X-Rite revises 2009 estimates and announces cuts
Monday, January 12, 2009
Press release from the issuing companyGRAND RAPIDS, Mich. Jan. 8, 2009 - X-Rite, Incorporated today announced that due to the slowdown in the global economy, the Company will fall short of its fourth quarter and 2008 sales estimate. The Company also announced a significant new profit improvement plan which will better align its 2009 sales expectations and cost structure.
Highlights of today’s announcement:
• Fourth quarter net sales expected in the range of $60 to $61 million and full year 2008 sales expected in the range of $261 to $262 million
• 2008 adjusted EBITDA (as defined in the Company’s credit agreements) estimated in the $57 to $60 million range
• A new profit improvement plan that will deliver up to $20 million of savings in a challenging economic environment
• An estimated 2009 restructuring charge of $3.5 million
• Strong year-end cash position of approximately $47 million
“We have seen an accelerating decline in demand, particularly in the fourth quarter of 2008,” said Thomas J. Vacchiano Jr., X-Rite’s CEO. “Large accounts have increasingly delayed projects and smaller end user accounts seemed to be waiting to see what will happen in the economy. Also, we observed that reseller partners took actions to trim their inventories due to the tight credit markets.”
The Company announced it expected 2008 net sales to be in the range of $261 to $262 million, which represents a decline of approximately 7.7percent versus 2007 on a pro forma comparable basis. 2008 adjusted EBITDA (as defined by X-Rite’s credit agreements) is estimated to be in the range of $57 to $60 million.
The new profit improvement plan is expected to deliver up to $20 million in 2009 savings, builds on actions taken in April of 2008 and includes accelerating the closure of X-Rite’s Viptronic group in Brixen, Italy announced in November 2008. Key contributors to the new profit improvement plan include:
• Narrow business focus and rationalize certain business segments
• Aggressively pursue manufacturing efficiencies, component cost reductions and distribution and logistics efficiencies
• Implement a reduction in force of approximately 90 jobs (excluding the Viptronic closure announced previously)
• Execute reduced work schedules and furloughs for selected employee groups
• Reduce third party services and discretionary spending
• Reduce executive compensation
• Suspend the Company's 2009 bonus programs and selected benefit programs
“Cost and working capital management actions taken in 2008 contributed substantially to the level of EBITDA profitability and cash flow,” said Bradley J. Freiburger, X-Rite’s interim CFO. “The additional actions we will take in our profit improvement plan for 2009, our strong cash position of approximately $47 million, and our track record of implementing cost control measures make us confident that we will be able to confront the economic climate we currently see this year.”
“Despite current economic challenges, we remain positive about X-Rite’s future,” said Vacchiano. “We have a strong market leadership position, great products and services, and the liquidity to manage through the anticipated downturn.”
The Company intends to provide more details regarding the 2008 financial results during its 2008 earnings call, scheduled for March 17, 2009.
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