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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 |
Xerium Technologies, Inc. (NYSE: XRM), a leading global provider of industrial consumable products and services, today announced its Q3 2013 results.
Key Highlights
* Sales continue to increase:
Excluding foreign currency effects, sales increased across all regions, $4.2 million or 5.5% in Asia, $2.8 million or 2.0% in Europe and $2.1 million or 1.1% in the Americas.
* Adjusted EBITDA continues to increase:
* Additional cost reduction programs continue to be implemented:
* The Company continues to reinvest the majority of its free cash flow to improve future results by:
* Q3 fully diluted earnings per share grew from a net loss of $(0.24) per diluted share to net income of $0.13 per diluted share, primarily as a result of increased gross margins and decreased operating expenses as a result of our cost reduction initiatives.
Harold Bevis, Xerium's President and Chief Executive Officer said:
“Third quarter 2013 performance was as expected. The business continues to be commercially steady and predictable with established trends. Adjusted EBITDA rates continue to increase due to explicit cost reduction actions which are being progressively implemented. We have identified numerous opportunities to advance the Company’s sales and Adjusted EBITDA, and we have prioritized them to achieve the proper balance amongst:
* Short-term results versus long term results;
* High-risk projects versus low-risk projects;
* Cost reduction programs versus sales growth programs;
* New product development versus next generation advancement of existing products; and
* Maintenance of current business/capabilities versus implementation of new business/capabilities."
“We have a large backlog going into the 4th quarter of 2013 and into 2014, and we see no substantial commercial changes to the business right now, including any end-of-the-year timing events in the industry. The Company is committed to the continuous pursuit and implementation of measurable and sustainable advancement. We intend to keep increasing our Adjusted EBITDA for multiple years including 2014 and we are finalizing the next slate of major actions right now. We are already committed to a significant portion of our discretionary 2014 capex spend as we have advance-ordered multiple long lead time machines."
“We are reinvesting the majority of our free cash flow back into the business right now and we will continue to do that in 2014. We will not need to do this indefinitely, but we feel we are catching-up right now, on top of normal needs. We need a few less plants in high-cost areas, a few more machines to debottleneck our sales growth avenues, a bit more production in low cost areas, more removal of SG&A redundancy and reorganization of our human resources into a leaner forward-looking profile."
“The new China clothing plant positively impacts 2016 and beyond. It will be a game-changer cost structure for the Company as well as increasing our customer service response times to Chinese customers. The China market is the largest in the world and we need to get set up correctly for the long term. The China investment decision demonstrates our top-down commitment to making material changes to Xerium’s business model."
“2014 and 2015 improvements are based upon a different set of decisions and actions. These improvements involve risk-taking and benefit from thoughtful planning. We like our improvement pace and we are designing plans for meaningful Adjusted EBITDA improvements for 2014 and 2015."
“Our cumulative goal is to progressively lay the foundation for higher performance. Our historical and legacy customers are doing well, but some are undergoing change. They need Xerium to be an even stronger valued partner than before, and we feel we are doing that. Our R&D function is focused and we are pursuing a slate of both next generation and new products. The collective goal of our 3,200 employees is to deliver incrementally higher value and achieve incrementally better results. Expect steady and solid advancement, built upon explicit and measurable actions.”
Third Quarter Financial Highlights:
SEGMENT INFORMATION
The following table presents net sales for the third quarter of 2013 and the third quarter of 2012 by segment and the effect of currency on third quarter 2012 net sales (dollars in thousands):
Net Sales For The Three Months EndedSeptember 30,
2013
September 30,
2012
$ Change
Currency
Effect of $
Change
% Change% Change
Excluding
Currency
Clothing $ 87,980 $ 88,873 $ (893 ) $ (114 ) (1.0 )% (0.9 )% Roll Covers $ 47,062 $ 45,358 1,704 713 3.8 % 2.2 % Total $ 135,042 $ 134,231 $ 811 $ 599 0.6 % 0.2 %The following table presents net sales for the nine months ended September 30, 2013 and 2012 by segment and the effect of currency on the nine months ended September 30, 2012 net sales (dollars in thousands):
Net Sales For The Nine Months EndedSeptember 30,
2013
September 30,
2012
$ Change
Currency
Effect of $
Change
% Change% Change
Excluding
Currency
Clothing $ 267,331 $ 265,671 $ 1,660 $ (1,759 ) 0.6 % 1.3 % Roll Covers $ 145,840 $ 139,302 6,538 853 4.7 % 4.1 % Total $ 413,171 $ 404,973 $ 8,198 $ (906 ) 2.0 % 2.2 %TRADE WORKING CAPITAL
The following table presents trade working capital as of September 30, 2013 and December 31, 2012 (in thousands):
September 30,
2013
December 31,
2012
$ Fav/
(Unfav)
Change
Trade Receivables, Net (1) $ 91,793 $ 83,567 $ (8,226 ) Inventories, Net 81,417 77,391 (4,026 ) Trade Accounts Payable (2) (27,453 ) (29,909 ) (2,456 ) Total $ 145,757 $ 131,049 $ (14,708 )(1) Trade Receivables, Net equals Accounts Receivable less Other Receivables of $1,192 and $889 at September 30, 2013 and December 31, 2012, respectively.(2) Trade Accounts Payables equals Accounts Payable less Deposits Received of $2,323 and $3,810 at September 30, 2013 and December 31, 2012, respectively and Other Payables of $1,521 and $3,166 at September 30, 2013 and December 31, 2012, respectively.
CONFERENCE CALL
The Company plans to hold a conference call on the following morning:
Date: Thursday, November 7, 2013 Start Time: 9:00 a.m. Eastern Time Domestic Dial-In: +1-800-510-0219 International Dial-In: +1-617-614-3451 Passcode: 90503131Webcast: www.xerium.com/investorrelations
To participate on the call, please dial in at least 10 minutes prior to the scheduled start. A live audio webcast and replay of the call may be found in the investor relations section of the Company’s website at www.xerium.com.
NON-GAAP FINANCIAL MEASURES
This press release includes measures of performance that differ from the Company’s financial results as reported under generally accepted accounting principles (“GAAP”). The Company uses supplementary non-GAAP measures, including EBITDA, Adjusted EBITDA, currency effects on Net Sales and Trade Working Capital to assist in evaluating its liquidity and financial performance. EBITDA and Adjusted EBITDA are specifically used in evaluating the ability to service indebtedness and to fund ongoing capital expenditures. Neither Adjusted EBITDA nor EBITDA should be considered in isolation or as a substitute for income (loss) or cash flows from operations (as determined in accordance with GAAP).
For additional information regarding non-GAAP financial measures and a reconciliation of such measures to the most comparable financial measures under GAAP, please see “Segment Information” and "Trade Working Capital" above and our Selected Financial Data below. In addition, the information in this press release should be read in conjunction with the corresponding exhibits, financial statements and footnotes contained in our Report on Form 10-Q for the quarter ended September 30, 2013 filed with the Securities and Exchange Commission.
About Xerium Technologies
Xerium Technologies, Inc. (NYSE:XRM) is a leading global provider of industrial consumable products and services. Xerium, which operates around the world under a variety of brand names, utilizes a broad portfolio of patented and proprietary technologies to provide customers with tailored solutions and products integral to production, all designed to optimize performance and reduce operational costs. With 28 manufacturing facilities in 12 countries around the world, Xerium has approximately 3,200 employees.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements. The words “believe,” “estimate,” “expect,” “intend,” “anticipate,” “goals,” variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. The forward-looking statements in this release include statements regarding our anticipated sales performance, cost savings measures, future efforts to improve overall performance and backlog. Forward-looking statements are not guarantees of future performance, and actual results may vary materially from the results expressed or implied in such statements. Differences may result from actions taken by us, as well as from risks and uncertainties beyond our control. These risks and uncertainties include the following items: (1) our expected sales performance and our backlog of sales may not be fully realized; (2) our cost reduction efforts, including our restructuring activities, may not have the positive impacts we anticipate; (3) our financial results could be adversely affected by fluctuations in interest rates and currency exchange rates, for instance a marked decline in the value of the Euro relative to the U.S. Dollar; (4) market improvement in our industry may occur more slowly than we anticipate, may stall or may not occur at all; (5) variations in demand for our products, including our new products, could negatively affect our revenues and profitability; (6) our manufacturing facilities may be required to quickly increase or decrease production, which could negatively affect our production facilities, customer order lead time, product quality, labor relations or gross margin; (7) our plans to develop and market new products, enhance operational efficiencies, and reduce costs may not be successful; (8) we are subject to execution risk related to the startup of our proposed new facility in China and (9) the other risks and uncertainties discussed elsewhere in this press release, our Form 10-K for the year ended December 31, 2012 filed on March 11, 2013 and our other SEC filings. If any of these risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary significantly from what we projected. Any forward-looking statement in this press release reflects our current views with respect to future events. Except as required by law, we assume no obligation to publicly update or revise these forward-looking statements for any reason, whether as a result of new information, future events, or otherwise. As discussed above, we are subject to substantial risks and uncertainties related to current economic conditions, and we encourage investors to refer to our SEC filings for additional information. Copies of these filings are available from the SEC and in the investor relations section of our website at www.xerium.com.
Selected Financial Data Follows
Xerium Technologies, Inc.
Consolidated Statements of Operations and Comprehensive Income (Loss)
(dollars in thousands, except per share data)
Three months ended September 30, Nine months ended September 30, 2013 2012 2013 2012 Net Sales $ 135,042 $ 134,231 $ 413,171 $ 404,973 Costs and expenses: Cost of products sold 81,656 85,079 252,628 258,396 Selling 17,242 18,546 53,349 57,104 General and administrative 15,278 15,650 45,418 47,509 Research and development 2,382 2,700 7,634 8,531 Restructuring 3,034 5,840 8,454 10,943 119,592 127,815 367,483 382,483 Income from operations 15,450 6,416 45,688 22,490 Interest expense, net (9,378 ) (9,777 ) (31,697 ) (28,494 ) Loss on extinguishment of debt — — (3,123 ) — Foreign exchange (loss) gain (905 ) (202 ) (1,102 ) 157 Income (loss) before provision for income taxes 5,167 (3,563 ) 9,766 (5,847 ) Provision for income taxes (3,063 ) (94 ) (9,055 ) (3,105 ) Net income (loss) $ 2,104 $ (3,657 ) $ 711 $ (8,952 ) Comprehensive income (loss) $ 9,182 $ (1,781 ) $ 2,665 $ (15,490 ) Net income (loss) per share: Basic $ 0.14 $ (0.24 ) $ 0.05 $ (0.59 ) Diluted $ 0.13 $ (0.24 ) $ 0.05 $ (0.59 ) Shares used in computing net income (loss) per share: Basic 15,375,728 15,257,617 15,352,352 15,215,752 Diluted 16,044,291 15,257,617 15,791,597 15,215,752Consolidated Selected Financial Data
Cash Flow Data: (in thousands) Nine months ended September 30, 2013 2012 Net cash provided by operating activities $ 30,431 $ 30,917 Net cash used in investing activities $ (13,327 ) $ (11,844 ) Net cash used in financing activities $ (2,878 ) $ (22,382 ) Other Financial Data: (in thousands) Depreciation and amortization $ 27,419 $ 30,242 Capital expenditures, gross $ (15,562 ) $ (13,222 ) Balance Sheet Data: (in thousands) September 30, 2013 December 31, 2012 Cash and cash equivalents $ 48,782 $ 34,777 Total assets $ 626,906 $ 618,843 Total debt $ 443,169 $ 444,992 Total stockholders’ deficit $ (25,369 ) $ (29,061 )EBITDA and Adjusted EBITDA Non-GAAP Measures
Non-GAAP Financial Measures
We use EBITDA and Adjusted EBITDA (as defined in our credit facility) as supplementary non-GAAP liquidity measures to assist us in evaluating our liquidity and financial performance, specifically our ability to service indebtedness and to fund ongoing capital expenditures. Neither EBITDA nor Adjusted EBITDA should be considered in isolation or as a substitute for income (loss) or cash flows from operations (as determined in accordance with GAAP).
EBITDA is defined as net income (loss) before interest expense, income tax provision (benefit) and depreciation (including non-cash impairment charges) and amortization.
“Adjusted EBITDA” means, with respect to any period, the total of (A) the consolidated net income for such period, plus (B) without duplication, to the extent that any of the following were deducted in computing such consolidated net income for such period: (i) provision for taxes based on income or profits, including, without limitation, federal, state, provincial, franchise and similar taxes, including any penalties and interest relating to any tax examinations, (ii) consolidated interest expense, (iii) consolidated depreciation and amortization expense, (iv) reserves for inventory in connection with plant closures, (v) consolidated operational restructuring costs, subject to annual limitations provided for in our credit facility, (vi) noncash charges resulting from the application of purchase accounting, including push-down accounting, (vii) non-cash expenses resulting from the granting of common stock, stock options, restricted stock or restricted stock unit awards under equity compensation programs solely with respect to common stock, and cash expenses for compensation mandatorily applied to purchase common stock, (viii) non-cash items relating to a change in or adoption of accounting policies, (ix) non-cash expenses relating to pension or benefit arrangements, (x) expenses incurred as a result of the repurchase, redemption or retention of common stock earned under equity compensation programs solely in order to make withholding tax payments, (xi) amortization or write-offs of deferred financing costs, (xii) any non-cash losses resulting from mark to market hedging obligations (to the extent the cash impact resulting from such loss has not been realized in such period) and (xiii) other non-cash losses or charges (excluding, however, any non-cash loss or charge which represents an accrual of, or a reserve for, a cash disbursement in a future period), minus (C) without duplication, to the extent any of the following were included in computing consolidated net income for such period, (i) non-cash gains with respect to the items described in clauses (vi), (vii), (ix), (xi), (xii) and (xiii) (other than, in the case of clause (xiii), any such gain to the extent that it represents a reversal of an accrual of, or reserve for, a cash disbursement in a future period) of clause (B) above and (ii) provisions for tax benefits based on income or profits. Notwithstanding the foregoing, Adjusted EBITDA, as defined in the credit facility and calculated below, may not be comparable to similarly titled measurements used by other companies.
Consolidated net income is defined as net income (loss) determined on a consolidated basis in accordance with GAAP; provided, however, that the following, without duplication, shall be excluded in determining consolidated net income: (i) any net after-tax extraordinary or non-recurring gains, losses or expenses (less all fees and expenses relating thereto), (ii) the cumulative effect of changes in accounting principles, (iii) any fees and expenses incurred during such period in connection with the issuance or repayment of indebtedness, any refinancing transaction or amendment or modification of any debt instrument, in each case, as permitted under the credit facility and (iv) any cancellation of indebtedness income.
The following table provides reconciliation from net income (loss) and operating cash flows, which are the most directly comparable GAAP financial measures, to EBITDA and Adjusted EBITDA.
Three Months EndedSeptember 30,Nine months ended
September 30,
Twelve
Months
Ended
September
30,
2013 2012 2013 2012 2013 Net income (loss) $ 2,104 $ (3,657 ) 711 $ (8,952 ) (8,371 ) Stock-based compensation 547 820 1,141 1,574 1,516 Depreciation 8,384 9,321 26,051 28,513 36,071 Amortization of intangibles 407 576 1,368 1,729 1,944 Deferred financing cost amortization 675 971 2,293 2,707 3,010 Foreign exchange loss on revaluation of debt (1,296 ) 344 1,626 879 2,039 Deferred taxes 591 (22 ) 1,339 (383 ) (6,527 ) Asset impairment — 1,600 1,078 1,600 3,154 Gain (loss) on disposition of property and equipment 161 (40 ) 154 (656 ) 235 Loss on extinguishment of debt — — 3,123 — 2,880 Net change in operating assets and liabilities 4,986 7,053 (8,453 ) 3,906 3,597 Net cash provided by operating activities 16,559 16,966 30,431 30,917 39,548 Interest expense, excluding amortization 8,703 8,806 29,404 25,787 38,071 Net change in operating assets and liabilities (4,986 ) (7,053 ) 8,453 (3,906 ) (3,597 ) Current portion of income tax expense 2,472 116 7,716 3,488 8,915 Stock-based compensation (547 ) (820 ) (1,141 ) (1,574 ) (1,516 ) Foreign exchange loss on revaluation of debt 1,296 (344 ) (1,626 ) (879 ) (2,039 ) Asset impairment — (1,600 ) (1,078 ) (1,600 ) (3,154 ) (Loss) gain on disposition of property and equipment (161 ) 40 (154 ) 656 (235 ) Loss on extinguishment of debt — — (3,123 ) — (2,880 ) EBITDA 23,336 16,111 68,882 52,889 73,113 Loss on extinguishment of debt — — 3,123 — 2,880 Stock-based compensation 547 820 1,141 1,574 1,516 Operational restructuring expenses 3,034 5,840 8,454 10,943 23,219 Legal fees related to term debt amendment —30 — 115 — Inventory write off — — 692 — 692 Non-restructuring impairment expense 1 — 667 — 1,862 Non-recurring CEO retirement expenses — 1,600 — 3,096 289 China plant startup costs 296 — 296 — 296 Adjusted EBITDA $ 27,214 $ 24,401 $ 83,255 $ 68,617 $ 103,867
Xerium Technologies, Inc.Phillip B. Kennedy, Investor Relations919-526-1444IR@xerium.com
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