X-Rite reports net loss of $9 million
Thursday, November 12, 2009
Press release from the issuing company
GRAND RAPIDS, Mich. – X-Rite, Incorporated today announced its financial results for the quarter ended October 3, 2009.
Highlights of today's announcement:
- Third quarter 2009 net sales of $45.6 million
- Continued gains in year-over-year profitability as a result of the Company's profit improvement plan
o Third quarter operating income of $1.6 million and a significant reduction in the net loss
reported in the quarter versus the third quarter of 2008
o Adjusted EBITDA margin in the quarter of 23.3 percent of net sales, up .5 percentage points
from the same period in 2008
o Continuing positive cash flows from operations
- Strengthened balance sheet
o Viptronic campus sale closed with net proceeds of $2.3 million
o Debt paid down in the third quarter by $7.7 million and $41.9 million year-to-date
o Cash balance of $29.0 million
- Exchanged $41.7 million of debt for mandatorily redeemable preferred stock and warrants
- Launched myPANTONE software application for Apple's App Store selling over 25,000 copies in first 60 days and earning Editor's Choice Award
- MatchRite iVue color matching system achieves pre-recession bookings at the Ace Hardware Fall Exhibition
The Company reported third quarter 2009 net sales of $45.6 million compared to $61.3 million in the third quarter of 2008. These results are in the range of Company expectations given general market conditions and reflect a decline of 25.6 percent versus prior year (24.8 percent after adjusting for currency impact). While the year-over-year sales difference narrowed in the third quarter, particularly in the Standards segment, soft demand from large printing customers continued to put pressure on sales results in the Measurement segment. On a year-to-date basis, net sales were $141.6 million, down 29.4 percent (27.0
percent after adjusting for the currency impact) for the same period in 2008.
"The third quarter has been an extremely active period for the Company, contributing many positives for the future of X-Rite," said Thomas J. Vacchiano Jr., X-Rite's Chief Executive Officer. "Our debt to preferred stock exchange provides additional operating cushion relative to covenants in our credit agreements, our sales initiatives are narrowing the year-over-year revenue difference, our positive operating cash flow has permitted us to continue an aggressive debt pay down schedule, and our recently released new products are being well received in the marketplace."
Supported by the Company's profit improvement actions and narrowing sales difference from the prior year, the 2009 third quarter net loss was $9.0 million versus a net loss of $15.5 million in the third quarter of last year. 2009 operating income was $1.6 million in the quarter, up from $.3 million in the third quarter of 2008. Adjusted EBITDA in the third quarter was $10.7 million and 23.3 percent of sales this year versus $14.0 million and 22.8 percent of sales in the same period last year.
The Company also reported continuing progress in working capital management supporting positive operating cash flows in the third quarter of 2009. The combination of continuing positive cash flows and the sale of the Viptronic's campus in Brixen contributed to a debt pay down of $7.7 million in the quarter.
Favorably influenced by the mandatorily redeemable preferred stock and warrant transaction, the Company reduced its first and second lien debt by $41.7 million to $158.5 million, net of cash of $29.0 million.
Rajesh K. Shah, X-Rite's Chief Financial Officer, commented, "I recently joined X-Rite because I was attracted by their leading market position and attractive business model. The Company has managed well through these difficult economic conditions and continues to do so. I believe X-Rite is well positioned for the opportunities we see ahead of us."
X-Rite reported that its new myPANTONE software application has been a top seller in its category since its launch in September, selling more than 25,000 copies to date on Apple's App Store. More recently, myPANTONE won the prestigious Editor's Choice Award from MacLife for its innovation in the design and creative category. Good news continued for X-Rite and its MatchRite iVue color matching system at the Ace Hardware Fall Exhibition, where bookings rebounded to pre-recession levels, achieving $700,000 to date.
Vacchiano closed by saying, "Market indicators are not yet clear enough or consistent enough to provide guidance. That said, we do see signs of improving market conditions in certain geographies and market segments. New sales and marketing activities, particularly when combined with new products, appear to be gaining more momentum than six to nine months ago."