 $34,738 $44,882 $33,445 $21,144 $20,298 $19,486 $18,707Total Current Assets $20,358 $30,483 $45,935 $57,929 $61,298 $70,036 $74,422 $62,935 $80,607Plant and Equipment $113,800 $141,800 $174,600 $198,000 $176,400 $185,400 $226,050 $268,925 $314,025Accumulated Depreciation -$37,933 -$47,387 -$59,026 -$72,227 -$74,987 -$87,347 -$102,417 -$120,345 -$141,280Total Fixed assets $75,867 $94,413 $115,573 $125,773 $101,413 $98,053 $123,633 $148,580 $172,745Total Assets $96,225 $124,896 $161,508 $183,703 $162,711 $168,089 $198,055 $211,515 $253,352Accounts Payable $6,583 $14,503 $16,526 $17,619 $13,604 $15,995 $21,392.0 $23,399.5 $26,103.0Current Debt $0 $0 $16,164 $45,561 $13,900 $0 $0 $0 $0Maturing L.T. Debt $0 $0 $0 $0 $0 $0 $20,850 $0 $0Long Term Debt $41,700 $60,694 $75,530 $75,530 $84,630 $84,630 $63,780 $63,780 $63,780Total Liabilities $48,283 $75,197 $108,219 $138,710 $112,134 $100,625 $106,022 $87,180 $89,883Common Stock $18,360 $21,785 $24,785 $24,785 $24,785 $24,785 $24,785 $24,785 $24,785Retained Earnings $29,582 $27,915 $28,504 $20,208 $25,792 $42,679 $67,248 $99,551 $138,684Total Equity $47,942 $49,700 $53,288 $44,992 $50,577 $67,464 $92,033 $124,336 $163,469Total Liabilities and OE $96,225 $124,896 $161,508 $183,703 $162,711 $168,089 $198,055 $211,515 $253,352

Balance Sheet

*ALL DOLLAR AMOUNTS x 1,000

Income Statement

2015 2016 2017 2018 2019 2020 2021 2022 2023Sales $101,073 $120,698 $136,227 $158,740 $162,733 $197,806 $221,226 $247,419 $276,714Variable Costs: Direct Labor $28,932 $37,521 $32,607 $40,093 $34,699 $40,428 $49,420 $52,865 $59,165 Direct Material $42,546 $45,534 $46,974 $56,945 $57,454 $69,179 $78,279 $87,143 $97,383 Inventory Carry $1,034 $1,654 $4,169 $5,386 $4,013 $2,537 $2,436 $2,338 $2,245Total Variable $72,513 $84,709 $83,749 $102,424 $96,167 $112,144 $130,135 $142,347 $158,793Contribution Margin $28,561 $35,989 $52,478 $56,315 $66,566 $85,662 $91,091 $105,072 $117,921Period Costs: Depreciation $7,587 $9,453 $11,640 $13,200 $11,760 $12,360 $15,070 $17,928 $20,935 SG&A: R&D $0 $1,745 $4,000 $3,281 $1,988 $2,405 $1,600 $1,600 $1,600 Promotions $4,100 $8,800 $10,000 $7,150 $5,750 $7,100 $7,500 $7,500 $7,500 Sales $4,100 $8,800 $10,000 $10,300 $8,140 $8,800 $11,000 $11,000 $11,000 Admin $778 $1,068 $2,737 $2,564 $2,884 $2,040 $2,400 $2,400 $2,400Total Period $16,564 $29,866 $38,377 $36,495 $30,522 $32,706 $37,570 $40,428 $43,435Net Margin $11,996 $6,123 $14,102 $19,821 $36,045 $52,957 $53,521 $64,644 $74,486Other (Fees, Writeoffs, TQM) $0 $1,121 $1,239 $15,000 $14,231 $13,500 $5,000 $5,000 $5,000EBIT $11,996 $5,003 $12,862 $4,821 $21,813 $39,457 $48,521 $59,644 $69,486Short Term Interest $0 $0 $2,347 $7,993 $1,835 $0 $0 $0 $0Long Term Interest $5,421 $7,567 $9,591 $9,591 $11,212 $11,212 $11,212 $11,212 $11,212Taxes $2,301 -$898 $323 -$4,467 $3,068 $9,886 $11,193 $14,530 $17,482Profit Sharing $85 $0 $12 $0 $114 $367 $442 $495 $553Net Income (Loss) $4,189 -$1,667 $589 -$8,296 $5,584 $17,992 $25,674 $33,407 $40,238

Income Statement

*ALL DOLLAR AMOUNTS x 1,000

Statement of Cash Flows

2015 2016 2017 2018 2019 2020 2021 2022 2023Cash Flows From OperatingNet Income (Loss) $4,189 -$1,667 $589 -$8,296 $5,584 $17,992 $25,674 $33,407 $40,238Depreciation $7,587 $9,453 $11,640 $13,200 $11,760 $12,360 $15,070 $17,928 $20,935Extraordinary Gains/Losses/Writeoffs $0 $0 $0 $0 -$419 $0 $0 $0 $0Accounts Payable $3,583 $7,919 $2,023 $1,093 -$4,015 $2,391 $5,397 $2,008 $2,703Inventory -$8,617 -$5,170 -$20,951 -$10,145 $11,437 $12,302 $846 $812 $779Accounts Receivable -$307 -$1,613 -$1,276 -$1,850 -$328 -$2,883 -$1,925 -$2,153 -$2,408Net Cash From Operations $6,434 $8,923 -$7,975 -$5,998 $24,020 $42,162 $45,062 $52,002 $62,248Cash Flows From Investing ActivitiesPlant Improvements $0 -$28,000 -$32,800 -$23,400 $13,019 -$9,000 -$40,650 -$42,875 -$45,100Cash Flows From Financing ActivitiesDividends Paid -$4,000 $0 $0 $0 $0 -$1,105 -$1,105 -$1,105 -$1,105Sales of Common Stock $0 $3,425 $3,000 $0 $0 $0 $0 $0 $0Purchase of Common Stock $0 $0 $0 $0 $0 $0 $0 $0 $0Cash From Long Term Debt $0 $18,994 $21,786 $0 $23,000 $0 $0 $0 $0Early Retirement of Long Term Debt $0 $0 $0 $0 $0 $0 $0 $0 $0Retirement of Current Debt $0 $0 $0 -$16,164 -$45,561 -$13,900 $0 $0 $0Cash From Current Debt Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0Cash From Emergency Loans $0 $0 $9,214 $45,561 $0 $0 $0 $0 $0Cash From Financing Activities -$4,000 $22,419 $34,000 $29,398 -$22,561 -$15,005 -$1,105 -$1,105 -$1,105

Net Change in Cash Position $2,434 $3,342 -$6,776 $0 $14,477 $18,157 $3,307 -$12,828 $16,043Closing Cash Position $3,434 $6,776 $0 $0 $14,477 $32,634 $35,941 $23,113 $39,157*ALL DOLLAR AMOUNTS x 1,000

Statement of Cash Flows