JOHNSON CITY, Tenn.,
Aug. 6, 2013 /PRNewswire/ -- NN, Inc. (NASDAQ: NNBR)
today reported its financial results for the period ended
June 30, 2013. Net sales for
the second quarter of 2013 decreased $2.5
million, or 2.5% to $96.3
million, compared to net sales of $98.8 million for the second quarter of
2012. The Company made the strategic decision to discontinue
the production and sale of certain non-strategic, low profit
products in the Precision Metal and Plastic and Rubber
Segments. This decision accounted for the majority if the
$2.5 million in sales reduction.
Net income for the second quarter of 2013 was $4.8 million, or $0.28 per diluted share, compared to $7.0 million, or $0.41 per diluted share for the same period last
year. The reduction of $2.2
million was mainly due to the recording of approximately
$1.0 million more of non-operating
foreign exchange gains in the second quarter of 2012 compared to
the second quarter of 2013 and the recording of approximately
$1.3 million in higher taxes in the
second quarter of 2013 compared to the second quarter of
2012. The higher taxes are the result of the use of an
effective tax rate of 36% for the second quarter of 2013 compared
to an effective rate of 16% for the second quarter of 2012.
This difference is due to the utilization of net operating loss
valuation allowances in 2012 that completely offset U.S. based
taxable income for the quarter. These allowances were
reversed as of December 31, 2012.
Net sales for the first six months of 2013 decreased
$13.2 million, or 6.5% to
$190.1 million, compared to net sales
of $203.3 million for the first six
months of 2012. A decrease of $13.3
million was attributable to lower demand for the Company's
products, mainly due to European automotive end markets and slowing
Asian economic growth. The negative impact of price and mix
of approximately $1.1 million was
offset by the favorable effects of foreign exchange of
approximately $1.2 million.
Net income for the first six months of 2013 was $7.6 million, or $0.45 per diluted share, compared to net income
of $12.9 million, or $0.76 per diluted share, for the comparable
period last year. The reduction of $5.3 million was mainly due to the effect of
lower sales which accounted for approximately $3.1 million of the reduction, the recording of
approximately $1.0 million more in
non-operating losses in the first six months of 2013 compared
to the first six months of 2012, and the recording of approximately
$1.2 million in higher taxes in the
first six months of 2013 compared to the first six months of
2012. The higher taxes are the result of the use of an
effective tax rate of 35% for the first six months of 2013 compared
to an effective rate of 18% for the first six months of 2012.
This rate difference is due to the utilization of net operating
loss valuation allowances in 2012 that completely offset U.S. based
taxable income for the quarter. These allowances were
reversed as of December 31,
2012.
As a percentage of net sales, cost of goods sold in the second
quarter of 2013 of 78.7% decreased slightly as compared to 78.8%
for last year's second quarter. Cost of products sold for the
first six months of 2013 of 79.0% decreased slightly as compared to
79.1% for the same period last year. These decreases reflect
ongoing cost reduction programs and operational initiatives.
Debt, net of cash, was $46.5
million at June 30, 2013, a
decrease of $4.0 million compared to
$50.5 million at December 31, 2012. As of June 30, 2013, approximately $4.9 million, or 29% of the planned capital
budget of $17.0 million for the year
had been utilized. Typically, capital expenditures are more
weighted to the second half of the year.
Richard D. Holder, President and
Chief Executive Officer commented, "We began to experience positive
revenue momentum during the second quarter of this year due to a
slight demand increase in the European heavy truck market and our
ability to better penetrate the markets of existing customers in
Europe. Our second quarter sales increased $2.5 million over sales for the first quarter of
this year. Although we are encouraged by this development,
the protracted general global economic uncertainty causes us to
remain cautious regarding the second half of the year.
Therefore, we are holding our estimates for the second half and
full year at this time.
"Compared to the same period last year, weak economic conditions
in Europe and Asia continued to negatively impact demand in
the second quarter. Additionally, we made the strategic
decision to shed non-core, non-strategic low profit products and
customer platforms. This action, while having a short-term
negative impact on sales, will position us for growth and allow us
to be a more profitable organization going forward."
Mr. Holder concluded, "During the first half of the year, we
continued to pursue the initiatives we began three years ago of
improved operating performance, cost structure enhancements and the
strengthening of our balance sheet. When the European
automotive market returns we will be better positioned to deliver
added profit to the bottom line. During the second quarter,
we began the process of revising and enhancing our current business
strategy. This strategy will include, among other
initiatives, plans to more aggressively pursue acquisitive and
organic growth opportunities in our core and adjacent markets.
We look forward to sharing details of this strategy in the
fourth quarter of this year."
NN, Inc. manufacturers 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 10 manufacturing plants in the United States, Western Europe, Eastern Europe and China. NN, Inc. had
sales of US $370 million in 2012.
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, the successful implementation of the global growth plan
including development of new products and consummation of potential
acquisitions and other risk factors and cautionary statements
listed from time to time 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, 2012.
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,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Net sales
|
$
96,305
|
|
$
98,824
|
|
$
190,102
|
|
$
203,343
|
Cost of products sold
(exclusive of
depreciation shown separately below)
|
75,751
|
|
77,848
|
|
150,268
|
|
160,817
|
Selling, general and
administrative
|
8,339
|
|
8,312
|
|
17,445
|
|
16,379
|
Depreciation and
amortization
|
4,294
|
|
4,389
|
|
8,825
|
|
8,846
|
Loss (gain) on
disposal of assets
|
1
|
|
--
|
|
5
|
|
(8)
|
Income from
operations
|
7,920
|
|
8,275
|
|
13,559
|
|
17,309
|
|
|
|
|
|
|
|
|
Interest
expense
|
709
|
|
1,116
|
|
1,494
|
|
2,327
|
Other expense
(income), net
|
(214)
|
|
(1,239)
|
|
365
|
|
(800)
|
Income before
provision for income taxes
|
7,425
|
|
8,398
|
|
11,700
|
|
15,782
|
Provision for income
taxes
|
2,655
|
|
1,360
|
|
4,059
|
|
2,835
|
Net
income
|
$
4,770
|
|
$
7,038
|
|
$
7,641
|
|
$
12,947
|
|
|
|
|
|
|
|
|
Diluted income per
common share
|
$
0.28
|
|
$
0.41
|
|
$
0.45
|
|
$
0.76
|
|
|
|
|
|
|
|
|
Weighted average
diluted shares
|
17,172
|
|
17,139
|
|
17,115
|
|
17,097
|
|
|
|
|
|
|
|
|
|
NN,
Inc. Condensed Balance Sheets (In
thousands) (Unaudited)
|
|
|
June
30,
2013
|
|
December
31,
2012
|
Assets
|
|
|
|
|
Current
Assets:
|
|
|
|
Cash
|
$
5,232
|
|
$
18,990
|
Accounts receivable,
net
|
67,521
|
|
51,628
|
Inventories
|
46,581
|
|
46,150
|
Other current
assets
|
8,603
|
|
10,528
|
Total
current assets
|
127,937
|
|
127,296
|
|
|
|
|
Property, plant and
equipment, net
|
115,469
|
|
119,687
|
Goodwill and
intangible assets, net
|
9,058
|
|
9,154
|
Other non-current
assets
|
8,975
|
|
9,206
|
Total
assets
|
$
261,439
|
|
$
265,343
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
40,023
|
|
$
37,000
|
Accrued salaries,
wages and benefits
|
10,888
|
|
10,174
|
Current maturities of
long-term debt
|
5,714
|
|
5,801
|
Income taxes
payable
|
961
|
|
543
|
Other current
liabilities
|
6,966
|
|
5,240
|
Total
current liabilities
|
64,552
|
|
58,758
|
|
|
|
|
Non-current deferred
tax liabilities
|
3,804
|
|
3,850
|
Long-term debt, net
of current portion
|
46,000
|
|
63,715
|
Other non-current
liabilities
|
11,056
|
|
10,460
|
Total
liabilities
|
125,412
|
|
136,783
|
|
|
|
|
Total stockholders'
equity
|
136,027
|
|
128,560
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$
261,439
|
|
$
265,343
|
NN,
Inc. Reconciliation of Non-GAAP to GAAP Financial
Measures (Unaudited)
|
|
|
Three Months
Ended
June 30,
2013
|
|
Three Months
Ended
June 30,
2012
|
|
In
Thousands
|
|
Diluted
Earnings
Per Share
|
|
In
Thousands
|
|
Diluted
Earnings
Per Share
|
Net income
|
$
4,770
|
|
$
0.28
|
|
$
7,038
|
|
$
0.41
|
After-tax foreign
exchange (gain) loss on
inter-company loans
|
(138)
|
|
(0.01)
|
|
(1,109)
|
|
(0.06)
|
Net income from
normal operations
|
$
4,632
|
|
$
0.27
|
|
$
5,929
|
|
$
0.35
|
|
|
|
|
Six Months
Ended
June 30,
2013
|
|
Six Months
Ended
June 30,
2012
|
|
In
Thousands
|
|
Diluted
Earnings
Per Share
|
|
In
Thousands
|
|
Diluted
Earnings
Per Share
|
Net income
|
$
7,641
|
|
$
0.45
|
|
$
12,947
|
|
$
0.76
|
After-tax foreign
exchange (gain) loss on
inter-company loans
|
212
|
|
0.01
|
|
(376)
|
|
(0.02)
|
After-tax
restructuring and other non-recurring items
|
399
|
|
0.02
|
|
--
|
|
--
|
Net income from
normal operations
|
$
8,252
|
|
$
0.48
|
|
$
12,571
|
|
$
0.74
|
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.
SOURCE NN, Inc.