Grand Rapids, Mich. – X-Rite, Incorporated today announced its financial results for the quarter ended April 3, 2010.
Highlights of today's announcement:
- Net Sales of $51.2 million in the first quarter of 2010 an increase of 9.9 percent over the same quarter in 2009
- Strong sales growth rates in the Asia Pacific region and in Industrial markets worldwide
- X-Rite and Lenovo extended their cooperation for color management enabled workstations for the graphics arts market
- X-Rite's development partnership with Microsoft, secured its first design win for next generation embedded color management technology with a major PC manufacturer
- New distribution arrangements signed with WYNIT, Inc. and SYNNEX Corporation to expand growth opportunities in the signage and technical printing markets
- Breakthrough new product (CAPSURE) launched for designers, decorators, paint contractors, and other creative communities
- Progress in key financial metrics for the first quarter evidenced by
- Adjusted EBITDA of $13 million reflecting quarter over quarter growth of 44.4 percent
- Strong adjusted EBITDA margin of 25.4 percent versus 19.4 percent in the prior year first quarter
- Operating Income of $4.9 million (9.6 percent of revenue) and a net loss of $2.1 million, including a $1.7 million restructuring charge recorded in the quarter
- Cash flows before financing activities of $8.7 million (17 percent of sales) in the quarter
- Strengthened the balance sheet
- Debt paid down in the quarter by $6.4 million
- Cash increased to $29.4 million
- Net debt from secured credit facilities reduced to $147.8 million
- Q1 sales momentum continuing into the second quarter of 2010
The Company reported first quarter 2010 net sales of $51.2 million compared to $46.6 million in the same period in 2009, a 9.9 percent increase versus the prior year first quarter. Sales in the first quarter of 2010 exceeded sales in the fourth quarter of 2009, an unusual divergence from historical patterns.
Substantial contributions to the Company's sales growth came from gains in Industrial markets worldwide (+56.1 percent) and across multiple vertical markets in Asia Pacific (+48.8 percent). These strong growth rates across most markets and regions were tempered by lower sales to certain large customers, principally in the offset printing and retail sectors.
"We are pleased to demonstrate the Company's ability to achieve significant sales growth in conjunction with the economic upturn being experienced around the world," said Thomas J. Vacchiano Jr., X?Rite's Chief Executive Officer. "More importantly, the combination of new products, recent business development efforts and new partnerships like those being announced today are yielding improved order rates."
The Company reported today that it extended its cooperation with Lenovo for color management enabled workstations to include the W510, its new 15 inch workstation launched in first quarter 2010. X?Rite added that following its development partnership with Microsoft, it has earned its first design win for next generation embedded color management technology with a major PC manufacturer, with shipments expected in 2011.
The Company made further progress in its strategy of expanding to adjacent markets by initiating two new distribution arrangements with WYNIT, Inc and SYNNEX Corporation, extending its presence in the North American signage and technical printing markets.
Building on the success of X?Rite's Matchstick product line, the Company launched a next generation product line named CAPSURE. In addition to "reading" a spot color and creating color palettes, as was the case with Matchstick, CAPSURE can "read" colors contained in patterns across a wide gamut of surfaces and textures, enhancing the creative workflows of designers, decorators, paint contractors, and other creative communities. Launched at the FARBE show in Europe in March 2010, the product has received very positive responses from leading paint manufacturers.
Supported by the combination of sales growth and previously announced profit improvement actions, the Company reported Adjusted EBITDA for the first quarter of $13.0 million, or 25.4 percent of sales, an increase of 44.4 percent over the first quarter of 2009. Operating Income was $4.9 million in the period versus an operating loss of $1.8 million in the prior year period. The Company reported a Net Loss in the quarter of $2.1 million, which was heavily influenced by a restructuring charge of $1.7 million, compared to a net loss of $8.7 million in the prior period.
The Company reported continued progress in working capital management, contributing to positive operating cash flow for the first quarter. Combined with the strong EBITDA results the Company was able to reduce its first and second lien debt obligations by $6.4 million in the quarter. At quarter end net debt from secured credit facilities was reduced to $147.8 million.
Rajesh K. Shah, X?Rite's Chief Financial Officer, commented "We are making very good progress on many financial fronts. An Adjusted EBITDA margin of over 25%, reflecting strong gross margins and continued effective operating cost management coupled with healthy operating cash flows to fuel business growth while aggressively paying down debt bodes well for our future financial success."
Vacchiano closed by saying, "Given our current order rates we see the second quarter of 2010 continuing the positive momentum we experienced in the first quarter. This should lead to sales growth in the high single digits compared to the second quarter of last year unless the European financial markets situation has a demonstrable impact on short term business conditions."