Exhibit 99.1
X-Rite Grows Top Line by 13% and Reports 87% Increase in Operating
Income for Second Quarter; Affirms 2004 Outlook
GRANDVILLE, Mich.--(BUSINESS WIRE)--July 22, 2004--X-Rite,
Incorporated (Nasdaq:XRIT), today announced its financial results for
the second quarter ended July 3, 2004.
Second Quarter Highlights:
-- Record second quarter net sales of $31.8 million, up 13
percent over second quarter 2003.
-- Eighth consecutive quarter of year-over-year sales growth.
-- Gross margins were 66.3 percent, up 6 percent from the second
quarter 2003.
-- Operating income increased by 87 percent from the second
quarter 2003.
-- Acquired Moniga Gremmo S.r.l., an industrial and ink
formulation software company based in Milan, Italy.
-- Launched seven new products under the Streamlined Color
Management(TM) banner at Drupa, the world's largest
International graphic arts expo, held in Germany in May.
The Company reported second quarter 2004 net sales of $31.8
million, an increase of 13 percent over the second quarter of last
year. Operating income was $4.8 million for the quarter, compared with
$2.6 million in the second quarter of 2003. Gross margins increased to
66.3 percent in 2004 from 62.6 percent in 2003, due principally to
changes in product mix and lower manufacturing costs. Operating income
was 15.1 percent of sales in the second quarter of 2004 as compared to
9.1 percent in the prior year period.
"We are very encouraged by the progress we have made in the first
two quarters of 2004," said Michael C. Ferrara, Chief Executive
Officer of X-Rite. "We recorded the highest level of second quarter
sales revenue in the company's history and have now delivered eight
consecutive quarters of growth. Further, we have been able to do so
with a continued emphasis on margin improvement."
Ferrara continued, "During the second quarter, we continued to
invest in engineering, sales, and marketing to support the launch of
seven new products under the Streamlined Color Management(TM) banner.
In addition, our acquisition of Milan-based Moniga Gremmo S.r.l
positions the company to enhance our global product offering and grow
our revenue base in the European market. As we move into the second
half of the year, our focus is on meeting our global customers' needs
and executing our product development strategy. We remain confident in
our ability to deliver double-digit revenue growth and higher
operating income throughout 2004 versus 2003."
"Our revenue growth continues to be strong, especially in Asia and
Europe," said Mary E. Chowning, Chief Financial Officer. "Our
continued ability to leverage our cost structure and control operating
costs enabled us to increase our operating income by close to 90
percent in the second quarter."
The Company reported a net loss of $680 thousand or 3 cents per
share in the second quarter of 2004 after a non-cash charge of $3.6
million (17 cents per share) related to Statement of Financial
Accounting Standards No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity (SFAS
No. 150). SFAS No. 150 requires certain long-term liabilities be
adjusted quarterly based on the Company's current stock price. These
liabilities relate to the repurchase agreements with the Company's
founders, the value of which was previously reflected as temporary
equity prior to the implementation of SFAS No. 150.
"The Company reported net income, excluding the impact of SFAS
No.150, of $3.0 million or 14 cents per share for the second quarter,"
continued Chowning. "This represents a 51 percent increase over the
second quarter net income in 2003."
The following table reconciles the Company's adjusted results to
GAAP net (loss) income:
Second Quarter
------------------------------------
2004 2003
----------------- ----------------
$ Per Share $ Per Share
------ --------- ----- ---------
Net income (loss) (GAAP basis) (680) (0.03) 1,961 0.10
Specific items
SFAS No. 150 impact 3,638 0.17 - -
------ --------- ----- ---------
Net income excluding specific
items 2,958 0.14 1,961 0.10
====== ========= ===== =========
Conference Call
The Company will conduct a live audio webcast discussing its
second quarter 2004 results on Thursday, July 22, 2004 at 11:00 a.m.
EST. The call will be co-hosted by Michael C. Ferrara, the Company's
Chief Executive Officer and Mary E. Chowning, its Chief Financial
Officer. To access this web cast, as well as all future webcasts, use
the X-Rite corporate website at www.x-rite.com. Select the Investor
Relations page and click on the conference call link for the web cast.
In addition, an archived version of the web cast conference call will
be available on X-Rite's website shortly after the live broadcast.
About X-Rite
X-Rite is a leading provider of color measurement solutions
comprised of hardware, software and services for the verification and
communication of color data. The Company serves a broad range of
industries, including graphic arts, digital imaging, industrial, and
retail color matching. X-Rite is global, with 18 offices throughout
Europe, Asia, and the Americas markets serving customers in over 80
countries.
Forward-Looking Statements/Use of Non-GAAP Financial Information
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Actual results may differ materially from those projected in the
forward-looking statements, due to a variety of factors, some of which
may be beyond the control of the Company. Factors that could cause
such differences include the Company's ability to sustain increased
sales, improve operations and realize cost savings, competitive and
general economic conditions, ability to access into new markets,
acceptance of the Company's products and other risks described in the
Company's filings with the Securities & Exchange Commission.
In addition to the results reported in accordance with generally
accepted accounting principles (GAAP) within this press release,
X-Rite has provided certain information, which are considered non-GAAP
financial measures. Management believes that these non-GAAP financial
measures are useful to both management and its investors in their
analysis of the Company's underlying business and operating
performance. Management also uses this information for operational
planning and decision-making purposes. Non-GAAP financial measures
should not be considered a substitute for any GAAP measure.
Additionally, non-GAAP financial measures as presented by X-Rite may
not be comparable to similarly titled measures reported by other
companies.
X-Rite, Incorporated
Consolidated Financial Highlights
(Unaudited - in thousands except EPS)
Q2 Q1 Q4 Q3 Q2
2004 2004 2003 2003 2003
-------- -------- -------- -------- --------
Net Sales $31,826 $28,528 $38,504 $26,818 $28,197
Gross Profit 21,094 18,157 25,100 16,767 17,646
Gross Profit Percent 66.3% 63.6% 65.2% 62.5% 62.6%
Selling and Marketing 8,397 8,045 9,039 8,124 7,145
General and
Administrative 4,027 4,329 5,478 3,943 4,466
R&D and Engineering 3,866 4,077 3,972 4,063 3,472
Impairment of Coherix
Assets - - 2,642 - -
Operating Income 4,804 1,706 3,969 637 2,563
Other Income (Expense) (266) (65) (159) (133) 309
Interest Expense (3,681) (4,862) (758) (86) (1)
Write-Down of Other
Investments - - (3,416) - (106)
Pre-tax Income (Loss) 857 (3,221) (364) 418 2,765
Net Income (Loss) $ (680) $(3,767) $ 2,207 $ 301 $ 1,961
Earnings (Loss) Per Share
Basic $ (0.03) $ (0.18) $ 0.11 $ 0.01 $ 0.10
Diluted $ (0.03) $ (0.18) $ 0.11 $ 0.01 $ 0.10
Average Shares
Outstanding
Basic 20,745 20,640 20,548 20,533 20,250
Diluted 20,745 20,640 20,739 20,711 20,382
Cash and Investments $ 9,647 $ 9,108 $14,102 $ 8,719 $13,643
Accounts Receivable 20,961 18,696 22,815 18,251 19,093
Inventory 16,467 16,352 16,014 16,051 15,050
Other Current Assets 4,125 4,214 3,182 3,060 3,316
Non-Current Assets 70,369 68,852 63,570 63,033 54,843
-------- -------- -------- -------- --------
Total Assets 121,569 117,222 119,683 109,114 105,945
Current Liabilities 14,607 13,573 18,214 11,607 11,017
Noncurrent Liabilities 43,514 39,625 34,857 34,200 -
-------- -------- -------- -------- --------
Total Liabilities 58,121 53,198 53,071 45,807 11,017
Shareholders' Equity $63,448 $64,024 $66,612 $63,307 $94,928
Capital Expenditures $ 1,423 $ 1,629 $ 1,095 $ 652 $ 448
Depreciation and
Amortization $ 1,326 $ 1,354 $ 1,826 $ 1,389 $ 1,495
International Sales 50.2% 45.4% 43.5% 41.5% 44.9%
X-Rite, Incorporated
Consolidated Financial Highlights, continued
(Unaudited - in thousands except EPS)
Quarter Ended Six Months Ended
----------------- -----------------
July 3, June 28, July 3, June 28,
2004 2003 2004 2003
-------- -------- -------- --------
Net Sales $31,826 $28,197 $60,354 $51,822
Gross Profit 21,094 17,646 39,251 32,867
Gross Profit Percent 66.3% 62.6% 65.0% 63.4%
Selling and Marketing 8,397 7,145 16,442 14,356
General and Administrative 4,027 4,466 8,356 7,818
R&D and Engineering 3,866 3,472 7,943 6,570
Operating Income 4,804 2,563 6,510 4,123
Other Income (Expense) (266) 309 (331) 349
Interest Expense (3,681) (1) (8,543) (1)
Write-Down of Other Investments - (106) - (246)
Pre-Tax Income (Loss) 857 2,765 (2,364) 4,225
Net Income (Loss) (680) 1,961 (4,447) 2,973
Earnings (Loss) Per Share
Basic & Diluted $ (0.03) $ 0.10 $ (0.21) $ 0.15
Average Shares Outstanding
Basic 20,745 20,250 20,693 20,241
Diluted 20,745 20,382 20,693 20,503
CONTACT: X-Rite, Incorporated
Mary E. Chowning, 616-257-2777
mchowning@xrite.com