Prepress

X-Rite Reports Continued Double-digit Growth and Improved Capital Structure

Friday 06. May 2011 - X-Rite, Incorporated (NASDAQ:XRIT) today announced its financial results for the first quarter ended April 2, 2011. The Company’s results reflect continued broad-based revenue growth and another quarter of strong operating performance. T

he Company also successfully completed a refinancing of its debt facilities which simplifies the capital structure and will substantially reduce the Company’s interest costs.
Highlights for the quarter:
First quarter 2011 net sales of $57.5 million, up 12.3 percent from the first quarter 2010
First quarter 2011 operating income of $9.0 million, up $4.1 million from the first quarter 2010
First quarter 2011 adjusted fully diluted earnings of $0.03 per share, compared to earnings of $(0.03) per share for the first quarter 2010. Adjusted fully diluted earnings per share exclude the impact of the Company’s debt refinancing and related charges. Reported fully diluted earnings for the first quarter 2011 were $(0.13) per share
First quarter adjusted EBITDA of $15.0 million, up 15.2 percent from the first quarter 2010. Adjusted EBITDA was 26.1 percent of net sales in the first quarter 2011 compared to 25.4 percent of net sales in the first quarter 2010
Completion of a new $225 million Senior Secured Credit Facility, fully replacing the Company’s First Lien Credit Facility and Mandatorily Redeemable Preferred Shares
Reported net sales for the first quarter were $57.5 million, an increase of $6.3 million versus the prior year. Leading the quarter-over-quarter growth were the Company’s Retail, Standards and Industrial product lines which increased by 46.8, 16.1 and 14.5 percent, respectively. On a regional basis, the Company experienced strong growth in Europe, which grew by 21.4 percent to $23.3 million as compared to $19.1 million in net sales for the first quarter of 2010.
Thomas J. Vacchiano Jr., the Company’s Chief Executive Officer, stated, “I am pleased to report that we have continued our strong 2010 financial performance into the first quarter of 2011. We believe these results reflect the value our customers see in X-Rite’s innovative portfolio of products and services. An example of this is the recently released i1 Professional Color Management product line. This includes the groundbreaking i1Profiler software technology designed to provide the power and control needed to create the highest quality color profiles, regardless of a user’s skill level, along with the new PANTONE Color Manager software.”
First quarter 2011 operating income of $9.0 million reflected a dramatic increase compared to the prior first quarter operating income of $4.9, or 86.2 percent. Operating income as a percent of net sales improved to 15.7 percent for the first quarter ended 2011, compared to 9.5 percent for the same period in 2010. The improved operating income is a reflection of the Company’s high operating leverage with strong gross margins of 59.9 percent and continued focus on operational efficiencies.
Adjusted EBITDA of $15.0 million for the first quarter increased by $2.0 million, or 15.2 percent compared to the same period in 2010. The Company’s improved operating results over the last several quarters combined with strong positive cash flow positioned the Company to successfully complete a significant debt refinancing in the first quarter. As previously announced, the Company fully paid off the Mandatorily Redeemable Preferred Shares and the First Lien Credit Facility in exchange for a new $225 million Senior Secured Credit Facility. Beginning borrowings under the new facility are $185 million. The Company estimates annualized interest of $10 million, which is a significant reduction from the prior year’s levels. In connection with the refinancing, the Company recorded $13.8 million for loss on redemption of the preferred shares and debt refinancing costs.
For the quarter ended April 2, 2011, the Company reported cash from operating activities of $1.1 million. The Company’s cash generated from operations in the quarter was reduced by changes in working capital, the largest component of which was payment of 2010 year-end variable compensation accruals.
Rajesh K. Shah, X-Rite’s Chief Financial Officer, commented, “Our continued sales growth and improving profitability provide us with excellent future opportunities. Our ability to leverage sales growth to yield continuing improvements in operating income and strong cash flows from operations is expected to contribute to improving stakeholder value.”
Vacchiano closed by saying, “2011 is off to a good start notwithstanding the macroeconomic uncertainty still lingering in the global markets. Based on what we see today, second quarter sales are expected to continue to reflect double-digit growth over prior year.”