GRANDVILLE, Mich.--April 21, 2005-- X-Rite, Incorporated today announced its financial results for the first quarter ended April 2, 2005.
The Company reported first quarter 2005 net sales of $27.6 million, a 3.2 percent decrease from the first quarter of last year. Gross margins were 63.4 percent compared to 63.6 percent in the comparable quarter last year. Operating income was $0.3 million, versus to $1.7 million in the first quarter of 2004. Operating income was 0.9 percent of sales in the first quarter of 2005, compared to 6.0 percent in the prior year period.
The Company attributed its revenue softness in the first quarter of 2005 to its Asia Pacific and digital imaging businesses, which were down 24 percent and 25 percent, respectively, from the previous year. "We believe the decline in the Asia Pacific region and digital imaging business are related to timing and do not have long-term negative implications for our growth. We expect to see significant growth in our Asia operations and digital imaging business for the full year in 2005," said Michael C. Ferrara, Chief Executive Officer of X-Rite.
Ferrara continued, "Revenues in all other areas performed well ahead of targets. We are encouraged by the growth in our European business, which exceeded our expectations in the first quarter. In addition, favorable customer response from large OEMs to our new products allows us to remain confident in our growth projections for 2005 in the digital imaging segment of our business."
The Company reported a net loss in the first quarter of 2005 of $0.3 million, or 1 cent per share, versus a loss of $3.8 million, or 18 cents per share, in the first quarter of 2004. The loss in 2004 was due to a non-cash charge of $4.9 million (23 cents per share) related to Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (SFAS No. 150).
"X-Rite continues to make investments in infrastructure, new business development, and marketing initiatives to support long-term growth plans," said Mary E. Chowning, Chief Financial Officer. "These planned investments, along with the slight decline in revenues, produced a decline in our operating income. Further, results in the first quarter of 2004 reflected growth of over 20 percent, making it more challenging to realize substantial improvement in the first quarter of 2005."
Affirming the Company's previously issued guidance, Ferrara added, "Our conversations with clients regarding our newer products remain highly exciting. While the adoption rate to date has been slightly lower than we might like, we continue to receive positive signals from our customers that they will include these solutions in their future products. As a result, we remain confident in our ability to deliver double-digit revenue growth and higher operating income in 2005 versus 2004."
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