Xerium Technologies, Inc. (
Q3 2010 Earnings Call Transcript
November 5, 2010 9:00 am ET
Kevin McDougall – EVP and Corporate Counsel
Stephen Light – President, CEO and Chairman
DeForest Hinman – Walthausen
Nicholas Ware [ph] – Anderson
Johan Dahlfors – Argan Capital
Robert Mandery – Citi
Tyrus Bookman – Park West
Previous Statements by XRM
» Xerium Technologies, Inc. Q2 2010 Earnings Call Transcript
» Xerium Technologies, Inc. Q1 2010 Earnings Call Transcript
» Xerium Technologies, Inc. Q4 2009 Earnings Call Transcript
Ladies and gentlemen, welcome to the Xerium Technologies Third Quarter 2010 Financial Results Conference Call on November 5, 2010. For example, for today’s reported presentation all participants lines will be in listen-only mode. After the presentation there will be an opportunity to ask questions. (Operator instructions)
I would now like to turn the conference over to Kevin McDougall, Xerium’s Executive Vice President and General Counsel. Please go ahead, sir.
Thank you, and welcome to Xerium Technologies third quarter 2010 financial results conference call. Joining me this morning are Stephen Light, the CEO, Chairman and President of Xerium Technologies; and Brian Fox, Interim Chief Financial Officer.
Steve will start the discussion this morning with an update on our progress and then we'll provide further financial details with respect to the quarter. Subsequently, we will open the lines for questions.
Xerium Technologies financial results for the quarter were announced in a press release after the market closed on Thursday, November 4, 2010. Notification of this call was broadly disclosed, and this conference call is being webcast using the link on the Investor Relations homepage on our Web site at www.xerium.com. We have also posted a slide presentation on our Web site, which we'll refer to during this conference call.
I’d also note that we will make comments today about the future expectations, plans and prospects for the company that constitute forward-looking statements for the purpose of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.
Our actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those described in yesterday’s press release and in our SEC filings. The forward-looking statements represent our view as of today, November 5, 2010, and we specifically disclaim any obligation to update these forward-looking statements.
Lastly, on this call, we plan to discuss supplementary non-GAAP financial measures such as adjusted EBITDA that are key metrics for our credit facility covenants and that we use internally to assess liquidity and financial performance and therefore believe will assist you in better understanding of our company.
Reconciliation to these measures to the comparable GAAP numbers are available in our press release and other materials which are each posted in the Investor Relations section at our Web site at www.xerium.com.
With that, I'll turn the call over to Stephen.
Thanks, Kevin. Good morning, ladies and gentlemen. Thanks for taking time this morning to join us. It’s been another very active quarter for the company and one in which we’ve made good progress in most areas. Although, as we’ll discuss little later on, there are few areas I’ll speak about where our progress is not quite as linear as I’d like.
As we’ve done each quarter in the past year, last night we published our earnings press release and posted, as Kevin said a set of relevant power point slides in the investor relations section of our Xerium Web site.
You’ll note that we have sequenced the charts to begin with bookings and flow through P&L and the balance sheet rather than beginning with our historical debt charts. As we believe we can now shift our focus toward operational performance rather than covenant complaint and debt management.
No one should read from that that we’re taking our eye off the cash ball, but rather we’re comfortable that we now have the processes ingrained into our culture to not lose sights of the focused area every day we work.
Now, let’s begin. I’ll present my prepared remarks in concert with thee slides that we’ve posted. I suggest if you have not already done so please do note and read the disclaimer on Slide #2 at your convenience.
Consolidated bookings shown on Chart #3 remained essentially constitute with Q2 at 142.7 million, in Q3 versus 143.7 million in the prior quarter. This level of bookings is consistent with our most recent analysis of the forecast concerning forestry product markets where rapid growth in the fourth quarter 2009 and the first half of 2010 has been attributed to replenishing depleted inventories at the end users. This ordering pattern is also completely consistent with our expectations of the recovery being supported by inventory replenishment and then a period of more normalized GDP equivalent growth. In fact, as I looked over prior earnings call script, we discuss this potential in our previous 2010 call.
During the quarter we witnessed the very typical slowdown in European booking as much as you know takes holidays during July and August. But as you can see, September’s consolidated bookings of $51.2 million with the second highest of the year that we remained confident in the stability of our market.
On Chart #4, you will see that Roll bookings have been slowly but very steadily rising, increasing 3.7% compared to the second quarter. In our opinion, the increase in Rolls booking marks the return to more normal behavior by the paper mills maintenance team as well as growing enthusiasm for the new Roll product about which I’ll speak later.