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Xerium Technologies Reports First Quarter Results

Stocks in this article: XRM

Xerium Technologies, Inc. (NYSE:XRM), a leading global manufacturer of industrial textiles and roll covers used primarily in the paper production process, announced today the results of its operations for the quarter ended March 31, 2012. Net sales decreased approximately 6% compared to the quarter ended March 31, 2011 and net (loss) income per diluted share decreased to $(0.50) from $0.04 for the quarter ended March 31, 2012 compared to 2011.

“The gradually increasing orders for paper machine clothing and roll coverings we’ve received in the first quarter of 2012 add to our confidence that we will experience steadily improving market conditions as the year progresses,” said Stephen R. Light, President, Chief Executive Officer and Chairman. “Clearly the challenge we face in 2012 and beyond is how to further reduce our costs to lessen the impact of the industry’s negative cycles, while we simultaneously drive to increase revenues. During the last four years, we’ve aggressively attacked our variable costs by: improving weaving yields by as much as 30% to consume less material, simplifying and speeding up many of our old processes, increasing our focus on trade working capital and improving total working capital by 25.4% since 2008, and reducing headcount approximately 15% in our core units, while substantially growing our presence in Asia by nearly 50%. We’ve closed numerous facilities and transferred work to areas where costs were lower. We’ve tightly controlled capital investment. Finally, we’ve consolidated many back office functions to reduce regional duplication. To move the Company to the next performance level and restore our historical margins, while adapting to the ever changing dynamics of the paper industry, we’ll capitalize on the improvements we’ve made to further rationalize our numerous facilities and reduce our fixed costs.”

RESTRUCTURING

During the first quarter of 2012, we incurred costs of $3.6 million to terminate a sales agency arrangement in Europe, of which $3.0 million will be paid in the second quarter of 2012 and $0.6 million will be paid in the third quarter of 2012. After accounting for ongoing personnel costs associated with directly employing these former independent sales agents, termination of this agreement is expected to result in annual cost savings of approximately $1.4 million.

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