JOHNSON CITY, Tenn.,
Aug. 3, 2016 /PRNewswire/ -- NN,
Inc., (NASDAQ: NNBR), a diversified industrial company, today
reported its financial results for the second quarter ended
June 30, 2016.
Richard Holder, President and
Chief Executive Officer, commented, "Commencing with this quarter
and in accordance with updated regulatory guidance we have
reformatted our earnings release to report our GAAP results first,
followed by our adjusted operating results."
GAAP Results
Net sales for the second quarter of 2016 increased $49.4 million, or 30.0% to $214.3 million, compared to $164.9 million for the second quarter of
2015. Acquisitions added $57.8
million in revenue. Sales in the legacy business were
negatively impacted $8.4 million
primarily from weakness in the industrial end market.
On a GAAP basis, income from operations for the second quarter
of 2016 was $16.7 million, compared
to $13.6 million for the same period
in 2015. Net income on a GAAP basis for second quarter of 2016 was
$2.0 million, or $0.07 per diluted share. This compares to net
income of $7.0 million, or
$0.36 per diluted share in the second
quarter of 2015.
On a GAAP basis, income from operations for second quarter 2016
in the Autocam Precision Components Group was $7.8 million compared to $9.1 million for the same period in 2015.
On a GAAP basis, income from operations for second quarter 2016
in the Precision Bearing Components Group was $6.5 million compared to $9.4 million for the same period in 2015.
On a GAAP basis, income from operations for second quarter 2016
in the Precision Engineered Products Group was $10.8 million compared to $0.5 million for the same period in 2015.
Adjusted Second Quarter 2016 Results
Adjusted income from operations for the second quarter of 2016
was $28.7 million, an increase of
89%, compared to $15.2 million for
the same period in 2015. Adjusted net income was $12.4 million, or $0.46 per diluted share, compared to $8.3 million, or $0.42 per diluted share for the same period in
2015.
Richard Holder, President and
Chief Executive Officer, commented, "The NN Operating System
continues to drive solid improvement throughout our business.
Our operating performance this quarter is a great example of our
ability to drive margin expansion."
Business Group Results
Autocam Precision Components
Net sales for the second quarter of 2016 were $83.0 million, compared to $86.5 million in the second quarter of 2015, a
decrease of $3.5 million.
Weakness in the industrial end market accounted for the
decline. Adjusted income from operations for the quarter increased
$0.7 million to $10.7 million, compared to $10.0 million in the second quarter of
2015.
Holder commented, "Focus on our CAFE Technologies and
improvements driven by the NN Operating System continue to drive
margin expansion in our APC group."
Precision Bearing Components
Net sales for the second quarter of 2016 were $65.2 million, compared to $69.3 million in the second quarter of 2015, a
decrease of $4.1 million. Soft
industrial market demand accounted for the decline. Adjusted
income from operations for the second quarter was $8.2 million, compared to $9.5 million in the second quarter of 2015.
Holder commented, "Despite continued weakness in the industrial
market our PBC team continues to focus on margin expansion driven
by the tenets of the NN Operating System."
Precision Engineered Products
Net sales for the second quarter of 2016 were $66.1 million, compared to $9.1 million in the second quarter of 2015, an
increase of $57.0 million. The
acquisition of PEP accounted for $58.4
million of the increase. Adjusted income from
operations for the quarter was $16.3
million, compared to $0.5
million in 2015.
Holder commented, "We continue to be pleased with the
performance of our PEP group. Our integration efforts are on
track and we are beginning to see the benefits of the NN Operating
System."
Holder concluded, "Driven by the NN Operating System and growth
in our non-industrial end markets we continue to deliver solid
operating results."
The full set of financial guidance for the third 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.
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 800-723-6575 or
785-830-1997 Conference ID: 7483731. 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, adjusted net income and adjusted
diluted earnings per share to the U.S. GAAP financial measures of
income from operations, net income and diluted earnings per
share.
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 41 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 of Net Income
|
(Unaudited)
|
|
Three Months
ended
|
|
Six Months
ended
|
|
June 30,
2016
|
|
June 30,
2016
|
(in thousands, except
per share data)
|
2016
|
2015
|
|
2016
|
2015
|
Net sales
|
$214,272
|
$164,856
|
|
$426,498
|
$328,601
|
Cost of products sold
(exclusive of depreciation and amortization shown separately
below)
|
156,794
|
128,708
|
|
316,548
|
258,025
|
Selling, general and
administrative
|
21,592
|
13,962
|
|
42,304
|
25,961
|
Depreciation and
amortization
|
15,136
|
8,597
|
|
32,484
|
17,091
|
Restructuring and
impairment charges
|
4,047
|
-
|
|
6,585
|
-
|
Income from
operations
|
16,703
|
13,589
|
|
28,577
|
27,524
|
|
|
|
|
|
|
Interest
expense
|
16,165
|
6,021
|
|
32,587
|
11,959
|
Other (income)
expense, net
|
(824)
|
19
|
|
(1,953)
|
1,419
|
Income (loss) before
provision (benefit) for income taxes and share of net income from
joint venture
|
1,362
|
7,549
|
|
(2,057)
|
14,146
|
Provision (benefit)
expense for income taxes
|
674
|
1,617
|
|
(46)
|
3,073
|
Share of net income
from joint venture
|
1,343
|
1,021
|
|
2,743
|
1,882
|
Net income
|
$2,031
|
$6,953
|
|
$732
|
$12,955
|
|
|
|
|
|
|
Basic income per
share:
|
|
|
|
|
|
Net income
|
$0.08
|
$0.36
|
|
$0.03
|
$0.68
|
Weighted average
shares outstanding
|
27,024
|
19,215
|
|
26,923
|
19,064
|
|
|
|
|
|
|
Diluted income per
share:
|
|
|
|
|
|
Net income
|
$0.07
|
$0.36
|
|
$0.03
|
$0.67
|
Weighted average
shares outstanding
|
27,187
|
19,582
|
|
27,050
|
19,416
|
|
|
|
|
|
|
Cash dividends
per common share
|
$0.07
|
$0.07
|
|
$0.14
|
$0.14
|
NN,
Inc.
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
|
(in thousands, except
per share data)
|
June
30,
|
December
31,
|
Assets
|
2016
|
2015
|
Current
assets:
|
|
|
Cash
|
$
15,080
|
$
15,087
|
Accounts receivable,
net
|
147,053
|
123,005
|
Inventories
|
118,784
|
119,836
|
Income tax
receivable
|
4,046
|
3,989
|
Current deferred tax
assets
|
-
|
6,696
|
Other current
assets
|
12,920
|
11,568
|
Total current
assets
|
297,883
|
280,181
|
|
|
|
Property, plant and
equipment, net
|
323,244
|
318,968
|
Goodwill,
net
|
448,690
|
449,898
|
Intangible assets,
net
|
267,769
|
282,169
|
Non-current deferred
tax assets
|
-
|
742
|
Investment in joint
venture
|
41,205
|
38,462
|
Other non-current
assets
|
10,950
|
10,147
|
Total
assets
|
$
1,389,741
|
$
1,380,567
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$
65,862
|
$
69,101
|
Accrued salaries,
wages and benefits
|
23,392
|
21,125
|
Income taxes
payable
|
2,042
|
5,350
|
Current maturities of
long-term debt
|
19,537
|
11,714
|
Current portion of
obligation under capital lease
|
4,101
|
4,786
|
Other current
liabilities
|
23,941
|
21,275
|
Total current
liabilities
|
138,875
|
133,351
|
|
|
|
Non-current deferred
tax liabilities
|
112,256
|
117,459
|
Long-term debt, net
of current portion
|
801,213
|
795,400
|
Accrued
post-employment benefits
|
6,045
|
6,157
|
Obligation under
capital lease, net of current portion
|
7,656
|
9,573
|
Other
|
6,290
|
4,746
|
Total
liabilities
|
1,072,335
|
1,066,686
|
Total stockholders'
equity
|
317,406
|
313,881
|
Total liabilities and
stockholders' equity
|
$
1,389,741
|
$
1,380,567
|
Reconciliation of
GAAP net income to Non-GAAP adjusted net income:
|
NN, Inc - Total
Company
|
Three Months Ended
June 30, 2016
|
|
Three Months Ended
June 30, 2015
|
|
In
Thousands
|
|
Diluted Earnings
Per
Share
|
|
In
Thousands
|
|
Diluted Earnings
Per
Share
|
GAAP Net
income
|
$2,031
|
|
$0.07
|
|
$6,953
|
|
$0.36
|
After-tax acquisition
and integration costs
|
1,285
|
|
0.05
|
|
436
|
|
0.02
|
After-tax foreign
exchange gain on inter-company loans
|
(700)
|
|
(0.02)
|
|
(232)
|
|
(0.01)
|
After-tax
restructuring and impairment charges
|
5,174
|
|
0.19
|
|
-
|
|
-
|
Amortization of
intangibles & deferred financing costs
|
4,642
|
|
0.17
|
|
1,148
|
|
0.06
|
Non-GAAP Adjusted net
income (b)
|
$12,432
|
|
$0.46
|
|
$8,305
|
|
$0.42
|
Reconciliation of
GAAP income from operations to Non-GAAP adjusted income from
operations:
|
NN, Inc - Total
Company
|
Three Months Ended
June 30,
|
|
2016
|
|
2015
|
|
$'000
|
% of
Sales
|
|
$'000
|
% of
Sales
|
GAAP Income from
operations
|
$16,703
|
7.8%
|
|
$13,589
|
8.2%
|
Restructuring &
impairment charges
|
4,745
|
2.2%
|
|
-
|
0.0%
|
Acquisition &
integration expenses
|
1,178
|
0.5%
|
|
681
|
0.4%
|
Amortization of
intangibles
|
6,101
|
2.8%
|
|
962
|
0.6%
|
Non-GAAP Adjusted
income from operations (a)
|
$28,727
|
13.4%
|
|
$15,232
|
9.2%
|
|
|
|
|
|
|
GAAP Total
Sales
|
$214,272
|
|
$164,856
|
Reconciliation of
GAAP income from operations to Non-GAAP adjusted income from
operations:
|
NN, Inc - Autocam
Precision Components Group
|
Three Months Ended
June 30,
|
|
2016
|
|
2015
|
|
$'000
|
% of
Sales
|
|
$'000
|
% of
Sales
|
GAAP Income from
operations
|
$7,770
|
9.4%
|
|
$9,095
|
10.5%
|
Restructuring &
impairment Charges
|
2,085
|
2.5%
|
|
-
|
0.0%
|
Acquisition &
integration expenses
|
-
|
0.0%
|
|
-
|
0.0%
|
Amortization of
intangibles
|
885
|
1.1%
|
|
885
|
1.0%
|
Non-GAAP Adjusted
income from operations
|
$10,740
|
12.9%
|
|
$9,980
|
11.5%
|
|
|
|
|
|
|
China JV
Contribution
|
1,343
|
|
|
1,021
|
|
Non-GAAP Adjusted
income from operations
|
$12,083
|
14.6%
|
|
$11,001
|
12.7%
|
|
|
|
|
|
|
GAAP Total
Sales
|
$82,991
|
|
$86,471
|
Reconciliation of
GAAP income from operations to Non-GAAP adjusted income from
operations:
|
NN, Inc -
Precision Bearing Components Group
|
Three Months Ended
June 30,
|
|
2016
|
|
2015
|
|
$'000
|
% of
Sales
|
|
$'000
|
% of
Sales
|
GAAP Income from
operations
|
$6,474
|
9.9%
|
|
$9,403
|
13.6%
|
Restructuring &
impairment Charges
|
1,651
|
2.5%
|
|
-
|
0.0%
|
Amortization of
intangibles
|
57
|
0.1%
|
|
57
|
0.1%
|
Non-GAAP Adjusted
income from operations
|
$8,182
|
12.6%
|
|
$9,460
|
13.7%
|
|
|
|
|
|
|
GAAP Total
Sales
|
$65,157
|
|
$69,261
|
Reconciliation of
GAAP income from operations to Non-GAAP adjusted income from
operations:
|
NN, Inc -
Precision Engineered Components Group
|
Three Months Ended
June 30,
|
|
2016
|
|
2015
|
|
$'000
|
% of
Sales
|
|
$'000
|
% of
Sales
|
GAAP Income from
operations
|
$10,782
|
16.3%
|
|
$501
|
5.5%
|
Acquisition &
integration expenses
|
311
|
0.5%
|
|
-
|
0.0%
|
Amortization of
intangibles
|
5,159
|
7.8%
|
|
20
|
0.2%
|
Non-GAAP Adjusted
income from operations (a)
|
$16,252
|
24.6%
|
|
$521
|
5.7%
|
|
|
|
|
|
|
GAAP Total
Sales
|
$66,124
|
|
$9,124
|
The Company discloses in this presentation the non-GAAP
financial measures of adjusted income from operations, adjusted net
income and adjusted diluted earnings per share. Each of these
non-GAAP financial measures 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, adjusted net income and adjusted diluted earnings per
share provide 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.
(a) Non-GAAP Adjusted income from operations, represents GAAP
income from operations, adjusted to exclude the effects of
restructuring and non-cash impairment charges (related to
plant closures and other charges incurred to implement our
strategic goals, that do not necessarily represent a major
strategic shift in operations), one-time charges related to
acquisition and integration costs, intangible amortization
costs for fair value step-up in values related to acquisitions, and
when applicable, our share of income from joint venture operations.
We believe this presentation is commonly used by investors and
professional research analysts in the valuation, comparison, rating
and investment recommendations of companies in the industrial
industry. We use this information for comparative purposes within
the industry. Non-GAAP adjusted income from operations, is not a
measure of financial performance under GAAP and should not be
considered as a measure of liquidity or as an alternative to GAAP
income from operations.
(b) Non-GAAP adjusted net income and adjusted diluted earnings
per share, represents GAAP net income, adjusted to exclude the
tax-affected effects of restructuring and non-cash impairment
charges (related to plant closures and other charges incurred to
implement our strategic goals, that do not necessarily represent a
major strategic shift in operations), one-time charges related to
acquisition and integration costs, amortization of
intangibles costs for fair value step-up in values related to
acquisitions and amortization of deferred financing costs, and
foreign exchange gain (loss) on inter-company loans. We believe
this presentation is commonly used by investors and professional
research analysts in the valuation, comparison, rating and
investment recommendations of companies in the industrial industry.
We use this information for comparative purposes within the
industry. Non-GAAP adjusted net income and adjusted diluted
earnings per share, is not a measure of financial performance under
GAAP and should not be considered as a measure of liquidity or as
an alternative to GAAP net income.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/nn-inc-reports-second-quarter-2016-results-300308674.html
SOURCE NN, Inc.