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Xerium Technologies Reports First 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 “Reporting Unit Information” above and our Selected Financial Data 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 quickly increase or decrease production, which could negatively affect our production facilities, customer order lead time, product quality, labor relations or gross margin; (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, 2011 filed on March 14, 2012 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.

Selected Financial Data Follows

Xerium Technologies, Inc.

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income

(dollars in thousands, except per share data)

 
(Unaudited)
Three Months Ended
March 31,
2012 2011
Net sales $ 134,364 $ 143,166
Costs and expenses:
Cost of products sold 87,921 89,251
Selling 19,488 19,524
General and administrative 17,825 17,380
Restructuring 3,974 168
Research and development   2,962     3,088  
  132,170     129,411  
Income from operations 2,194 13,755
Interest expense, net (9,598 ) (9,854 )
Foreign exchange gain   539     164  
(Loss) income before provision for income taxes (6,865 ) 4,065
Provision for income taxes   (657 )   (3,418 )
Net (loss) income $ (7,522 ) $ 647  
   
Comprehensive (loss) income $ (3,478 ) $ 6,392  
 
Net (loss) income per share:
Basic $ (0.50 ) $ 0.04  
Diluted $ (0.50 ) $ 0.04  
Shares used in computing net (loss) income per share:
Basic   15,162,183     14,988,624  
Diluted   15,162,183     16,635,189  

Condensed Consolidated Selected Financial Data

(in thousands)

 
Cash Flow data: Quarter Ended
March 31,
2012 2011
 
Net cash provided by (used in) operating activities $ 10,152 $ (194 )
Net cash used in investing activities (2,548 ) (2,572 )
Net cash used in financing activities (13,240 ) (4,384 )
 
Other financial data:
Depreciation and amortization $ 10,340 $ 10,808
Capital expenditures (3,251 ) (4,190 )
 
Balance sheet data: March 31, December 31,
2012 2011
 
Cash and cash equivalents $ 38,310 $ 43,566
Total assets 660,829 665,721
Senior debt 457,531 467,137
Total debt 458,737 469,054
Total stockholders' deficit (5,051 ) (2,305 )

EBITDA and Adjusted EBITDA Non-GAAP Measures

Non-GAAP Financial Measures

We use EBITDA and Adjusted EBITDA (as defined in the 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. The Credit Facility includes covenants based on Adjusted EBITDA. If our Adjusted EBITDA declines below certain levels, we 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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