JOHNSON CITY, Tenn.,
Nov. 1, 2017 /PRNewswire/ -- NN,
Inc., (NASDAQ: NNBR), a diversified industrial company, today
reported its financial results for the third quarter ended
September 30, 2017.
GAAP Results
Net sales for the third quarter of 2017 increased $1.5 million, or 1.0%, to $148.2 million, compared to $146.7 million for the third quarter of
2016. Growth in the medical, aerospace and automotive end
markets accounted for the increase.
On a GAAP basis, income from operations for the third quarter of
2017 was $6.3 million, compared to
$13.0 million for the same period in
2016. Income (loss) from continuing operations on a GAAP basis for
third quarter of 2017 was ($3.4
million). This compares to income (loss) from continuing
operations of $0.3 million in the
third quarter of 2016.
On a GAAP basis, income from operations for third quarter 2017
in the Autocam Precision Components Group was $6.8 million compared to $8.5 million for the same period in 2016.
On a GAAP basis, income from operations for third quarter 2017
in the Precision Engineered Products Group was $7.9 million compared to $9.9 million for the same period in 2016.
Adjusted Results
Adjusted income from operations for the third quarter of 2017
was $15.4 million, compared to
$19.9 million for the same period in
2016.
Richard Holder, President and
Chief Executive Officer, commented, "Overall operating performance
in the quarter was negatively impacted by severe weather events
that occurred during the period. These impacts created mix issues
which had a negative impact on margins. We expect these to return
to normal in the fourth quarter."
Business Group Results
Autocam Precision Components
Net sales for the third quarter of 2017 were $81.7 million, compared to $80.5 million in the third quarter of 2016, an
increase of 1.5% or $1.2 million.
Growth related to our Corporate Average Fuel Economy (CAFE)
automotive business accounted for the increase. Adjusted income
from operations for the quarter decreased $1.4 million to $9.7
million, compared to $11.1
million in the third quarter of 2016.
Mr. Holder commented, "Autocam continues to take share and
outgrow its CAFE end market. During the quarter we had
several program wins that required immediate investments due to the
short project launch requirements. These investments had a small
near term impact on their profitability."
Precision Engineered Products
Net sales for the third quarter of 2017 were $66.5 million, compared to $66.2 million in the third quarter of 2016, an
increase of $0.3 million.
Adjusted income from operations for the quarter was $13.3 million, compared to $15.2 million in 2016.
Mr. Holder commented, "The impacts of the hurricanes during the
third quarter had a negative effect on our profitability as we were
unable to ship to several of our customers. We expect this to
resolve in the fourth quarter."
Mr. Holder concluded, "The third quarter was another
transformative period for the organization as we divested our PBC
business. Additionally, our performance this quarter was
negatively impacted by weather delays within the business. We
expect these anomalies to our performance to normalize in the
fourth quarter."
The full set of financial guidance for the fourth quarter and
full year 2017 can be found in our supplemental presentation posted
in the Investor Relations section of our website at
www.nninc.com.
NN will discuss its results during its quarterly investor
conference call tomorrow morning starting at 9:00 a.m. ET. The call and supplemental
presentation may be accessed via NN's website, www.nninc.com. The
conference call can also be accessed by dialing 1-877-718-5107 or
1-719-325-4878 Conference ID: 8709327. For those who are
unavailable to listen to the live broadcast, a replay will be
available shortly after the call for 90 days.
NN discloses in this press release the non-GAAP financial
measures of adjusted income from operations and adjusted income
(loss) from continuing operations. Each of adjusted income
from operations and adjusted income (loss) from continuing
operations provide supplementary information about the impacts of
acquisition related expenses, foreign-exchange and other
non-operating impacts on our business.
The financial tables found later in this press release include a
reconciliation of adjusted income from operations, adjusted income
(loss) from continuing operations to the U.S. GAAP financial
measures of income from operations, and income (loss) from
continuing operations.
NN, Inc., a diversified industrial company combines advanced
engineering and production capabilities with in-depth materials
science expertise to design and manufacture high-precision
components and assemblies for a variety of markets on a global
basis. Headquartered in Johnson
City, Tennessee, NN has 36 manufacturing plants in
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 and completed
transactions are also forward-looking statements, including
statements relating to 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
or the possibility that the Company will be unable to execute on
the intended redeployment of proceeds from a divestiture, whether
due to a lack of favorable investment opportunities or
otherwise.
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, 2016. 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.
|
Condensed
Consolidated Statements Operations
|
(Unaudited)
|
|
Three Months
Ended
|
|
September
30,
|
|
2017
|
|
2016
|
|
|
|
|
Net sales
|
$
148,156
|
|
$
146,714
|
Cost of products sold
(exclusive of depreciation and
amortization shown separately
below)
|
110,836
|
|
107,185
|
Selling, general and
administrative expense
|
16,985
|
|
14,201
|
Acquisition related
costs excluded from selling, general and
administrative expense
|
619
|
|
-
|
Depreciation and
amortization
|
13,075
|
|
11,737
|
Restructuring and
integration expense
|
345
|
|
606
|
Income from
operations
|
6,296
|
|
12,985
|
|
|
|
|
Interest
expense
|
12,739
|
|
15,801
|
Loss on
extinguishment of debt and write-off of unamortized
debt issuance costs
|
-
|
|
2,589
|
Derivative payments
on interest rate swap
|
-
|
|
609
|
Derivative loss
(gain) on change in interest rate swap fair value
|
(27)
|
|
3,130
|
Other (income)
expense, net
|
(848)
|
|
(263)
|
Loss from continuing
operations before benefit for income
taxes and share of net income from joint
venture
|
(5,568)
|
|
(8,881)
|
Benefit for income
taxes
|
(1,011)
|
|
(7,733)
|
Share of net income
from joint venture
|
1,202
|
|
1,427
|
Income (loss) from
continuing operations
|
(3,355)
|
|
279
|
NN,
Inc.
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
|
|
September
30,
|
|
December
31,
|
|
2017
|
|
2016
|
Cash and cash
equivalents
|
$
347,380
|
|
$
6,271
|
Current maturities of
long-term debt
|
21,090
|
|
12,751
|
Current portion of
obligations under capital leases
|
2,905
|
|
3,332
|
Long-term debt, net
of current portion
|
793,999
|
|
785,713
|
Obligations under
capital leases, net of current portion
|
1,723
|
|
3,240
|
Reconciliation of
GAAP Income from Operations to Non-GAAP Adjusted Income from
Operations
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
$000s
|
September
30,
|
|
$000s
|
September
30,
|
NN, Inc.
Consolidated
|
2017
|
2016
|
|
Precision
Engineered Products
|
2017
|
2016
|
GAAP income from
operations
|
$
6,296
|
$
12,985
|
|
GAAP income from
operations
|
$
7,922
|
$
9,913
|
Restructuring and
integration expense
|
345
|
286
|
|
Restructuring and
integration expense
|
-
|
-
|
Acquisition and
transition expense
|
2,922
|
757
|
|
Acquisition and
transition expense
|
400
|
320
|
Amortization of
intangibles
|
5,840
|
5,865
|
|
Amortization of
intangibles
|
4,966
|
4,980
|
Non-GAAP adjusted
income from operations (a)
|
$
15,403
|
$
19,893
|
|
Non-GAAP adjusted
income from operations (a)
|
$
13,288
|
$
15,213
|
|
|
|
|
|
|
|
Non-GAAP adjusted
operating margin (1)
|
10.4%
|
13.6%
|
|
Non-GAAP adjusted
operating margin (1)
|
20.0%
|
23.0%
|
GAAP net
sales
|
148,156
|
146,714
|
|
GAAP net
sales
|
66,492
|
66,222
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
$000s
|
September
30,
|
|
|
|
Autocam Precision
Components
|
2017
|
2016
|
|
|
|
|
GAAP income from
operations
|
$
6,799
|
$
8,464
|
|
|
|
|
Restructuring and
integration expense
|
345
|
286
|
|
|
|
|
Acquisition and
transition expense
|
500
|
-
|
|
|
|
|
Amortization of
intangibles
|
874
|
885
|
|
|
|
|
Share of net income
from joint venture
|
1,202
|
1,427
|
|
|
|
|
Non-GAAP adjusted
income from operations (a)
|
$
9,720
|
$
11,062
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted
operating margin (1)
|
11.9%
|
13.7%
|
|
|
|
|
GAAP net
sales
|
81,664
|
80,492
|
|
(1) Non-GAAP adjusted
operating margin = Non-GAAP adjusted income from operations / GAAP
net sales
|
The Company discloses in this presentation the non-GAAP
financial measures of adjusted income from operations and Non-GAAP
adjusted operating margin. Each of these non-GAAP financial
measures provide supplementary information about the impacts of
acquisition, divestiture and integration related expenses,
foreign-exchange impacts on inter-company loans reorganizational
and impairment charges. Over the past four years, we have
completed seven acquisitions, two of which were transformative for
the Company, and sold two of our businesses. The costs we
incurred in completing such acquisitions, including the
amortization of intangibles and deferred financing costs, and these
divestitures have been excluded from these measures because their
size and inconsistent frequency are unrelated to our commercial
performance during the period, and which we believe are not
indicative of our ongoing operating costs. We exclude the impact of
currency translation from these measures because foreign exchange
rates are not under management's control and are subject to
volatility. Other non-operating charges such as, the write-off of
our interest rate swap, are excluded as the charges on not
indicative of our ongoing operating cost. We believe the
presentation of adjusted income from operations and adjusted
operating margin provide useful information in assessing our
underlying business trends and facilitates comparison of our
long-term performance over given periods.
The non-GAAP financial measures provided herein may not
provide information that is directly comparable to that provided by
other companies in the Company's industry, as other companies may
calculate such financial results differently. The Company's
non-GAAP financial measures are not measurements of financial
performance under GAAP, and should not be considered as
alternatives to actual income growth derived from income
amounts presented in accordance with GAAP. The Company does not
consider these non-GAAP financial measures to be a substitute for,
or superior to, the information provided by GAAP financial
results.
(a) Non-GAAP Adjusted income from operations, represents GAAP
income from operations, adjusted to exclude the effects of
restructuring and integration expense, non-operational charges
related to acquisition, divestiture and restructuring and
integration costs, intangible amortization costs for fair
value step-up in values related to acquisitions, and when
applicable, our share of income from joint venture operations. We
believe this presentation is commonly used by investors and
professional research analysts in the valuation, comparison, rating
and investment recommendations of companies in the industrial
industry. We use this information for comparative purposes within
the industry. Non-GAAP adjusted income from operations, is not a
measure of financial performance under GAAP and should not be
considered as a measure of liquidity or as an alternative to GAAP
income from operations.
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SOURCE NN, Inc.