JOHNSON CITY, Tenn.,
March 11, 2014 /PRNewswire/ -- NN,
Inc. (NASDAQ: NNBR) today reported its financial results for
the fourth quarter and twelve months ended December 31, 2013. Net sales for the fourth
quarter of 2014 were $90.1 million,
an increase of $9.9 million or 12.4%
(currency adjusted), compared to net sales of $80.2 million for the fourth quarter of
2012. This increase was due primarily to improved demand from
European automotive markets and continued strong demand in North
American and Asian automotive markets. Continued strong
demand in European heavy truck markets also contributed to the
increased sales.
Pre-tax income for the fourth quarter of 2013 was $6.1 million, compared to 2012 fourth quarter of
$0.5 million. This increase was due
to improved sales and improved operating performance at our
divisions. Reported net income for the fourth quarter 2013 was
$4.5 million or $0.25 per diluted share, compared to prior year's
net income for the fourth quarter of $8.2
million, or $0.48 per diluted
share. Fourth quarter 2012 net income included a onetime
$7.3 million benefit related to
deferred tax accounting.
Net sales for full year 2013 were $373.2
million, an increase of $3.1
million, or 1.0% compared to net sales of $370.1 million for full year 2012. Lower
demand due mainly to weak European automotive end markets and
slowing Asian economic growth in the first half of the year gave
way to improved economic conditions and greater demand in European,
North American and Asian automotive markets in the second half of
the year.
Pre-tax income for the full year of 2013 was $25.2 million, compared to the full year of 2012
of $20.3 million. This increase was
due to improved operating performance at our divisions. Reported
net income for the full year of 2013 was $17.2 million, or $1.00 per diluted share compared to $24.3 million, or $1.42 per diluted share for the comparable period
last year. Full year 2012 taxes included a onetime
$7.3 million benefit related to
deferred tax accounting.
As a percentage of net sales, cost of products sold for the
fourth quarter of 2013 decreased to 79.8% from 81.9% for the prior
year's fourth quarter. Cost of products sold for full year
2013 was 79.1% as compared to 79.7% for the same period last
year. The decrease in the cost of products sold as a
percentage of sales reflects the continuing operational performance
improvement in our divisions.
Debt, net of cash, was $33.4
million at December 31, 2013,
a decrease of $17.1 million over the
December 31, 2012 amount of
$50.5 million. Capital spending
totaled $15.3 million for the year
versus a budget of $17 million.
The Company reinstated its quarterly cash dividend during the
second quarter of 2013. Dividends paid during the year were
$3.1 million.
Richard Holder, President and
Chief Executive Officer, commented, "We finished 2013 strong
despite the negative impact of the persistent weak economic
conditions in Europe. Sales were also negatively impacted in
the short-term by our strategic decision to shed non-core,
non-strategic products and customer platforms. However, as a
result of this action we are now positioned for future growth at
higher levels of profitability. Even considering these
factors, our fourth quarter revenues were up 10.0% in currency
adjusted numbers as compared to last year's fourth quarter.
Along with the positive revenue trend, we have been able to
leverage strong incremental profits for each additional dollar of
revenue generated.
"During 2013, we continued to strengthen our balance sheet
having reduced net debt by $17.1
million. We accomplished this while at the same
time reinstating our quarterly dividend. We entered 2014 well
positioned to fund our organic and acquisitive growth plans as well
as shareholder value initiatives, all of which are key components
of our strategic plan.
"While we are sensitive to the prolonged general economic
uncertainty hanging over the markets as well as the weakness in
European automotive markets and in particular European industrial
markets, we are positive regarding NN's opportunities in
2014. We are forecasting 2014 sales to be in the range of
$400 million to $415 million.
This guidance does not include any additional potential
acquisitions we may close in 2014, but does include approximately
$15 million of incremental revenues
from our recently announced acquisition of the assets of V-S
Industries. The portfolio of V-S products is complementary to
the Whirlaway Products and will roll up the operations under its NN
Precision Metals Components Group."
Mr. Holder concluded, "On January 30,
2014 we presented our revised and enhanced business strategy
during our investor day meeting in New York City. If you have
not had an opportunity to view it, I encourage you to do so.
It is available on our website at www.nninc.com. Our strategy
includes numerous components and initiatives including plans to
aggressively pursue acquisitive and organic growth opportunities in
our core and adjacent markets to grow our Company from annual sales
of $373 million in 2013 to
$800 million in 2018. We
currently expect approximately 60% of this growth will come from
acquisitions, approximately 20% will come from growth in adjacent
markets and approximately 14% from organic growth, leaving
approximately 6% from European economic recovery. Our
strategic plan calls for specific growth, including compound annual
growth rates of: earnings per share of 31%, sales of 21% and EBIT
of 31%. Specific return targets of 13% return on
invested capital and 5% free cash to sales. These are bold,
aggressive goals, but ones that our Board of Directors and
management team strongly believe are obtainable and are strongly
committed to achieving."
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 12 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.
Condensed
Statements of Income
(In Thousands,
except per share amounts)
(Unaudited)
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
Net sales
|
$
90,081
|
|
$
80,155
|
|
$ 373,206
|
|
$
370,084
|
Cost of products sold
(exclusive of
depreciation
and amortization shown
separately
below)
|
71,848
|
|
65,615
|
|
295,136
|
|
294,859
|
Selling, general and
administrative
|
7,737
|
|
7,296
|
|
33,281
|
|
31,561
|
Depreciation and
amortization
|
4,022
|
|
4,440
|
|
16,957
|
|
17,643
|
(Gain) loss on
disposal of assets
|
--
|
|
(9)
|
|
5
|
|
(17)
|
Restructuring and
impairment charges
|
--
|
|
967
|
|
--
|
|
967
|
Income from
operations
|
6,474
|
|
1,846
|
|
27,827
|
|
25,071
|
|
|
|
|
|
|
|
|
Interest
expense
|
225
|
|
490
|
|
2,374
|
|
3,878
|
Other expense
(income), net
|
191
|
|
888
|
|
275
|
|
852
|
Income before
provision (benefit) for income taxes
|
6,058
|
|
468
|
|
25,178
|
|
20,341
|
Provision(benefit)
for income taxes
|
1,573
|
|
(7,738)
|
|
8,000
|
|
(3,927)
|
|
|
|
|
|
|
|
|
Net income
|
$
4,485
|
|
$
8,206
|
|
$
17,178
|
|
$
24,268
|
|
|
|
|
|
|
|
|
Diluted income per
share
|
$
0.25
|
|
$
0.48
|
|
$
1.00
|
|
$
1.42
|
|
|
|
|
|
|
|
|
Weighted average
diluted shares outstanding
|
17,817
|
|
17,150
|
|
17,260
|
|
17,114
|
NN,
Inc.
Condensed Balance
Sheets
(In
thousands)
(Unaudited)
|
|
|
December
31,
2013
|
|
December
31,
2012
|
Assets
|
|
|
|
|
Current
Assets:
|
|
|
|
Cash
|
$
3,039
|
|
$
18,990
|
Accounts receivable,
net
|
58,929
|
|
51,628
|
Inventories
|
54,530
|
|
46,150
|
Other current
assets
|
9,176
|
|
10,528
|
Total
current assets
|
125,674
|
|
127,296
|
|
|
|
|
Property, plant and
equipment, net
|
121,089
|
|
119,687
|
Goodwill,
net
|
8,624
|
|
8,254
|
Intangible assets,
net
|
900
|
|
900
|
Other non-current
assets
|
6,115
|
|
9,206
|
Total
assets
|
$
262,402
|
|
$
265,343
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
40,687
|
|
$
37,000
|
Accrued salaries,
wages and benefits
|
11,761
|
|
10,174
|
Current maturities of
long-term debt
|
10,477
|
|
5,801
|
Income taxes
payable
|
1,340
|
|
543
|
Other current
liabilities
|
5,119
|
|
5,240
|
Total
current liabilities
|
69,384
|
|
58,758
|
|
|
|
|
Non-current deferred
tax liabilities
|
3,844
|
|
3,850
|
Long-term debt, net
of current portion
|
26,000
|
|
63,715
|
Other non-current
liabilities
|
10,414
|
|
10,460
|
Total
liabilities
|
109,642
|
|
136,783
|
|
|
|
|
Total stockholders'
equity
|
152,760
|
|
128,560
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$
262,402
|
|
$
265,343
|
|
Three Months
Ended
December 31,
2013
|
|
Year
Ended
December 31,
2013
|
|
In
Thousands
|
|
Diluted Earnings
Per Share
|
|
In
Thousands
|
|
Diluted Earnings
Per Share
|
Net Income
|
$
4,485
|
|
$
0.25
|
|
$
17,178
|
|
$
1.00
|
After tax
restructuring and other non-recurring items
|
--
|
|
--
|
|
483
|
|
0.02
|
Foreign exchange loss
on intercompany
loans
|
--
|
|
--
|
|
84
|
|
0.01
|
|
|
|
|
|
|
|
|
Net Income from
normal operations
|
$
4,485
|
|
$
0.25
|
|
$
17,745
|
|
$
1.03
|
|
Three Months
Ended
December 31,
2012
|
|
Year
Ended
December 31,
2012
|
|
In
Thousands
|
|
Diluted Earnings
Per Share
|
|
In
Thousands
|
|
Diluted Earnings
Per Share
|
Net Income
|
$
8,206
|
|
$
0.48
|
|
$
24,268
|
|
$
1.42
|
Benefits from
reversing deferred tax asset valuation allowances, net of
offsetting tax charges
|
(7,257)
|
|
(0.43)
|
|
(7,257)
|
|
(0.43)
|
Impairment of
non-operating assets
|
1,008
|
|
0.06
|
|
1,008
|
|
0.06
|
Foreign exchange loss
on intercompany
loans
|
827
|
|
0.05
|
|
1,110
|
|
0.07
|
|
|
|
|
|
|
|
|
Net income from
normal operations
|
$
2,784
|
|
$
0.16
|
|
$
19,129
|
|
$
1.12
|
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.