KENTWOOD -- The color technology provider X-Rite Inc. (Nasdaq:XRIT) announced its financial results for the fourth quarter and full fiscal year ended Dec. 31, 2011.
Revenue for the quarter was $58.5 million, down 0.9 percent from $59 million a year earlier.
Revenue for the full year was $237.6 million, up 6.7 percent from $222.7 million a year earlier.
Net income for the quarter was $44.9 million or 51 cents a share, up from $4 million or 5 cents a share in the fourth quarter of 2010. The results had a large one-time gain from tax valuation allowances. Operating income for the quarter was $10 million, up from $9 million a year earlier.
For the full year, net income was $49.4 million or 56 cents a share, up from $3.6 million or 4 cents a share in 2010. The same one-time benefit applies. Operating income was $38.2 million for the year, up from $29 million in 2010.
For the quarter, the company said sales rose in most major product lines, particularly the imaging and media, standards, and support services product lines which grew 3.6, 4.7, and 9.6 percent, respectively. These gains were offset by a reduction in sales in the industrial markets of $2.4 million, or 17.1 percent, for the quarter where continued challenging economic conditions led to inventory adjustments and project deferrals at certain of our global customers.
Thomas J. Vacchiano Jr., the company's CEO, said: "With the mixed global economic conditions we experienced in the fourth quarter it was positive to see year over year sales gains from our new product launches and Asia Pacific expansion. For the full year, X-Rite continued to produce strong cash flows and improve our overall financial strength, including further deleveraging our balance sheet and significantly increasing our net income and earnings per share. As the clear market leader, we will continue to make the investments in new products and technology that should leave us well positioned to drive new sales growth as the global economy recovers."
The company's operating expenses were reduced from the fourth quarter 2010 by $1.8 million, or 7.1 percent. Increased spending on strategic initiatives, such as Asia Pacific expansion, and the negative effect of exchange rates on operating expenses were offset by other cost reductions. Operating income as a percent of net sales improved to 17.2 percent for the fourth quarter 2011, compared to 15.1 percent for the fourth quarter 2010.
Including a net tax benefit of $36.5 million related to releasing $47.2 million of tax valuation allowances, the Company reported fourth quarter net income of $44.9 million, or $0.51 per diluted share, an increase of $40.9 million, or $0.46 per diluted share, from the fourth quarter of 2010. The company began to record a valuation allowance against United States deferred tax assets in the fourth quarter of 2007. The release of a significant portion of this valuation allowance in the quarter reflects the recent trend of the company's profitability driven by the improved operational performance and the refinancing completed in the first quarter of 2011.
For the year ended Dec. 31, the company generated $35.5 million of cash flows before financing activities. The company used this cash flow to reduce its total debt in 2011 from $183.6 million to $149.8 million, or by $33.8 million, including the redemption of the mandatorily redeemable preferred stock.
Rajesh K. Shah, X-Rite CFO, said, "The company's financial performance in 2011 reflects our ability and commitment to consistently maintain high levels of profitability and cash flows. We remain focused on using our strong operating cash flow in a balanced manner to support growth while continuing to pay down debt."
Vacchiano concluded, "We are encouraged by the continued strong market acceptance of our new product releases and positive financial returns from our strategic investments. Global economic softness which was evident at the end of 2011 continued through the start of 2012. While these conditions are estimated to result in a low single digit decrease in our first quarter 2012 revenues as compared to the first quarter of 2011, we have seen strengthening as we have moved through the quarter. With the successful launch of PantoneLive in March, additional planned new product launches over the course of 2012 and ongoing gains from our key strategic initiatives, we are optimistic about the Company's overall growth potential and financial performance for the full year."
To listen in on a replay of a conference call discussing the results, visit www.xrite.com.
X-Rite develops, manufactures, markets and supports color measurement systems, software, color standards and services. X-Rite serves a range of industries, including printing, packaging, photography, graphic design, video, automotive, paints, plastics, textiles, dental and medical.
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