Between the apparent disappointment with Q1 earnings and the new world wide financial "crisis", this has been a difficult quarter to hold onto Xerium stock (not to mention the warrants - ouch). The management policy of not providing guidance, the dearth of sell-side analyst coverage, the debt load, and the complex currency effects on revenue and debt service make analysis very much a DIY proposition and one beyond my rudimentary competence. I won't even attempt to predict Q2 earnings.
There will certainly be one-time expenses related to the debt refinancing but residual expenses related to the Ch 11 balance sheet restructuring shoud be minimal if any. I would expect the key metrics that flatten out or mildly weakened in the first quarter to have resumed trend in Q2. Continued productivity improvements and the possibility that some new PMC looms may have come on line in S. America could potentially have decreased the order backlog and opened the door for new business that the company has been turning away. Further improvements in the roll covers business, which has lagged PMC in the economic recovery, could also increase revenue.
Stephen Light mentioned in the Q1 call (prepared remarks and Q/A) that the installs of PMC looms would occur throughout 2011. I had intended to listen to the call this morning while multi-tasking but it is no longer available on the IR site. I have notified IR in case the removal was unintentional, but a transcript is prepared each quarter and filed with the SEC as an 8-K. I highly recommend reviewing the transcript as part of a pre-earnings review. It can be found in the SEC filings section (filed 3/16/11) here: http://www.xerium.com/investorrelations
A direct link to the transcript is here:
if you see something that a coworker did like cutup brass at his house should you report this to the police are you dont work for this company its none of your business maybe corporate knows all about it so its not illegal but if its a customers roll dont worry about it because it dont concern you
At $12 and under, this stock is a lay-up. I would recommend any longs on here to average down if it dips again below $12. I'm not sure about the long term prospects of this company if the debt keeps increasing at this rate, but short term it will be back up to $20 by end of the year. There is also an ouside chance they get bought out by someone with deep pockets.
I want to add a few extrinsic factors that could effect price action around earnings. Although XRM is a NYSE stock, I continue to favor the NASDAQ site as a quick reference.
My expectation is that the bulk of institutional filings for Q2 will come after the earnings release. This has occurred for all quarters where the 45 day filing deadline is after the earnings release. Of the 16 filed to date, 2 totaling 105k shares have sold out, 3 are unchanged (annual filing required), and the remainder have added shares. Blackrock and Barclays made the largest additions. (Note: The 3/31 filing for Skytop is incorrect. Sharecount shown on the 13F-HR filed with the SEC is 451,527.)
Given that the price peak came within days of the Q1 reporting period and the relatively small volume since then, I would not expect huge additional sharecount reductions in late filings and increased institutional holdings are certainly possible. Momentum began to decline well before the price peak, something holders with a low cost basis may have seen as an opportunity to add rather than reduce. (Big investors sometimes take "advantage" of short-term traders and may have done their selling during the runup to the peak during Q1 and bought from the short sellers during the Q2 drop.)
Short interest (see the link on the right on the same page) has been relatively constant between 330k and 400k since the last earnings release. "Technically" the price has found a level of strong support (I hope) and some of the recent volume could have been short covering.
My only point is that the mixed blessing of the small float and large institutional holdings could make for some interesting price action with this 5th post-Ch11 earnings release. Go XRM!!!
One additional fundamental comment: a metric I will be checking on this report is Return on Assets. While still negative, it has been improving steadily. As new looms come online and considering asset disposal throughout the restructing and retention of equipment beyond the depreciation period, this metric could become impressive very quickly.