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Press Release

NN, Inc. Reports Second Quarter 2015 Results

JOHNSON CITY, Tenn., Aug. 5, 2015 /PRNewswire/ --

  • Net sales of $164.9 million, an increase of $58.2 million
  • Adjusted income from operations grew to $14.3 million
  • Adjusted net income of $7.2 million, or $0.37 per diluted share

NN, Inc., (NASDAQ: NNBR) a diversified industrial company, today reported its financial results for the second quarter ended June 30, 2015.  

Second Quarter 2015 Results

Net sales for the second quarter of 2015 increased $58.2 million, or 55%, to $164.9 million, compared to $106.7 million for the second quarter of 2014.  Acquisitions made subsequent to March 31, 2014 added $64.3 million in revenue.  Negative currency impacts reduced reported net sales by $9.3 million versus the second quarter of last year.

Adjusted income from operations for the second quarter of 2015 was $14.3 million, an increase of 51%, compared to $9.5 million for the same period in 2014. Adjusted net income, which excludes the after-tax impact of foreign exchange on inter-company loans and after-tax acquisition and integration expenses, increased to $7.2 million, or $0.37 per diluted share, compared to $6.0 million, or $0.33 per diluted share for the same period in 2014. 

On a GAAP basis, income from operations for the second quarter of 2015 was $13.6 million, compared to $8.2 million for the same period in 2014. Net income on a GAAP basis for the second quarter of 2015 was $7.0 million, or $0.36 per diluted share. This compared to $5.2 million, or $0.29 per diluted share, in the second quarter of 2014.

Richard Holder, President and Chief Executive Officer, commented, "Excluding the macro-economic challenges in Brazil our businesses along with our financial results continue to meet our expectations for the year. Our adjusted income from operations continued to improve during the quarter as the remainder of our portfolio continues to grow and hit our operating targets. The acquisitions we've made since 2014 remain on or ahead of our stated integration and synergy targets for 2015."

Business Group Results

Metal Bearing Components

Net sales for the group decreased $3.7 million to $69.3 million during the second quarter of 2015, compared to $73.0 million for second quarter 2014. Negative currency impacts of $9.3 million were partially offset by volume increases of $3.0 million and the contribution of acquisition sales of $2.6 million. Income from operations for the second quarter was $9.4 million, compared to $8.7 million in the second quarter of 2014.

"The Metal Bearing Components Group continued its solid performance in 2015," said Holder. "Excluding the negative currency impacts the business continues to grow and expand its end markets."

Autocam Precision Components

Net sales for the second quarter of 2015 were $86.5 million, compared to $25.3 million in the second quarter of 2014, an increase of $61.2 million.  Acquisitions accounted for $60.9 million of the increase.  Income from operations for the quarter increased $6.8 million to $9.1 million, compared to $2.3 million in the second quarter of 2014. 

Holder commented, "The Autocam Precision Components Group performed well despite the conditions in Brazil. As expected, new customer programs continued to ramp in the quarter and began to hit their expected operating targets as the quarter came to a close, while the integration of the Autocam acquisition remains ahead of schedule."

Plastic and Rubber Components

Net sales for the second quarter increased $0.7 million to $9.1 million, compared to $8.4 million for the same period in 2014. Income from operations for the quarter was $0.5 million, compared to $0.4 million in 2014.

Holder commented, "We continue to transform our plastics business as we focus on growing a diversified business that meets our operating expectations.  During the quarter we continued that process with the completion of the Caprock acquisition."

Holder concluded, "The second quarter was an important quarter in the history of our company. We made our first acquisition in our plastics portfolio and raised $182 million in equity to prepare for future acquisitions and continued growth as we remain focused on executing our strategic plan."

NN will discuss its results during its quarterly investor conference call tomorrow morning starting at 9:00 a.m. ET.  The call and an accompanying slide presentation may be accessed via NN's website. The conference call can also be accessed by dialing 888-427-9376; conference id – 5901109. For those who are unavailable to listen to the live broadcast, a replay will be available shortly after the call for 90 days.

The attached financial tables include a reconciliation of adjusted income from operations and adjusted net income to the U.S. GAAP financial measures of income from operations and net income.

NN, Inc., a diversified industrial company manufactures 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 26 manufacturing plants in the 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 pending or completed acquisitions are also forward-looking statements, including statements relating to the anticipated closing date of an acquisition, the Company's ability to obtain required regulatory approvals or satisfy closing conditions, the costs of an acquisition and the Company's source(s) of financing, 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, 2014. 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.

Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)





Three Months Ended


Six Months Ended



JUNE 30,


JUNE 30,



2015


2014


2015


2014

Net sales


$164,856


$106,680


$328,601


$209,208

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


128,708


84,285


258,025


164,569

Selling, general and administrative


13,962


10,074


25,961


20,104

Depreciation and amortization


8,597


4,084


17,091


7,961

Income from operations


13,589


8,237


27,524


16,574










Interest expense


6,021


551


11,959


1,115

Other expense, net


19


129


1,419


212

Income before provision for income taxes and share of net income from joint venture


7,549


7,557


14,146


15,247










Provision for income taxes


1,617


2,357


3,073


4,809

Share of net income from joint venture


1,021


-


1,882


-

Net income


$6,953


$5,200


$12,955


$10,438










Basic income per common share:


$0.36


$0.29


$0.68


$0.59

Weighted average shares outstanding


19,215


17,779


19,064


17,700

Diluted income per common share:


$0.36


$0.29


$0.67


$0.58

Weighted average shares outstanding


19,582


18,172


19,416


18,054

Cash dividends per common share


$0.07


$0.07


$0.14


$0.14

 

 

NN, Inc.

Condensed Balance Sheets

(In thousands)

(Unaudited)



June 30,


December 31,


2015


2014

Assets




Current assets:




  Cash

$21,409


$37,317

  Accounts receivable, net

114,819


97,510

  Inventories

87,928


91,469

  Other current assets

16,590


16,503

     Total current assets

$240,746


242,799





Property, plant and equipment, net

$272,047


278,442

Goodwill, net

85,436


83,941

Intangible asset, net

52,929


52,827

Investment in joint venture

38,240


34,703

Other non-current assets

19,542


20,001

     Total assets

$708,940


$712,713





Liabilities and Stockholders' Equity




Current liabilities:




  Accounts payable

$63,616


$71,094

  Accrued salaries, wages and benefits

19,760


21,148

  Current maturities of long-term debt

23,345


22,160

  Income taxes payable

5,057


3,274

  Current portion of obligations under capital lease

5,482


5,418

  Other current liabilities

11,481


14,504

     Total current liabilities

128,741


137,598





Non-current deferred tax liabilities

48,238


49,461

Long-term debt, net of current portion

335,938


328,026

Obligations under capital lease, net of current portion

11,829


14,539

Other non-current liabilities

10,692


9,390

     Total liabilities

$535,438


539,014





Total stockholders' equity

$173,502


173,699

Total liabilities and stockholders' equity

$708,940


$712,713

 

 

NN, Inc.

Reconciliation of Non-GAAP to GAAP Financial Measures

(Unaudited)


Reconciliation of net income to adjusted net income:








Three Months Ended
June 30, 2015


Three Months Ended
 June 30, 2014


(In Thousands)


Diluted Earnings Per Share


(In Thousands)


Diluted Earnings Per Share

Net Income

$6,953


$0.36


$5,200


$0.29

After tax acquisition and integration expenses

436


0.02


818


0.04

After-tax foreign exchange gain on inter-company loans

(232)


-0.01


-


0.00

Adjusted Net Income

$7,157


$0.37


$6,018


$0.33









Reconciliation of net income to adjusted net income:








Six Months Ended
June 30, 2015


Six Months Ended
June 30, 2014


(In Thousands)


Diluted Earnings Per Share


(In Thousands)


Diluted Earnings Per Share

Net Income

$12,955


$0.67


$10,438


$0.58

After tax acquisition and integration expenses

436


0.02


1,132


0.06

After-tax foreign exchange loss on inter-company loans

655


0.03


-


0.00

Adjusted Net Income

$14,046


$0.72


$11,570


$0.64









Reconciliation of income from operations to adjusted income from operations:






Three Months Ended
June 30, 2015


Three Months Ended
June 30, 2014


Six Months Ended
June 30, 2015


Six Months Ended
June 30, 2014


(In Thousands)


(In Thousands)


(In Thousands)


(In Thousands)

Income from operations

$13,589


$8,237


$27,524


$16,574

Acquisition and integration expenses

681


1,279


681


1,770

Adjusted Income from operations

$14,270


$9,516


$28,205


$18,344


Reconciliation of income from operations to adjusted income from operations






Three Months Ended
June 30, 2015


MBC


APC


PRC


NN Inc

Income from operations

$9,403


$9,095


$501


$13,589

Acquisition and integration expenses

-


-


-


681

China JV Income

-


1,021


-


1,021

Adjusted Income from operations Including China JV

$9,403


$10,116


$501


$15,291










Three Months Ended
June 30, 2014


MBC


APC


PRC


NN Inc

Income from operations

$8,748


$2,306


$414


$8,237

Acquisition and integration expenses

-


-


-


1,279

Adjusted Income from operations Including China JV

$8,748


$2,306


$414


$9,516


Reconciliation of income from operations to adjusted income from operations






Six Months Ended
June 30, 2015


MBC


APC


PRC


NN Inc

Income from operations

$18,491


$16,813


$714


$27,524

Acquisition and integration expenses

-


-


-


681

China JV Income

-


1,882


-


1,882

Adjusted Income from operations Including China JV

$18,491


$18,695


$714


$30,087










Six Months Ended
June 30, 2014


MBC


APC


PRC


NN Inc

Income from operations

$17,520


$4,868


$649


$16,574

Acquisition and integration expenses

-


-


-


1,770

Adjusted Income from operations Including China JV

$17,520


$4,868


$649


$18,344

 

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.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/nn-inc-reports-second-quarter-2015-results-300124401.html

SOURCE NN, Inc.

AT THE COMPANY - Robbie Atkinson, Corporate Treasurer & Investor Relations, (423) 434-8398; AT FINANCIAL RELATIONS BOARD - Marilynn Meek, (General info), 212-827-3773