Xerium Clothing segment earnings up for Q2

07 Aug '08

6 min read

• Adjusted EBITDA (as defined in the Company's amended credit facility) was $50.2 million for the 2008 quarter, compared to $38.2 million for the 2007 quarter. See "EBITDA and Adjusted EBITDA Reconciliation" below.

• In order to improve performance, the Company continues to target a reduction in days of receivables and increases in inventory turns and days of payables outstanding. During the 2008 quarter, as compared with the 2007 quarter, the Company reported that accounts receivables, as measured as a ratio of days of receivables, improved from 63 days to 59 days, inventory turns improved to 3.4 versus 3.2 and days of payables improved to 41 days versus 35 days.

• Cash on hand at June 30, 2008 was $25.4 million, compared to cash on hand at March 31, 2008 of $31.0 million. Cash on hand at June 30, 2007 was $24.7 million.

• During the 2008 quarter, Xerium made senior debt principal repayments of $2.3 million. During the six months ended June 30, 2008, the Company made senior debt repayments of $13.5 million.

• Capital expenditures during the 2008 quarter were $8.8 million, compared to $7.3 million during the 2007 quarter. As previously disclosed, the Company has slowed the pace of planned capital expenditures for its Vietnam facility and does not expect to begin production until 2009. The Company expects that capital expenditures will be in a range of approximately $38 to $44 million in 2008, and that capital expenditures in 2009 will be lower than those for 2008.

OTHER HIGHLIGHTS:
• As announced on May 30, the Company secured a fifth amendment to its existing $700 million senior credit facility, which requires that the Company comply with revised operating controls and financial covenants. The term loan portion of the credit facility matures in 2012 and the revolving credit portion matures in 2011, which is unchanged in the credit facility amendment.

• On August 4, 2008, the Company's independent registered public accounting firm, Ernst & Young LLP, removed the going concern explanatory paragraph from its audit report on the Company's financial statements as of December 31, 2007 and 2006 and for each of the three years in the period ended December 31, 2007.

CLOTHING SEGMENT HIGHLIGHTS:
• Clothing segment sales during the second quarter of 2008 increased $6.4 million, or 6.2%, to $109.3 million, from $102.9 million in the year-ago quarter, primarily from the favorable currency effects of $8.3 million and increased sales in Asia-Pacific, partially offset by decreased sales in North America and Europe. Net sales excluding the effects of currency decreased approximately 1.8%.

• Overall pricing levels in the clothing segment decreased approximately 1% during the 2008 quarter, compared to the prior-year period.

• Clothing segment earnings for the quarter increased 6.1% to $27.9 million for the 2008 quarter, compared to the prior-year quarter.

ROLL COVERS SEGMENT HIGHLIGHTS:
• Roll covers segment sales during the 2008 quarter increased $10.3 million, or 20.3%, to $61.1 million from $50.8 million in the 2007 quarter, due to $4.1 million of favorable currency effects on non-U.S. Dollar sales and increased sales in Europe, North America and Asia-Pacific.

• Overall pricing levels in the roll covers segment decreased by less than 1% in the 2008 quarter, compared to the prior year period.

• Roll covers segment earnings for the quarter increased 9.2% to $15.5 million for the 2008 quarter, compared to the prior-year quarter.

Xerium Technologies Inc

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