NN, Inc. (NASDAQ: NNBR), a global diversified industrial company
that engineers and manufactures high-precision components and
assemblies, today reported its financial results for the fourth
quarter ended December 31, 2023.
Financial and Strategic
Highlights
- Displayed strong execution against the Company’s multi-year
transformation plan, driving positive inflection in financial and
operating results in the second half of the year;
- Delivered company record for new business awards of $62.6
million in 2023;
- Launched multiple long-term strategic initiatives to drive
increased sales, increased profits, enhanced cash flows, and
increased shareholder value;
- Generated positive free cash flow in 2023 with enhanced
organization-wide focus driving step change in cash flow
performance in the second half of the year;
- Fourth quarter net sales of $112.5 million, down 4.6% versus
prior year;
- Fourth quarter operating loss of $7.9 million, improved by $3.1
million versus prior year;
- Fourth quarter adjusted EBITDA of $10.0 million up 28% versus
prior year; and
- Fourth quarter free cash flow of $1.3 million, down $5.1
million versus prior year.
“Our fourth quarter results capped off a transformative year for
NN Inc., a year in which we realigned our commercial and
operational strategies to deliver improved returns and to better
position the company for both short-term and long-term success,”
said Harold Bevis, President and Chief Executive Officer. “In 2023,
we launched a multi-year transformation and our revamped leadership
team’s aggressive redirected approach is already making a clear
impact on our financial and operational results, as evidenced by
the strengthening of our margins, improved free cash flow
performance, and accelerating sales growth. Additionally, we reset
the bar on customer performance and already we are performing
better with our customers. This is a tried and true path to future
business expansion. We are really proud of our global team and our
JV business as we are working as one team to reestablish leadership
positions in multiple areas.”
Bevis continued, “For the full year, we
delivered approximately $12 million in free cash flow, which is an
increase of more than $21 million year-over-year. Notably, we were
able to achieve improved operating income and fairly flat adjusted
EBITDA with a strong second half performance with the new game
plan. Specific to the fourth quarter, we were also pleased with our
big new business award performance. We are already in development
and ramp up mode on many of these awards and are making technical
advancements in many areas. This momentum has carried right into
2024, as our financial results showed step-change improvement in
the second half of the year. We remain focused on both leveraging
our core capabilities and adding to our leadership edge to win new
business across our diverse portfolio and believe we can add
between $55 million to $70 million of new business wins this
year.”
Bevis concluded, “Our organization-wide
commitment to our transformation into a profitable, growing company
is working and gaining momentum, and we are expecting 2024 to
continue to demonstrate progress reflected by improved results on
new business wins, profitability, free cash flow, and customer
service. Our capital efficient model and low-risk strategy to
structurally improve our operations will prove critical in lowering
risk for our company. These efforts will ultimately help optimize
our balance sheet. While we are encouraged by the early success
across our transformation efforts, our improvements are just
beginning. We remain committed to advancing and expanding our
progress as we move forward. Our decisive actions are taking hold
and I would like to thank all our NN team globally, whose
dedication and hard work are driving our transformation.”
Fourth Quarter GAAP Results
Net sales were $112.5 million, a decrease of 4.6% from the
fourth quarter of 2022, which was primarily due to reduced volume,
partially offset by higher customer pricing and favorable foreign
exchange effects.
Loss from operations was $7.9 million compared to a loss from
operations of $11.0 million in the fourth quarter of 2022. The
decrease in loss from operations was primarily driven by facility
closures and labor cost savings.
Income from operations for Power Solutions was $2.8 million
compared to loss from operations of $0.8 million for the same
period in 2022. Loss from operations for Mobile Solutions was $5.7
million compared to loss from operations of $5.4 million for the
same period in 2022.
Net loss was $20.5 million compared to net loss of $12.0 million
for the same period in 2022. The increase in net loss is primarily
due to warrant valuation due to stock price increase as well as
increased interest expense.
Fourth Quarter Adjusted Results
Adjusted loss from operations for the fourth quarter of 2023 was
$1.4 million compared to adjusted loss from operations of $3.3
million for the same period in 2022. Adjusted EBITDA was $10.0
million, or 8.9% of sales, compared to $7.8 million, or 6.6% of
sales, for the same period in 2022. Adjusted net loss was $4.9
million, or $0.10 per diluted share, compared to adjusted net loss
of $5.8 million, or $0.12 per diluted share, for the same period in
2022.
Free cash flow was a generation of cash of $1.3 million compared
to a generation of cash of $6.4 million for the same period in
2022.
Power Solutions
Net sales for the fourth quarter of 2023 were $43.3 million
compared to $50.0 million in the fourth quarter of 2022, a decrease
of 13.4% or $6.7 million. The decrease in sales was primarily due
to lower volume with certain customers. Adjusted income from
operations was $5.8 million compared to adjusted income from
operations of $4.5 million in the fourth quarter of 2022. The
increase in adjusted income from operations was primarily due to
cost savings associated with facility closures and labor, partially
offset by lower volume.
Mobile Solutions
Net sales for the fourth quarter of 2023 were $69.2 million
compared to $68.0 million in the fourth quarter of 2022, an
increase of 1.8% or $1.2 million. The increase in sales was due to
pricing and favorable foreign exchange, partially offset by lower
volume. Adjusted loss from operations was $2.3 million compared to
adjusted loss from operations of $3.7 million in the fourth quarter
of 2022. The decrease in adjusted loss from operations was due to
cost savings and operational improvements, partially offset by
lower volume and foreign exchange.
Full Year Results
Net sales decreased $9.5 million, or 1.9%, to $489.3 million
compared to $498.7 million for 2022, primarily due to reduced
volume, including the impact from the closure of the Taunton and
Irvine facilities, lower customer settlements, and unfavorable
foreign exchange, partially offset by pricing.
GAAP operating loss increased to $21.8 million compared to $21.1
million in 2022. Income from operations for 2023 in Power Solutions
was $11.1 million and loss from operations for Mobile Solutions was
$11.7 million.
On an adjusted basis, income from operations for 2023 was $3.1
million compared to adjusted income from operations of $1.9 million
in 2022. Adjusted EBITDA for 2023 was $43.1 million, or 8.8% of
sales, versus $43.9 million, or 8.8% of sales, for the same period
in 2022. Free cash flow was a generation of $11.7 million compared
to a use of cash of $9.8 million in 2022.
Power Solutions
Net sales for 2023 were $185.9 million compared to $205.2
million in 2022, a decrease of 9.4% or $19.3 million. The decrease
in sales was primarily due to lower volumes, including the impact
from the closure of the Taunton and Irvine facilities, partially
offset by pricing. Adjusted income from operations for 2023 was
$23.9 million compared to $20.1 million in 2022. The increase in
adjusted operating income was primarily due to facility closure
savings and a legal settlement reached during the first quarter of
2022, partially offset by lower volume.
Mobile Solutions
Net sales for 2023 were $303.3 million compared to $293.5
million in 2022, an increase of 3.3% or $9.8 million. The increase
in sales was primarily due to higher customer pricing, partially
offset by lower volume, and lower customer settlements. Adjusted
loss from operations for 2023 was $1.3 million compared to $2.7
million of adjusted operating income in 2022. Adjusted operating
income decreased due to lower sales volume, lower customer
settlements and unfavorable foreign exchange effects, partially
offset by cost savings and operating performance.
2024 Outlook
Assuming a steady end-market demand outlook with the exception
of the North America commercial vehicle market, the Company has
provided a ranged outlook for the full year 2024 as follows:
- Revenue in the range of $485 million to $510 million;
- Adjusted EBITDA in the range of $47 million to $55
million;
- Free cash flow in the range of $10 million to $15 million;
- New business wins in the range of $55 million to $70 million;
and
- Net leverage below 3.0x.
Michael Felcher, Senior Vice President and Chief
Financial Officer, commented, “Our transformation strategy is
working, and our 2024 Outlook reflects improved profitability and
consistent free cash flow generation in a stable and consistent
demand environment. We are also focused on improving our leverage
and other actions to position us to be ready to refinance in a
favorable market environment.”
Conference Call
NN will discuss its results during its quarterly
investor conference call on March 12, 2024, 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 1-877-255-4315 or 1-412-317-6579. For those who are
unavailable to listen to the live broadcast, a replay will be
available shortly after the call until March 12, 2025.
NN discloses in this press release the non-GAAP
financial measures of adjusted income (loss) from operations,
adjusted EBITDA, adjusted net income (loss), adjusted net income
(loss) per diluted common share, and free cash flow. Each of these
non-GAAP financial measures provides supplementary information
about the impacts of restructuring and integration expense,
acquisition and transition expenses, foreign exchange impacts on
inter-company loans, amortization of intangibles and deferred
financing costs, and other non-operating impacts on our
business.
The financial tables found later in this press
release include a reconciliation of adjusted income (loss) from
operations, adjusted operating margin, adjusted EBITDA, adjusted
EBITDA margin, adjusted net income (loss), adjusted net income
(loss) per diluted share, free cash flow to the U.S. GAAP financial
measures of income (loss) from operations, net income (loss), net
income (loss) per diluted common share, and cash provided (used) by
operating activities.
About NN, Inc.
NN, Inc., a global 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 Charlotte, North Carolina, NN
has facilities in North America, Europe, South America, and Asia.
For more information about the company and its products, please
visit www.nninc.com.
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 statements may discuss goals, intentions and
expectations as to future trends, plans, events, results of
operations or financial condition, or state other information
relating to NN, Inc. (the “Company”) based on current beliefs of
management as well as assumptions made by, and information
currently available to, management. Forward-looking statements
generally will be accompanied by words such as “anticipate,”
“believe,” “could,” “estimate,” “expect,” “forecast,” “guidance,”
“intend,” “may,” “possible,” “potential,” “predict,” “project” or
other similar words, phrases or expressions. Forward-looking
statements involve a number of risks and uncertainties that are
outside of management’s control and that may cause actual results
to be materially different from such forward-looking statements.
Such factors include, among others, general economic conditions and
economic conditions in the industrial sector; the impacts of
pandemics, epidemics, disease outbreaks and other public health
crises, on our financial condition, business operations and
liquidity; competitive influences; risks that current customers
will commence or increase captive production; risks of capacity
underutilization; quality issues; material changes in the costs and
availability of raw materials; economic, social, political and
geopolitical instability, military conflict, currency fluctuation,
and other risks of doing business outside of the United States;
inflationary pressures and changes in the cost or availability of
materials, supply chain shortages and disruptions, the availability
of labor and labor disruptions along the supply chain; our
dependence on certain major customers, some of whom are not parties
to long-term agreements (and/or are terminable on short notice);
the impact of acquisitions and divestitures, as well as expansion
of end markets and product offerings; our ability to hire or retain
key personnel; the level of our indebtedness; the restrictions
contained in our debt agreements; our ability to obtain financing
at favorable rates, if at all, and to refinance existing debt as it
matures; new laws and governmental regulations; the impact of
climate change on our operations; and cyber liability or potential
liability for breaches of our or our service providers’ information
technology systems or business operations disruptions. The
foregoing factors should not be construed as exhaustive and should
be read in conjunction with the sections entitled “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” included in the Company’s filings made
with the Securities and Exchange Commission. Any forward-looking
statement speaks only as of the date of this press release, and the
Company undertakes no obligation to publicly update or review any
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as required by law. New
risks and uncertainties may emerge from time to time, and it is not
possible for the Company to predict their occurrence or how they
will affect the Company. The Company qualifies all forward-looking
statements by these cautionary statements.
With respect to any non-GAAP financial measures included in the
following document, the accompanying information required by SEC
Regulation G can be found in the back of this document or in the
“Investors” section of the Company’s web site, www.nninc.com, under
the heading “News & Events” and subheading “Presentations.”
Investor & Media Contacts: Joe Caminiti or
Stephen Poe, InvestorsTim Peters,
MediaNNBR@alpha-ir.com312-445-2870
Financial Tables Follow
NN,
Inc. |
Condensed
Consolidated Statements of Operations and Comprehensive Income
(Loss) |
(Unaudited) |
|
|
|
|
|
Three Months Ended December
31, |
|
Year Ended December 31, |
(in thousands, except
per share data) |
2023 |
|
2022 |
|
2023 |
|
2022 |
Net sales |
$ |
112,533 |
|
|
$ |
118,012 |
|
|
$ |
489,270 |
|
|
$ |
498,738 |
|
Cost of sales (exclusive of
depreciation and amortization shown separately below) |
|
98,527 |
|
|
|
104,605 |
|
|
|
419,175 |
|
|
|
421,105 |
|
Selling, general, and
administrative expense |
|
11,603 |
|
|
|
11,182 |
|
|
|
47,436 |
|
|
|
49,635 |
|
Depreciation and
amortization |
|
11,477 |
|
|
|
13,269 |
|
|
|
46,120 |
|
|
|
47,231 |
|
Other operating expense
(income), net |
|
(1,131 |
) |
|
|
(3 |
) |
|
|
(1,657 |
) |
|
|
1,859 |
|
Loss from
operations |
|
(7,943 |
) |
|
|
(11,041 |
) |
|
|
(21,804 |
) |
|
|
(21,092 |
) |
Interest expense |
|
5,653 |
|
|
|
4,368 |
|
|
|
21,137 |
|
|
|
15,041 |
|
Other expense (income),
net |
|
8,760 |
|
|
|
(845 |
) |
|
|
10,730 |
|
|
|
(5,064 |
) |
Loss before provision for
income taxes and share of net income from joint venture |
|
(22,356 |
) |
|
|
(14,564 |
) |
|
|
(53,671 |
) |
|
|
(31,069 |
) |
Provision for income
taxes |
|
(904 |
) |
|
|
(107 |
) |
|
|
(2,285 |
) |
|
|
(1,621 |
) |
Share of net income from joint
venture |
|
2,719 |
|
|
|
2,657 |
|
|
|
5,806 |
|
|
|
6,592 |
|
Net loss |
$ |
(20,541 |
) |
|
$ |
(12,014 |
) |
|
$ |
(50,150 |
) |
|
$ |
(26,098 |
) |
Other comprehensive income
(loss): |
|
|
|
|
|
|
|
Foreign currency transaction gain (loss) |
|
5,016 |
|
|
|
5,387 |
|
|
|
1,410 |
|
|
|
(8,156 |
) |
Interest rate swap: |
|
|
|
|
|
|
|
Change in fair value, net of tax |
|
— |
|
|
|
894 |
|
|
|
(230 |
) |
|
|
3,358 |
|
Reclassification adjustments included in net loss, net of tax |
|
(449 |
) |
|
|
(369 |
) |
|
|
(1,815 |
) |
|
|
(420 |
) |
Other comprehensive income
(loss) |
$ |
4,567 |
|
|
$ |
5,912 |
|
|
$ |
(635 |
) |
|
$ |
(5,218 |
) |
Comprehensive
loss |
$ |
(15,974 |
) |
|
$ |
(6,102 |
) |
|
$ |
(50,785 |
) |
|
$ |
(31,316 |
) |
|
|
|
|
|
|
|
|
Basic and diluted net loss per
share |
$ |
(0.50 |
) |
|
$ |
(0.33 |
) |
|
$ |
(1.35 |
) |
|
$ |
(0.83 |
) |
Shares used to calculate basic
and diluted net loss per share |
|
47,709 |
|
|
|
44,708 |
|
|
|
46,738 |
|
|
|
44,680 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NN,
Inc. |
Condensed
Consolidated Balance Sheets |
(Unaudited) |
|
(in thousands, except
per share data) |
December 31, 2023 |
|
December 31, 2022 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
21,903 |
|
|
$ |
12,808 |
|
Accounts receivable, net |
|
65,545 |
|
|
|
74,129 |
|
Inventories |
|
71,563 |
|
|
|
80,682 |
|
Income tax receivable |
|
11,885 |
|
|
|
12,164 |
|
Prepaid assets |
|
2,464 |
|
|
|
2,794 |
|
Other current assets |
|
9,194 |
|
|
|
9,123 |
|
Total current assets |
|
182,554 |
|
|
|
191,700 |
|
Property, plant and equipment,
net |
|
185,812 |
|
|
|
197,637 |
|
Operating lease right-of-use
assets |
|
43,357 |
|
|
|
46,713 |
|
Intangible assets, net |
|
58,724 |
|
|
|
72,891 |
|
Investment in joint venture |
|
32,701 |
|
|
|
31,802 |
|
Deferred tax assets |
|
734 |
|
|
|
102 |
|
Other non-current assets |
|
7,003 |
|
|
|
5,282 |
|
Total assets |
$ |
510,885 |
|
|
$ |
546,127 |
|
Liabilities, Preferred
Stock, and Stockholders’ Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
45,480 |
|
|
$ |
45,871 |
|
Accrued salaries, wages and benefits |
|
15,464 |
|
|
|
11,671 |
|
Income tax payable |
|
524 |
|
|
|
926 |
|
Short-term debt and current maturities of long-term debt |
|
3,910 |
|
|
|
3,321 |
|
Current portion of operating lease liabilities |
|
5,735 |
|
|
|
5,294 |
|
Other current liabilities |
|
10,506 |
|
|
|
11,723 |
|
Total current liabilities |
|
81,619 |
|
|
|
78,806 |
|
Deferred tax liabilities |
|
4,988 |
|
|
|
5,596 |
|
Long-term debt, net of current
maturities |
|
149,369 |
|
|
|
149,389 |
|
Operating lease liabilities,
net of current portion |
|
47,281 |
|
|
|
51,411 |
|
Other non-current
liabilities |
|
24,827 |
|
|
|
9,960 |
|
Total liabilities |
|
308,084 |
|
|
|
295,162 |
|
Commitments and
contingencies |
|
|
|
Series D perpetual preferred
stock |
|
77,799 |
|
|
|
64,701 |
|
Stockholders' equity: |
|
|
|
Common stock |
|
473 |
|
|
|
439 |
|
Additional paid-in capital |
|
457,632 |
|
|
|
468,143 |
|
Accumulated deficit |
|
(295,348 |
) |
|
|
(245,198 |
) |
Accumulated other comprehensive loss |
|
(37,755 |
) |
|
|
(37,120 |
) |
Total stockholders’ equity |
|
125,002 |
|
|
|
186,264 |
|
Total liabilities, preferred
stock, and stockholders’ equity |
$ |
510,885 |
|
|
$ |
546,127 |
|
|
|
|
|
|
|
|
|
NN,
Inc. |
Condensed
Consolidated Statements of Cash Flows |
(Unaudited) |
|
|
|
Year EndedDecember 31, |
(in
thousands) |
2023 |
|
2022 |
Cash flows from operating
activities |
|
|
|
Net loss |
$ |
(50,150 |
) |
|
$ |
(26,098 |
) |
Adjustments to reconcile net loss
to net cash provided by operating activities: |
|
|
|
Depreciation and amortization |
|
46,120 |
|
|
|
47,231 |
|
Amortization of debt issuance costs and discount |
|
1,941 |
|
|
|
1,361 |
|
Paid-in-kind interest |
|
2,239 |
|
|
|
— |
|
Total derivative loss (gain), net of cash settlements |
|
11,933 |
|
|
|
(5,265 |
) |
Share of net income from joint venture, net of cash dividends
received |
|
(1,868 |
) |
|
|
(347 |
) |
Share-based compensation expense |
|
2,821 |
|
|
|
4,377 |
|
Deferred income taxes |
|
(1,273 |
) |
|
|
(1,814 |
) |
Other |
|
(785 |
) |
|
|
(3,207 |
) |
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
9,087 |
|
|
|
(4,920 |
) |
Inventories |
|
9,997 |
|
|
|
(6,672 |
) |
Accounts payable |
|
1,142 |
|
|
|
8,619 |
|
Income taxes receivable and payable, net |
|
(89 |
) |
|
|
(1,457 |
) |
Other |
|
(1,771 |
) |
|
|
(4,091 |
) |
Net cash provided by operating
activities |
|
29,344 |
|
|
|
7,717 |
|
Cash flows from investing
activities |
|
|
|
Acquisition of property, plant
and equipment |
|
(20,496 |
) |
|
|
(17,952 |
) |
Proceeds from sale of property,
plant, and equipment |
|
2,898 |
|
|
|
460 |
|
Net cash used in investing
activities |
|
(17,598 |
) |
|
|
(17,492 |
) |
Cash flows from financing
activities |
|
|
|
Proceeds from long-term debt |
|
61,000 |
|
|
|
46,000 |
|
Repayments of long-term debt |
|
(65,395 |
) |
|
|
(47,958 |
) |
Cash paid for debt issuance
costs |
|
(169 |
) |
|
|
(136 |
) |
Proceeds from short-term
debt |
|
3,648 |
|
|
|
— |
|
Other |
|
(1,967 |
) |
|
|
(3,092 |
) |
Net cash used in financing
activities |
|
(2,883 |
) |
|
|
(5,186 |
) |
Effect of exchange rate changes
on cash flows |
|
232 |
|
|
|
(887 |
) |
Net change in cash and cash
equivalents |
|
9,095 |
|
|
|
(15,848 |
) |
Cash and cash equivalents at
beginning of year |
|
12,808 |
|
|
|
28,656 |
|
Cash and cash equivalents at end
of year |
$ |
21,903 |
|
|
$ |
12,808 |
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Income (Loss) from Operations to
Non-GAAP Adjusted Income (Loss) from Operations |
|
|
(in
thousands) |
Three Months Ended December 31, |
NN, Inc.
Consolidated |
2023 |
|
2022 |
GAAP loss from operations |
$ |
(7,943 |
) |
|
$ |
(11,041 |
) |
Professional fees |
|
225 |
|
|
|
382 |
|
Personnel costs (1) |
|
1,175 |
|
|
|
902 |
|
Facility costs (2) |
|
1,617 |
|
|
|
1,405 |
|
Amortization of
intangibles |
|
3,478 |
|
|
|
5,067 |
|
Non-GAAP adjusted loss from
operations (a) |
$ |
(1,448 |
) |
|
$ |
(3,285 |
) |
|
|
|
|
|
|
Non-GAAP adjusted operating
margin (3) |
|
(1.3 |
)% |
|
|
(2.8 |
)% |
GAAP net sales |
$ |
112,533 |
|
|
$ |
118,012 |
|
|
|
|
|
|
|
|
|
(in
thousands) |
Three Months Ended December 31, |
Power
Solutions |
2023 |
|
2022 |
GAAP income (loss) from operations |
$ |
2,830 |
|
|
$ |
(840 |
) |
Professional fees |
|
63 |
|
|
|
— |
|
Personnel costs (1) |
|
82 |
|
|
|
590 |
|
Facility costs (2) |
|
141 |
|
|
|
506 |
|
Amortization of
intangibles |
|
2,640 |
|
|
|
4,229 |
|
Non-GAAP adjusted income from
operations (a) |
$ |
5,756 |
|
|
$ |
4,485 |
|
|
|
|
|
Non-GAAP adjusted operating
margin (3) |
|
13.3 |
% |
|
|
9.0 |
% |
GAAP net sales |
$ |
43,330 |
|
|
$ |
50,020 |
|
|
|
|
|
|
|
|
|
(in
thousands) |
Three Months EndedDecember 31, |
Mobile
Solutions |
2023 |
|
2022 |
GAAP loss from operations |
$ |
(5,686 |
) |
|
$ |
(5,389 |
) |
Personnel costs (1) |
|
1,091 |
|
|
|
— |
|
Facility costs (2) |
|
1,476 |
|
|
|
899 |
|
Amortization of
intangibles |
|
838 |
|
|
|
838 |
|
Non-GAAP adjusted loss from
operations (a) |
$ |
(2,281 |
) |
|
$ |
(3,652 |
) |
|
|
|
|
Share of net income from joint
venture |
|
2,719 |
|
|
|
2,657 |
|
Non-GAAP adjusted income
(loss) from operations with JV (a) |
$ |
438 |
|
|
$ |
(995 |
) |
|
|
|
|
Non-GAAP adjusted operating
margin (3) |
|
0.6 |
% |
|
|
(1.5 |
)% |
|
|
|
|
|
|
GAAP net sales |
$ |
69,203 |
|
|
$ |
67,994 |
|
(in
thousands) |
Three Months Ended December 31, |
Elimination |
2023 |
|
2022 |
GAAP net sales |
$ |
— |
|
$ |
(2 |
) |
|
|
|
|
|
|
|
(1) Personnel costs include recruitment,
retention, relocation, and severance costs
(2) Facility costs include costs of opening /
closing facilities and relocation / exit of manufacturing
operations
(3) Non-GAAP adjusted operating margin =
Non-GAAP adjusted income (loss) from operations / GAAP net
sales
Reconciliation of GAAP Income (Loss) from Operations to
Non-GAAP Adjusted Income (Loss) from Operations |
|
(in
thousands) |
Year Ended December 31, |
NN, Inc.
Consolidated |
2023 |
|
2022 |
GAAP loss from operations |
|
(21,804 |
) |
|
|
(21,092 |
) |
Litigation / settlement
costs |
|
— |
|
|
|
1,850 |
|
Professional fees |
|
640 |
|
|
|
1,607 |
|
Personnel costs (1) |
|
2,857 |
|
|
|
945 |
|
Facility costs (2) |
|
7,271 |
|
|
|
2,571 |
|
Amortization of
intangibles |
|
14,167 |
|
|
|
15,827 |
|
Impairments (Goodwill and
fixed assets) |
|
— |
|
|
|
219 |
|
Non-GAAP adjusted income from
operations (a) |
$ |
3,131 |
|
|
$ |
1,927 |
|
|
|
|
|
Non-GAAP adjusted operating
margin (3) |
|
0.6 |
% |
|
|
0.4 |
% |
GAAP net sales |
|
489,270 |
|
|
|
498,738 |
|
|
|
|
|
|
|
|
|
(in
thousands) |
Year Ended December 31, |
Power
Solutions |
2023 |
|
2022 |
GAAP income from operations |
|
11,096 |
|
|
|
3,536 |
|
Litigation / settlement
costs |
|
— |
|
|
|
1,850 |
|
Professional fees |
|
63 |
|
|
|
339 |
|
Personnel costs (1) |
|
204 |
|
|
|
590 |
|
Facility costs (2) |
|
1,742 |
|
|
|
1,269 |
|
Amortization of
intangibles |
|
10,814 |
|
|
|
12,474 |
|
Non-GAAP adjusted income from
operations (a) |
$ |
23,919 |
|
|
$ |
20,058 |
|
|
|
|
|
Non-GAAP adjusted operating
margin (3) |
|
12.9 |
% |
|
|
9.8 |
% |
GAAP net sales |
|
185,948 |
|
|
|
205,204 |
|
|
|
|
|
|
|
|
|
(in
thousands) |
Year Ended December 31, |
Mobile
Solutions |
2023 |
|
2022 |
GAAP loss from operations |
|
(11,749 |
) |
|
|
(2,165 |
) |
Personnel costs (1) |
|
1,593 |
|
|
|
— |
|
Facility costs (2) |
|
5,529 |
|
|
|
1,302 |
|
Amortization of
intangibles |
|
3,353 |
|
|
|
3,353 |
|
Impairments (Goodwill and
fixed assets) |
|
— |
|
|
|
219 |
|
Non-GAAP adjusted income
(loss) from operations (a) |
$ |
(1,274 |
) |
|
$ |
2,709 |
|
|
|
|
|
Share of net income from joint
venture |
|
5,806 |
|
|
|
6,592 |
|
Non-GAAP adjusted income from
operations with JV (a) |
$ |
4,532 |
|
|
$ |
9,301 |
|
|
|
|
|
Non-GAAP adjusted operating
margin (3) |
|
1.5 |
% |
|
|
3.2 |
% |
GAAP net sales |
|
303,335 |
|
|
|
293,536 |
|
(in
thousands) |
Year EndedDecember 31, |
Elimination |
2023 |
|
2022 |
GAAP net sales |
(13 |
) |
|
(2 |
) |
(1) Personnel costs include recruitment,
retention, relocation, and severance costs
(2) Facility costs include costs of opening /
closing facilities and relocation / exit of manufacturing
operations
(3) Non-GAAP adjusted operating margin =
Non-GAAP adjusted income (loss) from operations / GAAP net
sales
Reconciliation of GAAP Net Income (Loss) to Non-GAAP
Adjusted EBITDA |
|
|
Three Months Ended December 31, |
(in
thousands) |
2023 |
|
2022 |
GAAP net loss |
$ |
(20,541 |
) |
|
$ |
(12,014 |
) |
|
|
|
|
Provision for income
taxes |
|
904 |
|
|
|
107 |
|
Interest expense |
|
5,653 |
|
|
|
4,368 |
|
Change in fair value of
preferred stock derivatives and warrants |
|
9,172 |
|
|
|
(407 |
) |
Depreciation and
amortization |
|
11,477 |
|
|
|
13,269 |
|
Professional fees |
|
225 |
|
|
|
382 |
|
Personnel costs (1) |
|
1,175 |
|
|
|
902 |
|
Facility costs (2) |
|
1,617 |
|
|
|
1,405 |
|
Non-cash stock
compensation |
|
763 |
|
|
|
515 |
|
Non-cash foreign exchange loss
on inter-company loans |
|
(422 |
) |
|
|
(715 |
) |
Non-GAAP adjusted EBITDA
(b) |
$ |
10,023 |
|
|
$ |
7,812 |
|
|
|
|
|
Non-GAAP adjusted EBITDA
margin (3) |
|
8.9 |
% |
|
|
6.6 |
% |
GAAP net sales |
$ |
112,533 |
|
|
$ |
118,012 |
|
|
|
|
|
(1) Personnel
costs include recruitment, retention, relocation, and severance
costs |
(2) Facility costs
include costs of opening / closing facilities and relocation / exit
of manufacturing operations |
(3) Non-GAAP
adjusted EBITDA margin = Non-GAAP adjusted EBITDA / GAAP net
sales |
|
|
Year Ended December 31, |
(in
thousands) |
2023 |
|
2022 |
GAAP net loss |
$ |
(50,150 |
) |
|
$ |
(26,098 |
) |
|
|
|
|
Provision for income
taxes |
|
2,285 |
|
|
|
1,621 |
|
Interest expense |
|
21,137 |
|
|
|
15,041 |
|
Change in fair value of
preferred stock derivatives and warrants |
|
10,814 |
|
|
|
(5,267 |
) |
Depreciation and
amortization |
|
46,120 |
|
|
|
47,231 |
|
Litigation / settlement
costs |
|
— |
|
|
|
1,850 |
|
Professional fees |
|
640 |
|
|
|
1,607 |
|
Personnel costs (1) |
|
2,857 |
|
|
|
945 |
|
Facility costs (2) |
|
7,271 |
|
|
|
2,571 |
|
Non-cash stock
compensation |
|
2,823 |
|
|
|
4,378 |
|
Non-cash foreign exchange
(gain) loss on inter-company loans |
|
(676 |
) |
|
|
(212 |
) |
Fixed asset and goodwill
impairments |
|
— |
|
|
|
219 |
|
Non-GAAP adjusted EBITDA
(b) |
$ |
43,121 |
|
|
$ |
43,886 |
|
|
|
|
|
Non-GAAP adjusted EBITDA
margin (3) |
|
8.8 |
% |
|
|
8.8 |
% |
GAAP net sales |
|
489,270 |
|
|
|
498,738 |
|
|
|
|
|
(1) Personnel
costs include recruitment, retention, relocation, and severance
costs |
(2) Facility costs
include costs of opening / closing facilities and relocation / exit
of manufacturing operations |
(3) Non-GAAP
adjusted EBITDA margin = Non-GAAP adjusted EBITDA / GAAP net
sales |
|
Reconciliation of GAAP Net Income (Loss) to Non-GAAP
Adjusted Net Income and GAAP Net Income (Loss) per Diluted Common
Share to Non-GAAP Adjusted Net Income (Loss) per Diluted Common
Share |
|
|
Three Months Ended December 31, |
(in
thousands) |
2023 |
|
2022 |
GAAP net loss |
$ |
(20,541 |
) |
|
$ |
(12,014 |
) |
|
|
|
|
Pre-tax professional fees |
|
225 |
|
|
|
382 |
|
Pre-tax personnel costs |
|
1,175 |
|
|
|
902 |
|
Pre-tax facility costs |
|
1,617 |
|
|
|
1,405 |
|
Non-cash foreign exchange loss
on inter-company loans |
|
(422 |
) |
|
|
(715 |
) |
Pre-tax change in fair value
of preferred stock derivatives and warrants |
|
9,172 |
|
|
|
(407 |
) |
Pre-tax amortization of
intangibles and deferred financing costs |
|
4,009 |
|
|
|
5,407 |
|
Tax effect of adjustments
reflected above (c) |
|
(107 |
) |
|
|
(1,465 |
) |
Non-GAAP discrete tax
adjustments |
|
— |
|
|
|
730 |
|
Non-GAAP adjusted net income
(loss) (d) |
$ |
(4,872 |
) |
|
$ |
(5,775 |
) |
|
|
|
|
|
Three Months Ended December 31, |
(per diluted common
share) |
2023 |
|
2022 |
GAAP net loss per diluted
common share |
$ |
(0.50 |
) |
|
$ |
(0.33 |
) |
|
|
|
|
Pre-tax professional fees |
|
— |
|
|
|
0.01 |
|
Pre-tax personnel costs |
|
0.03 |
|
|
|
0.02 |
|
Pre-tax facility costs |
|
0.03 |
|
|
|
0.03 |
|
Pre-tax foreign exchange
(gain) loss on inter-company loans |
|
(0.01 |
) |
|
|
(0.02 |
) |
Pre-tax change in fair value
of preferred stock derivatives and warrants |
|
0.19 |
|
|
|
(0.01 |
) |
Pre-tax amortization of
intangibles and deferred financing costs |
|
0.08 |
|
|
|
0.12 |
|
Tax effect of adjustments
reflected above (c) |
|
— |
|
|
|
(0.03 |
) |
Non-GAAP discrete tax
adjustments |
|
— |
|
|
|
0.02 |
|
Preferred stock cumulative
dividends and deemed dividends |
|
0.07 |
|
|
|
0.07 |
|
Non-GAAP adjusted net income
(loss) per diluted common share (d) |
$ |
(0.10 |
) |
|
$ |
(0.12 |
) |
Shares used to calculate net
earnings (loss) per share |
|
47,709 |
|
|
|
44,708 |
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Net Income (Loss) to Non-GAAP
Adjusted Net Income and GAAP Net Income (Loss) per Diluted Common
Share to Non-GAAP Adjusted Net Income (Loss) per Diluted Common
Share |
|
|
Year Ended December 31, |
(in
thousands) |
2023 |
|
2022 |
GAAP net income (loss) |
$ |
(50,150 |
) |
|
$ |
(26,098 |
) |
|
|
|
|
Pre-tax foreign exchange
(gain) loss on inter-company loans |
|
(676 |
) |
|
|
(212 |
) |
Pre-tax litigation /
settlement costs |
|
— |
|
|
|
1,850 |
|
Pre-tax professional fees |
|
640 |
|
|
|
1,607 |
|
Pre-tax personnel costs |
|
2,857 |
|
|
|
945 |
|
Pre-tax facility costs |
|
7,271 |
|
|
|
2,571 |
|
Pre-tax change in fair value
of preferred stock derivatives and warrants |
|
10,814 |
|
|
|
(5,267 |
) |
Pre-tax amortization of
intangibles and deferred financing costs |
|
16,108 |
|
|
|
17,188 |
|
Pre-tax impairments of fixed
asset costs |
|
— |
|
|
|
219 |
|
Tax effect of adjustments
reflected above (c) |
|
(592 |
) |
|
|
(3,978 |
) |
Non-GAAP discrete tax
adjustments |
|
— |
|
|
|
3,128 |
|
Non-GAAP adjusted net income
(loss) (d) |
$ |
(13,728 |
) |
|
$ |
(8,047 |
) |
|
|
|
|
|
Year Ended December 31, |
(per diluted common
share) |
2023 |
|
2022 |
GAAP net income (loss) per
diluted common share |
$ |
(1.35 |
) |
|
$ |
(0.83 |
) |
|
|
|
|
Pre-tax foreign exchange
(gain) loss on inter-company loans |
|
(0.01 |
) |
|
|
— |
|
Pre-tax litigation /
settlement costs |
|
— |
|
|
|
0.04 |
|
Pre-tax professional fees |
|
0.01 |
|
|
|
0.04 |
|
Pre-tax personnel costs |
|
0.06 |
|
|
|
0.02 |
|
Pre-tax facility costs |
|
0.16 |
|
|
|
0.06 |
|
Pre-tax change in fair value
of preferred stock derivatives and warrants |
|
0.23 |
|
|
|
(0.12 |
) |
Pre-tax amortization of
intangibles and deferred financing costs |
|
0.34 |
|
|
|
0.38 |
|
Tax effect of adjustments
reflected above (c) |
|
(0.01 |
) |
|
|
(0.09 |
) |
Non-GAAP discrete tax
adjustments |
|
— |
|
|
|
0.07 |
|
Preferred stock cumulative
dividends and deemed dividends |
|
0.28 |
|
|
|
0.24 |
|
Non-GAAP adjusted net income
(loss) per diluted common share (d) |
$ |
(0.29 |
) |
|
$ |
(0.19 |
) |
Weighted average common shares
outstanding |
|
46,738 |
|
|
|
44,680 |
|
|
|
|
|
|
|
|
|
Reconciliation of Operating Cash Flow to Free Cash
Flow |
|
|
Three Months Ended December
31, |
|
Year Ended December 31, |
(in
thousands) |
2023 |
|
2022 |
|
2023 |
|
2022 |
Net cash provided by operating activities |
$ |
5,454 |
|
|
$ |
10,388 |
|
|
$ |
29,344 |
|
|
$ |
7,717 |
|
Acquisition of property,
plant, and equipment |
|
(4,204 |
) |
|
|
(3,941 |
) |
|
|
(20,496 |
) |
|
|
(17,952 |
) |
Proceeds from sale of
property, plant, and equipment |
|
22 |
|
|
|
— |
|
|
|
2,898 |
|
|
|
460 |
|
Free cash flow |
$ |
1,272 |
|
|
$ |
6,447 |
|
|
$ |
11,746 |
|
|
$ |
(9,775 |
) |
The Company discloses in this presentation the non-GAAP
financial measures of adjusted income (loss) from operations,
adjusted EBITDA, adjusted net income (loss), adjusted net income
(loss) per diluted common share, and free cash flow. Each of these
non-GAAP financial measures provides supplementary information
about the impacts of acquisition, divestiture and integration
related expenses, foreign-exchange impacts on inter-company loans,
reorganizational and impairment charges. Over the past five years,
we have completed several acquisitions, one of which was
transformative for the Company, and sold two of our businesses. The
costs we incurred in completing such acquisitions, including the
amortization of intangibles and deferred financing costs, and these
divestitures 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 are excluded as the charges
are not indicative of our ongoing operating cost. We believe the
presentation of adjusted income (loss) from operations, adjusted
EBITDA, adjusted net income (loss), adjusted net income (loss) per
diluted common share, and free cash flow provides 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 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 (loss) from operations represents
GAAP income (loss) from operations, adjusted to exclude the effects
of restructuring and integration expense; non-operational charges
related to acquisition and transition expense, intangible
amortization costs for fair value step-up in values related to
acquisitions, non-cash impairment charges, 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 (loss) 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 (loss) from operations.
(b) Non-GAAP adjusted EBITDA represents GAAP net income (loss),
adjusted to include income taxes, interest expense, write-off of
unamortized debt issuance costs, interest rate swap payments and
change in fair value that was recognized in earnings, change in
fair value of preferred stock derivatives and warrants,
depreciation and amortization, charges related to acquisition and
transition costs, non-cash stock compensation expense, foreign
exchange gain (loss) on inter-company loans, restructuring and
integration expense, costs related to divested businesses and
litigation settlements, income from discontinued operations, and
non-cash impairment charges, to the extent applicable. 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 EBITDA 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 (loss) from
continuing operations.
(c) This line item reflects the aggregate tax effect of all
non-tax adjustments reflected in the respective table. NN, Inc.
estimates the tax effect of the adjustment items identified in the
reconciliation schedule above by applying the applicable statutory
rates by tax jurisdiction 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.
(d) Non-GAAP adjusted net income (loss) represents GAAP net
income (loss) adjusted to exclude the tax-affected effects of
charges related to acquisition and transition costs, foreign
exchange gain (loss) on inter-company loans, restructuring and
integration charges, amortization of intangibles costs for fair
value step-up in values related to acquisitions and amortization of
deferred financing costs, non-cash impairment charges, write-off of
unamortized debt issuance costs, interest rate swap payments and
change in fair value, change in fair value of preferred stock
derivatives and warrants, costs related to divested businesses and
litigation settlements, income (loss) from discontinued operations,
and preferred stock cumulative dividends and deemed dividends. 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.
NN (NASDAQ:NNBR)
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NN (NASDAQ:NNBR)
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