Business News
X-Rite Announces Fourth Quarter 2009 Financial Results
Wednesday 17. March 2010 - Indicates Q1 2010 Sales Rebound
X-Rite, Incorporated (NASDAQ: XRIT) today announced its financial results for the quarter ended January 2, 2010.
Highlights of todays announcement:
Net sales of $50.1 million for the fourth quarter. An increase of 9.9 percent on a sequential quarter basis and reduction of 17.6 percent versus the same period in 2008
New sales programs for recently released products and emerging markets gained traction driving sales growth in certain market sectors and geographic regions in the fourth quarter
Favorable financial momentum in the quarter and full year evidenced by
Positive net income and operating income in the fourth quarter
Strong adjusted EBITDA margins of 25.3 percent and 23.3 percent, for the fourth quarter and full year respectively
Fourth quarter and year over year interest expense decreased by 27%
Positive and improving cash flows from operations
Strengthened the balance sheet
Debt paid down in the fourth quarter by $3.9 million and $45.7 million for the year
Additionally, secured debt reduced by $41.6 million through conversion to mandatorily redeemable preferred stock
Year end cash balance of $29.1 million
Net debt from secured credit facilities decreased to $154.5 from $220.1 million
Market buzz continues for the myPANTONETM app as it is being featured in a series of Apple iPhone advertisements
Sales trends in the first quarter of 2010 indicate a growth rate in the mid to high single digits compared to prior year quarter
The Company reported fourth quarter 2009 net sales of $50.1 million compared to $45.7 million in the third quarter of 2009 and $60.8 million in the fourth quarter of 2008. These results were in the range of Company expectations given the general market conditions and reflect an improving situation with sequential quarter growth of 9.9 percent and a narrowing decrease on a year over year basis in the quarter of 17.6 percent. Net sales for the full year were reported at $191.7 million, 26.7% lower than $261.5 million for 2008.
“It has been gratifying to see how the Company has managed so well through the unusually difficult challenges of 2009,” said Thomas J. Vacchiano Jr., X-Rites Chief Executive Officer. “Not only have our profit improvement plans been highly effective in the year, but in the fourth quarter of 2009 and now the first quarter of 2010 we are beginning to see the returns on our sales, marketing and new product initiatives in places like Greater China and more broadly across our industrial sector.”
X-Rite reported that its new myPANTONETM app is being featured in a series of iPhone advertisements by Apple in major news publications such as USA TodayTM and The Wall Street JournalTM. Released in September of 2009 in Apples iTunes store, this product combines Pantones “cool factor” with X-Rites leading color management technology.
Supported by the Companys profit improvement actions and narrowing sales difference from the prior year, the Company reported net income of $0.1 million and operating income of $1.5 million in the fourth quarter of 2009. A net loss of $64.7 million was reported in the same period in 2008, which included a $58.1 write down of goodwill and indefinite-lived intangible assets related to the Pantone acquisition in 2007.
Adjusted EBITDA for the fourth quarter was $12.7 million or 25.3 percent of sales as compared to $16.0 million or 26.3 percent of sales in the same period in 2008. Full year 2009 adjusted EBITDA was reported at $44.6 million or 23.3 percent of sales, compared to $60.7 million or 23.2 percent of sales for the full year 2008.
The Company also reported continued progress in working capital management contributing to positive operating cash flows in the fourth quarter and the year. Combined with the reported adjusted EBITDA result the Company was able to reduce its first and second lien debt obligations by $3.9 million in the fourth quarter and $45.7 million for the year. This yielded a secured net debt position for the Company at the end of 2009 of $154.5 million, netting cash of $29.1 million.
Rajesh K. Shah, X-Rites Chief Financial Officer, commented, “I have now been with the Company for approximately six months and I continue to be impressed by the capabilities and potential of X-Rite. We have made excellent progress in reducing our cost structure and strengthening our balance sheet. As market conditions improve X-Rites profit leverage and cash generation prospects should be attractive to investors.”
Vacchiano closed by saying, “a combination of variables, including improved market conditions, customer interest in new products, and increasingly effective new sales and marketing initiatives are yielding year over year sales growth for the Company in the first quarter of 2010. At this point we expect to report first quarter sales growth in the mid to high single digits.”