Xerium Technologies, Inc. (XRM)
Q2 2010 Earnings Call
August 12, 2010 9:00 am ET
Kevin McDougall - EVP and General Counsel
Steven Light - Chairman, President and CEO
Dave Maffucci - EVP and CFO
Brian Fox - Interim CFO
Kevin Cohen - Imperial Capital
DeForest Hinman - Walthausen & Co.
Adam Ritzer - CRT Capital
Previous Statements by XRM
» Xerium Technologies, Inc. Q1 2010 Earnings Call Transcript
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» Xerium Technologies, Inc. Q3 2009 Earnings Call Transcript
Ladies and gentlemen, welcome to the Xerium Technologies second quarter 2010 financial results conference call on August 12, 2010. (Operator Instructions)
I would now like to hand the conference over to Mr. Kevin McDougall, Executive Vice President and General Counsel.
Thank you and welcome to Xerium Technologies second quarter 2010 financial results conference call. Joining me this morning are Steven Light, the CEO, Chairman and President of Xerium Technologies; Dave Maffucci, Executive Vice President and Chief Financial Officer; and Brian Fox, Interim CFO.
Steven 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 Wednesday, August 11, 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 website at www.xerium.com. We have also posted a slide presentation on our website, which we'll refer to during this conference call.
I also note that we will make comments today about 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, August 12, 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 may use internally to assess liquidity and financial performance and therefore believe will assist you in better understanding our company. Reconciliation to these measures to the comparable GAAP numbers are available in our press release and in the slide presentation, which are each posted in the Investor Relations section at our website at www.xerium.com.
With that, I'll turn our call over to Steven.
Thanks, Kevin. Good morning, ladies and gentlemen. Thanks for taking time this morning to join us for the Xerium Technologies' investor call. I want to begin by telling you that I am very pleased with the progress we made this quarter, and it's been a very busy quarter.
I am also proud of the extraordinarily professional way in which our employees conducted themselves, leading up to and throughout the presses of our recently completed court-supervised recapitalization.
Simultaneously, I'm appreciative of the confidence our customers expressed in our strategy as they stayed with us throughout this difficult time. Their loyalty to Xerium and it's products is evidenced on the bookings graphics we'll discuss in a little while. And by the steady growth in our sales, which continued unabated during the 43 days of our bankruptcy.
As we've done each quarter in the past year, last night we published our earnings press release. And as Kevin indicated, we also posted a set of relevant power point slides in the investors section of our Xerium website.
Now, I'll present my prepared remarks in concert with those slides. Please do note and read the disclaimer on Slide 2 at your convenience. I'm going to begin with just a few remarks about our emergence from bankruptcy on May 26. And then move quickly on to the performance of the business.
On Slide 3, we present a view of our debt before and after the completion of our successful recapitalization. Since we wanted to make this improvement as clear as possible and without the variations caused by the recent flux in currency exchange rates, we're presenting this chart in constant currency for all periods.
Prior to our bankruptcy filing, approximately 40% of our debt was denominated in euros and 10% denominated in Canadian dollars. The remainder denominated in U.S. dollars. Today, primarily owing to the change in value of the euro versus the dollar, the allocation of debt is 28% in euros, 10% Canadian dollar and 62% in U.S. dollar. When the debt was re-cashed as part of the emergence process, the euro was trading at $1.26 which decreased the amount of euro debt that carried over to the new credit facilities.
As of the close of Q2, we had $474 million of debt comprised of a senior term note of $60 million, the second term loan of $407 million and outstanding amounts under local credit facilities of $7 million. We had total liquidity of $59 million including $33 million of unrestricted cash and un-drawn revolving credit facility of $26 million.
On a constant currency basis, our debt is decreased $130 million after a $10 million payment to reduce the amount of debt owed to our pre-petition lenders and the fees associated with the bankruptcy process, which included amounts paid to our various service providers and advisors and those of the lenders.
As a result of the recapitalization, our pro forma annual debt severance has been reduced by $32 million. In future quarters, this slide will show our debt after the bankruptcy period only. Nearly concurrent with completing the bankruptcy process, the New York Stock Exchange notified us that we were no longer on their watch list. We are now fully compliant with their listing standards and it is our expectation we will remain so.