X-Rite, Incorporated today announced its financial results for the quarter ended July 4, 2009.
Highlights of today's announcement:
• Second quarter 2009 net sales of $49.4 million
• Improved profitability as a result of the Company's profit improvement plan
- Second quarter operating income of $2.5 million and a significant reduction in the net loss in the second quarter versus prior year
- Adjusted EBITDA margin in the quarter of 24.8 percent of net sales, up 1.1 percentage points from prior year
- Healthy cash flow from operations
• Strengthened balance sheet
- Debt paid down in the second quarter by $13.4 million and $34.2 million year-to-date
- Net debt balance of $202.9 million at close of second quarter
- Second quarter ending cash balance of $33.8 million
• Closure of Viptronic business operations in June 2009
- Expected completion of campus sale by end of third quarter 2009 for $2.4 million
• New MatchRite iVue color matching system announced as next generation solution for Benjamin Moore stores in North America
• Increased adoption of ColorMunki Design by major industry partners and customers as key workflow tool in creative phase of product realization process
The Company reported second quarter 2009 net sales of $49.4 million compared to $73.5 million in second quarter 2008. These results are in the range of Company expectations given market conditions and reflect a decline of 32.8 percent (29.8 percent after a currency impact of $2.2 million) versus a comparatively strong prior year performance. On a year-to-date basis net sales were $96.0 million, 31.1 percent (27.9 percent after $4.5 million of currency impact) below the same period results last year. Both the Color Measurement and Color Standards segments experienced similar year over year declines as many customers and channel partners continued to delay purchase decisions in key X-Rite markets.
"While we are beginning to make progress in some new market segments that have been less affected by the global economic slump, core markets such as printing and automotive continue to face weak customer demand and corresponding investment levels, which in turn impact the demand for X-Rite's products. Generally, discretionary CAPEX spending remains below pre-recession levels," said Thomas J. Vacchiano Jr., X-Rite's chief executive officer. "Some good news is that we are beginning to see an increasing number of customers and partners reengaging in discussions with X-Rite about previously suspended projects or new projects, which may be an indicator of improving order rates later this year or in 2010."
Supported by the Company's profit improvement actions, the second quarter net loss was $7.6 million versus a loss of $20.9 million in the same period in 2008. Adjusted EBITDA in the second quarter was $12.3 million compared to $17.4 million in the second quarter 2008. Adjusted EBITDA as a percentage of net sales was 24.8 percent in the second quarter, an improvement of 1.1 percentage points from 2008. Operating income for the second quarter of 2009 was $2.5 million or 5 percent of net sales as compared to $0.4 million in the same period last year.
The Company reported that despite the net sales decline in the second quarter, successful execution of the profit improvement plan along with effective working capital management practices yielded healthy cash flows. The Company's cash position ending the period was $33.8 million and debt was reduced by $13.4 million in the second quarter to $236.7 million.
Bradley J. Freiburger, X-Rite's interim chief financial officer commented, "While we are pleased with our progress managing costs and working capital during these challenging times, we remain committed to keeping costs and working capital levels aligned with the realities of the current market. We believe X-Rite is poised to deliver attractive levels of cash flow and profitability when market opportunities improve."
The Company has completed its announced closure of business operations for Viptronic, a subsidiary of X-Rite located in Brixen, Italy as of June 2009. It is expected that the sale of the campus will be completed by September of this year at a price estimated to be $2.4 million.
X-Rite also announced that momentum for its new MatchRite iVue system continues to build as Benjamin Moore recently decided to adopt this technology as the next generation solution for its retail stores. Additionally, the Company reported that an increasing number of customers adopted its new ColorMunki Design product to improve speed, cost or quality in the design phase of their product realization processes. Early adopters include partners such as Corel and Bunkspeed, and customers such as Kohl's and Columbia Sportswear.
Vacchiano closed by commenting, "The general economic climate continues to cause substantial uncertainty making it impractical to provide guidance. That said, I am encouraged by new project design wins as noted in this press release. It is an indicator of the future opportunity for our industry and the leadership role that X-Rite has established."
