Xerium Technologies, Inc. (NYSE: XRM), a leading global provider of industrial consumable products and services, today announced its Q3 2013 results.
* Sales continue to increase:
- On a constant currency basis, Q3 2013 sales increased 0.2% from Q3 2012. See “Segment Information” and “Non-GAAP Financial Measures” below for further discussion.
- Q3 2013 sales per employee were $171k, remaining at a four year high.
- Backlog at September 30, 2013 was $156 million, slightly down from backlog at June 30, 2013, but consistent with seasonal expectations regarding orders.
- 2013 September Year-To-Date (YTD) sales were $413.2 million. Excluding foreign currency effects, YTD sales increased $9.1 million, or 2.2%, versus the comparable prior year period. This sales growth is in line with global paper market trade group estimates.
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.
- Constant currency sales growth was higher in rolls & mechanical services at $5.7 million, or 4.1%, than in machine clothing, which grew $3.4 million, or 1.3%.
- Sales growth continues to be hampered by lack of production capacity in multiple product areas. The Company is progressively working to eliminate these bottlenecks.
- For the last twelve months, sales and orders are exactly balanced on a constant currency basis at $542.2 million.
* Adjusted EBITDA continues to increase:
- Q3 2013 Adjusted EBITDA was $27.2 million, or 20.2% of sales. This is an increase of $2.8 million or 11.5% versus Q3 2012. See "Non-GAAP Financial Measures" below.
- September 2013 YTD Adjusted EBITDA was $83.3 million. This is an increase of $14.6 million or 21% over the comparable prior year period.
- Sales growth accounts for 27% and net cost reduction accounts for 73% of the September 2013 YTD Adjusted EBITDA improvement.
- SG&A continues to trend lower in both dollars and percentage. The improvement is primarily driven by cost reduction programs.
- Gross profit and gross margin continue to trend higher. The improvement is primarily driven by cost reduction programs.
- Compared to last year, cost reduction programs delivered an incremental $7.0 million in Q3 and an incremental $18.0 million through September 2013. This compares to $5.4 million in Q1 2013 and $5.6 in Q2 2013.
- Plant efficiency programs (waste reduction, procurement programs, productivity and logistics programs) account for approximately 40% of the YTD cost reduction improvements while restructuring programs account for 60% of the YTD cost reduction improvements.
- In Q3, Xerium announced plans to build a new, high-end press felt plant near Shanghai, China. This is anticipated to deliver both cost reduction and sales growth results.
- In Q3, the Company identified its restructuring goals targeted for implementation in Q1 2014.
- Ordering long lead time equipment;
- Making restructuring/severance payments;
- Finishing 4 plant closures, while 7 plant expansions are currently underway;
- Initiating the next plant closure;
- Building the new greenfield plant in China;
- Expanding the Company's after-market rolls and service footprint and capabilities;
- Implementing 10 new product programs that open new market aperture for Xerium to grow sales in the future; and
- Lowering its net debt to $394.4 million. Net debt leverage continues to improve in line with Adjusted EBITDA improvements, declining to approximately 3.8x Adjusted EBITDA.