JOHNSON CITY, Tenn.,
May 3, 2017 /PRNewswire/ -- NN, Inc.,
(NASDAQ: NNBR), a diversified industrial company, today reported
its financial results for the first quarter ended March 31, 2017.
GAAP Results
Net sales for the first quarter of 2017 increased $14.1 million, or 7%, to $226.3 million, compared to $212.2 million for the first quarter of
2016. Organic growth in the medical, aerospace and CAFE end
markets accounted for the increase.
On a GAAP basis, income from operations for the first quarter of
2017 was $22.2 million, compared to
$11.9 million for the same period in
2016. Net income on a GAAP basis for first quarter of 2017 was
$7.4 million, or $0.27 per diluted share. This compares to a net
loss of $1.3 million, or ($0.05) per diluted share in the first quarter of
2016.
On a GAAP basis, income from operations for first quarter 2017
in the Autocam Precision Components Group was $10.6 million compared to $6.5 million for the same period in 2016.
On a GAAP basis, income from operations for first quarter 2017
in the Precision Bearing Components Group was $8.4 million compared to $6.3 million for the same period in 2016.
On a GAAP basis, income from operations for first quarter 2017
in the Precision Engineered Products Group was $10.9 million compared to $5.4 million for the same period in 2016.
Adjusted Results
Adjusted income from operations for the first quarter of 2017
was $28.9 million, an increase of
20%, compared to $24.0 million for
the same period in 2016. Adjusted net income was $12.9 million, or $0.47 per diluted share, compared to $7.1 million, or $0.27 per diluted share for the same period in
2016.
Richard Holder, President and
Chief Executive Officer, commented, "We are pleased with our first
quarter performance. Sales grew organically in all three
groups for the second consecutive quarter, driven largely by new
programs in our medical and aerospace end markets.
Additionally, we saw our industrial markets continue to
normalize. Finally, we continue to see improvements in our
operating performance year over year driven by the NN Operating
System."
Business Group Results
Autocam Precision Components
Net sales for the first quarter of 2017 were $86.5 million, compared to $84.0 million in the first quarter of 2016, an
increase of 3% or $2.5 million.
Growth related to the CAFE automotive business accounted for
the increase. Adjusted income from operations for the quarter
increased $1.8 million to
$11.5 million, compared to
$9.7 million in the first quarter of
2016.
Mr. Holder commented, "The APC Group continues to perform
well. Our CAFE technology platform continues to drive growth
and margins continue to expand as we reap the benefits of the NN
Operating System."
Precision Bearing Components
Net sales for the first quarter of 2017 were $68.8 million, compared to $64.7 million in the first quarter of 2016, an
increase of $4.1 million or 6%.
Adjusted income from operations for the first quarter was
$8.6 million, compared to
$7.1 million in the first quarter of
2016.
Mr. Holder commented, "This marks the second consecutive quarter
of organic growth in our PBC business. Additionally, the margin
improvement driven by the NN Operating System continues to meet our
expectations."
Precision Engineered Products
Net sales for the first quarter of 2017 were $71.1 million, compared to $63.5 million in the first quarter of 2016, an
increase of $7.6 million or
12%. Volume increases related to the medical and aerospace
end markets were the primary drivers. Adjusted income from
operations for the quarter was $16.0
million, compared to $13.2
million in 2016.
Mr. Holder commented, "We continue to be pleased with the
operating improvements that we are driving through our PEP
business. Additionally, the investments we made in the sales
force during 2016 are starting to pay dividends as we continue to
win new business."
Mr. Holder concluded, "During the first quarter, we saw
continued growth from our three businesses, margins expanded and we
were able to execute on a key strategic initiative by refinancing
our Senior Notes following the quarter end. I am very proud
of our first quarter performance, as we continue to execute on our
strategic plan."
The full set of financial guidance for the second quarter and
full year 2017 can be found in the supplemental presentation posted
in the Investor Relations section of NN's website at
www.nninc.com.
NN will discuss its results during its quarterly investor
conference call tomorrow morning starting at 9:00 a.m. ET. The call and supplemental
presentation may be accessed via NN's website, www.nninc.com. The
conference call can also be accessed by dialing 1-800-279-9534 or
1-719-325-2142 Conference ID: 4725872. For those who are
unavailable to listen to the live broadcast, a replay will be
available shortly after the call for 30 days.
NN discloses in this press release the non-GAAP financial
measures of adjusted income from operations, adjusted net income
and adjusted diluted earnings per share. Each of adjusted
income from operations and adjusted net income provide
supplementary information about the impacts of acquisition related
expenses, foreign-exchange and other non-operating impacts on our
business.
The financial tables found later in this press release include a
reconciliation of adjusted income from operations, adjusted net
income and adjusted diluted earnings per share to the U.S. GAAP
financial measures of income from operations, net income and
diluted earnings per share.
NN, Inc., a diversified industrial company combines advanced
engineering and production capabilities with in-depth materials
science expertise to design and manufacture high-precision
components and assemblies for a variety of markets on a global
basis. Headquartered in Johnson
City, Tennessee, NN has 40 manufacturing plants in
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 completed acquisitions are also
forward-looking statements, including statements relating to 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, 2016. 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.
|
Condensed
Consolidated Statements of Net Income and Comprehensive Income
(Loss)
|
(Unaudited)
|
|
Three Months
ended
|
|
March
31,
|
(in thousands, except
per share data)
|
2017
|
2016
|
|
|
|
Net sales
|
$226,314
|
$212,226
|
Cost of products sold
(exclusive of depreciation and amortization shown separately
below)
|
166,954
|
159,754
|
Selling, general and
administrative
|
21,494
|
20,712
|
Depreciation and
amortization
|
15,568
|
17,348
|
Restructuring and
integration
|
140
|
2,538
|
Income from
operations
|
22,158
|
11,874
|
|
|
|
Interest
expense
|
14,956
|
16,422
|
Derivative losses on
change in interest rate swap fair value
|
(88)
|
-
|
Other (income)
expense, net
|
(724)
|
(1,129)
|
Income (loss) before
provision (benefit) for income taxes and share of net income from
joint venture
|
8,014
|
(3,419)
|
Provision (benefit)
expense for income taxes
|
2,300
|
(720)
|
Share of net income
from joint venture
|
1,693
|
1,400
|
Net income
(loss)
|
$7,407
|
$(1,299)
|
|
|
|
Basic income per
share:
|
|
|
Net income
(loss)
|
$0.27
|
$(0.05)
|
Weighted average
shares outstanding
|
27,303
|
26,869
|
|
|
|
Diluted income per
share:
|
|
|
Net income
(loss)
|
$0.27
|
$(0.05)
|
Weighted average
shares outstanding
|
27,634
|
26,869
|
|
|
|
Cash dividends
per common share
|
$0.07
|
$0.07
|
NN,
Inc.
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
|
(in
thousands)
|
March
31,
|
December
31,
|
|
2017
|
2016
|
|
|
|
Cash
|
$19,583
|
$14,405
|
Current maturities of
long-term debt
|
10,753
|
12,751
|
Current portion of
obligation under capital lease
|
3,664
|
3,762
|
Long-term debt, net
of current portion
|
799,450
|
785,713
|
Obligation under
capital lease, net of current portion
|
5,063
|
5,851
|
NN,
Inc.
|
|
|
|
Three Months
Ended
|
|
March
31,
|
NN, Inc.
Consolidated
|
2017
|
2016
|
GAAP Income from
Operations
|
$22,158
|
$11,874
|
Restructuring &
impairment charges
|
240
|
2,963
|
Acquisition &
integration expenses
|
573
|
3,263
|
Amortization of
intangibles
|
5,891
|
5,926
|
Non-GAAP Adjusted
Income from Operations(a)
|
$28,862
|
$24,026
|
|
|
|
Non-GAAP Adjusted
Operating Margin
|
12.8%
|
11.3%
|
GAAP Sales
|
226,314
|
212,226
|
|
|
|
|
|
|
Autocam Precision
Components
|
2017
|
2016
|
GAAP Income from
Operations
|
$10,601
|
$6,527
|
Restructuring &
impairment charges
|
11
|
2,274
|
Acquisition &
integration expenses
|
-
|
|
Amortization of
intangibles
|
873
|
885
|
Non-GAAP Adjusted
Income from Operations(a)
|
$11,485
|
$9,686
|
China JV
Contribution
|
1,693
|
1,400
|
Adjusted Income
from Operations
|
13,178
|
11,086
|
|
|
|
Non-GAAP Adjusted
Operating Margin
|
15.2%
|
13.2%
|
GAAP Sales
|
86,446
|
83,990
|
|
|
|
|
|
|
Precision Bearing
Components
|
2017
|
2016
|
GAAP Income from
Operations
|
$8,402
|
$6,326
|
Restructuring &
impairment charges
|
129
|
689
|
Acquisition &
integration expenses
|
-
|
|
Amortization of
intangibles
|
52
|
58
|
Non-GAAP Adjusted
Income from Operations(a)
|
$8,583
|
$7,073
|
|
|
|
Non-GAAP Adjusted
Operating Margin
|
12.5%
|
10.9%
|
GAAP Sales
|
68,759
|
64,745
|
|
|
|
|
|
|
Precision
Engineered Products
|
2017
|
2016
|
GAAP Income from
Operations
|
$10,914
|
$5,421
|
Restructuring &
impairment charges
|
100
|
|
Acquisition &
integration expenses
|
-
|
2,777
|
Amortization of
intangibles
|
4,966
|
4,983
|
Non-GAAP Adjusted
Income from Operations(a)
|
$15,980
|
$13,181
|
|
|
|
Non-GAAP Adjusted
Operating Margin
|
22.5%
|
20.8%
|
GAAP Sales
|
71,109
|
63,491
|
Reconciliation of
Net Income to Adjusted Net Income
|
|
Three Months
Ended
|
|
March
31,
|
GAAP Net Income to
Adjusted Net Income:
|
2017
|
2016
|
GAAP Net
Income
|
$7,407
|
$(1,299)
|
Pre-tax acquisition
and integration costs
|
573
|
3,245
|
Pre-tax foreign
exchange loss on inter-company loans
|
(447)
|
(876)
|
Pre-tax
reorganization and impairment charges
|
240
|
2,945
|
Pre-tax write-off
unamortized debt issuance costs
|
-
|
-
|
Pre-tax write-off
interest rate swap
|
-
|
-
|
Pre-tax amortization
of intangibles & deferred financing costs
|
7,262
|
6,952
|
Tax effect of all
adjustment reflected above(c)
|
(2,166)
|
(3,842)
|
Non-GAAP Adjusted Net
Income(b)
|
$12,869
|
$7,126
|
|
|
|
Diluted Earnings
per Share:
|
2017
|
2016
|
GAAP Net
Income
|
$0.27
|
$(0.05)
|
Pre-tax acquisition
and integration costs
|
0.02
|
0.12
|
Pre-tax foreign
exchange loss on inter-company loans
|
(0.02)
|
(0.03)
|
Pre-tax
reorganization and impairment charges
|
0.01
|
0.11
|
Pre-tax write-off
unamortized debt issuance costs
|
-
|
-
|
Pre-tax write-off
interest rate swap
|
-
|
-
|
Pre-tax amortization
of intangibles & deferred financing costs
|
0.26
|
0.26
|
Tax effect of all
adjustment reflected above(c)
|
(0.08)
|
(0.14)
|
Non-GAAP Adjusted Net
Income(b)
|
$0.47
|
$0.27
|
Diluted Shares
Outstanding
|
27,634
|
26,869
|
The Company discloses in this presentation the non-GAAP
financial measures of adjusted income from operations, adjusted net
income and adjusted diluted earnings per share. Each of these
non-GAAP financial measures provide supplementary information about
the impacts of acquisition and integration related expenses,
foreign-exchange impacts on inter-company loans reorganizational
and impairment charges. Over the past three years, we have
completed six acquisitions, two of which were transformative for
the Company. The costs we incurred in completing such acquisitions,
including the amortization of intangibles and deferred financing
costs, have been excluded from these measures because their size
and inconsistent frequency are unrelated to our commercial
performance during the period, and which we believe are not
indicative of our ongoing operating costs. We exclude the impact of
currency translation from these measures because foreign exchange
rates are not under management's control and are subject to
volatility. Other non-operating charges such as, the write-off of
our interest rate swap, are excluded as the charges on not
indicative of our ongoing operating cost. We believe the
presentation of adjusted income from operations, adjusted net
income and adjusted diluted earnings per share provide useful
information in assessing our underlying business trends and
facilitates comparison of our long-term performance over given
periods
The non-GAAP financial measures provided herein may not
provide information that is directly comparable to that provided by
other companies in the Company's industry, as other companies may
calculate such financial results differently. The Company's
non-GAAP financial measures are not measurements of financial
performance under GAAP, and should not be considered as
alternatives to actual net income growth derived from income
amounts presented in accordance with GAAP. The Company does not
consider these non-GAAP financial measures to be a substitute for,
or superior to, the information provided by GAAP financial
results.
(a) Non-GAAP Adjusted income from operations, represents GAAP
income from operations, adjusted to exclude the effects of
restructuring and non-cash impairment charges (related to
plant closures and other charges incurred to implement our
strategic goals, that do not necessarily represent a major
strategic shift in operations), one-time charges related to
acquisition and integration costs, intangible amortization
costs for fair value step-up in values related to acquisitions, and
when applicable, our share of income from joint venture operations.
We believe this presentation is commonly used by investors and
professional research analysts in the valuation, comparison, rating
and investment recommendations of companies in the industrial
industry. We use this information for comparative purposes within
the industry. Non-GAAP adjusted income from operations, is not a
measure of financial performance under GAAP and should not be
considered as a measure of liquidity or as an alternative to GAAP
income from operations.
(b) Non-GAAP adjusted net income and adjusted diluted earnings
per share, represents GAAP net income, adjusted to exclude the
tax-affected effects of restructuring and impairment charges
(related to plant closures and other charges incurred to implement
our strategic goals, that do not necessarily represent a major
strategic shift in operations), one-time charges related to
acquisition and integration costs, amortization of
intangibles costs for fair value step-up in values related to
acquisitions and amortization of deferred financing costs, and
foreign exchange gain (loss) on inter-company loans. We believe
this presentation is commonly used by investors and professional
research analysts in the valuation, comparison, rating and
investment recommendations of companies in the industrial industry.
We use this information for comparative purposes within the
industry. Non-GAAP adjusted net income and Non-GAAP adjusted
diluted earnings per share, is not a measure of financial
performance under GAAP and should not be considered as a measure of
liquidity or as an alternative to GAAP net income.
(c) This line item reflects the aggregate tax effect of all
nontax adjustments reflected in the table above. In addition, the
footnotes above indicate the after-tax amount of each individual
adjustment item. NN, Inc. estimates the tax effect of the
adjustment items identified in the reconciliation schedule above by
applying NN, Inc's. overall estimated effective tax rate to the
pretax amount, unless the nature of the item and/or the tax
jurisdiction in which the item has been recorded requires
application of a specific tax rate or tax treatment.
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visit:http://www.prnewswire.com/news-releases/nn-inc-reports-first-quarter-2017-results-300450962.html
SOURCE NN, Inc.