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 first
quarter ended March 31, 2024.
Highlights
- Strategic transformation program drove another quarter of
improved results, 3rd quarter in a row;
- First quarter net sales of $121.2 million, down 4.6% versus
prior year, driven largely by rationalized volume;
- First quarter operating loss of $4.8 million, an improvement of
$2.3 million versus prior year;
- First quarter adjusted EBITDA of $11.3 million, an improvement
of 38.9% versus prior year;
- First quarter free cash flow of $0.3 million, an improvement of
$4.0 million versus prior year; and
- Secured new business awards of $17.2 million in the first
quarter, $80 million in our last 5 quarters.
“In the first quarter, we continued to execute
our strategic transformation, which yielded continued improvement
in base business profitability and additive new business wins,”
said Harold Bevis, President and Chief Executive Officer. “Our
trailing-twelve-month adjusted EBITDA of $46 million improved for
the fourth consecutive quarter. We are increasing profits on
business in house, and we have cumulatively won $80 million of new
business over the last 5 quarters. This combination of results is
giving us new options to optimize our performance even further. We
have begun work on a laddered improvement program reaching into
2025 to continue our sequential improvement. We are balancing
between cost-out and growth initiatives, and using our free cash
flow to fund our business plan activities. Our cash flow generation
has been historically tight due to our current capital structure,
but we are improving our credit profile through this same hard work
and opening opportunities to improve our capital structure and
lower our cost of capital as well.”
Mr. Bevis continued, “We are further refining
our targeted growth agendas and reallocating our resources in
targeted areas. Our commercial performance year-to-date is on pace
with our 2024 targets for new business growth at 3x market rates,
and our cost improvement agenda is on track. We are pleased with
our overall performance but still have many areas to improve
further. Our results over the last year are encouraging us to set
our goals high.”
Mr. Bevis concluded, “Our worldwide markets are
mostly healthy, particularly in front of our most competitive
Mobile plants in China and Brazil and in front of Power plants in
the U.S. Steady investment into electric grid, electrification, and
climate-friendly vehicle power trains is ongoing and good for us.
The soft spots in our end-market demand are the U.S. commercial
vehicle market and the U.S. residential construction markets, both
small markets for us. So overall today, we have a good demand
outlook across our market profile. We are comfortable with our 2024
guidance on sales, adjusted EBITDA, free cash flow generation, and
new business wins. I want to thank all of our employees globally
who deliver beyond-reliable products every day, on-time to some of
the world’s most discriminating customers. Together with our
customers, we are developing and producing products that improve
quality of life and climate conditions for all of us.”
First Quarter GAAP Results
Net sales were $121.2 million, a decrease of
4.6% from the first quarter of 2023, which was primarily due to
non-recurring end-of-life pricing received in the first quarter of
2023, rationalized volume at plants undergoing turnarounds, and
increased organic volume at healthy plants.
Loss from operations was $4.8 million compared
to a loss from operations of $7.1 million in the first quarter of
2023. The decrease in loss from operations was primarily due to
items related to its 2023 facility closures - (1) sublease income
on closed facilities, and (2) one-time losses during the first
quarter of 2023 on sales of machinery and equipment associated with
these closures.
For the reporting segments, income from
operations for Power Solutions was $4.0 million compared to income
from operations of $1.7 million for the same period in 2023. Loss
from operations for Mobile Solutions was $2.1 million compared to
loss from operations of $3.3 million for the same period in
2023.
Net loss was $12.5 million compared to net loss
of $10.2 million for the same period in 2023. The increase in net
loss was primarily due to warrant valuation based on our stock
price and higher interest expense, partially offset by cost
reductions and higher joint venture income.
First Quarter Adjusted
Results
Adjusted loss from operations for the first
quarter of 2024 was $0.7 million compared to adjusted loss from
operations of $0.4 million for the same period in 2023. Adjusted
EBITDA was $11.3 million, or 9.3% of sales, compared to $8.1
million, or 6.4% of sales, for the same period in 2023. Adjusted
net loss was $4.0 million, or $0.08 per diluted share, compared to
adjusted net loss of $5.7 million, or $0.12 per diluted share, for
the same period in 2023. The improvement in profitability was
driven primarily by cost-out actions, partially offset by
end-of-life pricing in the prior year period.
Free cash flow was a generation of cash of $0.3
million compared to a use of cash of $3.7 million for the same
period in 2023.
Power Solutions Net sales for
the first quarter of 2024 were $48.2 million compared to $49.1
million in the first quarter of 2023, a decrease of 1.7%, or $0.9
million. The decrease in sales was primarily due to the
non-recurrence of end-of-life pricing received during the first
quarter of 2023 associated with the Irvine plant closure, partially
offset by higher volume. Adjusted income from operations was $6.8
million compared to adjusted income from operations of $5.5 million
in the first quarter of 2023. The increase in adjusted income from
operations was primarily due to favorable product mix and improved
operating performance, partially offset by the non-recurrence of
end-of-life pricing in the first quarter of 2023 associated with
the Irvine plant closure.
Mobile Solutions
Net sales for the first quarter of 2024 were
$73.1 million compared to $78.0 million in the first quarter of
2023, a decrease of 6.4%, or $4.9 million. The decrease in sales
was primarily due to rationalized volume at underperforming plants
and the pass-through effect of lower raw material costs. Adjusted
loss from operations was $1.2 million compared to adjusted loss
from operations of $0.8 million in the first quarter of 2023. The
increase in adjusted loss from operations was due to lower volume,
partially offset by cost reductions and operational
improvements.
2024 Outlook
Assuming steady end-market demand outlook, with
the exception of the North American residential construction market
and North American commercial vehicle market, we are confirming and
slightly tightening, in part, our outlook for the full year 2024 as
follows:
- Revenue in the range of $485
million to $505 million;
- Adjusted EBITDA in the range of $48
million to $54 million;
- Free cash flow in the range of $10
million to $15 million; and
- New business wins in the range of
$55 million to $70 million.
Michael Felcher, Senior Vice President and Chief
Financial Officer, commented, “Our strong transformation momentum
continued in the first quarter of 2024, and we are both confirming
and slightly tightening our full-year 2024 guidance ranges, which
are underpinned by our operational initiatives and commercial
prospecting. We are focused on generating improved profitability
and strong cash flow this year. We expect our improved performance
will improve our credit profile and enable opportunities to improve
our balance sheet and cost of capital further.”
Conference Call
NN will discuss its results during its quarterly
investor conference call on May 7, 2024, at 9 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 May 7, 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; 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,
MediaNNBR@alpha-ir.com312-445-2870
Financial Tables Follow
NN, Inc.Condensed Consolidated Statements
of Operations and Comprehensive Income (Loss)
(Unaudited) |
|
Three Months Ended March 31, |
(in thousands, except per share data) |
|
2024 |
|
|
|
2023 |
|
Net sales |
$ |
121,198 |
|
|
$ |
127,088 |
|
Cost of sales (exclusive of
depreciation and amortization shown separately below) |
|
101,086 |
|
|
|
108,421 |
|
Selling, general, and
administrative expense |
|
13,348 |
|
|
|
13,165 |
|
Depreciation and
amortization |
|
12,547 |
|
|
|
11,516 |
|
Other operating expense
(income), net |
|
(1,000 |
) |
|
|
1,061 |
|
Loss from
operations |
|
(4,783 |
) |
|
|
(7,075 |
) |
Interest expense |
|
5,366 |
|
|
|
4,288 |
|
Other expense (income),
net |
|
4,153 |
|
|
|
(2,208 |
) |
Loss before provision for
income taxes and share of net income from joint venture |
|
(14,302 |
) |
|
|
(9,155 |
) |
Provision for income
taxes |
|
(506 |
) |
|
|
(1,301 |
) |
Share of net income from joint
venture |
|
2,271 |
|
|
|
281 |
|
Net loss |
$ |
(12,537 |
) |
|
$ |
(10,175 |
) |
Other comprehensive income
(loss): |
|
|
|
Foreign currency transaction gain (loss) |
|
(2,346 |
) |
|
|
1,840 |
|
Interest rate swap: |
|
|
|
Change in fair value, net of tax |
|
— |
|
|
|
(230 |
) |
Reclassification adjustments included in net loss, net of tax |
|
(449 |
) |
|
|
(468 |
) |
Other comprehensive income
(loss) |
$ |
(2,795 |
) |
|
$ |
1,142 |
|
Comprehensive
loss |
$ |
(15,332 |
) |
|
$ |
(9,033 |
) |
|
|
|
|
Basic and diluted net loss per
share |
$ |
(0.34 |
) |
|
$ |
(0.29 |
) |
Shares used to calculate basic
and diluted net loss per share |
|
47,724 |
|
|
|
45,309 |
|
NN, Inc.Condensed Consolidated Balance
Sheets(Unaudited) |
|
(in thousands, except
per share data) |
March 31,2024 |
|
December 31,2023 |
Assets |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
20,610 |
|
|
$ |
21,903 |
|
Accounts receivable, net |
|
71,862 |
|
|
|
65,545 |
|
Inventories |
|
72,718 |
|
|
|
71,563 |
|
Income tax receivable |
|
11,952 |
|
|
|
11,885 |
|
Prepaid assets |
|
5,957 |
|
|
|
2,464 |
|
Other current assets |
|
10,439 |
|
|
|
9,194 |
|
Total
current assets |
|
193,538 |
|
|
|
182,554 |
|
Property, plant and equipment, net |
|
179,647 |
|
|
|
185,812 |
|
Operating lease right-of-use assets |
|
42,141 |
|
|
|
43,357 |
|
Intangible assets, net |
|
55,268 |
|
|
|
58,724 |
|
Investment in joint venture |
|
34,409 |
|
|
|
32,701 |
|
Deferred tax assets |
|
734 |
|
|
|
734 |
|
Other non-current assets |
|
7,087 |
|
|
|
7,003 |
|
Total
assets |
$ |
512,824 |
|
|
$ |
510,885 |
|
Liabilities, Preferred Stock, and Stockholders’
Equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
50,786 |
|
|
$ |
45,480 |
|
Accrued salaries, wages and benefits |
|
16,920 |
|
|
|
15,464 |
|
Income tax payable |
|
431 |
|
|
|
524 |
|
Short-term debt and current maturities of long-term debt |
|
7,014 |
|
|
|
3,910 |
|
Current portion of operating lease liabilities |
|
5,177 |
|
|
|
5,735 |
|
Other current liabilities |
|
14,464 |
|
|
|
10,506 |
|
Total
current liabilities |
|
94,792 |
|
|
|
81,619 |
|
Deferred
tax liabilities |
|
4,739 |
|
|
|
4,988 |
|
Long-term debt, net of current maturities |
|
151,531 |
|
|
|
149,369 |
|
Operating lease liabilities,
net of current portion |
|
45,803 |
|
|
|
47,281 |
|
Other non-current
liabilities |
|
18,349 |
|
|
|
24,827 |
|
Total
liabilities |
|
315,214 |
|
|
|
308,084 |
|
Commitments and contingencies |
|
|
|
Series D perpetual preferred
stock |
|
81,469 |
|
|
|
77,799 |
|
Stockholders' equity: |
|
|
|
Common stock |
|
495 |
|
|
|
473 |
|
Additional paid-in capital |
|
464,081 |
|
|
|
457,632 |
|
Accumulated deficit |
|
(307,885 |
) |
|
|
(295,348 |
) |
Accumulated other comprehensive loss |
|
(40,550 |
) |
|
|
(37,755 |
) |
Total
stockholders’ equity |
|
116,141 |
|
|
|
125,002 |
|
Total
liabilities, preferred stock, and stockholders’ equity |
$ |
512,824 |
|
|
$ |
510,885 |
|
NN, Inc.Condensed Consolidated Statements
of Cash Flows (Unaudited) |
|
|
Three Months Ended March 31, |
(in thousands) |
|
2024 |
|
|
|
2023 |
|
Cash flows from
operating activities |
|
|
|
Net loss |
$ |
(12,537 |
) |
|
$ |
(10,175 |
) |
Adjustments to reconcile net
loss to net cash provided by operating activities: |
|
|
|
Depreciation and amortization |
|
12,547 |
|
|
|
11,516 |
|
Amortization of debt issuance costs and discount |
|
544 |
|
|
|
353 |
|
Paid-in-kind interest |
|
730 |
|
|
|
— |
|
Total derivative loss, net of cash settlements |
|
3,331 |
|
|
|
386 |
|
Share of net income from joint venture, net of cash dividends
received |
|
(2,271 |
) |
|
|
(281 |
) |
Share-based compensation expense |
|
846 |
|
|
|
381 |
|
Deferred income taxes |
|
(260 |
) |
|
|
480 |
|
Other |
|
(666 |
) |
|
|
(287 |
) |
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
(6,888 |
) |
|
|
(5,506 |
) |
Inventories |
|
(1,554 |
) |
|
|
(447 |
) |
Accounts payable |
|
6,130 |
|
|
|
2,813 |
|
Income taxes receivable and payable, net |
|
(163 |
) |
|
|
(283 |
) |
Other |
|
923 |
|
|
|
1,276 |
|
Net cash provided by operating
activities |
|
712 |
|
|
|
226 |
|
Cash flows from
investing activities |
|
|
|
Acquisition of property, plant
and equipment |
|
(5,460 |
) |
|
|
(4,997 |
) |
Proceeds from sale of
property, plant, and equipment |
|
98 |
|
|
|
1,035 |
|
Net cash used in investing
activities |
|
(5,362 |
) |
|
|
(3,962 |
) |
Cash flows from
financing activities |
|
|
|
Proceeds from long-term
debt |
|
13,001 |
|
|
|
17,000 |
|
Repayments of long-term
debt |
|
(29,808 |
) |
|
|
(17,832 |
) |
Cash paid for debt issuance
costs |
|
(646 |
) |
|
|
(55 |
) |
Proceeds from sale-leaseback
of equipment |
|
4,910 |
|
|
|
— |
|
Proceeds from sale-leaseback
of land and buildings |
|
16,863 |
|
|
|
— |
|
Repayments of financing
obligations |
|
(99 |
) |
|
|
— |
|
Proceeds from short-term
debt |
|
— |
|
|
|
2,923 |
|
Other |
|
(651 |
) |
|
|
(785 |
) |
Net cash provided by financing
activities |
|
3,570 |
|
|
|
1,251 |
|
Effect of exchange rate
changes on cash flows |
|
(213 |
) |
|
|
222 |
|
Net change in cash and cash
equivalents |
|
(1,293 |
) |
|
|
(2,263 |
) |
Cash and cash equivalents at
beginning of year |
|
21,903 |
|
|
|
12,808 |
|
Cash and cash equivalents at
end of quarter |
$ |
20,610 |
|
|
$ |
10,545 |
|
Reconciliation of GAAP Income (Loss) from Operations to
Non-GAAP Adjusted Income (Loss) from Operations |
|
Three Months Ended March 31, |
(in
thousands) |
NN, Inc. Consolidated |
|
2024 |
|
|
|
2023 |
|
GAAP loss from operations |
$ |
(4,783 |
) |
|
$ |
(7,075 |
) |
Professional fees |
|
70 |
|
|
|
264 |
|
Personnel costs (1) |
|
300 |
|
|
|
157 |
|
Facility costs (2) |
|
258 |
|
|
|
2,739 |
|
Amortization of
intangibles |
|
3,456 |
|
|
|
3,563 |
|
Non-GAAP adjusted loss from
operations (a) |
$ |
(699 |
) |
|
$ |
(352 |
) |
|
|
|
|
Non-GAAP adjusted operating
margin (3) |
(0.6 |
)% |
|
(0.3 |
)% |
GAAP net sales |
$ |
121,198 |
|
|
$ |
127,088 |
|
|
Three Months Ended March 31, |
(in
thousands) |
Power Solutions |
|
2024 |
|
|
|
2023 |
|
GAAP income from
operations |
$ |
3,979 |
|
|
$ |
1,747 |
|
Personnel costs (1) |
|
35 |
|
|
|
— |
|
Facility costs (2) |
|
211 |
|
|
|
1,033 |
|
Amortization of
intangibles |
|
2,618 |
|
|
|
2,725 |
|
Non-GAAP adjusted income from
operations (a) |
$ |
6,843 |
|
|
$ |
5,505 |
|
|
|
|
|
Non-GAAP adjusted operating
margin (3) |
|
14.2 |
% |
|
|
11.2 |
% |
GAAP net sales |
$ |
48,238 |
|
|
$ |
49,072 |
|
|
Three Months Ended March 31, |
(in
thousands) |
Mobile Solutions |
|
2024 |
|
|
|
2023 |
|
GAAP loss from operations |
$ |
(2,143 |
) |
|
$ |
(3,319 |
) |
Personnel costs (1) |
|
86 |
|
|
|
— |
|
Facility costs (2) |
|
54 |
|
|
|
1,706 |
|
Amortization of
intangibles |
|
838 |
|
|
|
839 |
|
Non-GAAP adjusted loss from
operations (a) |
$ |
(1,165 |
) |
|
$ |
(774 |
) |
|
|
|
|
Share of net income from joint
venture |
|
2,271 |
|
|
|
281 |
|
Non-GAAP adjusted income
(loss) from operations with JV (a) |
$ |
1,106 |
|
|
$ |
(493 |
) |
|
|
|
|
Non-GAAP adjusted operating
margin (3) |
|
1.5 |
% |
|
(0.6 |
)% |
GAAP net sales |
$ |
73,060 |
|
|
$ |
78,018 |
|
|
Three Months Ended March 31, |
(in
thousands) |
Elimination |
|
2023 |
|
|
|
2022 |
|
GAAP net sales |
$ |
(100 |
) |
|
$ |
(2 |
) |
(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 March 31, |
(in thousands) |
|
2024 |
|
|
|
2023 |
|
GAAP net loss |
$ |
(12,537 |
) |
|
$ |
(10,175 |
) |
|
|
|
|
Provision for income
taxes |
|
506 |
|
|
|
1,301 |
|
Interest expense |
|
5,366 |
|
|
|
4,288 |
|
Change in fair value of
preferred stock derivatives and warrants |
|
3,781 |
|
|
|
(2,008 |
) |
Depreciation and
amortization |
|
12,547 |
|
|
|
11,516 |
|
Professional fees |
|
70 |
|
|
|
264 |
|
Personnel costs (1) |
|
300 |
|
|
|
157 |
|
Facility costs (2) |
|
258 |
|
|
|
2,739 |
|
Non-cash stock
compensation |
|
845 |
|
|
|
381 |
|
Non-cash foreign exchange
(gain) loss on inter-company loans |
|
161 |
|
|
|
(329 |
) |
Non-GAAP adjusted EBITDA
(b) |
$ |
11,297 |
|
|
$ |
8,134 |
|
|
|
|
|
Non-GAAP adjusted EBITDA
margin (3) |
|
9.3 |
% |
|
|
6.4 |
% |
GAAP net sales |
$ |
121,198 |
|
|
$ |
127,088 |
|
(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 March 31, |
(in thousands) |
|
2024 |
|
|
|
2023 |
|
GAAP net loss |
$ |
(12,537 |
) |
|
$ |
(10,175 |
) |
|
|
|
|
Pre-tax professional fees |
|
70 |
|
|
|
264 |
|
Pre-tax personnel costs |
|
300 |
|
|
|
157 |
|
Pre-tax facility costs |
|
258 |
|
|
|
2,739 |
|
Non-cash foreign exchange
(gain) loss on inter-company loans |
|
161 |
|
|
|
(329 |
) |
Pre-tax change in fair value
of preferred stock derivatives and warrants |
|
3,781 |
|
|
|
(2,008 |
) |
Pre-tax amortization of
intangibles and deferred financing costs |
|
4,000 |
|
|
|
3,917 |
|
Tax effect of adjustments
reflected above (c) |
|
(29 |
) |
|
|
(259 |
) |
Non-GAAP adjusted net income
(loss) (d) |
$ |
(3,996 |
) |
|
$ |
(5,694 |
) |
|
|
|
|
|
Three Months Ended March 31, |
(per diluted common
share) |
|
2024 |
|
|
|
2023 |
|
GAAP net loss per diluted
common share |
$ |
(0.34 |
) |
|
$ |
(0.29 |
) |
|
|
|
|
Pre-tax professional fees |
|
— |
|
|
|
0.01 |
|
Pre-tax personnel costs |
|
0.01 |
|
|
|
— |
|
Pre-tax facility costs |
|
0.01 |
|
|
|
0.06 |
|
Pre-tax foreign exchange
(gain) loss on inter-company loans |
|
— |
|
|
|
(0.01 |
) |
Pre-tax change in fair value
of preferred stock derivatives and warrants |
|
0.08 |
|
|
|
(0.04 |
) |
Pre-tax amortization of
intangibles and deferred financing costs |
|
0.08 |
|
|
|
0.09 |
|
Tax effect of adjustments
reflected above (c) |
|
— |
|
|
|
(0.01 |
) |
Preferred stock cumulative
dividends and deemed dividends |
|
0.08 |
|
|
|
0.07 |
|
Non-GAAP adjusted net income
(loss) per diluted common share (d) |
$ |
(0.08 |
) |
|
$ |
(0.12 |
) |
Shares used to calculate net
earnings (loss) per share |
|
47,724 |
|
|
|
45,309 |
|
Reconciliation of Operating Cash Flow to Free Cash
Flow |
|
|
Three Months Ended March 31, |
(in thousands) |
|
2024 |
|
|
|
2023 |
|
Net cash provided by operating
activities |
$ |
712 |
|
|
$ |
226 |
|
Acquisition of property,
plant, and equipment |
|
(5,460 |
) |
|
|
(4,997 |
) |
Proceeds from sale of
property, plant, and equipment |
|
98 |
|
|
|
1,035 |
|
Proceeds from sale-leaseback
of equipment |
|
4,910 |
|
|
|
— |
|
Free cash flow |
$ |
260 |
|
|
$ |
(3,736 |
) |
|
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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