Print Page  |  Close Window

SEC Filings

10-Q
NN INC filed this Form 10-Q on 11/09/2017
Entire Document
 


Table of Contents

Three Months Ended September 30, 2017, Compared to the Three Months Ended September 30, 2016

Overall Consolidated Results

 

     Three Months Ended September 30,  
     2017      2016      $ Change  

Net sales

   $ 148,156      $ 146,714      $ 1,442     

Volume

            $ 314  

Foreign exchange effects

              745  

Price/material inflation pass-through/mix

              383  

Cost of products sold (exclusive of depreciation and amortization shown separately below)

     110,836        107,185        3,651     

Volume

              480  

Foreign exchange effects

              604  

Mix

              2,309  

Inflation

              522  

Cost reduction projects/other

              (264

Selling, general and administrative expense

     16,985        14,201        2,784     

Acquisition related costs excluded from selling, general and administrative expense

     619        —          619     

Depreciation and amortization

     13,075        11,737        1,338     

Restructuring and integration expense

     345        606        (261   
  

 

 

    

 

 

    

 

 

    

Income from operations

     6,296        12,985        (6,689   

Interest expense

     12,739        15,801        (3,062   

Loss on extinguishment of debt and write-off of unamortized debt issuance costs

     —          2,589        (2,589   

Derivative payments (receipts) on interest rate swap

     —          609        (609   

Derivative loss (gain) on change in interest rate swap fair value

     (27      3,130        (3,157   

Other (income) expense, net

     (848      (263      (585   
  

 

 

    

 

 

    

 

 

    

Loss from continuing operations before benefit for income taxes and share of net income from joint venture

     (5,568      (8,881      3,313     

Benefit for income taxes

     1,436        8,246        (6,810   

Share of net income from joint venture

     1,202        1,427        (225   
  

 

 

    

 

 

    

 

 

    

Income (loss) from continuing operations

     (2,930      792        (3,722   

Income from discontinued operations, net of tax

     135,825        3,663        132,162     
  

 

 

    

 

 

    

 

 

    

Net income

   $ 132,895      $ 4,455      $ 128,440     
  

 

 

    

 

 

    

 

 

    

Net Sales. Net sales increased during the third quarter of 2017 from the third quarter of 2016, principally due to foreign exchange effects of the Brazilian real and the euro, each of which appreciated compared to the dollar. Overall, sales were ahead of the prior year by $1.2 million for APC and $0.3 million for PEP as demand for automotive products related to Corporate Average Fuel Economy (“CAFE”) efforts continued to rise.

Cost of Products Sold. The increase in cost of products sold was primarily due to a shift in product mix toward products using higher cost raw materials. An increase in demand for CAFE products and start-up costs for certain new products also contributed to the increase in cost of products sold. Additionally, increases were partially offset by cost savings from production process improvement projects.

Selling, General and Administrative Expense. The majority of the increase for the third quarter of 2017 from the third quarter of 2016 was due to infrastructure and staffing costs incurred related to our strategic initiatives, including a global implementation of an enterprise resource planning (“ERP”) system.

Acquisition Related Costs Excluded from Selling, General and Administrative Expense. Acquisition related costs are primarily third party legal, accounting, valuation consulting and investment banking advisory fees incurred related to the DRT Medical acquisition.

Interest Expense. Interest expense decreased by $3.1 million primarily due to the redemption of the Senior Notes at the beginning of the second quarter of 2017 with the proceeds of the Incremental Term Loan, which bears a lower interest rate based on LIBOR.

 

28