Xerium clothing segment sales decline in Q1

11 May '09

5 min read

• Gross margins declined to 38.0% in the first quarter of 2009 from 39.8% in the first quarter of 2008. The decline is primarily due to the impact of lower sales volumes in the roll covers segment.
• Restructuring expenses are related to the Company's long-term strategy to reduce production costs and improve long-term competitiveness by closing and/or transferring production from certain of its manufacturing facilities and through headcount reductions. During the first quarter of 2009, headcount reductions and facility and other costs were $1.3 million, which were almost entirely offset by a $1.2 million gain on the sale of Company's Swedish roll covers facility.
• Net loss for the first quarter of 2009 was $9.4 million or $0.19 per diluted share, compared to a net loss of $4.7 million or $0.10 per diluted share for the first quarter of 2008. The decrease is primarily a result of lower sales volumes in the first quarter of 2009 as compared with the first quarter of 2008, and the impact of a foreign exchange loss of $1.4 million, compared to a foreign exchange gain of $3.5 million in the first quarter of 2008, partially offset by lower operating expenses and the decrease in interest expense in the first quarter of 2009 due to the mark to market losses of $12 million in the first quarter of 2008 based on the loss of hedge accounting.
• Net cash used by operating activities was $7.8 million for the first quarter of 2009, compared to net cash provided by operating activities of $29.8 million for the first quarter of 2008. The decrease is due to a decrease in the volume of business as a result of the effect of the global economic crisis on the paper industry and an increase in working capital, principally due to the payment of payables and accruals.
• Adjusted EBITDA (as defined by the Company's amended credit facility) was $20.2 million for the quarter, compared to $35.6 million in the first quarter 2008. 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 2009 first quarter, as compared with the 2008 first quarter, the Company reported that accounts receivables, as measured as a ratio of days of receivables, were 47 days compared to 65 days; inventory turns were 4.4 compared to 3.2; and days of payables were 61 days compared to 85 days.
• Cash on hand at March 31, 2009 was $27.5 million, compared to $34.7 million at December 31, 2008, and $31.0 million at March 31, 2008.
• Capital expenditures during the first quarter of 2009 were $7.0 million, compared to $12.1 million in capital expenditures in the first quarter of 2008. The Company expects 2009 capital expenditures to be approximately $30 million and that capital expenditure levels in 2010 will be comparable to those for 2009.

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