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Xerium Technologies Inc. Message Board

  • nprfreak nprfreak May 14, 2012 6:03 PM Flag

    Earnings call transcript

    The official, company-corrected earnings call transcript is out as an 8-K filing.

    I highly recommend that anyone in or considering getting in XRM listen carefully to the conference call. They tend to be packed with information not found in the other SEC filings. Plus, it's about the closest thing to forward guidance management will provide.

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    • They whine about European paper market etc. It looks like stagnation in Europe is a complete surprise to them. Maybe they have never read a financial newspaper or a magazine in last 4 years. Maybe they never heard making economic forecasting before decision-making in their life, and that’s why they lead themselves to overcapacity and increased their production level to 100% last year despite the current situation of the world economy (specifically Europe). So they increased their production and lost more revenue.

      They even whine about Asian markets. Chinese New Year and decrease in orders!! Are they making fun of shareholders? Its ridiculous to blame Chinese New Year for decrease in product orders. Chinese New Year is no more than 3 days vacation for the manufacturing industry. Some Chinese producers do not stop the production at all during festivals including the New Year. Can’t they find another reason for to cover up their incompetence in Asian market?

      • 1 Reply to akrobert
      • akrobert: If you are a trader, you know projections about the future are never perfect. If you are an investor and think Xerium's prospects are so bad, perhaps you should either dig a bit deeper or just move on. For such a seemingly simple company with just two product types, Xerium's global footprint can be confounding to some. Dig deep due diligence is not for everyone. That said:

        To describe the domestic situation in Europe as "stagnation" has to be the understatement of the year. Even so, to say that management has not addressed the legacy overcapacity in Europe is incorrect. It is my opinion that management has executed to plan exceptionally well and continued to adjust as circumstances warrant. By way of example, I suggest comparing the global footprint slide on these two presentations, the first from November 2010 and the second within the last month.

        Note the reduction in roll cover plants in both Europe and Canada. Also note that a combined plant in Australia that had been shuttered was first reopened temporarily to meet the huge demand rebound and is now expected to remain in operation.

        As for capacity, PMC plants have recently been operating at more than 100% capacity due to high demand. The company was in fact turning away new business as the expansion in Brazil continued in order to keep the order backlog from growing to a point where existing customers would be impacted. Production costs for PMC increased somewhat due to the need to hire and train additional workers. That's a good problem to have IMO.

        Another factor to consider with PMC is the short replacement cycle time relative to roll covers. Prior to the credit crisis, mills kept replacement inventory as high as 10 on-site, only paying Xerium when those were installed. That model has changed to something much closer to "just in time" support. The limited PMC inventory maintained at mills today should should support something of a rebound in European revenue, even if the situation there only stabilizes. It also facilitates up-selling of newer, higher margin product without a significant lag.

        Finally, what you call "whining" I call explanation and color. By now I feel certain you think I'm a pumper. I'll take that over flamer any day!

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