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 NN, Inc. Reports Fourth Quarter 2015 Results In Line With Company Guidance
   Thursday, March 10, 2016 1:30:00 AM ET

-- Net sales of $183.9 million, an increase of $30.1 million

-- Adjusted income from operations grew to $19.4 million

-- Adjusted net income of $6.8 million or $0.25 per diluted share

NN, Inc., (NNBR ), a diversified industrial company, today reported its financial results for the fourth quarter and year ended December 31, 2015.

Fourth Quarter 2015 Results

Net sales for the fourth quarter of 2015 increased $30.1 million, or 20% to $183.9 million, compared to $153.8 million for the fourth quarter of 2014. Acquisitions added $42.2 million in revenue. Negative currency impacts reduced reported net sales by $11.7 million versus the fourth quarter of last year.

Adjusted income from operations for the fourth quarter of 2015 was $19.4 million, an increase of 63%, compared to $11.9 million for the same period in 2014. Adjusted net income was $6.8 million, or $0.25 per diluted share, compared to $6.7 million, or $0.35 per diluted share for the same period in 2014.

Richard Holder, President and Chief Executive Officer, commented, "Our performance for the quarter was in line with our guidance and expectations. Our operations continued to make improvements under the NN Operating System as we began in earnest to transform how we go to market."

2015 Results

Net sales for the fiscal year 2015 increased $178.7 million, or 37%, to $667.3 million, compared to $488.6 million for the year ended December 31, 2014. Acquisitions added $212.5 million in revenue. Negative currency impacts reduced reported net sales by $39.1 million versus the prior year.

Adjusted income from operations for the year ended December 31, 2015 was $65.7 million, an increase of 59%, compared to $41.2 million for fiscal year 2014. Adjusted net income increased to $32.4 million, or $1.53 per diluted share, compared to $25.0 million, or $1.37 per diluted share for the same period in 2014.

Mr. Holder commented, "2015 saw the Company diversify its market segment exposure as we continue to deliver on our commitments to improve our operating performance through the implementation of the NN Operating System. We are looking forward to 2016 when we will continue to execute on our strategic plan"

Business Group Results

Autocam Precision Components

Net sales for the fourth quarter of 2015 were $75.9 million, compared to $81.6 million in the fourth quarter of 2014, a decrease of $5.7 million. Negative currency and economic conditions, primarily in South America accounted for the decline. Adjusted income from operations for the quarter increased $0.6 million to $8.7 million, compared to $8.1 million in the fourth quarter of 2014.

Holder commented, "Despite persistent challenges related to currency and macro-economic headwinds in South America, using the NN Operating System our APC business and their focus on CAFE Technologies continues to perform well."

Precision Bearing Components

Net sales for the group decreased $5.7 million to $58.8 million during the fourth quarter of 2015, compared to $64.5 million for fourth quarter 2014. Negative currency impacts of $7.1 million accounted for the decline. Adjusted income from operations for the fourth quarter was $3.3 million, compared to $7.0 million in the fourth quarter of 2014.

Holder commented, "Beginning with the fourth quarter we have rebranded our bearing components group as the Precision Bearing Components group. This important change aligns with our core belief that everything we do requires precision and provides for the group’s continued increase in production in materials other than metal." Holder continued, "The continued effects of negative currency translation as well as the organizational realignments made during the year weighed on our PBC business during the quarter. Beginning in the first quarter of 2016, we expect these pressures to subside."

Precision Engineered Products

Holder continued, "As we discussed on the third quarter conference call and beginning with the fourth quarter our precision plastics portfolio has been absorbed into the PEP group."

Net sales for the fourth quarter increased $41.4 million to $49.1 million, compared to $7.7 million for the same period in 2014. Acquisitions accounted for $42.2 million of the increase. Adjusted income from operations for the quarter was $10.1 million, compared to $0.4 million in 2014.

Holder continued, "The acquisition of PEP was an important step in our strategic plan to expand our market segments, balance our cyclicality and enhance our value on an ongoing basis."

Guidance

Holder continued, "We continue to be optimistic about the opportunities in many of our market segments for 2016 and reaffirm our guidance for the year."

The full set of financial guidance for the first quarter and full year 2016 can be found in our supplemental presentation posted in the Investor Relations section of our website at www.nninc.com.

Holder concluded, "The fourth quarter was a transformational time in NN’s history. With the completion of the PEP acquisition we now have the market segments and diversification laid out in our strategic plan to compete across the economic cycle. Using the NN Operating System, 2016 will be a year when we focus on deleveraging and unlocking the growth potential within all our market segments."

GAAP Results

On a GAAP basis, income from operations for the fourth quarter of 2015 was negative $8.9 million, compared to $8.6 million for the same period in 2014. Net income on a GAAP basis for fourth quarter of 2015 resulted in a net loss of $27.1 million, or $(1.01) per diluted share. This compares to net income of $1.6 million, or $0.08 per diluted share in the fourth quarter of 2014. The loss in fourth quarter 2015 was driven by acquisition, financing and restructuring costs, which totaled $30.1 million, net of tax.

On a GAAP basis, income from operations for the year ending December 31, 2015 was $28.7 million, compared to $27.7 million for the same period in 2014. Net income on a GAAP basis for fiscal year 2015 resulted in a net loss $9.6 million, or $(0.45) per diluted share. This compares to net income of $8.2 million, or $0.45 per diluted share in fiscal year 2014. The loss for fiscal year 2015 was driven primarily by acquisition, financing and restructuring costs, which totaled $33.9 million, net of tax.

On a GAAP basis, income from operations for fourth quarter 2015 in the Autocam Precision Components Group was $4.0 million compared to $7.1 million for the same period in 2014.

On a GAAP basis, income from operations for fourth quarter 2015 in the Precision Bearing Components Group was $1.2 million compared to $6.8 million for the same period in 2014.

On a GAAP basis, income from operations for fourth quarter 2015 in the Precision Engineer Products Group was negative $5.0 million compared to $0.4 million for the same period in 2014.

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 800-505-9568 or 416-204-9271 Conference ID: 7636495. For those who are unavailable to listen to the live broadcast, a replay will be available shortly after the call for 90 days.

The Company discloses in this press release the non-GAAP financial measures of adjusted income from operations and adjusted net income. Each of adjusted income from operations and adjusted net income provide supplementary information about the impacts of acquisition related expenses, foreign-exchange and other non-operating impacts on our business.

The attached financial tables include a reconciliation of adjusted income from operations and adjusted net income to the U.S. GAAP financial measures of income from operations and net income.

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 42 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 completed acquisitions 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.

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, 2014 and the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015. 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.
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
                                                                            Three Months Ended     Twelve Months Ended
                                                                            December 31,           December 31,
(In Thousands of Dollars, Except Per Share Data)                            2015       2014        2015       2014
Net sales                                                                   $183,855   $153,761    $667,280   $488,601
Cost of products sold (exclusive of depreciation                            147,773    119,879     525,993    384,889
and amortization shown separately below)
Selling, general and administrative                                         14,771     13,957      51,902     43,756
Acquisition related costs excluded from selling, general and administrative 6,256      2,168       10,884     9,248
Depreciation and amortization                                               18,780     8,322       44,482     22,146
Restructuring and impairment charges                                        5,195      875         5,294      875
Income from operations                                                      (8,920)    8,560       28,725     27,687
Interest expense                                                            13,357     5,556       29,899     10,895
Write-off of unamortized debt issuance cost                                 18,673     -           18,673     1,398
Other expense, net                                                          1,091      453         3,103      2,222
Income before provision (benefit) for income                                (42,041)   2,551       (22,950)   13,172
taxes and share of net income from joint venture
Provision (benefit) for income taxes                                        (13,923)   1,539       (9,914)    5,786
Share of net income from joint venture                                      951        606         3,454      831
Net income (loss)                                                           $(27,167)  $1,618      $(9,582)   $8,217
Basic income (loss) per common share:                                       $(1.01)    $0.08       $(0.45)    $     0.46
Weighted average shares outstanding                                         26,840     19,317      21,181     17,887
Diluted income (loss) per common share:                                     $(1.01)    $0.08       $(0.45)    $0.45
Weighted average shares outstanding                                         26,840     19,317      21,181     18,253
Cash dividends per common share                                             $     0.07 $      0.07 $     0.28 $      0.28
NN, Inc.
Condensed Balance Sheets
(In thousands)
(Unaudited)
                                                        December 31, December 31,
(In Thousands of Dollars)                               2015         2014
Assets
Current assets:
Cash                                                    $15,087      $37,317
Accounts receivable, net                                123,005      97,510
Inventories                                             119,783      91,469
Other current assets                                    22,698       16,503
Total current assets                                    280,573      242,799
Property, plant and equipment, net                      318,968      278,442
Goodwill, net                                           453,882      83,941
Intangible asset, net                                   282,169      52,827
Investment in joint venture                             38,459       34,703
Other non-current assets                                24,748       20,001
Total assets                                            $1,398,799   $712,713
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable                                        $69,101      $71,094
Accrued salaries, wages and benefits                    21,125       21,148
Income taxes payable                                    8,650        3,274
Current maturities of long-term debt                    11,714       22,160
Current portion of obligations under capital lease      4,786        5,418
Other current liabilities                               21,275       14,504
Total current liabilities                               136,651      137,598
Non-current deferred tax liabilities                    121,585      49,461
Long-term debt, net of current portion                  808,359      328,026
Accrued post-employment benefits                        6,157        6,972
Obligations under capital lease, net of current portion 9,573        14,539
Other non-current liabilities                           4,742        2,418
Total liabilities                                       1,087,067    539,014
Total stockholders’ equity                              311,732      173,699
Total liabilities and stockholders’ equity              $1,398,799   $712,713
NN, Inc.
Reconciliation of Non-GAAP to GAAP Financial Measures
(Unaudited)
Reconciliation of net income to adjusted net income:
NN, Inc. - Total Company                               Three Months Ended                              Three Months Ended
                                                       December 31, 2015                               December 31, 2014
                                                       (In Thousands)              Diluted             (In Thousands)       Diluted
                                                                                   Earnings                                 Earnings
                                                                                   Per Share                                Per Share
Net Income                                             $(27,167)                   $(1.01)             $1,618               $0.08
After tax acquisition and integration expenses         25,561                      0.95                3,199                0.17
After-tax foreign exchange loss on inter-company loans 31                          -                   317                  0.02
After-tax impairment charges                           4,565                       0.17                577                  0.03
Amortization of intangibles & deferred financing costs 3,796                       0.14                969                  0.05
Adjusted Net Income                                    $6,786                      $0.25               $6,680               $0.35
Reconciliation of net income to adjusted net income:
NN, Inc. - Total Company                               Twelve Months Ended                             Twelve Months Ended
                                                       December 31, 2015                               December 31, 2014
                                                       (In Thousands)              Diluted             (In Thousands)       Diluted
                                                                                   Earnings                                 Earnings
                                                                                   Per Share                                Per Share
Net Income                                             $(9,582)                    $(0.45)             $8,217               $0.45
After tax acquisition and integration expenses         29,373                      1.39                13,553               0.74
After-tax foreign exchange loss on inter-company loans 952                         0.04                1,197                0.07
After-tax impairment charges                           4,575                       0.22                577                  0.03
Amortization of intangibles & deferred financing costs 7,040                       0.33                1,435                0.08
Adjusted Net Income                                    $32,358                     $1.53               $24,979              $1.37
Reconciliation of income from operations to adjusted income from
operations:
NN, Inc. - Total Company                               Three Months Ended          Three Months Ended  Twelve Months Ended  Twelve Months Ended
                                                       December 31, 2015           December 31, 2014   December 31, 2015    December 31, 2014
                                                       (In Thousands)              (In Thousands)      (In Thousands)       (In Thousands)
Income from operations                                 $(8,921)                    $8,560              $28,725              $27,687
Restructuring & impairment charges                     5,451                       875                 5,451                875
Acquisition and integration expenses                   17,931                      1,452               23,749               11,311
Amortization of intangibles                            4,940                       971                 7,790                1,340
Adjusted Income from operations                        $19,401                     $11,858             $65,715              $41,213
Reconciliation of income from operations to adjusted income from
operations:
NN, Inc. - Autocam Precision Components Group Three Months Ended  Three Months Ended
                                              December 31, 2015   December 31, 2014
                                              (In Thousands)      (In Thousands)
Income from operations                        $3,993              $7,171
Restructuring & impairment charges            2,634               -
Acquisition and integration expenses          1,185               -
Amortization of intangibles                   889                 904
Adjusted Income from operations               $8,701              $8,075
Reconciliation of income from operations to adjusted income from
operations:
NN, Inc. -Precision Bearing Components Group  Three Months Ended  Three Months Ended
                                              December 31, 2015   December 31, 2014
                                              (In Thousands)      (In Thousands)
Income from operations                        $1,186              $6,749
Restructuring & impairment charges            2,019               145
Amortization of intangibles                   52                  67
Adjusted Income from operations               $3,257              $6,961
Reconciliation of income from operations to adjusted income from
operations:
NN, Inc. -Precision Engineered                Three Months Ended  Three Months Ended
Products Group                                December 31, 2015   December 31, 2014
                                              (In Thousands)      (In Thousands)
Income from operations                        $(5,027)            $404
Acquisition and integration expenses          11,150              -
Amortization of intangibles                   3,999               -
Adjusted Income from operations               $10,122             $404

The Company discloses in this press release the non-GAAP financial measures of adjusted income from operations and adjusted net income. Each of adjusted income from operations and adjusted net income provide supplementary information about the impacts of acquisition related expenses and foreign-exchange impacts on intercompany loans. We believe the presentation of adjusted income from operations and adjusted net income provides useful information in assessing our results of operations and potential future results. These measures should not be considered as an alternative to their comparable GAAP measures, nor should they be considered in isolation, or as a substitute for analysis of our results reported under GAAP.

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/nn-inc-reports-fourth-quarter-2015-results-in-line-with-company-guidance-300233937.html

SOURCE NN, Inc.

http://rt.prnewswire.com/rt.gif?NewsItemId=NY43810&Transmission_Id=201603100130PR_NEWS_USPR_____NY43810&DateId=20160310



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