X-Rite Grows Operating Income 117% in Q3
Friday, October 22, 2004
GRANDVILLE, Mich.--Oct. 21, 2004-- X-Rite, Incorporated, today announced its financial results for the third quarter ended October 2, 2004. Third Quarter Highlights: Highest third quarter sales in the Company's history Ninth consecutive quarter of year-over-year sales growth Operating income growth of 117% versus prior year third quarter The Company reported net sales of $27.1 million for the third quarter of 2004 compared to $26.8 million in the third quarter last year, an increase of 1.1 percent. Operating income increased 117 percent to $1.4 million for the quarter compared to $0.6 million in the prior year. Gross margins increased to 65.0 percent in third quarter of 2004 compared to 62.5 percent in 2003 due to product mix, hardware and software bundling and manufacturing efficiencies. Operating income was 5.1 percent of sales in the third quarter of 2004 as compared to 2.4 percent in the prior year period. Net income for the three months was $1.5 million, or 7 cents per diluted share versus $0.3 million and 1 cent per diluted share for the comparable period last year. In addition, the Company recorded a tax benefit of $0.6 million in the third quarter as a result of a review of its 2000 through 2002 tax positions related to R&D credits and foreign sales. This benefit reduced our effective tax rate to 11.4% for the third quarter. For the nine months ended October 2, 2004, net sales were $87.5 million, which is an 11.3 percent increase over $78.6 million in the prior year period. Operating income for the nine month period was $ 7.9 million, which represents a 65.8 percent increase over the same period in 2003. Net loss for the nine months was $2.9 million, or 14 cents per share versus net income of $3.3 million, or 16 cents per diluted share for the comparable period last year. The nine month results for 2004 contain $8.6 million of non-cash interest charges related to the accounting under SFAS No. 150 for stock repurchase agreements with the Company's founders. Net income, excluding the SFAS No. 150 charge was $5.6 million, or 27 cents per diluted share, for the first nine months of 2004, an increase of 72.5 percent over 2003. "This year our third quarter revenue was negatively impacted by longer than anticipated manufacturing and testing ramp up periods for two key new products," said Michael C. Ferrara, Chief Executive Officer of X-Rite. "We've also experienced lower demand from our large North American mini lab customers versus last year. Despite these challenges, we are pleased to report our ninth consecutive quarter of year-over-year growth and the highest third quarter sales in our Company's history." "Customer demand for our new products is very strong and will positively impact our markets in 2005 and beyond," commented Ferrara. "Our continuing investments in new products and strong customer relationships allow us to remain a leader in the markets we serve and will help position our Company for future growth." "Our cost management efforts continue to pay off," commented Mary E. Chowning, X-Rite's Chief Financial Officer. "Operating expenses through the first nine months of 2004 were 56.0 percent of revenues versus 57.1 percent in 2003. Our revenue growth coupled with cost control is driving the leverage of our operating expense base. Additionally, gross margins improved for the nine month period by close to 2.0 percent over the prior year period. These improvements are driven by changes in the product mix toward software and bundled systems as well as improvements in manufacturing."