UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 18, 2014
NN, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 0-23486 | 62-1096725 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
| 2000 Waters Edge Drive, Johnson City, Tennessee | 37604 | |
| (Address of principal executive offices) | (Zip Code) |
(423) 743-9151
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| ITEM 7.01 | REGULATION FD DISCLOSURE |
Attached as Exhibit 99.1 to this Current Report on Form 8-K is a PowerPoint presentation, which provides an update to investors. The attached presentation updates NN, Inc.’s previously provided investor presentation.
The information presented in Item 7.01 to this Current Report on Form 8-K is being furnished in accordance with Rule 101(e)(1) under Regulation FD and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any registration statement filed under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated by reference.
| ITEM 9.01 | FINANCIAL STATEMENTS AND EXHIBITS |
| Exhibit |
Description | |
| 99.1 | Investor Presentation of NN, Inc. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 18, 2014
| NN, INC. | ||
| By: | /s/ William C. Kelly, Jr. | |
| Name: | William C. Kelly, Jr. | |
| Title: | Vice President and Chief Administrative Officer | |
EXHIBIT INDEX
| Exhibit |
Description | |
| 99.1 | Investor Presentation of NN, Inc. | |
| Exhibit 99.1
|
Exhibit 99.1
Investor Presentation
November 19-20, 2014
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Forward Looking Statement
Except for specific historical information, many of the matters discussed in this presentation 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, 2013. 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
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Vision & Mission
Our mission is to provide high-quality products and superior customer service that continuously exceed our customers’ expectations while providing enhanced value for our stakeholders.
Our vision is to be the leading manufacturer of high-performance precision components.
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A History of Growth
Estimated revenue of $700M
Traded on Nasdaq (NNBR)
Global reach, local depth
25 manufacturing facilities with operations in 10 countries
Approximately 4,200 employees
Continuous investment in technology leadership
Supplying to diversified blue chip customers in over 30 countries
1980Metal Bearing1999Components2000 2001 2003 2005 2006 2014…
Industrial Veenendaal SNR Ball Whirlaway V-S Chelsea
NN founded Molding Euroball Delta Rubber RFK Autocam
in Erwin, TN Assets Corporation Industries Grinding
Corporation Company
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NN, Inc. President & CEO
Richard D. Holder
Highly successful history of growing profitable organizations by acquisition, organic growth, and adjacent market growth
Joins NN from Eaton Corporation where he held several leadership positions most recently serving as President of Eaton Electrical Components Group
Held leadership positions at US Airways,
AlliedSignal and Parker Hannifin Corporation prior to joining Eaton
Served 10 years in USMC
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The New NN – Global Market Leader
NN is a $700+ million public company with three platforms
Metal Bearing Components
Autocam Precision Components
Plastics and Rubber Components
NN has a world leading market position in Metal Bearing Components
Top 3 in precision balls, Number 1 in tapered rollers
Low number of competitors; high market share; high barrier to entry
Stable market position throughout the cycle; organic growth limited due to high, stable market shares
The Autocam Precision Components platform has high growth opportunities
Top 3 in existing precision markets
Highly disaggregated global market
Few global players at the high precision range are in an excellent position to gain market share
NN’s Plastic & Rubber Components group specializes in high-precision plastic injection and rubber molded products for auto and industrial markets
Global reach is critical in our product platforms and with production in 10 countries, NN is able to serve all key customers.
NN is now top 3 globally in both Metal Bearing Components and Precision Metal Components
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The New NN – Global Market Leader
Metal Bearing Components
Steel Balls Tapered Rollers Cylindrical Rollers Bearing Cages Miscellaneous stamped metal products
Autocam Precision Components
Complex, high precision components for :
Fuel systems
Steering systems
Transmissions
HVAC compressors
Power tools
Plastic & Rubber Components
Bearing seals
Custom molded rubber seals Plastic retainers Precision plastic components
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Global Footprint
—Metal Bearing Components —Autocam Precision Components —Plastic & Rubber Components —Corporate Headquarters
Established global presence with profitable operations in North America, Europe, Brazil and China
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Megatrends
New Capital Cycle: the manufacturing world is coming off of a low period in capital investment. As customers consider make vs. buy decisions, NN is positioned to become the feeder company of choice in our markets.
Tier 1 and Tier 2 auto suppliers are concentrating on purchasing with fewer, larger suppliers.
Offshore sourcing is changing as logistics are becoming a growing factor. Supply Chain localization is gaining momentum with all manufacturers. Healthy U.S. automotive industry is providing opportunities for growth.
China is now the world’s largest market for personal cars.
Rigorous global gas mileage requirements assure growing demand for NN products
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Megatrends—High Growth Product Segments
GDI HP Diesel VCT/VVT Multi-Speed Trans EPS
MPG Increase + 15 —20% (1) + 20 —30% (1) + 4 —6% (2) + 5 —10% (3) + 3 —5% (4)
Content Per Vehicle
Impact + $54 (1) + $89 (1) + $10 (2) + $20 (3) + $4 (4)
Market Growth > 17% CAGR > 10% CAGR > 10% CAGR > 15% CAGR >10% CAGR
Key Regions/Markets
Technologies needed on a global scale to meet fuel economy regulations Conversion/implementation rates will outpace market growth All of these technologies require numerous high precision metal components
Source: Based on IHS Automotive and internal estimates
| (1) |
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Relative to base engine with MPFI fuel system |
| (3) |
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Relative to base 5-speed transmission |
| (2) |
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Relative to base engine without VVT/VCT |
| (4) |
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Relative to base Hydraulic Power Steering system |
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GDI: Increased APC Content per Vehicle
MPFI V6 GDI V6
Precision Turned Part content:
| 6 |
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injectors |
$6.00 per vehicle
Precision Turned Part content:
| 6 |
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Injectors |
| 1 |
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High pressure fuel pump |
| 2 |
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High pressure fittings |
$60 per vehicle
Technology requires more precision, tighter tolerances
GDI will have a VERY long life: 10-15+ years (MPFI lived for 30+ years)
GDI Fuel System
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Our Future Vision: 2018
$800+ million in revenue
$270 million in revenue from acquisitions – $280 million already completed
$145 million from organic and adjacent market growth based on enhanced R&D and market presence
Improving segment operating margins
Metal Bearing Components: 13.5%
Precision Metal Components: 12.0%
Plastic and Rubber Components: 8.5%
Established global presence with profitable operations in North America, Europe, Brazil and China
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Road to $800M
Outpace the Market with Expanded Focus and Investment
$ Millions
European Economic
$800 $800 $800 Recovery
$700
Organic Growth
3% per Year
$600
$540
$500
Adjacent Markets
$450
5% per Year
$400 $390
$373
$300
Acquisitions
$260 million in Sales
$200
$100
$0
2013 Base 2018 SP
2013 Base 2018 SP
NN will be growing revenue at 26% CAGR over the Strategic Plan Years
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The New NN – Products & Geography
Engine Components Fuel Systems
End Product Cooling System Fans Driveline
Use Transmission
Plastic & Rubber
Components
9%
Precision
21%
Metal
Product Mix Components
70%
Metal Bearing
Components
South
America
Asia
3%
10%
Geography 47% North
Europe America
40%
Fuel Systems Power Steering
Electric Motors Powertrain
Precision
Metal
Components
100%
Asia
7%
Europe
16%
58% North
America
South 19%
America
+
Engine Components Steering
Fuel Systems Transmission
Plastic & Rubber
Components
6%
43% Metal Bearing
Precision 51% Components
Metal
Components
Asia
South 7%
America
11%
50% North
America
Europe 32%
Improved balance among geographic focus and product mix
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The New NN – Customers & Markets
Nexteer
Timken
Iljin
2% 1%
GKN 3%
3%
HILITE
6%
SKF
Top Ten (Copeland) Emerson 6% 36%
Customers
7%
Schaeffler/
INA/FAG
7% 7%
ZF
NTN/SNR
Aerospace
<1% <1% Consumer / Other
HVAC 4%
Commercial 5%
Vehicles 5%
End Markets
General 25%
Industrial 59%
Light Auto
Brose
Hitachi
Continental 3%
3%
4% Bosch
Denso 3% 19%
Delphi 7%
6%
TRW 11%
7% Fiat
8%
GM
Cummins
Other
Commercial
Vehicles 4%
9%
87%
Light Auto
+
TRW
Cummins
HILITE 3%
3%
Emerson 3%
SKF
(Copeland) 4% 22%
Schaeffler/ 4%
INA/FAG
4%
ZF
4% 8%
5%
NTN/SNR Bosch
Fiat
Consumer2% Other
Commercial
Vehicles 3%
8%
General
Industrial 17%
70%
Light Auto
Diversified customer base with enhanced end market focus
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NN Today & Future Vision
Mix Shift
2014
Revenue = $680M*
Consumer Other
Heavy Truck 2%
3%
7%
General
Industrial 16%
72%
Light
Auto
2018
Revenue = $800M
Other
Consumer
3%
7%
Heavy
Truck 15%
50% Light
Auto
25%
General
Industrial
*Proforma full year consolidated revenue
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Creating an Integrated Company
Corporate Identity One corporate identity
Redesigned website
and Branding Common customer solutions
Operational Top Down Strategy
New Supply Chain Operations
Excellence Financial and Business Systems Consolidation
Level 3: Offset Economic Costs
Functional Quality: Drive a Zero Defect Culture
Excellence Safety: Drive a Zero Incident Culture
Delivery: Exceed Customers’ Expectations
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Enhanced R&D Efforts
Established 3 R&D Centers of Excellence
Adjacent markets
(e.g. spherical rollers, welded cages)
Game changing manufacturing processes
(e.g. ball cells, robotics)
Enhanced quality
(e.g. noise reduced product)
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Results of 5 Year Strategic Plan – First 9 Months
In January of 2014, NN announced its strategic plan with $270 million of planned acquisitions plus organic and adjacent market growth.
By September of 2014, we had completed 4 acquisitions totaling $280 million in revenue – 3 years ahead of schedule.
Meanwhile, the NN stock price has appreciated 50% since we announced the strategy in January.
We are in the process of updating the strategic plan.
NN, Inc. is now a $700 million public company with two industry-leading platforms in metal bearing components and precision metal components (rebranded as NN Autocam Precision Components Group).
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Financial Strategy / Policy
Build upon a strong, global operating platform while maintaining financial strength and flexibility Financial policy:
Maintain healthy leverage over business cycles and strategic growth period: Debt to EBITDA 2.0x – 3.0x, < 4.0x at peak
Cash flow priorities:
1) Debt repayment to achieve target leverage
2) Capex to achieve operational excellence and growth
3) Stable common dividends to shareholders (< 20% free cash flow).
4) Strategic acquisitions financed by debt and equity issuance to maintain leverage target
Generate above-market-average revenue growth and capture market share in key areas of new technology over Strategic Plan period
Improve market mix by decreasing auto exposure from 70% to 50%
Increase industrial /aerospace/medical offerings in existing product lines
Expand segment gross and operating margins (optimize mix, operational improvement, cost reductions) Continue to invest in R&D
Continue to pursue selective strategic acquisitions to diversify end markets and expand global reach, within leverage targets
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2015 Updated Forecast
Metrics Forecasted Target Analysis
Solid core growth tempered by foreign
Revenue $690— $710 Million currency exchange (FX) translation, and
slowing European and Brazilian economies.
Margins remain in line, we are pulling
EBITDA $110— $120 Million forward strategic investments as we
continue to invest in our future.
Capital Investment remains a key
Capital Spending $45— $55 Million
component of our growth strategy.
Cash Available for
$25— $35 Million Excess cash flow remains strong.
Debt Repayment
* Includes all completed acquisitions, organic growth and adjacent market growth per NN’s long-range strategic plan. EBITDA estimate assumes full realization of synergies and full integration of new operations.