JOHNSON CITY, Tenn.,
Nov. 4, 2015 /PRNewswire/
--
- Net sales of $154.8 million,
an increase of $29.2 million
- Adjusted income from operations grew to $15.3 million
- Adjusted net income of $8.3
million or $0.31 per diluted
share
NN, Inc., (NASDAQ: NNBR) a diversified industrial company, today
reported its financial results for the third quarter ended
September 30, 2015.
Third Quarter 2015 Results
Net sales for the third quarter of 2015 increased $29.2 million, or 23% to $154.8 million, compared to $125.6 million for the third quarter of
2014. Acquisitions added $41.6
million in revenue. Negative currency impacts reduced
reported net sales by $7.8 million
versus the third quarter of last year.
Adjusted income from operations for the third quarter of 2015
was $15.3 million, an increase of
44%, compared to $10.6 million for
the same period in 2014. Adjusted net income, which excludes the
after-tax impact of foreign exchange on inter-company loans and
after-tax acquisition and integration expenses, increased to
$8.3 million, or $0.31 per diluted share, compared to $6.3 million, or $0.34 per diluted share for the same period in
2014. In the quarter the Company also issued 7.6 million
shares related to the completion of the follow-on stock offering
earlier this year.
On a GAAP basis, income from operations for the third quarter of
2015 was $10.1 million, compared to
$2.6 million for the same period in
2014. Net income on a GAAP basis for the third quarter of 2015 was
$4.6 million, or $0.17 per diluted share. This compares to a net
loss $3.8 million, or $0.21 per diluted share in the third quarter of
2014.
Richard Holder, President and
Chief Executive Officer, commented, "The third quarter presented a
series of challenges in the broader economy that impacted our sales
during the quarter. Despite these headwinds we began to see the
impact of the NN Operating System as we were able to appropriately
manage our business in a rapidly changing environment and deliver
strong operating performance."
Business Group Results
Metal Bearing Components
Net sales for the group decreased $9.0
million to $60.5 million
during the third quarter of 2015, compared to $69.6 million for third quarter 2014. Negative
currency impacts of $6.7 million as
well as volume and price/mix reductions of $2.3 million accounted for the decline.
Income from operations for the third quarter was $6.6 million, compared to $7.6 million in the third quarter of 2014.
"Changes in demand in Asia as
well as the continued effects of negative currency translation
weighed on our MBC business during the quarter as sales declined
$9.0 million," said Holder. "However,
the business was still able to hold operating margins on a year
over year basis as we continue to drive results through the
operating system."
Autocam Precision Components
Net sales for the third quarter of 2015 were $83.2 million, compared to $46.6 million in the third quarter of 2014, an
increase of $36.6 million.
Acquisitions accounted for $39.7
million of the increase. Income from operations for
the quarter increased $5.4 million to
$10.9 million, compared to
$5.5 million in the third quarter of
2014.
Holder commented, "The Autocam Precision Components Group
continued to perform well despite the conditions in Asia and Brazil. APC's focus is on CAFE technologies
that have adoption rates and growth trends not tied to normal end
market cyclicality. In accordance with our continued
execution of our Autocam synergy plan we're announcing the closure
of one of our APC facilities early next year."
Plastic and Rubber Components
Net sales for the third quarter increased $1.6 million to $11.0
million, compared to $9.4
million for the same period in 2014. Income from operations
for the quarter was $0.6 million,
compared to $0.2 million in 2014.
Precision Engineered Products (PEP) Acquisition
Update
Holder commented, "As announced during the third quarter we
closed the PEP acquisition in October. Year to date PEP's
sales and margins continue to be in line with our
expectations. Starting with the fourth quarter we will be
reporting PEP as a segment within our portfolio.
Additionally, the PEP Group will include our existing Plastic and
Rubber Components Group as part of our continued focus on properly
aligning all of our businesses to address the end markets we
serve. PEP is an important part of our strategic plan and we
again welcome the team to our family."
Guidance
Holder continued, "As previously committed, beginning with the
fourth quarter we will initiate a more comprehensive set of
financial guidance designed to help our shareholders have the
appropriate information to accurately evaluate our
performance. This will include sales, adjusted EBITDA,
adjusted operating margin, and adjusted earnings per share.
With the completion of the PEP acquisition we will also begin
excluding non-cash amortization charges from our adjusted earnings
per share. We believe removing these charges provides the
shareholder with the best evaluation of the Company's
performance."
The full set of financial guidance for the fourth quarter and
2016 can be found in our supplemental deck on our website.
Holder concluded, "I am encouraged with our results in the face
of an ever changing macro environment. Our focus this year on
implementing the NN Operating System and managing our
organizational flex has had a significant impact on the quarter as
we were able to deliver operating improvements in all of our
businesses. Finally, with the announcement and subsequent close of
the PEP acquisition we remain focused on executing our strategic
plan."
NN will discuss its results during its quarterly investor
conference call tomorrow morning starting at 9:00 a.m. ET. The call and an accompanying
slide presentation may be accessed via NN's website. The conference
call can also be accessed by dialing 888-427-9376; conference id –
5901109. For those who are unavailable to listen to the live
broadcast, a replay will be available shortly after the call for 90
days.
The attached financial tables include a reconciliation of
adjusted income from operations, adjusted net income and adjusted
earnings per share to the U.S. GAAP financial measures of income
from operations and net income.
NN, Inc., a diversified industrial company 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 43
manufacturing plants in the 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 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, 2014 and quarterly report on form
10-Q for the quarterly period ended September 30, 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.
|
Consolidated
Statements of Income
|
(In thousands,
except per share amounts)
|
(Unaudited)
|
|
|
Three Months
Ended
September
30,
|
Nine Months
Ended
September
30,
|
(In Thousands of
Dollars, Except Per Share Data)
|
2015
|
2014
|
2015
|
2014
|
Net sales
|
$ 154,824
|
$125,632
|
$483,425
|
$334,840
|
Cost of products sold
(exclusive of depreciation
and amortization shown separately
below)
|
120,195
|
100,441
|
378,220
|
265,010
|
Selling, general and
administrative
|
11,949
|
11,124
|
37,910
|
29,799
|
Acquisition related
costs excluded from selling, general and administrative
|
3,948
|
5,651
|
3,948
|
7,080
|
Depreciation and
amortization
|
8,610
|
5,864
|
25,702
|
13,824
|
Income from
operations
|
10,122
|
2,552
|
37,645
|
19,127
|
|
|
|
|
|
Interest
expense
|
4,584
|
5,622
|
16,543
|
6,737
|
Other expense,
net
|
593
|
1,557
|
2,012
|
1,769
|
Income (loss) before
provision (benefit) for income
taxes and share of net
income from joint venture
|
4,945
|
(4,627)
|
19,090
|
10,621
|
Provision (benefit)
for income taxes
|
936
|
(562)
|
4,009
|
4,247
|
Share of net income
from joint venture
|
621
|
225
|
2,503
|
225
|
Net income (loss)
|
4,630
|
(3,840)
|
17,584
|
6,599
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss)
per common share:
|
$ 0.17
|
$ (0.21)
|
$ 0.87
|
$ 0.36
|
|
|
|
|
|
Weighted average
shares outstanding
|
26,839
|
17,979
|
20,122
|
17,749
|
|
|
|
|
|
|
|
|
|
|
Diluted income (loss)
per common share:
|
$ 0.17
|
$ (0.21)
|
$ 0.86
|
$ 0.36
|
|
|
|
|
|
Weighted average
shares outstanding
|
27,167
|
17,979
|
20,467
|
18,120
|
|
|
|
|
|
Cash dividends per
common share
|
$ 0.07
|
$ 0.07
|
$ 0.21
|
$ 0.21
|
|
|
|
|
|
|
|
|
|
|
|
NN,
Inc.
|
Condensed Balance
Sheets
|
(In
thousands)
|
(Unaudited)
|
|
|
September
30,
|
December
31,
|
(In Thousands of
Dollars)
|
2015
|
2014
|
Assets
|
|
|
Current
assets:
|
|
|
Cash
|
$40,102
|
$37,317
|
Accounts
receivable, net
|
108,144
|
97,510
|
Inventories
|
92,579
|
91,469
|
Other current
assets
|
17,560
|
16,503
|
Total current
assets
|
258,385
|
242,799
|
|
|
|
Property, plant and
equipment, net
|
266,562
|
278,442
|
Goodwill,
net
|
85,447
|
83,941
|
Intangible asset,
net
|
51,829
|
52,827
|
Investment in joint
venture
|
37,088
|
34,703
|
Other non-current
assets
|
20,165
|
20,001
|
Total assets
|
$719,476
|
$712,713
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$60,338
|
$71,094
|
Accrued
salaries, wages and benefits
|
18,362
|
21,148
|
Current
maturities of long-term debt
|
21,677
|
22,160
|
Income taxes
payable
|
4,933
|
3,274
|
Current
portion of obligations under capital lease
|
5,066
|
5,418
|
Other current
liabilities
|
10,747
|
14,504
|
Total current
liabilities
|
121,123
|
137,598
|
|
|
|
Non-current deferred
tax liabilities
|
46,950
|
49,461
|
Long-term debt, net
of current portion
|
184,356
|
328,026
|
Obligations under
capital lease, net of current portion
|
10,759
|
14,539
|
Other non-current
liabilities
|
12,584
|
9,390
|
Total liabilities
|
375,772
|
539,014
|
|
|
|
Total stockholders'
equity
|
343,704
|
173,699
|
Total liabilities and
stockholders' equity
|
$719,476
|
$712,713
|
NN,
Inc.
|
Reconciliation of
Non-GAAP to GAAP Financial Measures
|
(Unaudited)
|
|
Reconciliation of
net income to adjusted net income:
|
|
|
|
|
|
|
|
Three Months
Ended
September 30, 2015
|
|
Three Months
Ended
September 30, 2014
|
|
(In
Thousands)
|
|
Diluted Earnings
Per Share
|
|
(In
Thousands)
|
|
Diluted Earnings
Per Share
|
Net Income
|
$4,630
|
|
$0.17
|
|
$(3,840)
|
|
$(0.21)
|
After tax acquisition
and integration expenses
|
3,372
|
|
0.13
|
|
9,222
|
|
0.50
|
After-tax foreign
exchange gain on inter-company loans
|
284
|
|
0.01
|
|
880
|
|
0.05
|
Adjusted Net
Income
|
$8,286
|
|
$0.31
|
|
$6,262
|
|
$0.34
|
|
|
|
|
|
|
|
|
Reconciliation of
net income to adjusted net income:
|
|
|
|
|
|
|
|
Nine Months
Ended
September 30, 2015
|
|
Nine Months
Ended
September 30, 2014
|
|
(In
Thousands)
|
|
Diluted Earnings
Per Share
|
|
(In
Thousands)
|
|
Diluted Earnings
Per Share
|
Net Income
|
$17,584
|
|
$0.86
|
|
$6,599
|
|
$0.36
|
After tax acquisition
and integration expenses
|
3,808
|
|
0.19
|
|
10,354
|
|
0.57
|
After-tax foreign
exchange loss on inter-company loans
|
939
|
|
0.04
|
|
880
|
|
0.05
|
Adjusted Net
Income
|
$22,331
|
|
$1.09
|
|
$17,833
|
|
$0.98
|
|
|
|
|
|
|
|
|
Reconciliation of
income from operations to adjusted income from
operations:
|
|
|
|
|
|
Three Months
Ended
September 30, 2015
|
|
Three Months
Ended
September 30, 2014
|
|
Nine Months
Ended
September 30, 2015
|
|
Nine Months
Ended
September 30, 2014
|
|
(In
Thousands)
|
|
(In
Thousands)
|
|
(In
Thousands)
|
|
(In
Thousands)
|
Income from
operations
|
$10,122
|
|
$2,552
|
|
$37,645
|
|
$19,127
|
Acquisition and
integration expenses
|
5,138
|
|
8,088
|
|
5,819
|
|
9,858
|
Adjusted Income from
operations
|
$15,260
|
|
$10,640
|
|
$43,464
|
|
$28,985
|
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 intercompany loans. We believe the presentation of
adjusted income from operations and adjusted net income provides
useful information in assessing our results of operations and
potential future results. These measures should not be
considered as an alternative to their comparable GAAP measures, nor
should they be considered in isolation, or as a substitute for
analysis of our results reported under GAAP.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/nn-inc-reports-third-quarter-2015-results-300172758.html
SOURCE NN, Inc.