Xerium Technologies (XRM) Misses Q1 EPS by 23c; Acquires J.J. Plank Corporation

Xerium Technologies (NYSE: XRM) reported Q1 EPS of $0.07, $0.23 worse than the analyst estimate of $0.30. Revenue for the quarter came in at $115 million versus the consensus estimate of $118.04 million.

Xerium Technologies also announced that it has acquired the business of J.J. Plank Corporation, including its Spencer Johnston brand spreader roll line and related family of product lines for $18 million, comprised of $16.25 million in cash at closing, and the rest in future obligations. Spencer Johnston and the other J.J. Plank divisions supply equipment used in the production of paper, nonwoven fabrics, flexible packaging, tissue converting, and food packaging. The addition of these product lines will add strength and diversity to Xerium’s products, customers, and markets served. The combined company will have one of the broadest sets of capabilities with respect to spreader rolls, dandy rolls, and tissue embossing rolls in the world.

The transaction furthers Xerium’s strategic plan to expand into product categories with the strongest growth opportunities. Through the acquisition, Xerium will expand its current product offerings and service capabilities, its markets served, and strengthen its financial profile and grow its customer base.

Harold Bevis, President and CEO of Xerium Technologies, Inc., said, “Incorporating Spencer Johnston’s and the other divisions' strengths in spreader rolls, dandy rolls, and tissue embossing rolls with our existing portfolio of products is a strategically and financially compelling advancement opportunity. These product lines will strengthen our product and service offerings, add new customers to our roster, and accelerate revenue diversification. Importantly, this acquisition furthers the Company’s strategy of realigning its market presence and future sales opportunities by onboarding existing customer references and special-purpose manufacturing assets.”

Bevis continued, “The acquisition is expected to produce post-synergy Adjusted EBITDA of $6 million, which will bolster the company’s de-leveraging efforts and immediately improve Xerium’s leverage ratios on a pro-forma basis.”

Spencer Johnston and the other J.J. Plank divisions generated 2015 revenue of $18.5 million, and are expected to be immediately accretive. Including integration and synergies, Xerium expects the acquisition to provide an Adjusted EBITDA contribution in 2016 of $2 to $3 million, excluding transaction related costs. When fully integrated, EBITDA contribution is expected to be $6 million annually, assuming no unexpected changes to market conditions.

For earnings history and earnings-related data on Xerium Technologies (XRM) click here.

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