Q4/2011 earnings release is Tuesday after the bell, conference call the next morning. I remain bullish on Xerium but "the waiting is the hardest part" to quote Tom Petty.
There seems to be a second sell-side analyst and institutional holders are showing some interest again. This is the only quarter where we get the institutional view before the earnings release. Not to say they know any more than we do, but at least the stock is a little less under the radar than it has been.
A list of items of potential interest off the top of my head - please don't rely on any numbers I provide. Newer investors may be interested in some of the "reminder" items.
CEO Stephen Light is retiring by the end of this year and will get a substantial exit package. I had hoped he would stick around longer but have no doubt the transition will be carefully executed. He and the team he assembled did an amazing job of turning around Xerium. May his Corvette accumulate many pleasant miles in retirement.
XRM float is very small - roughly 8 million shares and much of that has been bought up by institutional holders. Insider holdings are so large partly because of the debt to equity reorganization. Apax and certain board members are prohibited from selling shares outside a formal offering.
1.6 million warrants with a strike price of $19.64 expiring May 2014 were issued to existing shareholders on reorganization. These trade OTC with ticker XRMWQ. Based on my read of the SEC filings, few if any were exercised when the price spiked into the $20s. I expect the 10-K to provide a clearer picture. The warrants have recently traded at $0.30 but in very small quantities.
Xerium has been operating above 100% capacity for papermachine clothing and is actively installing new looms to further increase production. Roll covers have been slower to recover but have ramped nicely and benefitted from the success of the improved-margin Smart Roll products.
Other than stock price, the trends seem to be continuing in the right direction despite a little unevenness. The question of the moment is will this be good enough to get us up off the floor? We shall see.
I didn't say it was good, just "decent." I would wait until the share price settles. $6 range would be a good entry point. But in reality, the market cap is so low that they are almost priced for another BK. Could be someone knows something and has been dumping their shares. It would have been smart for them to do a placement when they were trading at $20 and use the cash to pay down their debt.
Earnings seem decent, but the size of the debt is still troublesome. It just looks like they are just plugging along. I would be much happier if they initiated strategic alternatives for the company and eventually sold it.