NN, Inc. (NASDAQ: NNBR), a global diversified industrial company
that engineers and manufactures high-precision components and
assemblies, today reported its financial results for the second
quarter ended June 30, 2024.
Highlights
- Strategic transformation program drove enhanced results, fourth
consecutive quarter of improved year-over-year performance;
- Second quarter net sales of $123.0 million, down 1.8% versus
prior year, driven primarily by unfavorable foreign exchange
impacts and rationalization of unprofitable business in Mobile
Solutions;
- Second quarter operating loss of $2.1 million, an improvement
of 47.5% versus prior year;
- Second quarter adjusted EBITDA of $13.4 million, an improvement
of 27.6% versus prior year;
- Secured new business awards of $34.3 million year-to-date;
and
- Subsequent to quarter-end, the company executed the sale of its
lone non-core plastics plant and used $15.4 million of proceeds to
pay down debt.
“NN delivered another quarter of improvement,
driven by the execution of our strategic transformation plan which
is yielding observable momentum across key focus areas of
profitability enhancement, operational performance, and accelerated
new business wins,” said Harold Bevis, President and Chief
Executive Officer. “Our committed efforts to strengthen
profitability were evident in the quarter, as our $13.4 million of
adjusted EBITDA reflected solid growth over the prior year, which
is the fourth consecutive quarter of year-over-year improvement. On
a trailing-twelve-month basis we have delivered adjusted EBITDA of
$49.2 million, an improvement of 28.7% year-over-year. Our focus on
improved operating performance and productivity has helped drive
solid margin expansion, advancing our profitability and overcoming
the strategic rationalization of volumes which impacted our
top-line.”
Mr. Bevis continued, “We continue to see strong
momentum in our commercial efforts as we have won nearly $18
million of new business awards in the second quarter and $97
million over the last six quarters. We are on pace to deliver our
2024 targets for new business wins. The electrical, industrial, and
medical markets remain unchanged, healthy, and growing. However,
the global auto market is recalibrating the choices of powertrain
and low-cost country production.”
Mr. Bevis concluded, “We are pleased with our
overall performance for the quarter and remain highly confident in
our ability to accelerate our transformation and pace of growth. We
are delivering significantly improved plant level performance,
which is strengthening our profitability and new business win
platform. In the near term, we remain highly focused on optimizing
our capital structure and lowering our cost of capital through a
strategic refinancing which is currently underway. We are also
focusing our commercial growth agenda on expanding our electrical
business, across auto and non-auto end markets, as well as our
high-value NN Medical business in low-cost geographies. I would
like to recognize the efforts of our global team members in
supporting our ongoing transformation, as we thank them for
delivering results as our improved performance is generated through
their hard work.”
Second Quarter GAAP ResultsNet
sales were $123.0 million, a decrease of 1.8% from the second
quarter of 2023, which was primarily due to rationalized volume at
plants undergoing transformations and unfavorable foreign exchange
effects of 0.8% or $1.0 million, partially offset by the net impact
of contractual pricing provisions.
Loss from operations was $2.1 million compared
to a loss from operations of $4.0 million in the second quarter of
2023. The decrease in loss from operations was primarily due to
improved operating performance within several facilities.
Income from operations for Power Solutions was
$5.3 million compared to income from operations of $2.6 million for
the same period in 2023. Loss from operations for Mobile Solutions
was $1.6 million compared to loss from operations of $1.5 million
for the same period in 2023.
Net loss was $2.2 million compared to net loss of $14.4 million
for the same period in 2023. The decrease in net loss was primarily
due to non-cash derivative mark-to-market gains recognized during
the current quarter compared to losses recognized in the second
quarter of 2023.
Second Quarter Adjusted
ResultsAdjusted income from operations for the second
quarter of 2024 was $2.1 million compared to adjusted income from
operations of $1.3 million for the same period in 2023. Adjusted
EBITDA was $13.4 million, or 10.9% of sales, compared to $10.5
million, or 8.4% of sales, for the same period in 2023.
Adjusted net loss was $0.8 million, or $0.02 per
diluted share, compared to adjusted net loss of $3.3 million, or
$0.08 per diluted share, for the same period in 2023. Free cash
flow was a use of cash of $1.3 million compared to a generation of
cash of $3.0 million for the same period in 2023.
Power Solutions Net sales for the second
quarter of 2024 were $50.2 million compared to $48.1 million in the
second quarter of 2023, an increase of 4.3%, or $2.1
million. The increase in sales was primarily due to higher
precious metals pass-through pricing and inflation pricing,
partially offset by lower volume during the current quarter.
Adjusted income from operations was $8.0 million compared to
adjusted income from operations of $5.6 million in the second
quarter of 2023. The increase in adjusted income from operations
was primarily due to favorable production volumes and improved
operating performance.
Mobile SolutionsNet sales for the second
quarter of 2024 were $72.9 million compared to $77.2 million in the
second quarter of 2023, a decrease of 5.6%, or $4.3 million. The
decrease in sales was primarily due to lower volume at facilities
undergoing transformations, contractual reduction in customer
pricing, and unfavorable foreign exchange effects.
Adjusted loss from operations was $0.7 million compared to
adjusted income from operations of $0.2 million in the second
quarter of 2023. The decrease in adjusted income from operations
was primarily due to lower production volumes.
Updated 2024 OutlookNN is reaffirming its
full-year 2024 outlook previously provided in its news release on
July 2, 2024.
- Revenue in the range of $465
million to $485 million;
- Adjusted EBITDA in the range of $47
million to $51 million;
- Free cash flow in the range of $8
million to $12 million; and
- New business wins in the range of
$55 million to $70 million.
Chris Bohnert, Senior Vice President and Chief
Financial Officer, commented, “NN continued to make significant
progress on its transformation goals in the quarter and we are
maintaining our full year 2024 guidance ranges as market
fundamentals and our improved operating performance have been in
line with our previous expectations. Additionally, optimizing NN’s
capital structure and the proactive strategic re-financing of our
term loan remains a top priority for our team in the near-term and
will be a key next step in our transformational strategy.”
Conference CallNN will discuss
its results during its quarterly investor conference call on August
8, 2024, at 10 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 1-877-255-4315 or 1-412-317-6579.
For those who are unavailable to listen to the live broadcast, a
replay will be available shortly after the call until August 8,
2025.
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, 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 global 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 facilities in North America, Europe, South
America, and Asia. For more information about the company and its
products, please visit www.nninc.com.
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
pandemics, epidemics, disease outbreaks and other public health
crises on our 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, political and
geopolitical instability, military conflict, currency fluctuation,
and other risks of doing business outside of the United States;
inflationary pressures and changes in the cost or availability of
materials, supply chain shortages and disruptions, the availability
of labor and labor disruptions along the supply chain; 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, as well as expansion
of end markets and product offerings; our ability to hire or retain
key personnel; 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; our ability to secure, maintain or enforce patents or
other appropriate protections for our intellectual property; new
laws and governmental regulations; the impact of climate change on
our operations; and cyber liability or potential liability for
breaches of our or our service providers’ information technology
systems or business operations disruptions. The foregoing factors
should not be construed as exhaustive and should be read in
conjunction with the sections entitled “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” included in the Company’s filings made with
the Securities and Exchange Commission. Any forward-looking
statement speaks only as of the date of this press release, and the
Company undertakes no obligation to publicly update or review any
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as required by law. New
risks and uncertainties may emerge from time to time, and it is not
possible for the Company to predict their occurrence or how they
will affect the Company. The Company qualifies all forward-looking
statements by these cautionary statements.
With respect to any non-GAAP financial measures included in the
following document, the accompanying information required by SEC
Regulation G can be found in the back of this document or in the
“Investors” section of the Company’s web site, www.nninc.com, under
the heading “News & Events” and subheading “Presentations.”
Investor & Media Contacts: Joe Caminiti or
Stephen Poe, InvestorsTim Peters or Emma Brandeis,
MediaNNBR@alpha-ir.com312-445-2870
Financial Tables Follow
NN, Inc.Condensed Consolidated Statements
of Operations and Comprehensive Income (Loss)
(Unaudited) |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in thousands, except per share data) |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net sales |
$ |
122,992 |
|
|
$ |
125,206 |
|
|
$ |
244,190 |
|
|
$ |
252,294 |
|
Cost of sales (exclusive of
depreciation and amortization shown separately below) |
|
101,257 |
|
|
|
107,684 |
|
|
|
202,343 |
|
|
|
216,105 |
|
Selling, general, and
administrative expense |
|
13,511 |
|
|
|
10,975 |
|
|
|
26,859 |
|
|
|
24,140 |
|
Depreciation and
amortization |
|
11,761 |
|
|
|
11,550 |
|
|
|
24,308 |
|
|
|
23,066 |
|
Other operating expense
(income), net |
|
(1,390 |
) |
|
|
(956 |
) |
|
|
(2,390 |
) |
|
|
105 |
|
Loss from
operations |
|
(2,147 |
) |
|
|
(4,047 |
) |
|
|
(6,930 |
) |
|
|
(11,122 |
) |
Interest expense |
|
5,873 |
|
|
|
5,457 |
|
|
|
11,239 |
|
|
|
9,745 |
|
Other expense (income),
net |
|
(3,461 |
) |
|
|
5,641 |
|
|
|
692 |
|
|
|
3,433 |
|
Loss before benefit
(provision) for income taxes and share of net income from joint
venture |
|
(4,559 |
) |
|
|
(15,145 |
) |
|
|
(18,861 |
) |
|
|
(24,300 |
) |
Benefit (provision) for income
taxes |
|
215 |
|
|
|
(325 |
) |
|
|
(291 |
) |
|
|
(1,626 |
) |
Share of net income from joint
venture |
|
2,141 |
|
|
|
1,093 |
|
|
|
4,412 |
|
|
|
1,374 |
|
Net loss |
$ |
(2,203 |
) |
|
$ |
(14,377 |
) |
|
$ |
(14,740 |
) |
|
$ |
(24,552 |
) |
Other
comprehensive loss: |
|
|
|
|
|
|
|
Foreign currency transaction loss |
|
(3,387 |
) |
|
|
(2,374 |
) |
|
|
(5,733 |
) |
|
|
(534 |
) |
Interest rate swap: |
|
|
|
|
|
|
|
Change in fair value, net of tax |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(230 |
) |
Reclassification adjustments included in net loss, net of tax |
|
(449 |
) |
|
|
(449 |
) |
|
|
(898 |
) |
|
|
(917 |
) |
Other
comprehensive loss |
$ |
(3,836 |
) |
|
$ |
(2,823 |
) |
|
$ |
(6,631 |
) |
|
$ |
(1,681 |
) |
Comprehensive loss |
$ |
(6,039 |
) |
|
$ |
(17,200 |
) |
|
$ |
(21,371 |
) |
|
$ |
(26,233 |
) |
|
|
|
|
|
|
|
|
Basic and diluted net loss per
share |
$ |
(0.12 |
) |
|
$ |
(0.38 |
) |
|
$ |
(0.46 |
) |
|
$ |
(0.67 |
) |
Shares
used to calculate basic and diluted net loss per share |
|
48,839 |
|
|
|
46,357 |
|
|
|
48,281 |
|
|
|
45,836 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NN, Inc.Condensed Consolidated Balance
Sheets(Unaudited) |
|
(in thousands, except
per share data) |
June 30,2024 |
|
December 31,2023 |
Assets |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
13,746 |
|
|
$ |
21,903 |
|
Accounts receivable, net |
|
68,832 |
|
|
|
65,545 |
|
Inventories |
|
68,291 |
|
|
|
71,563 |
|
Income tax receivable |
|
13,045 |
|
|
|
11,885 |
|
Prepaid assets |
|
4,545 |
|
|
|
2,464 |
|
Other current assets |
|
16,883 |
|
|
|
9,194 |
|
Total
current assets |
|
185,342 |
|
|
|
182,554 |
|
Property, plant and equipment, net |
|
171,591 |
|
|
|
185,812 |
|
Operating lease right-of-use assets |
|
41,593 |
|
|
|
43,357 |
|
Intangible assets, net |
|
51,221 |
|
|
|
58,724 |
|
Investment in joint venture |
|
36,330 |
|
|
|
32,701 |
|
Deferred tax assets |
|
771 |
|
|
|
734 |
|
Other non-current assets |
|
10,386 |
|
|
|
7,003 |
|
Total
assets |
$ |
497,234 |
|
|
$ |
510,885 |
|
Liabilities, Preferred Stock, and Stockholders’
Equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
45,470 |
|
|
$ |
45,480 |
|
Accrued salaries, wages and benefits |
|
14,848 |
|
|
|
15,464 |
|
Income tax payable |
|
380 |
|
|
|
524 |
|
Short-term debt and current maturities of long-term debt |
|
8,041 |
|
|
|
3,910 |
|
Current portion of operating lease liabilities |
|
5,417 |
|
|
|
5,735 |
|
Other current liabilities |
|
16,739 |
|
|
|
10,506 |
|
Total
current liabilities |
|
90,895 |
|
|
|
81,619 |
|
Deferred
tax liabilities |
|
4,605 |
|
|
|
4,988 |
|
Long-term debt, net of current maturities |
|
150,694 |
|
|
|
149,369 |
|
Operating lease liabilities,
net of current portion |
|
45,078 |
|
|
|
47,281 |
|
Other non-current
liabilities |
|
12,214 |
|
|
|
24,827 |
|
Total
liabilities |
|
303,486 |
|
|
|
308,084 |
|
Commitments and contingencies |
|
|
|
Series D perpetual preferred
stock |
|
85,312 |
|
|
|
77,799 |
|
Stockholders' equity: |
|
|
|
Common stock |
|
500 |
|
|
|
473 |
|
Additional paid-in capital |
|
462,410 |
|
|
|
457,632 |
|
Accumulated deficit |
|
(310,088 |
) |
|
|
(295,348 |
) |
Accumulated other comprehensive loss |
|
(44,386 |
) |
|
|
(37,755 |
) |
Total
stockholders’ equity |
|
108,436 |
|
|
|
125,002 |
|
Total
liabilities, preferred stock, and stockholders’ equity |
$ |
497,234 |
|
|
$ |
510,885 |
|
|
|
|
|
|
|
|
|
NN, Inc.Condensed Consolidated Statements
of Cash Flows (Unaudited) |
|
|
Six Months Ended June 30, |
(in thousands) |
|
2024 |
|
|
|
2023 |
|
Cash flows from operating activities |
|
|
|
Net
loss |
$ |
(14,740 |
) |
|
$ |
(24,552 |
) |
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities: |
|
|
|
Depreciation and amortization |
|
24,308 |
|
|
|
23,066 |
|
Amortization of debt issuance costs and discount |
|
1,106 |
|
|
|
880 |
|
Paid-in-kind interest |
|
1,436 |
|
|
|
744 |
|
Total derivative loss (gain), net of cash settlements |
|
(1,068 |
) |
|
|
5,691 |
|
Share of net income from joint venture |
|
(4,412 |
) |
|
|
(1,374 |
) |
Share-based compensation expense |
|
1,536 |
|
|
|
851 |
|
Deferred income taxes |
|
(479 |
) |
|
|
110 |
|
Other |
|
(758 |
) |
|
|
(721 |
) |
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
(8,747 |
) |
|
|
(5,078 |
) |
Inventories |
|
(1,185 |
) |
|
|
3,920 |
|
Other operating assets |
|
(2,705 |
) |
|
|
(6,615 |
) |
Income taxes receivable and payable, net |
|
(1,326 |
) |
|
|
(730 |
) |
Accounts payable |
|
1,726 |
|
|
|
6,927 |
|
Other operating liabilities |
|
4,739 |
|
|
|
5,524 |
|
Net cash
provided by (used in) operating activities |
|
(569 |
) |
|
|
8,643 |
|
Cash flows from investing activities |
|
|
|
Acquisition of property, plant and equipment |
|
(9,052 |
) |
|
|
(12,196 |
) |
Proceeds
from sale of property, plant, and equipment |
|
237 |
|
|
|
2,777 |
|
Net cash
used in investing activities |
|
(8,815 |
) |
|
|
(9,419 |
) |
Cash flows from financing activities |
|
|
|
Proceeds
from long-term debt |
|
25,000 |
|
|
|
35,000 |
|
Repayments of long-term debt |
|
(46,061 |
) |
|
|
(34,725 |
) |
Cash
paid for debt issuance costs |
|
(646 |
) |
|
|
(55 |
) |
Proceeds
from sale-leaseback of equipment |
|
8,324 |
|
|
|
— |
|
Proceeds
from sale-leaseback of land and buildings |
|
16,863 |
|
|
|
— |
|
Repayments of financing obligations |
|
(211 |
) |
|
|
— |
|
Proceeds
from short-term debt |
|
— |
|
|
|
3,648 |
|
Other |
|
(1,700 |
) |
|
|
(1,610 |
) |
Net cash
provided by financing activities |
|
1,569 |
|
|
|
2,258 |
|
Effect
of exchange rate changes on cash flows |
|
(342 |
) |
|
|
47 |
|
Net
change in cash and cash equivalents |
|
(8,157 |
) |
|
|
1,529 |
|
Cash and
cash equivalents at beginning of year |
|
21,903 |
|
|
|
12,808 |
|
Cash and
cash equivalents at end of quarter |
$ |
13,746 |
|
|
$ |
14,337 |
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Income (Loss) from Operations to
Non-GAAP Adjusted Income (Loss) from Operations |
|
(in
thousands) |
Three Months Ended June 30, |
NN, Inc. Consolidated |
|
2024 |
|
|
|
2023 |
|
GAAP loss from operations |
$ |
(2,147 |
) |
|
$ |
(4,047 |
) |
Professional fees |
|
(12 |
) |
|
|
119 |
|
Personnel costs (1) |
|
826 |
|
|
|
622 |
|
Facility costs (2) |
|
(51 |
) |
|
|
1,022 |
|
Amortization of
intangibles |
|
3,456 |
|
|
|
3,563 |
|
Non-GAAP adjusted income from
operations (a) |
$ |
2,072 |
|
|
$ |
1,279 |
|
|
|
|
|
Non-GAAP adjusted operating
margin (3) |
|
1.7 |
% |
|
|
1.0 |
% |
GAAP net sales |
$ |
122,992 |
|
|
$ |
125,206 |
|
|
|
|
|
|
|
|
|
(in
thousands) |
Three Months Ended June 30, |
Power Solutions |
|
2024 |
|
|
|
2023 |
|
GAAP income from operations |
$ |
5,320 |
|
|
$ |
2,583 |
|
Personnel costs (1) |
|
33 |
|
|
|
— |
|
Facility costs (2) |
|
79 |
|
|
|
244 |
|
Amortization of
intangibles |
|
2,617 |
|
|
|
2,724 |
|
Non-GAAP adjusted income from
operations (a) |
$ |
8,049 |
|
|
$ |
5,551 |
|
|
|
|
|
Non-GAAP adjusted operating
margin (3) |
|
16.0 |
% |
|
|
11.5 |
% |
GAAP net sales |
$ |
50,151 |
|
|
$ |
48,062 |
|
|
|
|
|
|
|
|
|
(in
thousands) |
Three Months Ended June 30, |
Mobile Solutions |
|
2024 |
|
|
|
2023 |
|
GAAP loss from operations |
$ |
(1,630 |
) |
|
$ |
(1,461 |
) |
Personnel costs (1) |
|
265 |
|
|
|
40 |
|
Facility costs (2) |
|
(130 |
) |
|
|
778 |
|
Amortization of
intangibles |
|
839 |
|
|
|
838 |
|
Non-GAAP adjusted income
(loss) from operations (a) |
$ |
(656 |
) |
|
$ |
195 |
|
|
|
|
|
Share of net income from joint
venture |
|
2,141 |
|
|
|
1,093 |
|
Non-GAAP adjusted income from
operations with JV (a) |
$ |
1,485 |
|
|
$ |
1,288 |
|
|
|
|
|
Non-GAAP adjusted operating
margin (3) |
|
2.0 |
% |
|
|
1.7 |
% |
GAAP net sales |
$ |
72,855 |
|
|
$ |
77,153 |
|
|
|
|
|
|
|
|
|
(in
thousands) |
Three Months Ended June 30, |
Elimination |
|
2023 |
|
|
|
2022 |
|
GAAP net sales |
$ |
(14 |
) |
|
$ |
(9 |
) |
|
|
|
|
|
|
|
|
(1) Personnel costs include recruitment, retention, relocation,
and severance costs(2) Facility costs include costs of opening /
closing facilities and relocation / exit of manufacturing
operations(3) Non-GAAP adjusted operating margin = Non-GAAP
adjusted income (loss) from operations / GAAP net sales
Reconciliation of GAAP Net Income (Loss)
to Non-GAAP Adjusted EBITDA
|
Three Months Ended June 30, |
(in thousands) |
|
2024 |
|
|
|
2023 |
|
GAAP net loss |
$ |
(2,203 |
) |
|
$ |
(14,377 |
) |
|
|
|
|
Benefit (provision) for income
taxes |
|
(215 |
) |
|
|
325 |
|
Interest expense |
|
5,873 |
|
|
|
5,457 |
|
Change in fair value of
preferred stock derivatives and warrants |
|
(3,949 |
) |
|
|
5,754 |
|
Depreciation and
amortization |
|
11,761 |
|
|
|
11,550 |
|
Professional fees |
|
(12 |
) |
|
|
119 |
|
Personnel costs (1) |
|
826 |
|
|
|
622 |
|
Facility costs (2) |
|
(51 |
) |
|
|
1,022 |
|
Non-cash stock
compensation |
|
691 |
|
|
|
471 |
|
Non-cash foreign exchange
(gain) loss on inter-company loans |
|
684 |
|
|
|
(445 |
) |
Non-GAAP adjusted EBITDA
(b) |
$ |
13,405 |
|
|
$ |
10,498 |
|
|
|
|
|
Non-GAAP adjusted EBITDA
margin (3) |
|
10.9 |
% |
|
|
8.4 |
% |
GAAP net sales |
$ |
122,992 |
|
|
$ |
125,206 |
|
|
|
|
|
|
|
|
|
(1) Personnel costs include recruitment, retention, relocation,
and severance costs(2) Facility costs include costs of opening /
closing facilities and relocation / exit of manufacturing
operations(3) Non-GAAP adjusted EBITDA margin = Non-GAAP adjusted
EBITDA / GAAP net sales
Reconciliation of GAAP Net Income (Loss) to Non-GAAP
Adjusted Net Income and GAAP Net Income (Loss) per Diluted Common
Share to Non-GAAP Adjusted Net Income (Loss) per Diluted Common
Share |
|
|
Three Months Ended June 30, |
(in thousands) |
|
2024 |
|
|
|
2023 |
|
GAAP net loss |
$ |
(2,203 |
) |
|
$ |
(14,377 |
) |
|
|
|
|
Pre-tax professional fees |
|
(12 |
) |
|
|
119 |
|
Pre-tax personnel costs |
|
826 |
|
|
|
622 |
|
Pre-tax facility costs |
|
(51 |
) |
|
|
1,022 |
|
Non-cash foreign exchange
(gain) loss on inter-company loans |
|
684 |
|
|
|
(445 |
) |
Pre-tax change in fair value
of preferred stock derivatives and warrants |
|
(3,949 |
) |
|
|
5,754 |
|
Pre-tax amortization of
intangibles and deferred financing costs |
|
4,018 |
|
|
|
4,090 |
|
Tax effect of adjustments
reflected above (c) |
|
(63 |
) |
|
|
(64 |
) |
Non-GAAP adjusted net income
(loss) (d) |
$ |
(750 |
) |
|
$ |
(3,279 |
) |
|
|
|
|
|
Three Months Ended June 30, |
(per diluted common
share) |
|
2024 |
|
|
|
2023 |
|
GAAP net loss per diluted
common share |
$ |
(0.12 |
) |
|
$ |
(0.38 |
) |
|
|
|
|
Pre-tax personnel costs |
|
0.02 |
|
|
|
0.01 |
|
Pre-tax facility costs |
|
— |
|
|
|
0.02 |
|
Pre-tax foreign exchange
(gain) loss on inter-company loans |
|
0.01 |
|
|
|
(0.01 |
) |
Pre-tax change in fair value
of preferred stock derivatives and warrants |
|
(0.08 |
) |
|
|
0.12 |
|
Pre-tax amortization of
intangibles and deferred financing costs |
|
0.08 |
|
|
|
0.09 |
|
Preferred stock cumulative
dividends and deemed dividends |
|
0.08 |
|
|
|
0.07 |
|
Non-GAAP adjusted net income
(loss) per diluted common share (d) |
$ |
(0.02 |
) |
|
$ |
(0.08 |
) |
Shares used to calculate net
earnings (loss) per share |
|
48,839 |
|
|
|
46,357 |
|
|
|
|
|
|
|
|
|
Reconciliation of Operating Cash Flow to Free Cash
Flow |
|
Three Months Ended June 30, |
(in thousands) |
|
2024 |
|
|
|
2023 |
|
Net cash provided by (used in)
operating activities |
$ |
(1,281 |
) |
|
$ |
8,417 |
|
Acquisition of property,
plant, and equipment |
|
(3,592 |
) |
|
|
(7,199 |
) |
Proceeds from sale of
property, plant, and equipment |
|
139 |
|
|
|
1,742 |
|
Proceeds from sale-leaseback
of equipment |
|
3,415 |
|
|
|
— |
|
Free cash flow |
$ |
(1,319 |
) |
|
$ |
2,960 |
|
|
|
|
|
|
|
|
|
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. The costs we incur in
completing acquisitions, including the amortization of intangibles
and deferred financing costs, and divestitures are excluded from
these measures because their size and inconsistent frequency are
unrelated to our commercial performance during the period, and 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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