X-Rite Posts Loss On Debt Refinancing, Sales Up Strongly

Kentwood-based X-Rite Inc. (Nasdaq: XRIT) Thursday announced higher sales but a big loss on paper caused by the refinancing of bonds and redemption of preferred shares for the company's first fiscal quarter ended April 2.

The company said the refinancing simplifies its capital structure and will cut its interest costs in the future.

"Our continued sales growth and improving profitability provide us with excellent future opportunities," said CEO Thomas J. Vacchiano Jr. "Our ability to leverage sales growth to yield continuing improvements in operating income and strong cash flows from operations is expected to contribute to improving stakeholder value."

Sales of $57.5 million for the quarter were up 12.3 percent from $1.2 million a year earlier. Operating income for the quarter was $9 million, up from $4.9 million a year earlier.

The company reported "adjusted earnings" of 3 cents a share, vs. a loss of 3 cents a share a year earlier by the same measurement. The adjusted earnings exclude the impact of the company's debt refinancing and related charges.

Sales in the company's retail, standards and industrial product lines grew by 46.8, 16.1 and 14.5 percent, respectively. On a regional basis, growth was strongest in Europe, where sales rose 21.4 percnet to $23.3 mllion.

During the quarter, X-Rite fully paid off its Mandatorily Redeemable Preferred Shares and the First Lien Credit Facility in exchange for a new $225 million Senior Secured Credit Facility. Beginning borrowings under the new facility are $185 million. The Company estimates annualized interest of $10 million, which is a significant reduction from the prior year's levels. In connection with the refinancing, X-Rite recorded $13.8 million for loss on redemption of the preferred shares and debt refinancing costs.

That charge gave X-Rite an official net loss of $11 million or 13 cents a share in the quarter, vs. a net loss of $2.1 million or 3 cents a loss a year earlier.

Said CFO Rajesh K. Shah: "Our continued sales growth and improving profitability provide us with excellent future opportunities. Our ability to leverage sales growth to yield continuing improvements in operating income and strong cash flows from operations is expected to contribute to improving stakeholder value."

To listen to a recording of a conference call discussing these results, visit www.xrite.com.

X-Rite develops, manufactures, markets and supports color measurement systems, software, color standards and services. X-Rite serves a range of industries, including printing, packaging, photography, graphic design, video, automotive, paints, plastics, textiles, dental and medical.