JOHNSON CITY, Tenn.,
Nov. 4, 2014 /PRNewswire/ -- NN,
Inc., (NASDAQ: NNBR) a diversified industrial company, today
reported its financial results for the period ended September 30, 2014. Adjusted income from
operations for the third quarter increased $2.8 million, or 36% to $10.6 million as compared to $7.8 million for the third quarter of 2013.
Adjusted net income increased to $6.3
million or $0.34 per diluted
share compared to $5.0 million or
$0.29 per diluted share for the same
period in 2013.
Richard Holder, President and
Chief Executive Officer, commented, "We are pleased with our
operating performance in the third quarter and we continue to see
growth in our existing and newly acquired businesses. Beginning
with this quarter, and moving forward we are focusing on adjusted
income from operations as the key metric for measuring our
performance. We believe adjusted income from operations is
the best indicator of performance in our core businesses and
removes fluctuations resulting from non-recurring activities."
Net sales for the third quarter of 2014 increased $32.6 million, or 35% to $125.6 million, compared to net sales of
$93.0 million for the third quarter
of 2013. This increase included approximately $29.3 million in net sales from the acquisitions
made in 2014. Volume also increased by $3.3 million in existing businesses due to
continued strong demand in Asia
and North America.
As a percentage of net sales, cost of products sold in the third
quarter of 2014 of 80.0% increased slightly as compared to 78.5%
for last year's third quarter due to acquisition and integration
costs.
Reported net loss for the third quarter of 2014 was ($3.8) million, or a loss ($0.21) per diluted share. The loss includes
$10.1 million of after-tax
non-operating charges related to the acquisitions, expenses related
to the retirement of previous debt, and foreign exchange losses on
intercompany loans. Excluding these costs, adjusted net
income for the third quarter of 2014 was $6.3 million, or $0.34 per diluted share, an increase of 26% as
compared to adjusted net income for the same period in the
prior year of $5.0 million, or
$0.29 per diluted share.
Adjusted income from operations for the nine months ended
September 30, 2014 increased
$7.1 million or 32.4% to $29.0 million compared to $21.9 million for the same period in 2013.
The increase in year to date adjusted income from operations was
driven largely from $17.4 million in
increased sales volume, operating improvements in existing
businesses and one month of operating income from Autocam.
Net sales for the first nine months of 2014 increased
$51.7 million, or 18.3 % to
$334.8 million, compared to net sales
of $283.1 million for the first nine
months of 2013. This included approximately $35.4 million in net revenue from the
acquisitions of Autocam, RFK, Chelsea Grinding, and V-S Industries
during 2014. Continued strong demand in Europe, Asia
and North America, accounted for
the remainder of the increase.
Net income for the first nine months of 2014 was $6.6 million, or $0.36 per diluted share, compared to net income
of $12.7 million, or $0.74 per diluted share, for the comparable
period last year. Year to date net income includes costs
related to our four acquisitions, debt retirement, and foreign
exchange losses related to intercompany loans. Adjusted net income
for the first nine months of 2014 excluding these non-recurring
costs was $17.8 million, or
$0.98 per diluted share.
Cost of products sold for the first nine months of 2014 of 79.1%
decreased slightly as compared to 78.9% for the same period last
year due to acquisition and integration costs. .
Debt, net of cash, was $333.6
million at September 30, 2014,
an increase of $300.2 million
compared to $33.4 million at
December 31, 2013. The increase
was due primarily to the acquisition activity in the first nine
months of 2014.
Richard Holder, President and
Chief Executive Officer, commented, "We are pleased with our third
quarter and nine month results which remained in line with our
expectations. We expect our existing businesses to experience
positive results in the fourth quarter while layering in additional
sales and operating income from Autocam."
"Shortly after the Autocam acquisition we created an NN
Integration and Transformation team led by a group of leaders from
our financial and operational disciplines. I am pleased
to report we are on plan with this highly important initiative,
specifically with our Autocam Precision Components
Group."
Mr. Holder concluded, "2014 has already been a transformative
year for NN with the acquisition and integration of four new
businesses. Given our performance and the closing of the
Autocam transaction, we are revising our expected revenue guidance
for full year 2014 from $400-$415
million given earlier this year to $490-$500 million, including approximately
$103 million in incremental revenue
from our four acquired companies."
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 25
manufacturing plants in the United
States, 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, 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
September
30,
|
|
Nine Months
Ended September
30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Net Sales
|
$ 125,632
|
|
$ 93,023
|
|
$ 334,840
|
|
$ 283,125
|
Cost of products sold
(exclusive of
depreciation shown separately below)
|
100,441
|
|
73,020
|
|
265,010
|
|
223,288
|
Selling, general and
administrative
|
11,124
|
|
8,099
|
|
29,799
|
|
25,544
|
Acquisition related
costs excluded from
selling, general and administrative
|
5,651
|
|
--
|
|
7,080
|
|
--
|
Depreciation and
amortization
|
5,864
|
|
4,110
|
|
13,824
|
|
12,935
|
Loss on disposal of
assets
|
--
|
|
--
|
|
--
|
|
5
|
Income from
Operations
|
2,552
|
|
7,794
|
|
19,127
|
|
21,353
|
|
|
|
|
|
|
|
|
Interest
expense
|
5,622
|
|
655
|
|
6,737
|
|
2,149
|
Other expense
(income), net
|
1,557
|
|
(281)
|
|
1,769
|
|
84
|
Income before
provision for income taxes
|
(4,627)
|
|
7,420
|
|
10,621
|
|
19,120
|
Provision (benefit)
for income taxes
|
(562)
|
|
2,368
|
|
4,247
|
|
6,427
|
Share of net income
(loss) from joint
venture
|
225
|
|
--
|
|
225
|
|
--
|
Net
income
|
$ (3,840)
|
|
$ 5,052
|
|
$ 6,599
|
|
$ 12,693
|
|
|
|
|
|
|
|
|
Diluted income per
common share
|
$ (0.21)
|
|
$ 0.29
|
|
$ 0.36
|
|
$ 0.74
|
|
|
|
|
|
|
|
|
Weighted average
diluted shares
|
18,411
|
|
17,450
|
|
18,120
|
|
17,180
|
|
|
|
|
|
|
|
|
|
NN, Inc.
Condensed Balance
Sheets
(In thousands)
(Unaudited)
|
September
30,
2014
|
|
December
31,
2013
|
Assets
|
|
|
|
|
Current
Assets:
|
|
|
|
Cash
|
$ 26,892
|
|
$ 3,039
|
Accounts receivable,
net
|
112,859
|
|
58,929
|
Inventories
|
86,921
|
|
54,530
|
Other current
assets
|
20,053
|
|
9,176
|
Total
current assets
|
246,725
|
|
125,674
|
|
|
|
|
Property, plant and
equipment, net
|
274,600
|
|
121,089
|
Goodwill and
intangible assets, net
|
141,904
|
|
9,524
|
Other non-current
assets
|
55,159
|
|
6,115
|
Total
assets
|
$ 718,388
|
|
$ 262,402
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$ 62,767
|
|
$ 40,687
|
Accrued salaries,
wages and benefits
|
20,821
|
|
11,761
|
Current maturities of
long-term debt
|
6,548
|
|
10,477
|
Income taxes
payable
|
1,338
|
|
1,340
|
Other current
liabilities
|
18,052
|
|
5,119
|
Total
current liabilities
|
109,526
|
|
69,384
|
|
|
|
|
Non-current deferred
tax liabilities
|
49,980
|
|
3,844
|
Long-term debt, net
of current portion
|
353,951
|
|
26,000
|
Other non-current
liabilities
|
24,675
|
|
10,414
|
Total
liabilities
|
538,132
|
|
109,642
|
|
|
|
|
Total stockholders'
equity
|
180,256
|
|
152,760
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$ 718,388
|
|
$ 262,402
|
NN, Inc.
Reconciliation of Non-GAAP
to GAAP Financial Measures
(Unaudited)
|
Three Months
Ended
September 30,
2014
|
|
Three Months
Ended
September 30,
2013
|
|
In
Thousands
|
|
In
Thousands
|
Income from
operations
|
$ 2,552
|
|
$ 7,794
|
Acquisition and
integration costs
|
8,088
|
|
--
|
Adjusted income from
operations
|
$ 10,640
|
|
$ 7,794
|
|
Three Months
Ended
September 30,
2014
|
|
Three Months
Ended
September 30,
2013
|
|
In
Thousands
|
|
Diluted Earnings
Per Share
|
|
In
Thousands
|
|
Diluted Earnings
Per Share
|
Net income
|
$ (3,840)
|
|
$ (0.21)
|
|
$ 5,052
|
|
$ 0.29
|
After-tax acquisition
and integration costs
|
9,222
|
|
0.50
|
|
--
|
|
--
|
After-tax foreign
exchange loss on inter-company
loans
|
880
|
|
0.05
|
|
(44)
|
|
--
|
Adjusted net
income
|
$ 6,262
|
|
$ 0.34
|
|
$ 5,008
|
|
$ 0.29
|
|
Nine Months
Ended
September 30,
2014
|
|
Nine Months
Ended
September 30,
2013
|
|
In
Thousands
|
|
In
Thousands
|
Income from
operations
|
$ 19,127
|
|
$ 21,353
|
Acquisition and
integration costs
|
9,858
|
|
--
|
Adjusted income from
operations
|
$ 28,985
|
|
$ 21,353
|
|
Nine Months
Ended
September 30,
2014
|
|
Nine Months
Ended
September 30,
2013
|
|
In
Thousands
|
|
Diluted Earnings
Per Share
|
|
In
Thousands
|
|
Diluted Earnings
Per Share
|
Net income
|
$ 6,599
|
|
$ 0.36
|
|
$ 12,693
|
|
$ 0.74
|
After-tax acquisition
and integration costs
|
10,354
|
|
0.57
|
|
--
|
|
--
|
After-tax foreign
exchange loss on inter-company
loans
|
880
|
|
0.05
|
|
168
|
|
0.01
|
After-tax
restructuring and other non-recurring
items
|
--
|
|
--
|
|
399
|
|
0.02
|
Adjusted net income
|
$ 17,833
|
|
$ 0.98
|
|
$ 13,260
|
|
$ 0.77
|
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.