NN, Inc.(Nasdaq: NNBR) recently reported its financial results for the fourth quarter and year ended December 31, 2011. Net sales for the fourth quarter were $96.3 million, flat with $96.3 million for the comparable period of 2010. The positive impact of raw material pass through and price increases of $3.4 million were offset by unfavorable mix issues and foreign currency translation of $3.1 million. Decreased revenues of $7.7 million at our European operations due to the European economy were offset by increased demand for our products at the Precision Metals segment of $6.6 million and increased sales volumes at our China operations of the Metal Bearings segment of $1.0 million.
Reported net income for the fourth quarter of 2011 of $4.9 million, or $0.29 per diluted share, included $0.8 million net of tax non-operating foreign currency exchange gains on intercompany loans and $0.6 million in other non-operating income. Net income from normal operations in the fourth quarter of 2011 was $3.5 million, up 14%, or $0.21 per diluted share compared to net income from normal operations of $3.1 million, or $0.18 per diluted share for the same period in 2010.
Net sales for the full year of 2011 were $424.7 million, an increase of $59.3 million or 16% as compared to $365.4 million for the same period of 2010. Approximately $34.9 million of the increase was attributable to increased demand for NN’s products, particularly in industrial and automotive end markets as well as new sales programs at Whirlaway. Price increases and the material pass through accounted for another $17.5 million and the net positive effect of foreign currency translation and mix issues accounted for the remaining $6.9 million of the increase.
Reported net income for the full year of 2011 of $20.9 million, or $1.24 per diluted share included $0.9 million net of tax non-operating foreign currency exchange gains on intercompany loans and $1.4 million in other non-operating income. Net income from normal operations for the full year of 2011 was $18.6 million, up 68%, or $1.10 per diluted share, compared to a net income from normal operations of $11.1 million, or $0.67 per diluted share for the full year of 2010.
James H. Dorton, Senior Vice President and Chief Financial Officer, commented, “Our fourth quarter revenues and earnings reflect the continued improved performance and profitability of our Whirlaway operation. However, the negative impact of the weak European automotive and industrial markets offset these improvements during the fourth quarter and second half of the year. As a percentage of net sales, cost of products sold of 82.1% in the fourth quarter of 2011 was flat as compared to 82.0% in the fourth quarter of 2010. For the years 2011 and 2010, cost of products sold as a percentage of net sales was 81.9% and 81.1%, respectively.”
“Our debt, net of cash at December 31, 2011 was $73.6 million. This represents an increase of $5.8 million over the December 31, 2010 amount of $67.8 million. Positive cash flow generated by improved earnings during 2011 was offset by the funding of working capital increases associated with higher sales levels, the timing of payments of account payable balances and the funding of capital projects during the year.”
Roderick R. Baty,Chairman and Chief Executive Officer, commented, “We are encouraged by our record results for 2011. Our restructured base business, Metal Bearing Components, performed well during 2011 and delivered excellent profitability to the bottom line. In addition, the continual quarter over quarter reductions in start-up cost issues, combined with operational improvements at Whirlaway culminated in positive fourth quarter profitability as compared to previous quarterly losses at this operation during 2011. Whirlaway has now been profitable for five consecutivemonths and we expect this momentum to continue into 2012.”
Mr. Baty, concluded, “In regards to 2012, we are currently forecasting revenues to be in the range of $415 million to $425 million, relatively consistent with our 2011 revenues of $425 million after adjusting for currency. In building our 2012 forecast, we assumed good economic growth in North America and Asia, offset by reductions in Europe. Even though we are forecasting revenues in the same relative range as 2011, we are anticipating solid improvement in margins, net income and EPS for 2012. Our earnings outlook is based upon a significant swing in profitability at Whirlaway along with good operational improvements at our Metal Bearing and Plastic and Rubber Components business units.”
NN, Inc. manufacturers and supplies high precision metal bearing components, industrial plastic and rubber products and precision metal components to a variety of markets on a global basis. Headquartered in Johnson City, Tennessee, NN has 10 manufacturing plants in the United States, Western Europe, Eastern Europe and China. NN, Inc. had sales of US $425 million in 2011.
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, the successful implementation of the global growth plan including development of new products and consummation of potential acquisitions and other risk factors and cautionary statements listed from time to time 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, 2010.
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