Xerium Technologies

Xerium Technologies (XRM) makes consum adapted products for idea manufacturers. They sell two broad types of products: motif automobile clothing (2/3 of revenues) and paper machine curve covers (1/3 of revenues). topic machine clothing is a rarity woven textile that helps guide the paper fibers through the paper machine man allowing water to drain out. Roll covers be generally rubber or polyurethane and cover the metal paper machine rolls that roll the paper fibers through the machine. Paper machine clothing has to be replaced every few months, while roll covers are replaced every 1-2 years.

Xerium is an industry leader in a consolidated, mature trade. With 15% market share they are the number two player in paper machine clothing behind Alb whatsoever International (AIN). They are the largest maker of roll covers with 33% market share.

XRM sales are tie to the level of global paper production. While the paper market is highly cyclical and also undergoing structural changes, in the bigger picture paper production should be a sweetheart slow grower in line with global GDP. As a global maker of products that can be fitted to any paper machine, XRM is not tied to a specific geography or segment of the paper market.



So they should be able to adapt to the shifting of paper demand egression from western sandwich economies to Asia, as well as to the decline in newsprint and printing paper which should be filled in with growth in packaging and tissue papers.

XRM was slip up hard in 2009 as paper production capacity was taken offline and customers move down their consumables inventories. The slowdown combined with their highly leveraged balance carpenters plane forced XRM into tripping their debt covenants. That led to a prepackaged loser in March 2010, which enabled XRM to reduce their debt load by $one hundred forty million. The business recovered strongly in 2010 and the stock hit $24 in April of 2011. Since then the stock has gone on a sharp downtrend to the current price under $7.

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