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8-K - FORM 8-K - NN INCd27284d8k.htm

Exhibit 99.1

 

LOGO

 

LOGO

 

  

RE: NN, Inc.

207 Mockingbird Lane

3rd Floor

Johnson City, TN 37604

FOR FURTHER INFORMATION:

  

AT THE COMPANY

Robbie Atkinson

Corporate Treasurer & Investor Relations

(423) 434-8398

  

AT FINANCIAL RELATIONS BOARD

Marilynn Meek

(General info)

212-827-3773

FOR IMMEDIATE RELEASE

August 5, 2015

NN, INC. REPORTS SECOND QUARTER 2015 RESULTS

 

    Net sales of $164.9 million, an increase of $58.2 million

 

    Adjusted income from operations grew to $14.3 million

 

    Adjusted net income of $7.2 million, or $0.37 per diluted share

Johnson City, Tenn, August 5, 2015 –NN, Inc., (NASDAQ: NNBR) a diversified industrial company, today reported its financial results for the second quarter ended June 30, 2015.

Second Quarter 2015 Results

Net sales for the second quarter of 2015 increased $58.2 million, or 55%, to $164.9 million, compared to $106.7 million for the second quarter of 2014. Acquisitions made subsequent to March 31, 2014 added $64.3 million in revenue. Negative currency impacts reduced reported net sales by $9.3 million versus the second quarter of last year.

Adjusted income from operations for the second quarter of 2015 was $14.3 million, an increase of 51%, compared to $9.5 million for the same period in 2014. Adjusted net income, which excludes the after-tax impact of foreign exchange on inter-company loans and after-tax acquisition and integration expenses, increased to $7.2 million, or $0.37 per diluted share, compared to $6.0 million, or $0.33 per diluted share for the same period in 2014.

On a GAAP basis, income from operations for the second quarter of 2015 was $13.6 million, compared to $8.2 million for the same period in 2014. Net income on a GAAP basis for the second quarter of 2015 was $7.0 million, or $0.36 per diluted share. This compared to $5.2 million, or $0.29 per diluted share, in the second quarter of 2014.


Richard Holder, President and Chief Executive Officer, commented, “Excluding the macro-economic challenges in Brazil our businesses along with our financial results continue to meet our expectations for the year. Our adjusted income from operations continued to improve during the quarter as the remainder of our portfolio continues to grow and hit our operating targets. The acquisitions we’ve made since 2014 remain on or ahead of our stated integration and synergy targets for 2015.”

Business Group Results

Metal Bearing Components

Net sales for the group decreased $3.7 million to $69.3 million during the second quarter of 2015, compared to $73.0 million for second quarter 2014. Negative currency impacts of $9.3 million were partially offset by volume increases of $3.0 million and the contribution of acquisition sales of $2.6 million. Income from operations for the second quarter was $9.4 million, compared to $8.7 million in the second quarter of 2014.

“The Metal Bearing Components Group continued its solid performance in 2015,” said Holder. “Excluding the negative currency impacts the business continues to grow and expand its end markets.”

Autocam Precision Components

Net sales for the second quarter of 2015 were $86.5 million, compared to $25.3 million in the second quarter of 2014, an increase of $61.2 million. Acquisitions accounted for $60.9 million of the increase. Income from operations for the quarter increased $6.8 million to $9.1 million, compared to $2.3 million in the second quarter of 2014.

Holder commented, “The Autocam Precision Components Group performed well despite the conditions in Brazil. As expected, new customer programs continued to ramp in the quarter and began to hit their expected operating targets as the quarter came to a close, while the integration of the Autocam acquisition remains ahead of schedule.”

Plastic and Rubber Components

Net sales for the second quarter increased $0.7 million to $9.1 million, compared to $8.4 million for the same period in 2014. Income from operations for the quarter was $0.5 million, compared to $0.4 million in 2014.

Holder commented, “We continue to transform our plastics business as we focus on growing a diversified business that meets our operating expectations. During the quarter we continued that process with the completion of the Caprock acquisition.”

Holder concluded, “The second quarter was an important quarter in the history of our company. We made our first acquisition in our plastics portfolio and raised $182 million in equity to prepare for future acquisitions and continued growth as we remain focused on executing our strategic plan.”


NN will discuss its results during its quarterly investor conference call tomorrow morning starting at 9:00 a.m. ET. The call and an accompanying slide presentation may be accessed via NN’s website. The conference call can also be accessed by dialing 888-427-9376; conference id – 5901109. For those who are unavailable to listen to the live broadcast, a replay will be available shortly after the call for 90 days.

The attached financial tables include a reconciliation of adjusted income from operations and adjusted net income to the U.S. GAAP financial measures of income from operations and net income.

NN, Inc., a diversified industrial company manufactures and supplies high precision metal bearing components, industrial plastic and rubber products and precision metal components to a variety of markets on a global basis. Headquartered in Johnson City, Tennessee, NN has 26 manufacturing plants in the North America, Western Europe, Eastern Europe, South America and China.

Except for specific historical information, many of the matters discussed in this press release may express or imply projections of revenues or expenditures, statements of plans and objectives or future operations or statements of future economic performance. These, and similar statements, are forward-looking statements concerning matters that involve risks, uncertainties and other factors which may cause the actual performance of NN, Inc. and its subsidiaries to differ materially from those expressed or implied by this discussion. All forward-looking information is provided by the Company pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995 and should be evaluated in the context of these factors. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “assumptions”, “target”, “guidance”, “outlook”, “plans”, “projection”, “may”, “will”, “would”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “potential” or “continue” (or the negative or other derivatives of each of these terms) or similar terminology. Factors which could materially affect actual results include, but are not limited to: general economic conditions and economic conditions in the industrial sector, inventory levels, regulatory compliance costs and the Company’s ability to manage these costs, start-up costs for new operations, debt reduction, competitive influences, risks that current customers will commence or increase captive production, risks of capacity underutilization, quality issues, availability and price of raw materials, currency and other risks associated with international trade, the Company’s dependence on certain major customers, and the successful implementation of the global growth plan including development of new products. Similarly, statements made herein and elsewhere regarding pending or completed acquisitions are also forward-looking statements, including statements relating to the anticipated closing date of an acquisition, the Company’s ability to obtain required regulatory approvals or satisfy closing conditions, the costs of an acquisition and the Company’s source(s) of financing, the future performance and prospects of an acquired business, the expected benefits of an acquisition on the Company’s future business and operations and the ability of the Company to successfully integrate recently acquired businesses.

For additional information concerning such risk factors and cautionary statements, please see the section titled “Risk Factors” in the Company’s periodic reports filed with the Securities and Exchange Commission, including, but not limited to, the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014. Except as required by law, we undertake no obligation to update or revise any forward-looking statements we make in our press releases, whether as a result of new information, future events or otherwise.

Financial Tables Follow


NN, Inc.

Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended
JUNE 30,
    

Six Months Ended

JUNE 30,

 
     2015      2014      2015      2014  

Net sales

   $ 164,856       $ 106,680       $ 328,601       $ 209,208   

Cost of products sold (exclusive of depreciation

and amortization shown separately below)

     128,708         84,285         258,025         164,569   

Selling, general and administrative

     13,962         10,074         25,961         20,104   

Depreciation and amortization

     8,597         4,084         17,091         7,961   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income from operations

     13,589         8,237         27,524         16,574   

Interest expense

     6,021         551         11,959         1,115   

Other expense, net

     19         129         1,419         212   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income before provision for income taxes and

share of net income from joint venture

     7,549         7,557         14,146         15,247   

Provision for income taxes

     1,617         2,357         3,073         4,809   

Share of net income from joint venture

     1,021         —           1,882         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 6,953       $ 5,200       $ 12,955       $ 10,438   
  

 

 

    

 

 

    

 

 

    

 

 

 

Basic income per common share:

   $ 0.36       $ 0.29       $ 0.68       $ 0.59   

Weighted average shares outstanding

     19,215         17,779         19,064         17,700   

Diluted income per common share:

   $ 0.36       $ 0.29       $ 0.67       $ 0.58   

Weighted average shares outstanding

     19,582         18,172         19,416         18,054   

Cash dividends per common share

   $ 0.07       $ 0.07       $ 0.14       $ 0.14   


NN, Inc.

Condensed Balance Sheets

(In thousands)

(Unaudited)

 

     June 30,
2015
     December 31,
2014
 

Assets

     

Current assets:

     

Cash

   $ 21,409       $ 37,317   

Accounts receivable, net

     114,819         97,510   

Inventories

     87,928         91,469   

Other current assets

     16,590         16,503   
  

 

 

    

 

 

 

Total current assets

   $ 240,746         242,799   

Property, plant and equipment, net

   $ 272,047         278,442   

Goodwill, net

     85,436         83,941   

Intangible asset, net

     52,929         52,827   

Investment in joint venture

     38,240         34,703   

Other non-current assets

     19,542         20,001   
  

 

 

    

 

 

 

Total assets

   $ 708,940       $ 712,713   
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

     

Current liabilities:

     

Accounts payable

   $ 63,616       $ 71,094   

Accrued salaries, wages and benefits

     19,760         21,148   

Current maturities of long-term debt

     23,345         22,160   

Income taxes payable

     5,057         3,274   

Current portion of obligations under capital lease

     5,482         5,418   

Other current liabilities

     11,481         14,504   
  

 

 

    

 

 

 

Total current liabilities

     128,741         137,598   

Non-current deferred tax liabilities

     48,238         49,461   

Long-term debt, net of current portion

     335,938         328,026   

Obligations under capital lease, net of current portion

     11,829         14,539   

Other non-current liabilities

     10,692         9,390   
  

 

 

    

 

 

 

Total liabilities

   $ 535,438         539,014   

Total stockholders’ equity

   $ 173,502         173,699   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 708,940       $ 712,713   
  

 

 

    

 

 

 


NN, Inc.

Reconciliation of Non-GAAP to GAAP Financial Measures

(Unaudited)

 

Reconciliation of net income to adjusted net income:                
    

Three Months Ended

June 30, 2015

    

Three Months Ended

June 30, 2014

 
     (In Thousands)      Diluted
Earnings Per
Share
     (In Thousands)      Diluted
Earnings Per
Share
 

Net Income

   $ 6,953       $ 0.36       $ 5,200       $ 0.29   

After tax acquisition and integration expenses

     436         0.02         818         0.04   

After-tax foreign exchange gain on inter-company loans

     (232      -0.01         —           0.00   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted Net Income

   $ 7,157       $ 0.37       $ 6,018       $ 0.33   
  

 

 

    

 

 

    

 

 

    

 

 

 
Reconciliation of net income to adjusted net income:                
    

Six Months Ended

June 30, 2015

    

Six Months Ended

June 30, 2014

 
     (In Thousands)      Diluted
Earnings Per
Share
     (In Thousands)      Diluted
Earnings Per
Share
 

Net Income

   $ 12,955       $ 0.67       $ 10,438       $ 0.58   

After tax acquisition and integration expenses

     436         0.02         1,132         0.06   

After-tax foreign exchange loss on inter-company loans

     655         0.03         —           0.00   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted Net Income

   $ 14,046       $ 0.72       $ 11,570       $ 0.64   
  

 

 

    

 

 

    

 

 

    

 

 

 
Reconciliation of income from operations to adjusted income from operations:         
     Three Months
Ended
June 30, 2015
(In Thousands)
     Three Months
Ended
June 30, 2014
(In Thousands)
     Six Months
Ended
June 30, 2015
(In Thousands)
     Six Months
Ended
June 30, 2014
(In Thousands)
 

Income from operations

   $ 13,589       $ 8,237       $ 27,524       $ 16,574   

Acquisition and integration expenses

     681         1,279         681         1,770   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted Income from operations

   $ 14,270       $ 9,516       $ 28,205       $ 18,344   
  

 

 

    

 

 

    

 

 

    

 

 

 


Reconciliation of income from operations to adjusted income from operations                
     Three Months Ended June 30, 2015  
     MBC      APC      PRC      NN Inc  

Income from operations

   $ 9,403       $ 9,095       $ 501       $ 13,589   

Acquisition and integration expenses

     —           —           —           681   

China JV Income

     —           1,021         —           1,021   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted Income from operations Including China JV

   $ 9,403       $ 10,116       $ 501       $ 15,291   
  

 

 

    

 

 

    

 

 

    

 

 

 
     Three Months Ended June 30, 2014  
     MBC      APC      PRC      NN Inc  
  

 

 

    

 

 

    

 

 

    

 

 

 

Income from operations

   $ 8,748       $ 2,306       $ 414       $ 8,237   

Acquisition and integration expenses

     —           —           —           1,279   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted Income from operations Including China JV

   $ 8,748       $ 2,306       $ 414       $ 9,516   
  

 

 

    

 

 

    

 

 

    

 

 

 
Reconciliation of income from operations to adjusted income from operations         
     Six Months Ended June 30, 2015  
     MBC      APC      PRC      NN Inc  

Income from operations

   $ 18,491       $ 16,813       $ 714       $ 27,524   

Acquisition and integration expenses

     —           —           —           681   

China JV Income

     —           1,882         —           1,882   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted Income from operations Including China JV

   $ 18,491       $ 18,695       $ 714       $ 30,087   
  

 

 

    

 

 

    

 

 

    

 

 

 
     Six Months Ended June 30, 2014  
     MBC      APC      PRC      NN Inc  

Income from operations

   $ 17,520       $ 4,868       $ 649       $ 16,574   

Acquisition and integration expenses

     —           —           —           1,770   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted Income from operations Including China JV

   $ 17,520       $ 4,868       $ 649       $ 18,344   
  

 

 

    

 

 

    

 

 

    

 

 

 

The Company’s management evaluates operating performance excluding unusual and/or nonrecurring items. The Company believes excluding such items provides a more effective and comparable measure of performance and a clearer view of underlying trends. Since net income excluding these items is not a measure calculated in accordance with GAAP, this should not be considered as a substitute for other GAAP measures, including net income, as an indicator of performance. Accordingly, net income/loss excluding the above items is reconciled to net income/loss on a GAAP basis.