JOHNSON CITY, Tenn.,
Aug. 5, 2014 /PRNewswire/ -- NN, Inc.
(NASDAQ: NNBR) today reported its financial results for the period
ended June 30, 2014. Net sales
for the second quarter of 2014 increased $10.4 million, or 10.8% to $106.7 million, compared to net sales of
$96.3 million for the second quarter
of 2013. This increase included approximately $4.1 million in net sales from the acquisition of
the assets of V-S Industries that was announced on February 4, 2014. Continued strong demand
in Asia and improved demand from
European automotive markets accounted for the remainder of the
increase.
Reported net income for the second quarter of 2014 was
$5.2 million, or $0.29 per diluted share included approximately
$0.8 million of after-tax integration
and acquisition costs as compared to $4.8
million, or $0.28 per diluted
share for the same period last year. Excluding these costs,
net income from normal operations for the second quarter of 2014
was $6.0 million, or $0.33 per diluted share, an increase of 22.2% as
compared to diluted earnings per share from normal operations for
the same period in the prior year of $4.6
million, or $0.27 per diluted
share. Acquisition and integration costs were funded by
continued growth and improved operating performance.
Net sales for the first six months of 2014 increased
$19.1 million, or 10.0 % to
$209.2 million, compared to net sales
of $190.1 million for the first six
months of 2013. This included approximately $5.9 million in net sales from the acquisition of
the assets of V-S Industries. Continued strong demand
in Asia and improved demand from
European automotive and heavy truck markets accounted for the
remainder of the increase.
Reported net income for the first six months of 2014 was
$10.4 million, or $0.58 per diluted share, compared to net income
of $7.6 million, or $0.45 per diluted share, for the comparable
period last year. Net income from normal operations for the
first six months of 2014 excluding after-tax integration and
acquisition costs was $11.6 million,
or $0.64 per diluted share.
As a percentage of net sales, cost of goods sold in the second
quarter of 2014 of 79.0% increased slightly as compared to 78.7%
for last year's second quarter. Cost of products sold for the
first six months of 2014 of 78.7% decreased slightly as compared to
79.0% for the same period last year.
Debt, net of cash, was $50.7
million at June 30, 2014, an
increase of $17.3 million compared to
$33.4 million at December 31, 2013. The increase was due
primarily to the acquisition activity in the first six months of
2014. As of June 30, 2014,
approximately $5.8 million, or 25.2%
of the planned capital budget of $23.0
million for the year had been utilized. Typically,
capital expenditures are more weighted to the second half of the
year.
Richard Holder, President and
Chief Executive Officer, commented, "Second quarter and six month
results were largely in line with our expectations. The
strong sales momentum that began in 2013 continued into the second
quarter of this year. We again benefited from sustained
growth, share gains and product expansion in our Asian and European
markets. Sales in North
America were in line with our markets. We also
continued to strengthen our bottom line while funding acquisition
and integration costs.
"Looking forward, we remain optimistic about the second half of
the year. We expect continued strong demand in Asia and improving demand in Europe. RFK
and Chelsea will be accretive to earnings in our current quarter
and V-S Industries is expected to become accretive to earnings
later this year. These three acquisitions combined represent
approximately $30 million in
increased annual revenues.
"Additionally, last month, we announced the signing of a
definitive agreement to acquire Autocam Corporation, a global
leader in the engineering, manufacture and assembly of highly
complex, system critical components for fuel systems, engines and
transmission, power steering and electric motors. This
transaction will contribute over $250
million to our top line revenues. Further, it will
both leverage NN's and Autocam's complementary core strengths and
values and position this business segment to outgrow its end
markets by taking advantage of global market trends in fuel
efficient technologies. Subject to customary closing
conditions and regulatory approval, we expect our proposed
acquisition of Autocam to close in this quarter."
Mr. Holder concluded, "While we are pleased with what we have
been able to accomplish so far this year, we are continually
working toward further improvement to the benefit of all
stakeholders. We will continue to focus on growing our
business organically as well as through strategic acquisitions
while simultaneously improving our cost structure."
NN, Inc. 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 14 manufacturing plants in the United States, Mexico, Western
Europe, Eastern Europe and
China. NN, Inc. had sales of US $373
million in 2013.
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, 2013. 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,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Net sales
|
$ 106,680
|
|
$ 96,305
|
|
$ 209,208
|
|
$ 190,102
|
Cost of products sold
(exclusive of
depreciation shown separately below)
|
84,285
|
|
75,751
|
|
164,569
|
|
150,268
|
Selling, general and
administrative
|
10,074
|
|
8,339
|
|
20,104
|
|
17,445
|
Depreciation and
amortization
|
4,084
|
|
4,294
|
|
7,961
|
|
8,825
|
Loss on disposal of
assets
|
--
|
|
1
|
|
--
|
|
5
|
Income from
operations
|
8,237
|
|
7,920
|
|
16,574
|
|
13,559
|
|
|
|
|
|
|
|
|
Interest
expense
|
551
|
|
709
|
|
1,115
|
|
1,494
|
Other expense
(income), net
|
129
|
|
(214)
|
|
212
|
|
365
|
Income before
provision for income taxes
|
7,557
|
|
7,425
|
|
15,247
|
|
11,700
|
Provision for income
taxes
|
2,357
|
|
2,655
|
|
4,809
|
|
4,059
|
Net
income
|
$ 5,200
|
|
$ 4,770
|
|
$ 10,438
|
|
$ 7,641
|
|
|
|
|
|
|
|
|
Diluted income per
common share
|
$ 0.29
|
|
$ 0.28
|
|
$ 0.58
|
|
$ 0.45
|
|
|
|
|
|
|
|
|
Weighted average
diluted shares
|
18,172
|
|
17,172
|
|
18,054
|
|
17,115
|
|
|
|
|
|
|
|
|
|
NN,
Inc.
Condensed Balance
Sheets
(In
thousands)
(Unaudited)
|
|
|
June
31,
2014
|
|
December
31,
2013
|
Assets
|
|
|
|
|
Current
Assets:
|
|
|
|
Cash
|
$ 5,812
|
|
$ 3,039
|
Accounts receivable,
net
|
80,740
|
|
58,929
|
Inventories
|
61,541
|
|
54,530
|
Other current
assets
|
9,934
|
|
9,176
|
Total
current assets
|
158,027
|
|
125,674
|
|
|
|
|
Property, plant and
equipment, net
|
132,681
|
|
121,089
|
Goodwill and
intangible assets, net
|
12,108
|
|
9,524
|
Other non-current
assets
|
4,604
|
|
6,115
|
Total
assets
|
$ 307,420
|
|
$ 262,402
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$ 48,540
|
|
$ 40,687
|
Accrued salaries,
wages and benefits
|
13,408
|
|
11,761
|
Current maturities of
long-term debt
|
4,000
|
|
10,477
|
Income taxes
payable
|
3,300
|
|
1,340
|
Other current
liabilities
|
6,088
|
|
5,119
|
Total
current liabilities
|
75,336
|
|
69,384
|
|
|
|
|
Non-current deferred
tax liabilities
|
3,962
|
|
3,844
|
Long-term debt, net
of current portion
|
53,500
|
|
26,000
|
Other non-current
liabilities
|
10,783
|
|
10,414
|
Total
liabilities
|
143,581
|
|
109,642
|
|
|
|
|
Total stockholders'
equity
|
163,839
|
|
152,760
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$ 307,420
|
|
$ 262,402
|
NN,
Inc.
Reconciliation of
Non-GAAP to GAAP Financial Measures
(Unaudited)
|
|
|
Three Months
Ended
June 30,
2014
|
|
Three Months
Ended
June 30,
2013
|
|
In
Thousands
|
|
Diluted
Earnings
Per Share
|
|
In
Thousands
|
|
Diluted
Earnings
Per Share
|
Net income
|
$ 5,200
|
|
$ 0.29
|
|
$ 4,770
|
|
$ 0.28
|
After-tax acquisition
and integration costs
|
818
|
|
0.04
|
|
--
|
|
--
|
After-tax foreign
exchange gain on inter-company loans
|
--
|
|
--
|
|
(138)
|
|
(0.01)
|
Net income from
normal operations
|
$ 6,018
|
|
$ 0.33
|
|
$ 4,632
|
|
$
0.27
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
June 30,
2014
|
|
Six Months
Ended
June 30,
2013
|
|
In
Thousands
|
|
Diluted
Earnings
Per Share
|
|
In
Thousands
|
|
Diluted
Earnings
Per Share
|
Net income
|
$ 10,438
|
|
$ 0.58
|
|
$ 7,641
|
|
$ 0.45
|
|
|
|
|
|
|
|
|
After-tax acquisition
and integration costs
|
1,132
|
|
0.06
|
|
--
|
|
--
|
After-tax foreign
exchange loss on inter-company loans
|
--
|
|
--
|
|
212
|
|
0.01
|
After-tax
restructuring and other non-recurring items
|
--
|
|
--
|
|
399
|
|
0.02
|
Net income from
normal operations
|
$ 11,570
|
|
$ 0.64
|
|
$ 8,252
|
|
$ 0.48
|
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.