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Xerium Technologies Reports Third Quarter Results

For additional information regarding non-GAAP financial measures and a reconciliation of such measures to the most comparable financial measures under GAAP, please see below. The information in this press release should be read in conjunction with the financial statements and footnotes contained in our documents to be filed with the Securities and Exchange Commission.

About Xerium Technologies

Xerium Technologies, Inc. (NYSE: XRM) is a leading global manufacturer and supplier of two types of consumable products used primarily in the production of paper-clothing and roll covers. The Company, 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 31 manufacturing facilities in 14 countries around the world, Xerium has approximately 3,400 employees.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements involving risks and uncertainties, both known and unknown, that may cause actual results to differ materially from those indicated. These risks and uncertainties include the following items: (1) 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 stemming from the European sovereign debt crisis; (2) a sustained downturn in the paper industry, compounded by uncertainty in global economic conditions, could adversely affect our revenues and profitability; (3) market improvement in our industry may occur more slowly than we anticipate, may stall or may not occur at all; (4) variations in demand for our products, including our new products, could negatively affect our revenues and profitability; (5) our manufacturing facilities may be required to operate at or near capacity, which could negatively affect our production facilities, customer order lead time, product quality and labor relations; (6) our plans to develop and market new products, enhance operational efficiencies, and reduce costs may not be successful; and (7) the other risks and uncertainties discussed elsewhere in this press release, our Form 10-K for the year ended December 31, 2010, our Form 10-Qs for the quarters ended March 31, 2011 and June 30, 2011 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. 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.

 
Xerium Technologies, Inc. Condensed Consolidated Statements of Operations—(Unaudited) (dollars in thousands, except per share data)
 
  Three Months Ended   Nine Months Ended
September 30, September 30,
2011   2010 2011   2010
Net sales $ 148,227 $ 135,899 $ 441,771 $ 403,741
Costs and expenses:
Cost of products sold 94,010 83,258 275,768 247,671
Selling 19,817 18,043 59,848 53,986
General and administrative 14,002 15,652 47,560 60,097
Restructuring and impairments 577 3,322 1,287 7,433
Research and development   2,907     2,887     8,920     8,707  
  131,313     123,162     393,383     377,894  
Income from operations 16,914 12,737 48,388 25,847
Interest expense, net (9,873 ) (12,020 ) (29,709 ) (44,529 )
Loss on extinguishment of debt - - (2,926 ) -
Foreign exchange (loss) gain   (289 )   744     (284 )   736  
 

Income (loss) before reorganization expenses and provision for income taxes

6,752 1,461 15,469 (17,946 )
Reorganization expenses   -     (799 )   -     (44,374 )
Income (loss) before provision for income taxes 6,752 662 15,469 (62,320 )
Provision for income taxes   3,264     4,318     9,711     11,504  
Net income (loss) $ 3,488   $ (3,656 ) $ 5,758   $ (73,824 )
 
Net income (loss) per share:        
Basic $ 0.23   $ (0.24 ) $ 0.38   $ (8.84 )
Diluted $ 0.23   $ (0.24 ) $ 0.38   $ (8.84 )
Shares used in computing net income (loss) per share:
Basic   15,135,309     14,970,050     15,059,320     8,350,635  
Diluted   15,144,668     14,970,050     15,068,679     8,350,635  
 
 

Condensed Consolidated Selected Financial Data (in thousands)

 
Cash Flow data:   Nine Months Ended
September 30,
2011   2010
 
Net cash provided by operating activities $ 30,836 $ 3,465
Net cash provided by (used in) investing activities 2,494 (29,639 )
Net cash (used in) provided by financing activities (28,905 ) 35,534
 
Other financial data:
Depreciation and amortization $ 33,302 $ 30,763
Capital expenditures (18,930 ) (14,405 )
 
 
 
Balance sheet data: September 30, December 31,
2011 2010
 
Cash and cash equivalents and restricted cash $ 42,957 $ 52,402
Total assets 690,010 700,143
Senior debt 471,695 475,563
Total debt 475,356 481,361
Total stockholders' equity 15,055 18,735
 

NON-GAAP FINANCIAL MEASURES

The Company uses EBITDA and Adjusted EBITDA (as defined in its new credit facility) as supplementary non-GAAP financial measures to assist in evaluating its liquidity and financial performance, specifically its ability to service indebtedness and to fund ongoing capital expenditures. The new credit facility includes covenants based on Adjusted EBITDA. If the Company’s Adjusted EBITDA declines below certain levels, it may violate the covenants resulting in a default condition under the credit facility or be required to prepay the credit facility. 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).

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