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): March 17, 2015
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.) | ||
| 207 Mockingbird Lane, 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., dated March 17, 2015. | |
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: March 18, 2015
| 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., dated March 17, 2015. | |
| Exhibit 99.1
|
Investor Presentation
March 17, 2015
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Forward-Looking Statement & Disclaimer
Forward Looking Statement: With the exception of the historical information contained in this presentation, the matters described herein contain forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve a number of risks and uncertainties 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, competitive influences, risks that current customers will commence or increase captive production, risks of capacity underutilization, quality issues, availability of raw materials, currency and other risks associated with international trade, the Company’s dependence on certain major customers, and other risk factors and cautionary statements listed from time to time in the Company’s periodic reports filed with the Securities and Exchange Commission, including, but not limited to, the Company’s Annual Report on 10-K for the fiscal year ended December 31, 2013.
Disclaimer: NN disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements included herein or therein to reflect future events or developments.
This presentation includes certain non-GAAP measures as defined by SEC rules. A reconciliation of those measures to the most directly comparable GAAP equivalent is provided in the fourth quarter and full year 2014 press release dated March 10, 2014 on the investor relations section of our website at www.nninc.com.
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Building a Diversified Industrial
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Building a Diversified Industrial
Focused on a high Building a balanced
precision portfolio and Gr business that earns
outgrowing end mark oughout the cycle
Outgrowing End Str Solid
Markets Strategy
Outgrowing
ets
ansformational Flawless
ansformationalTechnology ExecutionT
Investing in
transformational
technology
Developing a fully
egrated operating
system that supports all
of our businesses
[Graphic Appears Here]
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Building a Diversified Industrial
We have made significant progress against other DIs…
Rank among comparable S/Mid-Cap DIs
Metric Ä Rank
2012—13 2013—14
Sales Growth 8 1 +7
Adjusted Operating
8 5 +3
Margin
Return on Equity 8 5 +3
Total Return 10 1 +9
P/E Ratio 5 6 -1
…but we remain undervalued to our peers
Compared to 9 S/Mid Cap companies outlined on page 10 5 Analysis was done on year over year, TTM, and 2 year TTM period or using 2014 estimates Source: Bloomberg Analytics
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Building a Diversified Industrial
1 year into the Strategic Period
16
14
12
10
EV/EBITDA 8
6
4
2
0
S/Mid Cap DIs Premiere DIs
NN Actuant Altra Ametek Circor
Colfax Crane Kaman Park Ohio Worthington
Eaton ITW Honeywell Danaher
6
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NN multiple based on midpoint of 2015 EBITDA Guidance
Source: Bloomberg Analytics
Company Overview
7
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2014 at a Glance
February: Acquired V-S Industries, a high precision manufacturer with locations in Wheeling,
IL and Juarez, Mexico
June: Acquired tapered roller manufacturer RFK, located in Bosnia & Herzegovina
July: Acquired the assets of Chelsea Grinding Company, a cylindrical roller manufacturer
September: Acquired Autocam, a high precision manufacturer with locations on 4 continents
2014: Achieved strategic goal of 3% organic and 5% adjacent market expansion
We are ahead of schedule on the Strategic Plan
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Today
2015 forecasted revenue of $690M—$710M
Global reach, local depth
Top 3 globally in both bearing components, and precision metal components
25 manufacturing facilities with operations in 10 countries
4,200 employees
Three R&D Centers around the globe
Supplying to diversified end markets in over 30 countries
[Graphic Appears Here]
1980 1999 2000 2001 2003 2005 2006 2014…
NN founded SNR Ball Whirlaway V-S RFK Chelsea
in Erwin, TN Assets Corporation Industries Grinding Autocam
Corporation Company
CGC
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Foundation for Growth
Five new Board appointments since 2012
New President & CEO in 2013, key management retained
Developed Treasury, FP&A, Supply Chain, Shared Services and IT group infrastructure
Design of the NN Operating System
Enhanced management bandwidth with acquisitions
The fundaments of our plan have not changed. We will continue to deliver on our commitments.
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Company Overview
End
Product Mix Geography Markets
Plastic & Rubber
Asia General/Plastics
Components Commercial
South Transportation
6% America 7% 5%
8%
11%
7%
Industrial/ 17%
Aerospace
/Medical
43% 51% 32% 50%
Metal Europe North 70%
Bearing Autocam America
Components Precision Light Auto
Components 32%
Enhanced end market focus and an improved balance among our geographic and product mix
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Customer Profile
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Value Proposition
Ability to manufacture precision products with ultra tight tolerances in high volume
Total product life cycle
Established global footprint
Highly specialized skill and engineering in bearing components and precision machining
Significant proprietary knowledge and trade secrets
Leading manufacturer of high precision components 13
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Differentiation
High precision manufacturing
Operating tolerances of <1 micron
Specialty machine building and in-house tooling leading to significant competitive advantages – trade secrets
Application specific customer design
Repeatable high volume global manufacturing in millions of parts per day
Zero defect process design, extendable to additional industry platforms
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Global Footprint
Metal Bearing Components
Autocam Precision Components
Plastic & Rubber Components
Corporate Headquarters
25 high precision manufacturing facilities on 4 continents
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Moving Forward 16
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Road to $1 Billion
$ Millions
$1,000 $1,000 $1,000
$926 2014 Full Year Pro
$900 Forma Revenue
$800
$772
Organic Growth
$700 $680 3% per Year
$600
Adjacent Markets
$500 5% per Year
$400
$373
Acquisitions
$300
$200 2013 Base 2018
Outpace the Market with Expanded
Focus and Investment
$1+ billion in revenue
~$75 million planned acquisitions
~$245 million from organic and adjacent market growth based
Enhanced R&D and market presence
NN will be growing revenue 270% and EPS 400% over the Strategic Plan years
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Expanding Operating Margins
18 17%
16 16%
14 14% 14%
13%
12 12% 12%
10 10% 10%
8 8%
6
4
3% 3%
2
0
APC MBC PRC
2014 Adj. Operating Margin 2015 Forecasted Adj. Operating Margin 2018 Strategic Plan
18
All percentages rounded to the nearest whole number
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Today & Future Vision – End Markets
2014 2018
Revenue = $680M* Revenue = $1B
Light Auto
Light Auto – CAFE Related
Technologies 5% 0% 0%
8% 10%
Industrial/Aerospace/Medical
8%
17%
Commercial Transportation 70% 50%
General/Plastics 32%
Building a balanced business that earns throughout the cycle 19
*Proforma full year consolidated revenue
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Today & Future Vision – Segment Mix
2014 2018
Revenue = $680M* Revenue = $1B
51
43%
%
51% 43% 52% 39%
43
%
6% 9%
6%
31 43% 51 50
%%%
Autocam Precision60Components Plastic & Rubber Components Metal Bearing Components
%
25
%
Segment mix continues to improve as our revenues continue to grow
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*Proforma full year consolidated revenue
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Strategic Building Blocks 2018
31.9% 18.2%
EPS CAGR ROIC
37.5% 25.8%
21.8% Operating Manufacturing
Sales CAGR Income Margin
CAGR
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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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Precision components group
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Macro Trend: CAFE Standards
Global Fuel Efficiency Standards
77 mpg
56 mpg
50 mpg
U.S. fuel efficiency requirements increase from 35 MPG in 2014 to 56 MPG in 2025 ? 60% higher
The EU’s 2020 requirement of 77 MPG is ~40% higher than the U.S. same-year requirement China and Japan will both require fuel efficiency to reach 50 MPG or above by 2020
Rapidly increasing standards are driving OEMs to accelerate new technology development
Technology Increase in Fuel
Efficiency
Direct fuel Injection / High Pressure Diesel 15-30%
Multi-Speed Transmissions (6-9 gears) 5-10%
Variable Valve Timing / Variable Cam Timing 4-6%
Electric Power Steering 1 mpg
Source: ICCT
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Target Segments: Fuel Saving Technologies
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)
CPV Impact + $54 (1) + $89 (1) + $10 (2) + $20 (3) + $4 (4)
Market Growth > 17% CAGR > 10% CAGR > 10% CAGR > 15% CAGR > 10% CAGR
Global Adoption(5)(6)
27% / 46% 20% / 30% 72% / 95% 30% / 45% 50% / 75%
Rate 2014/2018
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
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Target Segments: Fuel Saving Technologies
MPFI V6 GDI V6
GDI Fuel System
Precision Turned Part content: Precision Turned Part content:
• 6 injectors • 6 Injectors
• 1 High pressure fuel pump
• 2 High pressure fittings
$6.00 per vehicle $60 per vehicle
• Technology requires more precision, tighter tolerances
• GDI will have a VERY long life: 10-15+ years (MPFI lived for 30+ years)
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Expansion Segments: General Industrial, Aerospace
Product Segments, Markets & Customers
Consumer Tools HVAC Rec/ATV Industrial Motors Aerospace Fluid Power
Addressable
$2 billion $3 billion $200 million $3 billion $10+ billion $5+ billion
Market (2014)
Market Growth
Technologies Longer battery life, EPS (Steering) Higher pressure, greater
Compressor modulation High efficiency motors Weight reduction
Driving Growth Lighter weight ABS control
Customers
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Bearing Components group
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Macro Trends
Outsourcings of key components is increasing
Tier 1 and Tier 2 suppliers are concentrating on purchasing with fewer, larger suppliers
Supply chain localization continues to gain momentum
Increasing fuel economy standards are driving technology
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Target Segments
Product Segments, Markets and Customers 2014
Automotive Aerospace Railway Linear Systems Fluid Power Industrial
35%
Addressable
$1 billion $250 million $125 million $100 million $100 million
Market (2014) 65%
Automotive
Market Growth
Penetration in Build rate on Increased utilization Expanding industrial Manufacturing
Growth Drivers developing markets commercial aircraft of rail automation investment
2018
Customers
Industrial
42%
58%
Automotive
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MBC High Growth Product Segments
Balls Tapered Rollers Other Rollers Cages Sheet Metal Parts
Competitive Profile Primarily outsourced Primarily insourced Primarily insourced Mixed and fragmented Mixed and fragmented
Industrial, automotive,
Automotive, electrical Industrial and some
Primary Markets off-highway, rail and General industrial Diversified end market
aero and industrial automotive
industrial
Automotive growth in Developing trend Industrial investment and Follows the roller Niche market within
Market Growth developing markets towards outsourcing aftermarket demand markets automotive
Key Regions/Markets
• Growth in developing markets will drive end market expansion
• Expansion of content into broader industrial markets
• Outsourcing will create significant opportunities
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Investor Presentation
March 17, 2015