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Exhibit 99.1

 

LOGO

 

LOGO

 

   RE: NN, Inc.
   207 Mockingbird Lane
   3rd Floor
   Johnson City, TN 37604
FOR FURTHER INFORMATION:   
AT THE COMPANY    AT FINANCIAL RELATIONS BOARD
Robbie Atkinson    Marilynn Meek
VP, Corporate Treasurer & Investor Relations    (General info)
(423) 434-8398    212-827-3773

FOR IMMEDIATE RELEASE

May 4, 2016

NN, INC. REPORTS FIRST QUARTER 2016 RESULTS IN LINE WITH COMPANY GUIDANCE

 

    Net sales of $212.2 million, an increase of $48.5 million

 

    Adjusted income from operations increased $9.1 million to $24 million

 

    Adjusted net income of $7.1 million or $0.27 per diluted share

Johnson City, Tenn, May 4, 2016 – NN, Inc., (NASDAQ: NNBR), a diversified industrial company, today reported its financial results for the first quarter ended March 31, 2016.

First Quarter 2016 Results

Net sales for the first quarter of 2016 increased $48.5 million, or 30% to $212.2 million, compared to $163.7 million for the first quarter of 2015. Acquisitions added $55.6 million in revenue. Negative currency and price/mix impacts reduced reported net sales by $7.1 million versus the first quarter of last year.

Adjusted income from operations for the first quarter of 2016 was $24.0 million, an increase of 61%, compared to $14.9 million for the same period in 2015. Adjusted net income was $7.1 million, or $0.27 per diluted share, compared to $8.0 million, or $0.41 per diluted share for the same period in 2015.

Richard Holder, President and Chief Executive Officer, commented, “Our performance for the quarter was in line with our expectations as we continue to see the positive effects of the NN Operating System. The first quarter also marked our first full period post the acquisition of PEP. We are very pleased with where we are in our integration efforts as we continue to find more opportunities to deliver engineered solutions to our customers.”


Business Group Results

Autocam Precision Components

Net sales for the first quarter of 2016 were $84.0 million, compared to $82.6 million in the first quarter of 2015, an increase of $1.4 million. Adjusted income from operations for the quarter increased $1.1 million to $9.7 million, compared to $8.6 million in the first quarter of 2015.

Holder commented, “The Autocam Group continues to perform well with the continued adoption of CAFE technologies driving our performance, and we are pleased with the margin expansion the team has achieved.”

Precision Bearing Components

Net sales for the first quarter of 2016 were $64.7 million, compared to $73.2 million in the first quarter of 2015, a decrease of $8.5 million. Negative currency impacts of $1.4 million and a soft industrial market accounted for the decline. Adjusted income from operations for the first quarter was $7.1 million, compared to $9.2 million in the first quarter of 2015.

Holder commented, “The Group rebounded in the first quarter from the challenges during the fourth quarter of 2015. Operating performance returned to our expectations, and we continue to drive margin expansion throughout 2016.”

Precision Engineered Products

Net sales for the first quarter of 2016 were $63.5 million, compared to $7.9 million in the first quarter of 2015, an increase of $55.6 million. The acquisition of PEP accounted for $56.0 million of the increase. Adjusted income from operations for the quarter was $13.2 million, compared to $0.2 million in 2015.

Holder commented, “The integration of PEP is off to a good start. The strong operating performance in the quarter met our expectations. We expect to see improvements throughout the year as we implement the NN Operating System.”

Guidance

Holder continued, “Our businesses have performed to our expectations thus far in 2016. We are encouraged by the positive trends in the macro back drop and reaffirm our guidance for the year.”

The full set of financial guidance for the second quarter and full year 2016 can be found in our supplemental presentation posted in the Investor Relations section of our website at www.nninc.com.

Holder concluded, “We are pleased with our performance to start the year. The team continues to focus on the disciplined execution of the NN Operating System.”

GAAP Results

On a GAAP basis, income from operations for the first quarter of 2016 was $11.9 million, compared to $13.9 million for the same period in 2015. Net loss on a GAAP basis for first quarter of 2016 was $1.3 million, or ($0.05) per diluted share. This compares to net income of $6.0 million, or $0.31 per diluted share in the first quarter of 2015.


On a GAAP basis, income from operations for first quarter 2016 in the Autocam Precision Components Group was $6.5 million compared to $7.7 million for the same period in 2015.

On a GAAP basis, income from operations for first quarter 2016 in the Precision Bearing Components Group was $6.3 million compared to $9.1 million for the same period in 2015.

On a GAAP basis, income from operations for first quarter 2016 in the Precision Engineered Products Group was $5.4 million compared to $0.2 million for the same period in 2015.

NN will discuss its results during its quarterly investor conference call tomorrow morning starting at 9:00 a.m. ET. The call and supplemental presentation may be accessed via NN’s website, www.nninc.com. The conference call can also be accessed by dialing 888-505-4368 or 719-325-2281 Conference ID: 9964576. For those who are unavailable to listen to the live broadcast, a replay will be available shortly after the call for 90 days.

The Company discloses in this press release the non-GAAP financial measures of adjusted income from operations and adjusted net income. Each of adjusted income from operations and adjusted net income provide supplementary information about the impacts of acquisition related expenses, foreign-exchange and other non-operating impacts on our business.

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 combines advanced engineering and production capabilities with in-depth materials science expertise to design and manufacture high-precision components and assemblies for a variety of markets on a global basis. Headquartered in Johnson City, Tennessee, NN has 42 manufacturing plants in 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 completed acquisitions are also forward-looking statements, including statements relating to 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, 2015. 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.

Condensed Consolidated Statements Income (Loss)

(Unaudited)

 

    

Three Months ended

March 31,

 
(in thousands, except per share data)    2016     2015  

Net sales

   $ 212,226      $ 163,746   

Cost of products sold (exclusive of depreciation and amortization shown separately below)

     159,754        129,317   

Selling, general and administrative

     20,712        12,001   

Depreciation and amortization

     17,348        8,494   

Restructuring and impairment charges

     2,538        —     
  

 

 

   

 

 

 

Income from operations

     11,874       13,934  

Interest expense

     16,422        5,938   

Other (income) expense, net

     (1,129     1,400   
  

 

 

   

 

 

 

Income (loss) before provision (benefit) for income taxes and share of net income from joint venture

     (3,419     6,596   

Provision (benefit) expense for income taxes

     (720     1,456   

Share of net income from joint venture

     1,400        861   
  

 

 

   

 

 

 

Net (loss) income

   $ (1,299 )   $ 6,001  
  

 

 

   

 

 

 

Basic income (loss) per share:

    

Net income (loss)

   $ (0.05   $ 0.32   
  

 

 

   

 

 

 

Weighted average shares outstanding

     26,869       18,996  
  

 

 

   

 

 

 

Diluted income (loss) per share:

    

Net income (loss)

   $ (0.05   $ 0.31   
  

 

 

   

 

 

 

Weighted average shares outstanding

     26,869        19,380   
  

 

 

   

 

 

 

Cash dividends per common share

   $ 0.07     $ 0.07  
  

 

 

   

 

 

 


NN, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

 

     March 31,      December 31,  

(in thousands, except per share data)

   2016      2015  

Assets

     

Current assets:

     

Cash

   $ 15,079       $ 15,087   

Accounts receivable, net

     143,323         123,005   

Inventories

     120,119         119,836   

Income tax receivable

     3,989         3,989   

Current deferred tax assets

     —           6,696   

Other current assets

     13,125         11,568   
  

 

 

    

 

 

 

Total current assets

     295,635         280,181   

Property, plant and equipment, net

     325,222         318,968   

Goodwill, net

     450,190         449,898   

Intangible assets, net

     273,807         282,169   

Non-current deferred tax assets

     —           742   

Investment in joint venture

     39,862         38,462   

Other non-current assets

     10,901         10,147   
  

 

 

    

 

 

 

Total assets

   $ 1,395,617       $ 1,380,567   
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

     

Current liabilities:

     

Accounts payable

   $ 70,292       $ 69,101   

Accrued salaries, wages and benefits

     24,341         21,125   

Income taxes payable

     3,525         5,350   

Current maturities of long-term debt

     11,947         11,714   

Current portion of obligation under capital lease

     4,440         4,786   

Other current liabilities

     26,938         21,275   
  

 

 

    

 

 

 

Total current liabilities

     141,483         133,351   

Non-current deferred tax liabilities

     111,050         117,459   

Long-term debt, net of current portion

     804,672         795,400   

Accrued post-employment benefits

     6,177         6,157   

Obligation under capital lease, net of current portion

     8,646         9,573   

Other

     6,257         4,746   
  

 

 

    

 

 

 

Total liabilities

     1,078,285         1,066,686   

Total stockholders’ equity

     317,332         313,881   
  

 

 

    

 

 

 


Reconciliation of income from operations to adjusted income from operations:

 

NN, Inc - Total Company    Three Months Ended March 31,  
     2016     2015  
     $’000      % of Sales     $’000      % of Sales  

Income from operations

   $ 11,874         5.6   $ 13,934         8.5

Restructuring & impairment charges

     2,963         1.4     —           0.0

Acquisition & integration expenses

     3,263         1.5     —           0.0

Amortization of intangibles

     5,926         2.8     983         0.6
  

 

 

    

 

 

   

 

 

    

 

 

 

Adjusted income from operations

   $ 24,026         11.3   $ 14,917         9.1
  

 

 

    

 

 

   

 

 

    

 

 

 

Total Sales

   $ 212,226         $ 163,746      

Total liabilities and stockholders’ equity

   $ 1,395,617         $ 1,380,567      
  

 

 

      

 

 

    

 

Reconciliation of income from operations to adjusted income from operations:

 

  

NN, Inc - Autocam Precision Components Group    Three Months Ended March 31,  
     2016     2015  
     $’000      % of Sales     $’000      % of Sales  

Income from operations

   $ 6,527         7.8   $ 7,718         9.3

Restructuring & impairment Charges

     2,274         2.7     —           0.0

Acquisition & integration expenses

     —           0.0     —           0.0

Amortization of intangibles

     885         1.1     910         1.1
  

 

 

    

 

 

   

 

 

    

 

 

 

Adjusted income from operations

   $ 9,686         11.5   $ 8,628         10.4
  

 

 

    

 

 

   

 

 

    

 

 

 

China JV Contribution

     1,400           861      

Adjusted income from operations

   $ 11,086         13.2   $ 9,489         11.5

Total Sales

   $ 83,990         $ 82,622      


Reconciliation of income from operations to adjusted income from operations:

 

NN, Inc - Precision Bearing Components Group    Three Months Ended March 31,  
     2016     2015  
     $’000      % of Sales     $’000      % of Sales  

Income from operations

   $ 6,326         9.8   $ 9,089         12.4

Restructuring & impairment Charges

     689         1.1     —           0.0

Amortization of intangibles

     58         0.1     73         0.1
  

 

 

    

 

 

   

 

 

    

 

 

 

Adjusted income from operations

   $ 7,073         10.9   $ 9,162         12.5
  

 

 

    

 

 

   

 

 

    

 

 

 

Total Sales

   $ 64,745         $ 73,236      

Reconciliation of income from operations to adjusted income from operations:

 

NN, Inc - Precision Engineered Products Group    Three Months Ended March 31,  
     2016     2015  
     $’000      % of Sales     $’000      % of Sales  

Income from operations

   $ 5,421         8.5   $ 213         2.7

Restructuring & impairment Charges

     —           0.0     —           0.0

Acquisition & integration expenses

     2,777         4.4     —           0.0

Amortization of intangibles

     4,983         7.8     —           0.0
  

 

 

    

 

 

   

 

 

    

 

 

 

Adjusted income from operations

   $ 13,181         20.8   $ 213         2.7
  

 

 

    

 

 

   

 

 

    

 

 

 

Total Sales

   $ 63,491         $ 7,888      


Reconciliation of net income to adjusted net income:

 

NN, Inc - Total Company    Three Months Ended March 31, 2016     Three Months Ended March 31, 2015  
     In Thousands     Diluted Earnings
Per Share
    In Thousands      Diluted Earnings
Per Share
 

Net income

   ($ 1,299     (0.05     6,001       $ 0.31   

After-tax acquisition and integration costs

     2,422        0.09        —           —     

After-tax foreign exchange loss on inter-company loans

     (654     (0.02     886         0.04   

Restructuring & impairment charges

     2,198        0.08        —           —     

Amortization of intangibles & deferred financing costs

     4,459        0.17        1,140         0.06   
  

 

 

   

 

 

   

 

 

    

 

 

 

Adjusted net income

   $ 7,126      $ 0.27      $ 8,027       $ 0.41   
  

 

 

   

 

 

   

 

 

    

 

 

 

The Company discloses in this press release the non-GAAP financial measures of adjusted income from operations and adjusted net income. Each of adjusted income from operations and adjusted net income provide supplementary information about the impacts of acquisition related expenses and foreign-exchange impacts on inter-company loans. Over the past three years, we have completed six acquisitions, two of which were transformative for the Company. The costs we incurred in completing such acquisitions, including the amortization of intangibles and deferred financing costs, have been excluded from these measures because their size and inconsistent frequency are unrelated to our commercial performance during the period, and which we believe are not indicative of our ongoing operating costs. We exclude the impact of currency translation from these measures because foreign exchange rates are not under management’s control and are subject to volatility. We believe the presentation of adjusted income from operations and adjusted net income provides useful information in assessing our underlying business trends and facilitates comparison of our long-term performance over given periods

The non-GAAP financial measures provided herein may not provide information that is directly comparable to that provided by other companies in the Company’s industry, as other companies may calculate such financial results differently. The Company’s non-GAAP financial measures are not measurements of financial performance under GAAP, and should not be considered as alternatives to actual net income growth derived from income amounts presented in accordance with GAAP. The Company does not consider these non-GAAP financial measures to be a substitute for, or superior to, the information provided by GAAP financial results.