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SEC Filings

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


Table of Contents

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

Overall Consolidated Results

 

     Nine Months Ended September 30,  
     2017      2016      $ Change  

Net sales

   $ 463,658      $ 443,310      $ 20,348     

Volume

            $ 20,520  

Foreign exchange effects

              425  

Price/material inflation pass-through/mix

              (597

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

     339,345        323,660        15,685     

Volume

              13,145  

Foreign exchange effects

              639  

Mix

              4,987  

Inflation

              2,009  

Cost reduction projects/other

              (5,095

Selling, general and administrative expense

     52,606        46,931        5,675     

Acquisition related costs excluded from selling, general and
administrative expense

     619        —          619     

Depreciation and amortization

     38,432        38,411        21     

Restructuring and integration expense

     362        4,851        (4,489   
  

 

 

    

 

 

    

 

 

    

Income from operations

     32,294        29,457        2,837     

Interest expense

     39,916        48,708        (8,792   

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

     39,639        2,589        37,050     

Derivative payments (receipts) on interest rate swap

     —          609        (609   

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

     (14      3,130        (3,144   

Other (income) expense, net

     (945      (2,297      1,352     
  

 

 

    

 

 

    

 

 

    

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

     (46,302      (23,282      (23,020   

Benefit for income taxes

     14,145        11,763        2,382     

Share of net income from joint venture

     4,139        4,170        (31   
  

 

 

    

 

 

    

 

 

    

Loss from continuing operations

     (28,018      (7,349      (20,669   

Income from discontinued operations, net of tax

     146,579        12,564        134,015     
  

 

 

    

 

 

    

 

 

    

Net income

   $ 118,561      $ 5,215      $ 113,346     
  

 

 

    

 

 

    

 

 

    

Net Sales. Net sales increased during the first nine months of 2017 from the first nine months of 2016, principally due to higher volumes. The higher volumes were primarily due to demand improvements within the medical end market, the automotive end market and the industrial end market. Overall, sales were ahead of the prior year by $7.3 million for APC and $13.1 million for PEP.

Cost of Products Sold. The increase in cost of products sold was primarily due to the increase in demand and production volumes as well as changes in product mix and start-up costs for certain new products. Increases were partially offset by cost savings from production process improvement projects.

Selling, General and Administrative Expense. The majority of the increase during the first nine months of 2017 from the first nine months 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.

Depreciation and Amortization. The slight increase in depreciation and amortization during the first nine months of 2017 from the first nine months of 2016 was consistent with additions to property, plant and equipment. The expected increase was partially offset by the absence in 2017 of $2.5 million of amortization of backlog and unfavorable leasehold intangibles which became fully amortized during the first quarter of 2016.

 

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