Xerium Technologies declares Q2 results & Financial Outlook 2005
12 Aug '05
6 min read
Gutierrez added, "From a financial standpoint, they have experienced some erosion in gross margin in the second quarter of 2005 as compared to the same period last year. This was primarily the result of the effect of inflation on our manufacturing costs, production inefficiencies in our North American clothing operations and product mix shift, which collectively caused a deterioration of more than 4.5 percentage points on gross margin percentage compared to the same period last year. Those items were partially offset by the positive impact of currency and savings realized from their cost reduction programs. Notwithstanding the production issues and the costs associated with the IPO and their impact on their bottom line, they are pleased with the effectiveness of market strategy, as evidenced by the increase in new business awards."
In addition, "Continuing strong cash generation provides us confidence in their core business model. With $51 million in cash on hand at the end of the second quarter, they believe they are in a very good position to invest further in the business, both organically and through acquisition, and to support dividend policy."
He concluded, "They have substantially completed the major restructuring programs that have been under way, both in roll covers and clothing, and they expect to significantly increase production in clothing and believe that substantial benefits will accrue to the business during the second half of 2005 as a result of these initiatives, new business and planned product introductions."
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