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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 “Segment Information” 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 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) a sustained downturn in the paper industry, compounded by uncertainty in global economic conditions, particularly those stemming from Europe, could adversely affect our revenues and profitability; (2) our cost reduction efforts 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 stemming from the European sovereign debt crisis; (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 profits; (7) our plans to develop and market new products, enhance operational efficiencies, and reduce costs may not be successful; and (8) 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)
 
 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

2012   2011 2012   2011
Net sales $ 134,231 $ 148,227 $ 404,973 $ 441,771
Costs and expenses:
Cost of products sold 85,079 94,010 258,396 275,768
Selling 18,546 19,817 57,104 59,848
General and administrative 15,650 14,002 47,509 47,560
Restructuring 5,840 577 10,943 1,287
Research and development 2,700   2,907   8,531   8,920  
127,815   131,313   382,483   393,383  
Income from operations 6,416 16,914 22,490 48,388
Interest expense, net (9,777 ) (9,873 ) (28,494 ) (29,709 )
Loss on extinguishment of debt (2,926 )
Foreign exchange (loss) gain (202 ) (289 ) 157   (284 )
(Loss) income before provision for income taxes (3,563 ) 6,752 (5,847 ) 15,469
Provision for income taxes (94 ) (3,264 ) (3,105 ) (9,711 )
Net (loss) income $ (3,657 ) $ 3,488   $ (8,952 ) $ 5,758  
Comprehensive loss $ (1,781 ) $ (18,375 ) $ (15,490 ) $ (4,453 )
Net (loss) income per share:
Basic $ (0.24 ) $ 0.23   $ (0.59 ) $ 0.38  
Diluted $ (0.24 ) $ 0.23   $ (0.59 ) $ 0.38  
Shares used in computing net (loss) income per share:
Basic 15,257,617   15,135,309   15,215,752   15,059,320  
Diluted 15,257,617   15,144,668   15,215,752   15,068,679  
 

Condensed Consolidated Selected Financial Data

 
Cash Flow Data: (in thousands)  

Nine Months Ended

September 30,

2012   2011
Net cash provided by operating activities $ 30,205 $ 30,836
Net cash (used in) provided by investing activities (11,844 ) 2,494
Net cash used in financing activities (22,382 ) (28,905 )
 
Other Financial Data: (in thousands)
 
Depreciation and amortization 30,242 33,302
Capital expenditures, gross (13,222 ) (18,930 )
 
Balance Sheet Data: (in thousands)

September 30, 2012

(Unaudited)

December 31,

2011

Cash and cash equivalents $ 39,577 $ 43,566
Total assets 630,777 665,721
Senior debt 439,965 467,137
Total debt 447,810 469,054
Total stockholders’ deficit (16,544 ) (2,305 )

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. 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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