NN, Inc. (NASDAQ: NNBR), a diversified industrial company, today
reported its financial results for the first quarter ended March
31, 2022.
Warren Veltman, President and Chief Executive Officer, said, “I
am pleased with our first quarter performance on sales and adjusted
EBITDA, and our execution in what remains a challenging operating
environment. Our first quarter revenues were up over a strong
comparable period in 2021 and up 16% sequentially from the fourth
quarter of 2021. This revenue increase was achieved despite the
ongoing supply chain challenges affecting our customers and the
industries we serve. Part of our strong revenue performance was
attributable to our successful negotiations with many customers on
pricing to mitigate the inflationary pressures our business has
faced. Our sales pipeline continued to grow as we seek to leverage
capabilities across Mobile and Power Solutions to target the
transformation driven by the adoption of electric vehicles and the
evolution of the power grid. As we prepare for our upcoming virtual
Investor Day in a couple weeks, we are confident in our strategic
direction and focused on delivering increased shareholder
value.”
GAAP Results
Net sales were $128.1 million, an increase of 1.0% from the
first quarter of 2021, primarily due to the pass through of
increased material and inflationary costs to customers. These
increases were partially offset by decreased demand from automotive
customers due largely to the ongoing supply chain issues affecting
the industry.
Loss from operations was $3.4 million compared to income from
operations of $1.0 million in the first quarter of 2021. Loss from
operations increased due to variable cost inefficiencies associated
with global supply chain interruptions and uneven customer ordering
patterns and COVID-19 pandemic related employee absenteeism. In
addition, the prior year cost of sales benefited from favorable
overhead absorption.
Income from operations in the Mobile Solutions segment was $2.0
million compared to $6.1 million for the same period in 2021.
Income from operations for Power Solutions segment was $0.4 million
compared to $2.4 million for the same period in 2021.
Net loss was $3.3 million compared to a net loss of $4.9 million
for the same period in 2021. The decrease in net loss was primarily
driven by increased income from the Company’s China joint venture
as well as costs associated with the refinancing and interest rate
swap termination that occurred in the first quarter of 2021,
partially offset by higher income tax expense.
Adjusted Results
Adjusted income from operations for the first quarter of 2022
was $2.7 million compared to $6.4 million for the same period in
2021. Adjusted EBITDA was $13.4 million, or 10.5% of sales,
compared to $16.9 million, or 13.3% of sales, for the same period
in 2021. Adjusted net loss was $0.2 million, or $0.00 per diluted
share, compared to adjusted net loss of $2.2 million, or $0.05 per
diluted share, for the same period in 2020.
Free cash flow was a use of cash of $9.5 million compared to
free cash flow of $2.4 million for the same period in 2021.
“Sales in our Power Solutions business increased year over year
as we continue to see recovery and the impact of new business wins,
supplemented by pricing actions to recover inflationary
costs. Our Mobile Solutions business continued to be
affected by the ongoing supply chain issues reducing automotive
production schedules. We are taking a proactive
approach to inflation, as we have agreed on full protection for
material inflation for nearly all customers, and are working to
recover other inflationary and volume related impacts.
We used approximately $9.5 million of free cash flow during the
first quarter of 2022 which was driven by an increase in accounts
receivable in line with the sequential increase in sales from the
fourth quarter of 2021,” said Veltman.
Mobile Solutions
Net sales for the first quarter of 2022 were $76.1 million
compared to $77.8 million in the first quarter of 2021, a decrease
of 2.2% or $1.7 million. The decrease in sales was primarily due to
lower customer demand, partially offset by the pass through of
increased material and other inflationary costs to customers along
with pricing associated with underutilized capacity. Adjusted
income from operations was $3.0 million compared to $7.1 million of
adjusted income from operations in the first quarter of 2021.
Adjusted income from operation decreased primarily due to lower
sales volume, higher material and labor costs, and production
inefficiencies caused by supply chain interruptions and COVID-19
pandemic related employee absenteeism. In addition, the prior year
income from operations benefited by favorable overhead absorption
as the result of increases in inventory during the three months
ended March 31, 2021.
Power Solutions
Net sales for the first quarter of 2022 were $52.0 million
compared to $49.1 million in the first quarter of 2021, an increase
of 6.0% or $2.9 million. The increase in sales was primarily due to
the pass through of increased material costs to customers. Adjusted
income from operations was $5.2 million compared to $5.5 million in
the first quarter of 2021. The decrease in adjusted income from
operations was primarily due to higher selling, general and
administrative expenses, partially offset by an increase in
favorable overhead absorption.
2022 Outlook
- Revenue in the range of $515 million to $540 million
- Adjusted EBITDA in the range of $57 million to $63 million
- Free cash flow in the range of $14 million to $20 million
- Free cash flow guidance does not include CARES Act tax refund
of ~$10 million due to uncertain timing
Conference Call
NN will discuss its results during its quarterly investor
conference call on May 6, 2022, 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
1-877-317-6789 or 1-412-317-6789, Conference ID: 10164949. For
those who are unavailable to listen to the live broadcast, a replay
will be available shortly after the call until March 7, 2023.
NN discloses in this press release the non-GAAP financial
measures of adjusted income (loss) from operations, adjusted
EBITDA, adjusted net income (loss), adjusted net income (loss) per
diluted common share, and free cash flow. Each of these non-GAAP
financial measures provides supplementary information about the
impacts of restructuring and integration expense, acquisition and
transition expenses, foreign exchange impacts on inter-company
loans, amortization of intangibles and deferred financing costs,
and other non-operating impacts on our business.
The financial tables found later in this press release include a
reconciliation of adjusted income (loss) from operations, adjusted
operating margin, adjusted EBITDA, adjusted EBITDA margin, adjusted
net income (loss), adjusted net income (loss) per diluted share,
and free cash flow to the U.S. GAAP financial measures of income
(loss) from operations, net income (loss), net income (loss) per
diluted common share, and cash provided (used) by operating
activities.
About NN, Inc.
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 Charlotte, North Carolina, NN has 31
facilities in North America, 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 statements may discuss goals, intentions and expectations as
to future trends, plans, events, results of operations or financial
condition, or state other information relating to NN, Inc. (“the
Company”), based on current beliefs of management as well as
assumptions made by, and information currently available to,
management. Forward-looking statements generally will be
accompanied by words such as “anticipate,” “believe,” “could,”
“estimate,” “expect,” “forecast,” “guidance,” “intend,” “may,”
“possible,” “potential,” “predict,” “project” or other similar
words, phrases or expressions. Forward-looking statements involve a
number of risks and uncertainties that are outside of management’s
control and 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; the impacts of the COVID-19
pandemic on the Company’s financial condition, business operations
and liquidity; competitive influences; risks that current customers
will commence or increase captive production; risks of capacity
underutilization; quality issues; material changes in the costs and
availability of raw materials; economic, social, and political
instability, currency fluctuation, and other risks of doing
business outside of the United States; our dependence on certain
major customers, some of whom are not parties to long-term
agreements (and/or are terminable on short notice); the impact of
acquisitions and divestitures; the level of our indebtedness; the
restrictions contained in our debt agreements; our ability to
obtain financing at favorable rates, if at all, and to refinance
existing debt as it matures; unanticipated difficulties integrating
acquisitions; new laws and governmental regulations; the impact of
climate change on our operations; cyber liability or potential
liability for breaches of our or our service providers’ information
technology systems or business operations disruptions; and other
risk factors and cautionary statements listed from time-to-time in
our periodic reports filed with the Securities and Exchange
Commission. We disclaim 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.
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,
2021 and when filed, the Company’s Quarterly Report on Form 10-Q
for the three months ended March 31, 2022. 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.
FOR FURTHER INFORMATION:
Jeff Tryka, CFA Investor Relations
Contactjtryka@lambert.com (616)
258-5766
Financial Tables Follow
NN, Inc.Condensed
Consolidated Statements of Operations and Comprehensive Income
(Loss) (Unaudited)
|
|
Three Months EndedMarch 31, |
(in thousands, except per share data) |
|
|
2022 |
|
|
|
2021 |
|
Net sales |
|
$ |
128,067 |
|
|
$ |
126,804 |
|
Cost of sales (exclusive of depreciation and amortization shown
separately below) |
|
|
104,578 |
|
|
|
99,688 |
|
Selling, general, and administrative expense |
|
|
13,454 |
|
|
|
14,575 |
|
Depreciation and amortization |
|
|
11,429 |
|
|
|
11,568 |
|
Other operating expense (income), net |
|
|
2,026 |
|
|
|
(5 |
) |
Income (loss) from
operations |
|
|
(3,420 |
) |
|
|
978 |
|
Interest expense |
|
|
3,439 |
|
|
|
2,024 |
|
Loss on extinguishment of debt and write-off of debt issuance
costs |
|
|
— |
|
|
|
2,390 |
|
Derivative payments on interest rate swap |
|
|
— |
|
|
|
1,717 |
|
Loss on interest rate swap |
|
|
— |
|
|
|
2,033 |
|
Other income, net |
|
|
(2,996 |
) |
|
|
(122 |
) |
Loss before benefit
(provision) for income taxes and share of net income from joint
venture |
|
|
(3,863 |
) |
|
|
(7,064 |
) |
Benefit (provision) for income taxes |
|
|
(1,531 |
) |
|
|
756 |
|
Share of net income from joint venture |
|
|
2,092 |
|
|
|
1,395 |
|
Net loss |
|
$ |
(3,302 |
) |
|
$ |
(4,913 |
) |
Other
comprehensive income (loss): |
|
|
|
|
Foreign currency translation gain (loss) |
|
|
2,600 |
|
|
|
(3,347 |
) |
Interest rate swap: |
|
|
|
|
Change in fair value, net of tax |
|
|
1,187 |
|
|
|
— |
|
Reclassification adjustment for losses included in net loss, net of
tax |
|
|
34 |
|
|
|
2,851 |
|
Other
comprehensive income (loss) |
|
$ |
3,821 |
|
|
$ |
(496 |
) |
Comprehensive income (loss) |
|
$ |
519 |
|
|
$ |
(5,409 |
) |
Basic net loss per
common share: |
|
|
|
|
Net loss per common share |
|
$ |
(0.13 |
) |
|
$ |
(0.46 |
) |
Weighted average common shares outstanding |
|
|
44,594 |
|
|
|
42,672 |
|
Diluted net loss per common share: |
|
|
|
|
Net loss per common share |
|
$ |
(0.13 |
) |
|
$ |
(0.46 |
) |
Weighted average common shares outstanding |
|
|
44,594 |
|
|
|
42,672 |
|
|
|
|
|
|
|
|
|
|
NN, Inc.Condensed
Consolidated Balance
Sheets(Unaudited)
(in thousands, except
per share data) |
|
March 31, 2022 |
|
December 31, 2021 |
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
20,627 |
|
|
$ |
28,656 |
|
Accounts receivable, net |
|
|
89,397 |
|
|
|
71,419 |
|
Inventories |
|
|
81,239 |
|
|
|
75,027 |
|
Income tax receivable |
|
|
11,055 |
|
|
|
11,808 |
|
Other current assets |
|
|
14,989 |
|
|
|
9,372 |
|
Total current assets |
|
|
217,307 |
|
|
|
196,282 |
|
Property, plant and equipment, net |
|
|
208,286 |
|
|
|
209,105 |
|
Operating lease right-of-use assets |
|
|
46,771 |
|
|
|
46,443 |
|
Intangible assets, net |
|
|
85,131 |
|
|
|
88,718 |
|
Investment in joint venture |
|
|
32,177 |
|
|
|
34,045 |
|
Deferred tax assets |
|
|
313 |
|
|
|
314 |
|
Other non-current assets |
|
|
5,863 |
|
|
|
4,194 |
|
Total assets |
|
$ |
595,848 |
|
|
$ |
579,101 |
|
Liabilities, Preferred
Stock, and Stockholders’ Equity |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
48,906 |
|
|
$ |
36,710 |
|
Accrued salaries, wages and benefits |
|
|
20,695 |
|
|
|
17,739 |
|
Income tax payable |
|
|
676 |
|
|
|
2,072 |
|
Current maturities of long-term debt |
|
|
3,138 |
|
|
|
3,074 |
|
Current portion of operating lease liabilities |
|
|
4,962 |
|
|
|
5,704 |
|
Other current liabilities |
|
|
13,457 |
|
|
|
8,718 |
|
Total current liabilities |
|
|
91,834 |
|
|
|
74,017 |
|
Deferred tax liabilities |
|
|
7,920 |
|
|
|
7,456 |
|
Long-term debt, net of current portion |
|
|
150,400 |
|
|
|
151,052 |
|
Operating lease liabilities, net of current portion |
|
|
51,597 |
|
|
|
51,295 |
|
Other non-current liabilities |
|
|
14,724 |
|
|
|
17,289 |
|
Total liabilities |
|
|
316,475 |
|
|
|
301,109 |
|
Commitments and contingencies |
|
|
|
|
Series D perpetual preferred stock - $0.01 par value per share, 65
shares authorized, issued and outstanding at March 31, 2022 and
December 31, 2021, respectively |
|
|
56,345 |
|
|
|
53,807 |
|
Stockholders' equity: |
|
|
|
|
Common stock - $0.01 par value per share, 90,000 shares authorized,
43,890 and 43,027 shares issued and outstanding at March 31, 2022
and December 31, 2021, respectively |
|
|
439 |
|
|
|
430 |
|
Additional paid-in capital |
|
|
473,072 |
|
|
|
474,757 |
|
Accumulated deficit |
|
|
(222,402 |
) |
|
|
(219,100 |
) |
Accumulated other comprehensive loss |
|
|
(28,081 |
) |
|
|
(31,902 |
) |
Total stockholders’ equity |
|
|
223,028 |
|
|
|
224,185 |
|
Total liabilities, preferred
stock, and stockholders’ equity |
|
$ |
595,848 |
|
|
$ |
579,101 |
|
|
|
|
|
|
|
|
|
|
NN, Inc.Condensed
Consolidated Statements of Cash Flows
(Unaudited)
|
|
Three Months EndedMarch 31, |
(in thousands) |
|
|
2022 |
|
|
|
2021 |
|
Cash flows from
operating activities |
|
|
|
|
Net (loss) |
|
$ |
(3,302 |
) |
|
$ |
(4,913 |
) |
Adjustments to reconcile net (loss) to net cash provided by (used
in) operating activities: |
|
|
|
|
Depreciation and amortization |
|
|
11,429 |
|
|
|
11,568 |
|
Amortization of debt issuance costs and discount |
|
|
332 |
|
|
|
405 |
|
Impairments of property, plant and equipment |
|
|
233 |
|
|
|
— |
|
Loss on extinguishment of debt and write-off of debt issuance
costs |
|
|
— |
|
|
|
2,390 |
|
Total derivative loss (gain), net of cash settlements |
|
|
(2,543 |
) |
|
|
3,301 |
|
Share of net income from joint venture, net of cash dividends
received |
|
|
1,934 |
|
|
|
(1,395 |
) |
Compensation expense from issuance of share-based awards |
|
|
949 |
|
|
|
886 |
|
Deferred income taxes |
|
|
(42 |
) |
|
|
(1,605 |
) |
Other |
|
|
(826 |
) |
|
|
(1,081 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
|
|
(17,633 |
) |
|
|
(6,684 |
) |
Inventories |
|
|
(5,536 |
) |
|
|
(5,589 |
) |
Accounts payable |
|
|
11,416 |
|
|
|
7,094 |
|
Income taxes receivable and payable, net |
|
|
(631 |
) |
|
|
(344 |
) |
Other |
|
|
(1,003 |
) |
|
|
3,851 |
|
Net cash provided by (used in) operating activities |
|
|
(5,223 |
) |
|
|
7,884 |
|
Cash flows from
investing activities |
|
|
|
|
Acquisition of property, plant and equipment |
|
|
(4,262 |
) |
|
|
(5,468 |
) |
Proceeds from sale of property, plant, and equipment |
|
|
36 |
|
|
|
11 |
|
Cash settlements of interest rate swap |
|
|
— |
|
|
|
(15,420 |
) |
Net cash used in investing activities |
|
|
(4,226 |
) |
|
|
(20,877 |
) |
Cash flows from
financing activities |
|
|
|
|
Cash paid for debt issuance costs |
|
|
— |
|
|
|
(6,856 |
) |
Proceeds from issuance of preferred stock |
|
|
— |
|
|
|
61,918 |
|
Redemption of preferred stock |
|
|
— |
|
|
|
(122,434 |
) |
Proceeds from long-term debt |
|
|
8,000 |
|
|
|
150,000 |
|
Repayments of long-term debt |
|
|
(8,729 |
) |
|
|
(70,721 |
) |
Repayments of short-term debt, net |
|
|
— |
|
|
|
(1,090 |
) |
Other |
|
|
(787 |
) |
|
|
(1,189 |
) |
Net cash provided by (used in) financing activities |
|
|
(1,516 |
) |
|
|
9,628 |
|
Effect of exchange rate changes on cash flows |
|
|
2,936 |
|
|
|
(1,740 |
) |
Net change in cash and cash equivalents |
|
|
(8,029 |
) |
|
|
(5,105 |
) |
Cash and cash equivalents at beginning of period |
|
|
28,656 |
|
|
|
48,138 |
|
Cash and cash equivalents at end of period |
|
$ |
20,627 |
|
|
$ |
43,033 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Income (Loss) from
Operations to Non-GAAP Adjusted Income (Loss) from
Operations
|
|
|
|
|
|
|
|
$000s |
Three Months EndedMarch 31, |
NN, Inc.
Consolidated |
|
2022 |
|
|
|
2021 |
|
GAAP income (loss) from
operations |
$ |
(3,420 |
) |
|
$ |
978 |
|
Acquisition and transition
expense* |
|
2,254 |
|
|
|
1,789 |
|
Amortization of
intangibles |
|
3,587 |
|
|
|
3,586 |
|
Fixed asset impairments |
|
233 |
|
|
|
— |
|
Non-GAAP adjusted income
(loss) from operations (a) |
$ |
2,654 |
|
|
$ |
6,354 |
|
|
|
|
|
Non-GAAP adjusted operating
margin |
|
2.1 |
% |
|
|
5.0 |
% |
GAAP net sales |
$ |
128,067 |
|
|
$ |
126,804 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$000s |
Three Months EndedMarch 31, |
Power
Solutions |
|
2022 |
|
|
|
2021 |
|
GAAP income (loss) from
operations |
$ |
364 |
|
|
$ |
2,432 |
|
Acquisition and transition
expense |
|
2,039 |
|
|
|
298 |
|
Amortization of
intangibles |
|
2,749 |
|
|
|
2,748 |
|
Non-GAAP adjusted income
(loss) from operations (a) |
$ |
5,152 |
|
|
$ |
5,478 |
|
|
|
|
|
Non-GAAP adjusted operating
margin |
|
9.9 |
% |
|
|
11.2 |
% |
GAAP net sales |
$ |
52,011 |
|
|
$ |
49,075 |
|
|
|
|
|
|
|
|
|
$000s |
Three Months EndedMarch 31, |
Mobile
Solutions |
|
2022 |
|
|
|
2021 |
|
GAAP income (loss) from
operations |
$ |
1,969 |
|
|
$ |
6,090 |
|
Acquisition and transition
expense |
|
— |
|
|
|
162 |
|
Amortization of
intangibles |
|
838 |
|
|
|
838 |
|
Fixed asset impairments |
|
233 |
|
|
|
— |
|
Non-GAAP adjusted income
(loss) from operations (a) |
|
3,040 |
|
|
|
7,090 |
|
|
|
|
|
Share of net income from joint
venture |
|
2,092 |
|
|
|
1,395 |
|
Non-GAAP adjusted income
(loss) from operations with JV |
$ |
5,132 |
|
|
$ |
8,485 |
|
|
|
|
|
Non-GAAP adjusted operating
margin (1) |
|
6.7 |
% |
|
|
10.9 |
% |
GAAP net sales |
$ |
76,070 |
|
|
$ |
77,776 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$000s |
Three Months EndedMarch 31, |
Elimination |
|
2022 |
|
|
|
2021 |
|
GAAP net sales |
$ |
(14 |
) |
|
$ |
(47 |
) |
|
|
|
|
(1) Non-GAAP adjusted operating margin = Non-GAAP adjusted
income (loss) from operations / GAAP net sales*2022 expense
includes $0.2 million of professional fees, $0.2 million of
integration & transformation fees, and $1.9 million of asset
write-downs and litigation settlement fees.*2021 expense includes
$0.6 million of professional fees and $1.2 million of integration
& transformation fees.
|
Reconciliation of Net Income (Loss) to Non-GAAP Adjusted
EBITDA |
|
Three Months EndedMarch 31, |
000's |
|
2022 |
|
|
|
2021 |
|
GAAP net income (loss) |
$ |
(3,302 |
) |
|
$ |
(4,913 |
) |
|
|
|
|
Provision (benefit) for income
taxes |
|
1,531 |
|
|
|
(756 |
) |
Interest expense |
|
3,439 |
|
|
|
2,024 |
|
Write-off of unamortized debt
issuance cost |
|
— |
|
|
|
2,390 |
|
Pre-tax derivative loss, net
of cash settlements |
|
— |
|
|
|
3,750 |
|
Change in fair value of
preferred stock derivatives and warrants |
|
(2,543 |
) |
|
|
(449 |
) |
Depreciation and
amortization |
|
11,429 |
|
|
|
11,568 |
|
Acquisition and transition
expense |
|
2,254 |
|
|
|
1,789 |
|
Non-cash stock
compensation |
|
949 |
|
|
|
887 |
|
Non-cash foreign exchange
(gain) loss on inter-company loans |
|
(595 |
) |
|
|
619 |
|
Fixed asset impairments |
|
233 |
|
|
|
— |
|
Non-GAAP adjusted EBITDA
(b) |
$ |
13,395 |
|
|
$ |
16,909 |
|
|
|
|
|
Non-GAAP adjusted EBITDA
margin (2) |
|
10.5 |
% |
|
|
13.3 |
% |
GAAP net sales |
$ |
128,067 |
|
|
$ |
126,804 |
|
(2) Non-GAAP adjusted EBITDA margin = Non-GAAP adjusted EBITDA /
GAAP net sales
|
Reconciliation of Net Income (Loss) to Non-GAAP Adjusted
Net Income and Net Income (Loss) per |
Diluted Common Share to Non-GAAP Adjusted Net Income (Loss)
per Diluted Common Share |
|
Three Months EndedMarch 31, |
000's |
|
2022 |
|
|
|
2021 |
|
GAAP net income (loss) |
$ |
(3,302 |
) |
|
$ |
(4,913 |
) |
|
|
|
|
Pre-tax acquisition and
transition expense |
|
2,254 |
|
|
|
1,789 |
|
Pre-tax foreign exchange
(gain) loss on inter-company loans |
|
(595 |
) |
|
|
619 |
|
Pre-tax write-off of
unamortized debt issuance costs |
|
— |
|
|
|
2,390 |
|
Pre-tax change in fair value
of preferred stock derivatives and warrants |
|
(2,543 |
) |
|
|
(449 |
) |
Pre-tax amortization of
intangibles and deferred financing costs |
|
3,919 |
|
|
|
3,992 |
|
Pre-tax derivative loss, net
of cash settlements |
|
— |
|
|
|
3,750 |
|
Pre-tax impairments of fixed
asset costs |
|
233 |
|
|
|
— |
|
Tax effect of adjustments
reflected above (c) |
|
(686 |
) |
|
|
(2,564 |
) |
Non-GAAP discrete tax
adjustments |
|
551 |
|
|
|
(2,382 |
) |
Non-GAAP adjusted net income
(loss) (d) |
$ |
(169 |
) |
|
$ |
2,232 |
|
|
|
|
|
|
Three Months EndedMarch 31, |
Per diluted common
share |
|
2022 |
|
|
|
2021 |
|
GAAP net income (loss) per
diluted common share |
$ |
(0.13 |
) |
|
$ |
(0.46 |
) |
|
|
|
|
Pre-tax acquisition and
transition expense |
|
0.05 |
|
|
|
0.04 |
|
Pre-tax foreign exchange
(gain) loss on inter-company loans |
|
(0.01 |
) |
|
|
0.01 |
|
Pre-tax write-off of
unamortized debt issuance costs |
|
— |
|
|
|
0.06 |
|
Pre-tax change in fair value
of preferred stock derivatives and warrants |
|
(0.06 |
) |
|
|
(0.01 |
) |
Pre-tax amortization of
intangibles and deferred financing costs |
|
0.09 |
|
|
|
0.09 |
|
Pre-tax derivative loss, net
of cash settlements |
|
— |
|
|
|
0.09 |
|
Pre-tax impairments of fixed
asset costs |
|
0.01 |
|
|
|
— |
|
Tax effect of adjustments
reflected above (c) |
|
(0.02 |
) |
|
|
(0.06 |
) |
Non-GAAP discrete tax
adjustments |
|
0.01 |
|
|
|
(0.06 |
) |
Preferred stock cumulative
dividends and deemed dividends |
|
0.06 |
|
|
|
0.34 |
|
Non-GAAP adjusted net income
(loss) per diluted common share (d) |
$ |
0.00 |
|
|
$ |
0.05 |
|
Weighted average common shares
outstanding |
|
44,594 |
|
|
|
42,672 |
|
|
|
|
|
|
|
|
|
Reconciliation of Operating Cash Flow to
Free Cash Flow
|
Three Months EndedMarch 31, |
000’s |
|
2022 |
|
|
|
2021 |
|
Net cash provided by (used in)
operating activities |
|
(5,223 |
) |
|
|
7,884 |
|
Acquisition of property, plant
and equipment |
|
(4,262 |
) |
|
|
(5,468 |
) |
Free cash flow |
$ |
(9,485 |
) |
|
$ |
2,416 |
|
|
|
|
|
|
|
|
|
The Company discloses in this presentation the non-GAAP
financial measures of adjusted income (loss) from operations,
adjusted EBITDA, adjusted net income (loss), adjusted net income
(loss) per diluted common share, and free cash flow. Each of these
non-GAAP financial measures provides 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 five years,
we have completed several acquisitions, one of which was
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 are excluded as the charges
are not indicative of our ongoing operating cost. We believe the
presentation of adjusted income (loss) from operations, adjusted
EBITDA, adjusted net income (loss), adjusted net income (loss) per
diluted common share, and free cash flow provides 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 (loss) from operations represents
GAAP income (loss) from operations, adjusted to exclude the effects
of restructuring and integration expense; non-operational charges
related to acquisition and transition expense, intangible
amortization costs for fair value step-up in values related to
acquisitions, non-cash impairment charges, 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 (loss) 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 (loss) from operations.
(b) Non-GAAP adjusted EBITDA represents GAAP net income (loss),
adjusted to include income taxes, interest expense, write-off of
unamortized debt issuance costs, interest rate swap payments and
change in fair value that was recognized in earnings, change in
fair value of preferred stock derivatives and warrants,
depreciation and amortization, charges related to acquisition and
transition costs, non-cash stock compensation expense, foreign
exchange gain (loss) on inter-company loans, restructuring and
integration expense, costs related to divested businesses and
litigation settlements, income from discontinued operations, and
non-cash impairment charges, to the extent applicable. 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 EBITDA 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 (loss) from
continuing operations.
(c) This line item reflects the aggregate tax effect of all
non-tax adjustments reflected in the respective table. NN, Inc.
estimates the tax effect of the adjustment items identified in the
reconciliation schedule above by applying the applicable statutory
rates by tax jurisdiction unless the nature of the item and/or the
tax jurisdiction in which the item has been recorded requires
application of a specific tax rate or tax treatment.
(d) Non-GAAP adjusted net income (loss) represents GAAP net
income (loss) adjusted to exclude the tax-affected effects of
charges related to acquisition and transition costs, foreign
exchange gain (loss) on inter-company loans, restructuring and
integration charges, amortization of intangibles costs for fair
value step-up in values related to acquisitions and amortization of
deferred financing costs, non-cash impairment charges, write-off of
unamortized debt issuance costs, interest rate swap payments and
change in fair value, change in fair value of preferred stock
derivatives and warrants, costs related to divested businesses and
litigation settlements, income (loss) from discontinued operations,
and preferred stock cumulative dividends and deemed dividends. 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.
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