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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Xerium Technologies New (delisted) | NYSE:XRM | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 13.49 | 0 | 01:00:00 |
ý
|
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
¨
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
DELAWARE
|
42-1558674
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
|
14101 Capital Boulevard
Youngsville, North Carolina
|
27596
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer
|
|
¨
|
|
Accelerated filer
|
|
x
|
|
Smaller reporting company
|
|
¨
|
Non-accelerated filer
|
|
¨
|
|
(Do not check if a smaller reporting company)
|
|
|
|
Emerging growth company
|
|
¨
|
|
|
|
Page
|
Item 1.
|
||
|
|
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Item 2.
|
||
|
|
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Item 3.
|
||
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|
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Item 4.
|
||
|
||
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|
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Item 1.
|
||
|
|
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Item 1A.
|
||
|
|
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Item 5.
|
Other Information
|
|
|
|
|
Item 6.
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
(Unaudited)
|
|
|
||||
|
March 31, 2018
|
|
December 31,
2017 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
9,901
|
|
|
$
|
17,253
|
|
Accounts receivable, net
|
82,473
|
|
|
76,633
|
|
||
Inventories, net
|
76,647
|
|
|
74,725
|
|
||
Prepaid expenses
|
13,685
|
|
|
11,335
|
|
||
Other current assets
|
16,845
|
|
|
15,316
|
|
||
Total current assets
|
199,551
|
|
|
195,262
|
|
||
Property and equipment, net
|
281,442
|
|
|
282,378
|
|
||
Goodwill
|
67,178
|
|
|
64,783
|
|
||
Intangible assets
|
5,658
|
|
|
5,965
|
|
||
Non-current deferred tax asset
|
11,198
|
|
|
10,103
|
|
||
Other assets
|
9,211
|
|
|
9,358
|
|
||
Total assets
|
$
|
574,238
|
|
|
$
|
567,849
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Notes payable
|
$
|
8,622
|
|
|
$
|
8,398
|
|
Accounts payable
|
40,256
|
|
|
39,856
|
|
||
Accrued expenses
|
51,082
|
|
|
64,155
|
|
||
Current maturities of long-term debt
|
9,855
|
|
|
10,614
|
|
||
Total current liabilities
|
109,815
|
|
|
123,023
|
|
||
Long-term debt, net of current maturities
|
484,929
|
|
|
473,904
|
|
||
Liabilities under capital leases
|
15,189
|
|
|
15,952
|
|
||
Non-current deferred tax liability
|
13,601
|
|
|
12,897
|
|
||
Pension, other post-retirement and post-employment obligations
|
68,901
|
|
|
69,205
|
|
||
Other long-term liabilities
|
9,944
|
|
|
9,334
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ deficit
|
|
|
|
||||
Preferred stock, $0.001 par value, 1,000,000 shares authorized; no shares outstanding as of March 31, 2018 and December 31, 2017
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value, 20,000,000 shares authorized; 16,413,179 and 16,367,743 shares outstanding as of March 31, 2018 and December 31, 2017, respectively
|
16
|
|
|
16
|
|
||
Paid-in capital
|
432,785
|
|
|
432,489
|
|
||
Accumulated deficit
|
(455,814
|
)
|
|
(457,712
|
)
|
||
Accumulated other comprehensive loss
|
(105,128
|
)
|
|
(111,259
|
)
|
||
Total stockholders’ deficit
|
(128,141
|
)
|
|
(136,466
|
)
|
||
Total liabilities and stockholders’ deficit
|
$
|
574,238
|
|
|
$
|
567,849
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net Sales
|
$
|
126,075
|
|
|
$
|
119,866
|
|
Costs and expenses:
|
|
|
|
||||
Cost of products sold
|
78,842
|
|
|
72,240
|
|
||
Selling
|
15,677
|
|
|
15,674
|
|
||
General and administrative
|
13,097
|
|
|
12,423
|
|
||
Research and development
|
1,568
|
|
|
1,744
|
|
||
Restructuring
|
824
|
|
|
3,164
|
|
||
|
110,008
|
|
|
105,245
|
|
||
Income from operations
|
16,067
|
|
|
14,621
|
|
||
Interest expense, net
|
(12,765
|
)
|
|
(13,263
|
)
|
||
Other components of net periodic pension cost
|
(266
|
)
|
|
(361
|
)
|
||
Loss on extinguishment of debt
|
—
|
|
|
(25
|
)
|
||
Foreign exchange gain (loss)
|
532
|
|
|
(1,125
|
)
|
||
Income (loss) before provision for income taxes
|
3,568
|
|
|
(153
|
)
|
||
Provision for income taxes
|
(1,337
|
)
|
|
(2,681
|
)
|
||
Net income (loss)
|
$
|
2,231
|
|
|
$
|
(2,834
|
)
|
Comprehensive income
|
$
|
8,362
|
|
|
$
|
6,806
|
|
Net income (loss) per share:
|
|
|
|
||||
Basic
|
$
|
0.14
|
|
|
$
|
(0.18
|
)
|
Diluted
|
$
|
0.13
|
|
|
$
|
(0.18
|
)
|
Shares used in computing net income (loss) per share:
|
|
|
|
||||
Basic
|
16,398,076
|
|
|
16,153,113
|
|
||
Diluted
|
16,655,850
|
|
|
16,153,113
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Operating activities
|
|
|
|
||||
Net income (loss)
|
$
|
2,231
|
|
|
$
|
(2,834
|
)
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
||||
Stock-based compensation
|
355
|
|
|
531
|
|
||
Depreciation
|
7,954
|
|
|
7,819
|
|
||
Amortization of intangible assets
|
307
|
|
|
273
|
|
||
Deferred financing cost amortization
|
932
|
|
|
899
|
|
||
Foreign exchange (gain) loss on revaluation of debt
|
(84
|
)
|
|
627
|
|
||
Deferred taxes
|
(204
|
)
|
|
10
|
|
||
Gain on disposition of property and equipment
|
(57
|
)
|
|
(49
|
)
|
||
Loss on extinguishment of debt
|
—
|
|
|
25
|
|
||
Provision for doubtful accounts
|
305
|
|
|
41
|
|
||
Change in assets and liabilities which (used) provided cash:
|
|
|
|
||||
Accounts receivable
|
(4,583
|
)
|
|
(4,153
|
)
|
||
Inventories
|
(956
|
)
|
|
(1,136
|
)
|
||
Prepaid expenses
|
(2,388
|
)
|
|
783
|
|
||
Other current assets
|
(1,345
|
)
|
|
(1,785
|
)
|
||
Accounts payable and accrued expenses
|
(13,793
|
)
|
|
(7,334
|
)
|
||
Deferred and other long-term liabilities
|
(833
|
)
|
|
(940
|
)
|
||
Net cash used in operating activities
|
(12,159
|
)
|
|
(7,223
|
)
|
||
Investing activities
|
|
|
|
||||
Capital expenditures
|
(2,510
|
)
|
|
(5,285
|
)
|
||
Proceeds from disposals of property and equipment
|
88
|
|
|
216
|
|
||
Net cash used in investing activities
|
(2,422
|
)
|
|
(5,069
|
)
|
||
Financing activities
|
|
|
|
||||
Proceeds from borrowings
|
31,133
|
|
|
40,476
|
|
||
Principal payments on debt
|
(22,513
|
)
|
|
(29,693
|
)
|
||
Payment of financing fees
|
—
|
|
|
(170
|
)
|
||
Payment of obligations under capital leases
|
(1,424
|
)
|
|
(1,520
|
)
|
||
Employee taxes paid on equity awards
|
(59
|
)
|
|
—
|
|
||
Net cash provided by financing activities
|
7,137
|
|
|
9,093
|
|
||
Effect of exchange rate changes on cash flows
|
92
|
|
|
529
|
|
||
Net decrease in cash
|
(7,352
|
)
|
|
(2,670
|
)
|
||
Cash and cash equivalents at beginning of period
|
17,253
|
|
|
12,808
|
|
||
Cash and cash equivalents at end of period
|
$
|
9,901
|
|
|
$
|
10,138
|
|
|
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Raw materials
|
$
|
15,128
|
|
|
$
|
13,881
|
|
Work in process
|
30,222
|
|
|
27,819
|
|
||
Finished goods (includes consigned inventory of $7,029 at March 31, 2018 and $7,757 at December 31, 2017)
|
38,074
|
|
|
39,798
|
|
||
Inventory allowances
|
(6,777
|
)
|
|
(6,773
|
)
|
||
|
$
|
76,647
|
|
|
$
|
74,725
|
|
|
Beginning Balance
|
|
Charged to
Cost
of Sales
|
|
Effect of Foreign
Currency
Translation
|
|
Deduction
from
Reserves
|
|
Ending Balance
|
||||||||||
Three Months Ended March 31, 2018:
|
$
|
2,470
|
|
|
$
|
359
|
|
|
$
|
37
|
|
|
$
|
(239
|
)
|
|
$
|
2,627
|
|
Three Months Ended March 31, 2017:
|
$
|
2,203
|
|
|
$
|
235
|
|
|
$
|
30
|
|
|
$
|
(179
|
)
|
|
$
|
2,289
|
|
|
Three Months Ended March 31,
|
||||
|
2018
|
|
2017
|
||
Weighted-average common shares outstanding–basic
|
16,398,076
|
|
|
16,153,113
|
|
Dilutive effect of stock-based compensation awards outstanding
|
257,774
|
|
|
—
|
|
Weighted-average common shares outstanding–diluted
|
16,655,850
|
|
|
16,153,113
|
|
|
Three Months Ended March 31,
|
||||
|
2018
|
|
2017
|
||
Anti-dilutive securities
|
686,208
|
|
|
902,988
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Fair value of derivative liability
|
$
|
(39
|
)
|
|
$
|
(591
|
)
|
|
Three Months Ended March 31, 2018
|
|
Three Months Ended March 31, 2017
|
||||
Change in fair value of derivative included in foreign exchange gain
|
$
|
427
|
|
|
$
|
145
|
|
|
Notional Sold
|
|
Notional Purchased
|
|
|||
Non-designated hedges of foreign exchange risk
|
$
|
18,372
|
|
|
$
|
(24,476
|
)
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
9.5% Senior Notes due August 2021.
|
$
|
480,000
|
|
|
$
|
480,000
|
|
Capital leases
|
19,914
|
|
|
20,749
|
|
||
Notes payable, working capital loan, variable interest rate at 1.45%. Matures August 31, 2018, with one-year rollover option.
|
8,622
|
|
|
8,398
|
|
||
Fixed asset loan contract, variable interest rate of 5.23%. Matures June of 2020.
|
6,996
|
|
|
6,761
|
|
||
Other debt
|
15,235
|
|
|
6,062
|
|
||
Total debt
|
530,767
|
|
|
521,970
|
|
||
Less deferred financing costs and debt discount
|
(12,172
|
)
|
|
(13,102
|
)
|
||
Less current maturities of long term debt and notes payable
|
(18,477
|
)
|
|
(19,012
|
)
|
||
Total long term debt including capital leases
|
$
|
500,118
|
|
|
$
|
489,856
|
|
|
|
|
|
||||
Balance sheet classification of total long-term debt including capital leases
|
|
|
|
||||
Long-term debt, net of current maturities and deferred financing costs
|
484,929
|
|
|
473,904
|
|
||
Liabilities under capital lease, non-current
|
15,189
|
|
|
15,952
|
|
||
Total long term debt including capital leases
|
$
|
500,118
|
|
|
$
|
489,856
|
|
•
|
declare dividends or redeem or repurchase equity interests;
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Service cost
|
$
|
383
|
|
|
$
|
376
|
|
Interest cost
|
1,088
|
|
|
1,267
|
|
||
Expected return on plan assets
|
(1,405
|
)
|
|
(1,496
|
)
|
||
Amortization of net loss
|
583
|
|
|
590
|
|
||
Net periodic benefit cost
|
$
|
649
|
|
|
$
|
737
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net income (loss)
|
$
|
2,231
|
|
|
$
|
(2,834
|
)
|
Foreign currency translation adjustments
|
6,077
|
|
|
9,765
|
|
||
Pension liability changes under Topic 715
|
54
|
|
|
(125
|
)
|
||
Comprehensive income
|
$
|
8,362
|
|
|
$
|
6,806
|
|
|
Foreign
Currency
Translation
Adjustment
|
|
Pension
Liability
Changes Under
Topic 715
|
|
Accumulated
Other
Comprehensive
(Loss) Income
|
||||||
Balance at December 31, 2017
|
$
|
(69,149
|
)
|
|
$
|
(42,110
|
)
|
|
$
|
(111,259
|
)
|
Other comprehensive income (loss) before reclassifications
|
6,077
|
|
|
(529
|
)
|
|
5,548
|
|
|||
Amounts reclassified from other comprehensive loss
|
|
|
|
|
|
||||||
Amortization of actuarial losses
|
—
|
|
|
583
|
|
|
583
|
|
|||
Net current period other comprehensive income
|
6,077
|
|
|
54
|
|
|
6,131
|
|
|||
Balance at March 31, 2018
|
$
|
(63,072
|
)
|
|
$
|
(42,056
|
)
|
|
$
|
(105,128
|
)
|
|
Balance at December 31, 2017
|
|
Charges
|
|
Currency
Effects |
|
Cash
Payments |
|
Balance at
March 31, 2018 |
||||||||||
Severance and other benefits
|
$
|
2,686
|
|
|
$
|
183
|
|
|
$
|
44
|
|
|
$
|
(987
|
)
|
|
$
|
1,926
|
|
Facility costs and other
|
733
|
|
|
641
|
|
|
12
|
|
|
(950
|
)
|
|
436
|
|
|||||
Total
|
$
|
3,419
|
|
|
$
|
824
|
|
|
$
|
56
|
|
|
$
|
(1,937
|
)
|
|
$
|
2,362
|
|
|
Balance at December 31, 2016
|
|
Charges
|
|
Currency
Effects |
|
Cash
Payments |
|
Balance at
March 31, 2017 |
||||||||||
Severance and other benefits
|
$
|
3,805
|
|
|
$
|
2,258
|
|
|
$
|
138
|
|
|
$
|
(1,061
|
)
|
|
$
|
5,140
|
|
Facility costs and other
|
392
|
|
|
906
|
|
|
14
|
|
|
(980
|
)
|
|
332
|
|
|||||
Total
|
$
|
4,197
|
|
|
$
|
3,164
|
|
|
$
|
152
|
|
|
$
|
(2,041
|
)
|
|
$
|
5,472
|
|
|
Clothing
|
|
Roll
Covers |
|
Corporate
|
|
Total
|
||||||||
Three months ended March 31, 2018
|
|
|
|
|
|
|
|
||||||||
Net Sales
|
$
|
75,757
|
|
|
$
|
50,318
|
|
|
$
|
—
|
|
|
$
|
126,075
|
|
Segment Earnings (Loss)
|
$
|
18,912
|
|
|
$
|
10,756
|
|
|
$
|
(4,275
|
)
|
|
$
|
25,393
|
|
Three months ended March 31, 2017
|
|
|
|
|
|
|
|
||||||||
Net Sales
|
$
|
72,495
|
|
|
$
|
47,371
|
|
|
$
|
—
|
|
|
$
|
119,866
|
|
Segment Earnings (Loss)
|
$
|
20,798
|
|
|
$
|
9,795
|
|
|
$
|
(4,037
|
)
|
|
$
|
26,556
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Segment Earnings (Loss):
|
|
|
|
||||
Clothing
|
$
|
18,912
|
|
|
$
|
20,798
|
|
Roll Covers
|
10,756
|
|
|
9,795
|
|
||
Corporate
|
(4,275
|
)
|
|
(4,037
|
)
|
||
Stock-based compensation
|
(355
|
)
|
|
(531
|
)
|
||
CEO transition expense
|
(157
|
)
|
|
—
|
|
||
Interest expense, net
|
(12,765
|
)
|
|
(13,263
|
)
|
||
Depreciation and amortization
|
(8,261
|
)
|
|
(8,093
|
)
|
||
Loss on extinguishment of debt
|
—
|
|
|
(25
|
)
|
||
Restructuring expense
|
(824
|
)
|
|
(3,164
|
)
|
||
Other non-recurring expense
|
(122
|
)
|
|
(45
|
)
|
||
Plant startup costs
|
—
|
|
|
(480
|
)
|
||
Unrealized foreign exchange gain (loss)
|
659
|
|
|
(1,108
|
)
|
||
Income (loss) before provision for income taxes
|
$
|
3,568
|
|
|
$
|
(153
|
)
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
RSU and DSU Awards
(1)
|
|
$
|
355
|
|
|
$
|
531
|
|
(1)
|
Related to RSUs and DSUs awarded to certain employees and non-employee directors.
|
|
Parent
|
|
Total Guarantors
|
|
Total Non Guarantors
|
|
Other Eliminations
|
|
The Company
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
46,063
|
|
|
$
|
85,093
|
|
|
$
|
(5,081
|
)
|
|
$
|
126,075
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of products sold
|
—
|
|
|
29,843
|
|
|
54,080
|
|
|
(5,081
|
)
|
|
78,842
|
|
|||||
Selling
|
51
|
|
|
4,716
|
|
|
10,910
|
|
|
—
|
|
|
15,677
|
|
|||||
General and administrative
|
56
|
|
|
(3,763
|
)
|
|
16,804
|
|
|
—
|
|
|
13,097
|
|
|||||
Research and development
|
335
|
|
|
817
|
|
|
416
|
|
|
—
|
|
|
1,568
|
|
|||||
Restructuring
|
—
|
|
|
443
|
|
|
381
|
|
|
—
|
|
|
824
|
|
|||||
|
442
|
|
|
32,056
|
|
|
82,591
|
|
|
(5,081
|
)
|
|
110,008
|
|
|||||
(Loss) income from operations
|
(442
|
)
|
|
14,007
|
|
|
2,502
|
|
|
—
|
|
|
16,067
|
|
|||||
Interest expense, net
|
(11,907
|
)
|
|
(440
|
)
|
|
(418
|
)
|
|
—
|
|
|
(12,765
|
)
|
|||||
Foreign exchange gain (loss)
|
601
|
|
|
306
|
|
|
(375
|
)
|
|
—
|
|
|
532
|
|
|||||
Equity in subsidiaries income
|
11,973
|
|
|
2,283
|
|
|
—
|
|
|
(14,256
|
)
|
|
—
|
|
|||||
Other components of net periodic pension cost
|
(129
|
)
|
|
(192
|
)
|
|
55
|
|
|
—
|
|
|
(266
|
)
|
|||||
Dividend income (expense), net
|
2,508
|
|
|
2,510
|
|
|
—
|
|
|
(5,018
|
)
|
|
—
|
|
|||||
Income (loss) before provision for income taxes
|
2,604
|
|
|
18,474
|
|
|
1,764
|
|
|
(19,274
|
)
|
|
3,568
|
|
|||||
(Provision for) benefit from income taxes
|
(373
|
)
|
|
2
|
|
|
(966
|
)
|
|
—
|
|
|
(1,337
|
)
|
|||||
Net income (loss)
|
$
|
2,231
|
|
|
$
|
18,476
|
|
|
$
|
798
|
|
|
$
|
(19,274
|
)
|
|
$
|
2,231
|
|
Comprehensive income (loss)
|
$
|
1,812
|
|
|
$
|
18,445
|
|
|
$
|
7,379
|
|
|
$
|
(19,274
|
)
|
|
$
|
8,362
|
|
|
Parent
|
|
Total
Guarantors |
|
Total Non
Guarantors |
|
Other
Eliminations |
|
The
Company |
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
46,945
|
|
|
$
|
81,084
|
|
|
$
|
(8,163
|
)
|
|
$
|
119,866
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of products sold
|
—
|
|
|
30,855
|
|
|
49,548
|
|
|
(8,163
|
)
|
|
72,240
|
|
|||||
Selling
|
233
|
|
|
5,044
|
|
|
10,397
|
|
|
—
|
|
|
15,674
|
|
|||||
General and administrative
|
2,570
|
|
|
879
|
|
|
8,974
|
|
|
—
|
|
|
12,423
|
|
|||||
Research and development
|
299
|
|
|
931
|
|
|
514
|
|
|
—
|
|
|
1,744
|
|
|||||
Restructuring
|
61
|
|
|
642
|
|
|
2,461
|
|
|
—
|
|
|
3,164
|
|
|||||
|
3,163
|
|
|
38,351
|
|
|
71,894
|
|
|
(8,163
|
)
|
|
105,245
|
|
|||||
(Loss) income from operations
|
(3,163
|
)
|
|
8,594
|
|
|
9,190
|
|
|
—
|
|
|
14,621
|
|
|||||
Interest expense, net
|
(12,338
|
)
|
|
(347
|
)
|
|
(578
|
)
|
|
—
|
|
|
(13,263
|
)
|
|||||
Foreign exchange (loss) gain
|
(472
|
)
|
|
65
|
|
|
(718
|
)
|
|
—
|
|
|
(1,125
|
)
|
|||||
Equity in subsidiaries income
|
8,714
|
|
|
4,381
|
|
|
—
|
|
|
(13,095
|
)
|
|
—
|
|
|||||
Other components of net periodic pension cost
|
(132
|
)
|
|
(188
|
)
|
|
(41
|
)
|
|
—
|
|
|
(361
|
)
|
|||||
Loss on extinguishment of debt
|
(25
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25
|
)
|
|||||
Dividend income (expense), net
|
4,263
|
|
|
3,858
|
|
|
—
|
|
|
(8,121
|
)
|
|
—
|
|
|||||
(Loss) income before provision for income taxes
|
(3,153
|
)
|
|
16,363
|
|
|
7,853
|
|
|
(21,216
|
)
|
|
(153
|
)
|
|||||
Benefit from (provision for) income taxes
|
319
|
|
|
(141
|
)
|
|
(2,859
|
)
|
|
—
|
|
|
(2,681
|
)
|
|||||
Net (loss) income
|
$
|
(2,834
|
)
|
|
$
|
16,222
|
|
|
$
|
4,994
|
|
|
$
|
(21,216
|
)
|
|
$
|
(2,834
|
)
|
Comprehensive (loss) income
|
$
|
(3,684
|
)
|
|
$
|
16,230
|
|
|
$
|
15,476
|
|
|
$
|
(21,216
|
)
|
|
$
|
6,806
|
|
|
Parent
|
|
Total
Guarantors |
|
Total Non
Guarantors |
|
Other
Eliminations |
|
The
Company |
||||||||||
Operating activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss)
|
$
|
2,231
|
|
|
$
|
18,476
|
|
|
$
|
798
|
|
|
$
|
(19,274
|
)
|
|
$
|
2,231
|
|
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Stock-based compensation
|
355
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
355
|
|
|||||
Depreciation
|
573
|
|
|
1,998
|
|
|
5,383
|
|
|
—
|
|
|
7,954
|
|
|||||
Amortization of intangible assets
|
—
|
|
|
306
|
|
|
1
|
|
|
—
|
|
|
307
|
|
|||||
Deferred financing cost amortization
|
888
|
|
|
—
|
|
|
44
|
|
|
—
|
|
|
932
|
|
|||||
Foreign exchange (gain) loss on revaluation of debt
|
(180
|
)
|
|
—
|
|
|
96
|
|
|
—
|
|
|
(84
|
)
|
|||||
Deferred taxes
|
101
|
|
|
—
|
|
|
(305
|
)
|
|
—
|
|
|
(204
|
)
|
|||||
Loss (gain) on disposition of property and equipment
|
—
|
|
|
101
|
|
|
(158
|
)
|
|
—
|
|
|
(57
|
)
|
|||||
Provision for doubtful accounts
|
—
|
|
|
1
|
|
|
304
|
|
|
—
|
|
|
305
|
|
|||||
Undistributed equity in earnings of subsidiaries
|
(11,973
|
)
|
|
(2,283
|
)
|
|
—
|
|
|
14,256
|
|
|
—
|
|
|||||
Change in assets and liabilities which (used) provided cash:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Accounts receivable
|
(31
|
)
|
|
(1,948
|
)
|
|
(2,604
|
)
|
|
—
|
|
|
(4,583
|
)
|
|||||
Inventories
|
—
|
|
|
1,218
|
|
|
(2,174
|
)
|
|
—
|
|
|
(956
|
)
|
|||||
Prepaid expenses
|
(300
|
)
|
|
84
|
|
|
(2,172
|
)
|
|
—
|
|
|
(2,388
|
)
|
|||||
Other current assets
|
25
|
|
|
(178
|
)
|
|
(1,192
|
)
|
|
—
|
|
|
(1,345
|
)
|
|||||
Accounts payable and accrued expenses
|
(13,948
|
)
|
|
193
|
|
|
(38
|
)
|
|
—
|
|
|
(13,793
|
)
|
|||||
Deferred and other long-term liabilities
|
(214
|
)
|
|
171
|
|
|
(790
|
)
|
|
—
|
|
|
(833
|
)
|
|||||
Intercompany loans
|
20,552
|
|
|
(13,403
|
)
|
|
(7,149
|
)
|
|
—
|
|
|
—
|
|
|||||
Net cash (used in) provided by operating activities
|
(1,921
|
)
|
|
4,736
|
|
|
(9,956
|
)
|
|
(5,018
|
)
|
|
(12,159
|
)
|
|||||
Investing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
(176
|
)
|
|
(740
|
)
|
|
(1,594
|
)
|
|
—
|
|
|
(2,510
|
)
|
|||||
Intercompany property and equipment transfers, net
|
380
|
|
|
(61
|
)
|
|
(319
|
)
|
|
—
|
|
|
—
|
|
|||||
Proceeds from disposals of property and equipment
|
—
|
|
|
23
|
|
|
65
|
|
|
—
|
|
|
88
|
|
|||||
Net cash provided by (used in) investing activities
|
204
|
|
|
(778
|
)
|
|
(1,848
|
)
|
|
—
|
|
|
(2,422
|
)
|
|||||
Financing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from borrowings
|
26,189
|
|
|
—
|
|
|
4,944
|
|
|
—
|
|
|
31,133
|
|
|||||
Principal payments on debt
|
(16,943
|
)
|
|
—
|
|
|
(5,570
|
)
|
|
—
|
|
|
(22,513
|
)
|
|||||
Dividends paid
|
—
|
|
|
(2,508
|
)
|
|
(2,510
|
)
|
|
5,018
|
|
|
—
|
|
|||||
Payment of obligations under capital leases
|
(604
|
)
|
|
(670
|
)
|
|
(150
|
)
|
|
—
|
|
|
(1,424
|
)
|
|||||
Intercompany loans
|
(8,562
|
)
|
|
(788
|
)
|
|
9,350
|
|
|
—
|
|
|
—
|
|
|||||
Employee taxes paid on equity awards
|
(59
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(59
|
)
|
|||||
Net cash provided by (used in) financing activities
|
21
|
|
|
(3,966
|
)
|
|
6,064
|
|
|
5,018
|
|
|
7,137
|
|
|||||
Effect of exchange rate changes on cash flows
|
—
|
|
|
1
|
|
|
91
|
|
|
—
|
|
|
92
|
|
|||||
Net decrease in cash
|
(1,696
|
)
|
|
(7
|
)
|
|
(5,649
|
)
|
|
—
|
|
|
(7,352
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
3,578
|
|
|
57
|
|
|
13,618
|
|
|
—
|
|
|
17,253
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
1,882
|
|
|
$
|
50
|
|
|
$
|
7,969
|
|
|
$
|
—
|
|
|
$
|
9,901
|
|
|
Parent
|
|
Total
Guarantors |
|
Total Non
Guarantors |
|
Other
Eliminations |
|
The
Company |
||||||||||
Operating activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Net (loss) income
|
$
|
(2,834
|
)
|
|
$
|
16,222
|
|
|
$
|
4,994
|
|
|
$
|
(21,216
|
)
|
|
$
|
(2,834
|
)
|
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Stock-based compensation
|
531
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
531
|
|
|||||
Depreciation
|
579
|
|
|
2,069
|
|
|
5,171
|
|
|
—
|
|
|
7,819
|
|
|||||
Amortization of intangible assets
|
—
|
|
|
246
|
|
|
27
|
|
|
—
|
|
|
273
|
|
|||||
Deferred financing cost amortization
|
875
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
899
|
|
|||||
Foreign exchange loss on revaluation of debt
|
625
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
627
|
|
|||||
Deferred taxes
|
(321
|
)
|
|
—
|
|
|
331
|
|
|
—
|
|
|
10
|
|
|||||
Loss on disposition of property and equipment
|
—
|
|
|
(37
|
)
|
|
(12
|
)
|
|
—
|
|
|
(49
|
)
|
|||||
Loss on extinguishment of debt
|
25
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|||||
Provision for doubtful accounts
|
—
|
|
|
(15
|
)
|
|
56
|
|
|
—
|
|
|
41
|
|
|||||
Undistributed equity in earnings of subsidiaries
|
(8,714
|
)
|
|
(4,381
|
)
|
|
—
|
|
|
13,095
|
|
|
—
|
|
|||||
Change in assets and liabilities which (used) provided cash:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts receivable
|
(8
|
)
|
|
(2,981
|
)
|
|
(1,164
|
)
|
|
—
|
|
|
(4,153
|
)
|
|||||
Inventories
|
—
|
|
|
62
|
|
|
(1,198
|
)
|
|
—
|
|
|
(1,136
|
)
|
|||||
Prepaid expenses
|
(226
|
)
|
|
289
|
|
|
720
|
|
|
—
|
|
|
783
|
|
|||||
Other current assets
|
—
|
|
|
(117
|
)
|
|
(1,668
|
)
|
|
—
|
|
|
(1,785
|
)
|
|||||
Accounts payable and accrued expenses
|
(14,965
|
)
|
|
443
|
|
|
7,188
|
|
|
—
|
|
|
(7,334
|
)
|
|||||
Deferred and other long-term liabilities
|
(47
|
)
|
|
169
|
|
|
(1,062
|
)
|
|
—
|
|
|
(940
|
)
|
|||||
Intercompany loans
|
17,832
|
|
|
(9,010
|
)
|
|
(8,822
|
)
|
|
—
|
|
|
—
|
|
|||||
Net cash (used in) provided by operating activities
|
(6,648
|
)
|
|
2,959
|
|
|
4,587
|
|
|
(8,121
|
)
|
|
(7,223
|
)
|
|||||
Investing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
(158
|
)
|
|
(167
|
)
|
|
(4,960
|
)
|
|
—
|
|
|
(5,285
|
)
|
|||||
Intercompany property and equipment transfers, net
|
—
|
|
|
29
|
|
|
(29
|
)
|
|
—
|
|
|
—
|
|
|||||
Proceeds from disposals of property and equipment
|
—
|
|
|
211
|
|
|
5
|
|
|
—
|
|
|
216
|
|
|||||
Net cash (used in) provided by investing activities
|
(158
|
)
|
|
73
|
|
|
(4,984
|
)
|
|
—
|
|
|
(5,069
|
)
|
|||||
Financing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from borrowings
|
36,253
|
|
|
—
|
|
|
4,223
|
|
|
—
|
|
|
40,476
|
|
|||||
Principal payments on debt
|
(25,730
|
)
|
|
—
|
|
|
(3,963
|
)
|
|
—
|
|
|
(29,693
|
)
|
|||||
Dividends paid
|
—
|
|
|
(4,263
|
)
|
|
(3,858
|
)
|
|
8,121
|
|
|
—
|
|
|||||
Payments of obligations under capitalized leases
|
(656
|
)
|
|
(721
|
)
|
|
(143
|
)
|
|
—
|
|
|
(1,520
|
)
|
|||||
Payment of deferred financing fees
|
(187
|
)
|
|
—
|
|
|
17
|
|
|
—
|
|
|
(170
|
)
|
|||||
Intercompany loans
|
(2,186
|
)
|
|
1,739
|
|
|
447
|
|
|
—
|
|
|
—
|
|
|||||
Net cash provided by (used in) financing activities
|
7,494
|
|
|
(3,245
|
)
|
|
(3,277
|
)
|
|
8,121
|
|
|
9,093
|
|
|||||
Effect of exchange rate changes on cash flows
|
—
|
|
|
—
|
|
|
529
|
|
|
—
|
|
|
529
|
|
|||||
Net increase (decrease) in cash
|
688
|
|
|
(213
|
)
|
|
(3,145
|
)
|
|
—
|
|
|
(2,670
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
1,368
|
|
|
279
|
|
|
11,161
|
|
|
—
|
|
|
12,808
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
2,056
|
|
|
$
|
66
|
|
|
$
|
8,016
|
|
|
$
|
—
|
|
|
$
|
10,138
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
rate and magnitude of decline in graphical grade paper production;
|
•
|
fluctuations in interest rates and currency exchange rates;
|
•
|
over-capacity of certain grades of paper, leading to distressed profit situations;
|
•
|
execution risk related to the startup of new facilities;
|
•
|
local economic conditions in the areas around the world where we conduct business;
|
•
|
quality issues with new products that could lead to higher warranty and quality costs;
|
•
|
structural shifts in the demand for paper;
|
•
|
the effectiveness of our strategies and plans;
|
•
|
sudden increase or decrease in production capacity;
|
•
|
trend toward extended life in forming fabrics, leading to reduced market size;
|
•
|
our development and marketing of new technologies and our ability to compete against new technologies developed by competitors;
|
•
|
variations in demand for our products, including our new products;
|
•
|
fluctuations in the price of our component supply costs and energy costs;
|
•
|
our ability to generate substantial operating cash flow to service our debt and fund growth and unexpected cash needs;
|
•
|
occurrences of terrorist attacks or an armed conflict involving the United States or any other country in which we conduct business, or any other domestic or international calamity, including natural disasters;
|
•
|
changes in the policies, laws, regulations and practices of the United States and any foreign country in which we operate or conduct business, including changes regarding taxes and the repatriation of earnings; and
|
•
|
anti-takeover provisions in our charter documents.
|
•
|
advances in technology of our products, which can provide value to our customers by improving the efficiency of paper-making machines and reduce their manufacturing costs;
|
Currency
|
|
Three Months Ended March 31, 2018
|
|
Three Months Ended March 31, 2017
|
Canadian Dollar
|
|
$0.79 = 1 Canadian Dollar
|
|
$0.76 = 1 Canadian Dollar
|
Brazilian Real
|
|
$0.31 = 1 Brazilian Real
|
|
$0.32 = 1 Brazilian Real
|
Japanese Yen
|
|
$0.01 = 1 Japanese Yen
|
|
$0.01 = 1 Japanese Yen
|
Australian Dollar
|
|
$0.79 = 1 Australian Dollar
|
|
$0.76 = 1 Australian Dollar
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Domestic income from operations
|
$
|
13,565
|
|
|
$
|
5,431
|
|
Foreign income from operations
|
2,502
|
|
|
9,190
|
|
||
Total income from operations
|
$
|
16,067
|
|
|
$
|
14,621
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Net sales
|
$
|
126,075
|
|
|
$
|
119,866
|
|
Costs and expenses:
|
|
|
|
||||
Cost of products sold
|
78,842
|
|
|
72,240
|
|
||
Selling
|
15,677
|
|
|
15,674
|
|
||
General and administrative
|
13,097
|
|
|
12,423
|
|
||
Research and development
|
1,568
|
|
|
1,744
|
|
||
Restructuring
|
824
|
|
|
3,164
|
|
||
|
110,008
|
|
|
105,245
|
|
||
Income from operations
|
16,067
|
|
|
14,621
|
|
||
Interest expense, net
|
(12,765
|
)
|
|
(13,263
|
)
|
||
Other components of net periodic pension cost
|
(266
|
)
|
|
(361
|
)
|
||
Loss on extinguishment of debt
|
—
|
|
|
(25
|
)
|
||
Foreign exchange gain (loss)
|
532
|
|
|
(1,125
|
)
|
||
Income (loss) before provision for income taxes
|
3,568
|
|
|
(153
|
)
|
||
Provision for income taxes
|
(1,337
|
)
|
|
(2,681
|
)
|
||
Net income (loss)
|
$
|
2,231
|
|
|
$
|
(2,834
|
)
|
Comprehensive income
|
$
|
8,362
|
|
|
$
|
6,806
|
|
•
|
declare dividends or redeem or repurchase equity interests;
|
|
Three Months Ended
March 31, |
||||||
|
2018
|
|
2017
|
||||
Net income (loss)
|
$
|
2,231
|
|
|
$
|
(2,834
|
)
|
Stock-based compensation
|
355
|
|
|
531
|
|
||
Depreciation
|
7,954
|
|
|
7,819
|
|
||
Amortization of intangible assets
|
307
|
|
|
273
|
|
||
Deferred financing cost amortization
|
932
|
|
|
899
|
|
||
Foreign exchange (gain) loss on revaluation of debt
|
(84
|
)
|
|
627
|
|
||
Deferred tax expense
|
(204
|
)
|
|
10
|
|
||
Gain on disposition of property and equipment
|
(57
|
)
|
|
(49
|
)
|
||
Loss on extinguishment of debt
|
—
|
|
|
25
|
|
||
Net change in operating assets and liabilities
|
(23,593
|
)
|
|
(14,524
|
)
|
||
Net cash used in operating activities
|
(12,159
|
)
|
|
(7,223
|
)
|
||
Interest expense, excluding amortization
|
11,833
|
|
|
12,365
|
|
||
Net change in operating assets and liabilities
|
23,593
|
|
|
14,524
|
|
||
Current portion of income tax expense
|
1,541
|
|
|
2,671
|
|
||
Stock-based compensation
|
(355
|
)
|
|
(531
|
)
|
||
Foreign exchange gain (loss) on revaluation of debt
|
84
|
|
|
(627
|
)
|
||
Gain on disposition of property and equipment
|
57
|
|
|
49
|
|
||
Loss on extinguishment of debt
|
—
|
|
|
(25
|
)
|
||
EBITDA
|
24,594
|
|
|
21,203
|
|
||
Loss on extinguishment of debt
|
—
|
|
|
25
|
|
||
Stock-based compensation
|
355
|
|
|
531
|
|
||
CEO transition expense
|
157
|
|
|
—
|
|
||
Operational restructuring expenses
|
824
|
|
|
3,164
|
|
||
Other non-recurring expenses
|
122
|
|
|
45
|
|
||
Plant startup costs
|
—
|
|
|
480
|
|
||
Unrealized foreign exchange (gain) loss
|
(659
|
)
|
|
1,108
|
|
||
Adjusted EBITDA
|
$
|
25,393
|
|
|
$
|
26,556
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
Exhibit
Number
|
|
Description of Exhibits
|
|
|
|
|
|
|
|
Certification Statement of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
Certification Statement of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
Certification Statement of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
Certification Statement of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
XERIUM TECHNOLOGIES, INC.
|
|
|
(Registrant)
|
|
|
|
|
April 30, 2018
|
By:
|
/s/Clifford E. Pietrafitta
|
|
|
Clifford E. Pietrafitta
|
|
|
Executive Vice President and CFO
|
|
|
(Principal Financial Officer)
|
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