JOHNSON CITY, Tenn.,
Aug. 2, 2017 /PRNewswire/ -- NN,
Inc., (NASDAQ: NNBR), a diversified industrial company, today
reported its financial results for the second quarter ended
June 30, 2017.
GAAP Results
Net sales for the second quarter of 2017 increased $11.6 million, or 5%, to $225.9 million, compared to $214.3 million for the second quarter of
2016. Organic growth in the medical, aerospace and CAFE end
markets accounted for the increase.
On a GAAP basis, income from operations for the second quarter
of 2017 was $20.6 million, compared
to $16.7 million for the same period
in 2016. Net loss on a GAAP basis for second quarter of 2017 was
$21.5 million, or ($0.78) per diluted share. This compares to a net
income of $2.0 million, or
$0.07 per diluted share in the second
quarter of 2016. The loss was driven by cost related to the
refinance and retirement of the senior notes during the
quarter.
On a GAAP basis, income from operations for second quarter 2017
in the Autocam Precision Components Group was $10.7 million compared to $7.8 million for the same period in 2016.
On a GAAP basis, income from operations for second quarter 2017
in the Precision Bearing Components Group was $8.4 million compared to $6.5 million for the same period in 2016.
On a GAAP basis, income from operations for second quarter 2017
in the Precision Engineered Products Group was $10.6 million compared to $10.8 million for the same period in 2016.
Adjusted Results
Adjusted income from operations for the second quarter of 2017
was $28.1 million, compared to
$28.7 million for the same period in
2016. Adjusted net income was $13.9
million, or $0.51 per diluted
share, compared to $12.4 million, or
$0.46 per diluted share for the same
period in 2016.
Richard Holder, President and
Chief Executive Officer, commented, "Overall operating performance
in the quarter was in line with our expectations and our plan for
the quarter. Sales were slightly ahead of plan as we continue to
see new business wins in our medical and aerospace end
markets. Adjusted earnings per share of $0.51 was also better than expected."
Business Group Results
Autocam Precision Components
Net sales for the second quarter of 2017 were $86.7 million, compared to $83.0 million in the second quarter of 2016, an
increase of 4% or $3.7 million.
Growth related to our CAFE automotive business accounted for
the increase. Adjusted income from operations for the quarter
increased $0.9 million to
$11.6 million, compared to
$10.7 million in the second quarter
of 2016.
Mr. Holder commented, "The APC Group continues to perform
well. Our CAFE technology platform continues to drive growth
and margins continue to expand as we reap the benefits of the NN
Operating System."
Precision Bearing Components
Net sales for the second quarter of 2017 were $67.9 million, compared to $65.2 million in the second quarter of 2016, an
increase of $2.7 million or 4%.
Adjusted income from operations for the second quarter was
$8.7 million, compared to
$8.2 million in the second quarter of
2016.
Mr. Holder commented, "The PBC Group continued to see improved
performance in the second quarter, and sales and operating profit
were better than the prior year, meeting our expectations for the
quarter. Regarding the divestiture of PBC, we remain on track and
we expect to close the transaction before year-end."
Precision Engineered Products
Net sales for the second quarter of 2017 were $71.3 million, compared to $66.1 million in the second quarter of 2016, an
increase of $5.2 million, or
8%. Volume increases related to our medical and aerospace end
markets were the primary drivers. Adjusted income from
operations for the quarter was $15.6
million, compared to $16.3
million in 2016.
Mr. Holder commented, "We continue to experience new program
wins in both our medical and aerospace end markets and are pleased
with the top line performance of the PEP Group. As these new
programs reach normal production levels in the second half and we
gain the benefits of the NN Operating System, we expect margins to
return to normal."
Mr. Holder concluded, "We are pleased with the performance of
the business in the second quarter and first half of the year. Our
strategy continues to pay dividends as we have now seen growth in
all of our segments in three consecutive quarters."
The full set of financial guidance for the second quarter and
full year 2017 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 1-888-452-4004 or
1-719-325-2108 Conference ID: 4928092. For those who are
unavailable to listen to the live broadcast, a replay will be
available shortly after the call for 90 days.
NN discloses in this press release the non-GAAP financial
measures of adjusted income from operations, adjusted net income
and adjusted diluted earnings per share. 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 financial tables found later in this press release 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 40 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 pending and completed
transactions 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
or the possibility that the Company will be unable to execute on
the intended redeployment of proceeds from a divestiture, whether
due to a lack of favorable investment opportunities or
otherwise.
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, 2016. 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 Statement of Income (Loss)
(Unaudited)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
(in thousands, except
per share data)
|
2017
|
2016
|
|
2017
|
2016
|
|
|
|
|
|
|
Net sales
|
$225,875
|
$214,272
|
|
$452,189
|
$426,498
|
Cost of products sold
(exclusive of depreciation and amortization shown
separately below)
|
166,040
|
156,794
|
|
332,994
|
316,548
|
Selling, general and
administrative expense
|
23,036
|
21,592
|
|
44,530
|
42,304
|
Depreciation and
amortization
|
15,900
|
15,136
|
|
31,468
|
32,484
|
Restructuring and
integration expense
|
306
|
4,047
|
|
446
|
6,585
|
Income from
operations
|
20,593
|
16,703
|
|
42,751
|
28,577
|
|
|
|
|
|
|
Interest
expense
|
12,409
|
16,165
|
|
27,365
|
32,587
|
Loss on
extinguishment of debt and write-off of unamortized debt
issuance
costs
|
39,639
|
-
|
|
39,639
|
-
|
Derivative loss on
change in interest rate swap fair value
|
101
|
-
|
|
13
|
-
|
Other (income)
expense, net
|
645
|
(824)
|
|
(79)
|
(1,953)
|
Income (loss) before
provision (benefit) for income taxes and share of net
income from joint venture
|
(32,201)
|
1,362
|
|
(24,187)
|
(2,057)
|
Provision (benefit)
for income taxes
|
(9,428)
|
674
|
|
(7,128)
|
(46)
|
Share of net income
from joint venture
|
1,244
|
1,343
|
|
2,937
|
2,743
|
Net income
(loss)
|
$(21,529)
|
$2,031
|
|
$(14,122)
|
$732
|
|
|
|
|
|
|
Basic net income
(loss) per share:
|
|
|
|
|
|
Net income (loss) per
share
|
$(0.78)
|
$0.08
|
|
$(0.52)
|
$0.03
|
Weighted average
shares outstanding
|
27,468
|
27,024
|
|
27,358
|
26,923
|
|
|
|
|
|
|
Diluted net income
(loss) per share:
|
|
|
|
|
|
Net income (loss) per
share
|
$(0.78)
|
$0.07
|
|
$(0.52)
|
$0.03
|
Weighted average
shares outstanding
|
27,468
|
27,187
|
|
27,358
|
27,050
|
|
|
|
|
|
|
Cash dividends
per common share
|
$0.07
|
$0.07
|
|
$0.14
|
$0.14
|
NN,
Inc.
|
June
30,
|
December
31,
|
Condensed
Consolidated Balance Sheet (Unaudited)
|
2017
|
2016
|
Cash
|
$19,166
|
$14,405
|
Current maturities of
long-term debt
|
24,748
|
12,751
|
Current portion of
obligation under capital lease
|
3,523
|
3,762
|
Long-term debt, net
of current portion
|
827,390
|
785,713
|
Obligation under
capital lease, net of current portion
|
4,691
|
5,851
|
NN,
Inc.
|
|
|
|
|
|
Reconciliation of
Income from Operations to
Adjusted Income from Operations
For the Period
Ending:
|
June
30,
|
June
30,
|
NN, Inc.
Consolidated
|
2017
|
2016
|
GAAP Income from
Operations
|
$20,593
|
$16,703
|
Restructuring &
impairment charges
|
306
|
4,745
|
Acquisition &
integration expenses
|
1,279
|
1,178
|
Amortization of
intangibles
|
5,893
|
6,101
|
Non-GAAP Adjusted
Income from Operations (a)
|
$28,071
|
$28,727
|
|
|
|
Non-GAAP Adjusted
Operating Margin (a)
|
12.4%
|
13.4%
|
GAAP Sales
|
225,875
|
214,272
|
|
|
|
|
|
|
Autocam Precision
Components
|
2017
|
2016
|
GAAP Income from
Operations
|
$10,688
|
$7,770
|
Restructuring &
impairment charges
|
6
|
2,085
|
Acquisition &
integration expenses
|
-
|
|
Amortization of
intangibles
|
874
|
885
|
Non-GAAP Adjusted
Income from Operations
|
$11,568
|
$10,740
|
JV
Contribution
|
1,244
|
1,343
|
Non-GAAP Adjusted
Income from Operations (a)
|
12,812
|
12,083
|
|
|
|
Non-GAAP Adjusted
Operating Margin (a)
|
14.8%
|
14.6%
|
GAAP Sales
|
86,658
|
82,991
|
|
|
|
|
|
|
Precision Bearing
Components
|
2017
|
2016
|
GAAP Income from
Operations
|
$8,351
|
$6,474
|
Restructuring &
impairment charges
|
300
|
1,651
|
Acquisition &
integration expenses
|
-
|
|
Amortization of
intangibles
|
53
|
57
|
Non-GAAP Adjusted
Income from Operations (a)
|
$8,704
|
$8,182
|
|
|
|
Non-GAAP Adjusted
Operating Margin (a)
|
12.8%
|
12.6%
|
GAAP Sales
|
67,928
|
65,157
|
|
|
|
|
|
|
Precision
Engineered Products
|
2Q17
|
2Q16
|
GAAP Income from
Operations
|
$10,600
|
$10,782
|
Restructuring &
impairment charges
|
-
|
|
Acquisition &
integration expenses
|
-
|
311
|
Amortization of
intangibles
|
4,966
|
5,159
|
Non-GAAP Adjusted
Income from Operations (a)
|
$15,566
|
$16,252
|
|
|
|
Non-GAAP Adjusted
Operating Margin (a)
|
21.8%
|
24.6%
|
GAAP Sales
|
71,289
|
66,124
|
NN,
Inc.
|
|
|
Reconciliation of
Net Income to Adjusted Net Income
|
|
|
For the Period
Ending:
|
June
30,
|
GAAP Net Income to
Adjusted Net Income
|
2017
|
2016
|
GAAP Net
Income
|
$(21,529)
|
$2,031
|
Pre-tax acquisition
and integration costs
|
1,279
|
1,178
|
Pre-tax foreign
exchange loss (gain) on inter-company
loans
|
770
|
(643)
|
Pre-tax
reorganization and impairment charges
|
306
|
4,745
|
Loss on
extinguishment of debt and write-off of
unamortized debt issuance costs
|
39,740
|
-
|
Pre-tax write-off
interest rate swap
|
-
|
-
|
Pre-tax amortization
of intangibles & deferred financing
costs
|
6,920
|
7,254
|
Tax effect of all
adjustment reflected above (c)
|
(13,548)
|
(2,133)
|
Non-GAAP Adjusted Net
Income (b)
|
$13,938
|
$12,432
|
|
|
|
|
|
|
Reconciliation of
Diluted Earnings per Share to
Adjusted Diluted Earnings per Share
|
2017
|
2Q16
|
GAAP Net Income per
Share
|
$(0.78)
|
$0.07
|
Pre-tax acquisition
and integration costs
|
0.05
|
0.04
|
Pre-tax foreign
exchange loss (gain) on inter-company
loans
|
0.03
|
(0.02)
|
Pre-tax
reorganization and impairment charges
|
0.01
|
0.18
|
Loss on
extinguishment of debt and write-off of
unamortized debt issuance costs
|
1.45
|
-
|
Pre-tax write-off
interest rate swap
|
-
|
-
|
Pre-tax amortization
of intangibles & deferred financing
costs
|
0.25
|
0.27
|
Tax effect of all
adjustment reflected above (c)
|
(0.49)
|
(0.08)
|
Non-GAAP Adjusted Net
Income per Share (b)
|
$0.51
|
$0.46
|
Diluted
Shares O/S
|
27,468
|
27,100
|
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 and integration related expenses,
foreign-exchange impacts on inter-company loans reorganizational
and impairment charges. 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. Other non-operating charges such as, the write-off of
our interest rate swap, are excluded as the charges on not
indicative of our ongoing operating cost. 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 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, loss on
extinguishment of debt and write-off of unamortized debt issuance
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 Non-GAAP 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.
(c) This line item reflects the aggregate tax effect of all
nontax adjustments reflected in the table above. In addition, the
footnotes above indicate the after-tax amount of each individual
adjustment item. NN, Inc. estimates the tax effect of the
adjustment items identified in the reconciliation schedule above by
applying NN, Inc's. overall estimated effective tax rate to the
pretax amount, unless the nature of the item and/or the tax
jurisdiction in which the item has been recorded requires
application of a specific tax rate or tax treatment.
View original
content:http://www.prnewswire.com/news-releases/nn-inc-reports-second-quarter-2017-results-300498720.html
SOURCE NN, Inc.