•Earnings from normal operations up 12.8% for the quarter and 9.0% for the first nine months over prior year
•Currency adjusted third quarter and first nine months sales down 10.3% and 8.4% respectively over prior year
•Net income from normal operations for the third quarter and nine months ended September 30, 2012 was $3.8 million and $16.3 million, respectively, as compared to $3.3 million and $15.0 million for the same periods in 2011
PDF

Johnson City, Tenn, November 8, 2012 – NN, Inc. (Nasdaq: NNBR) today reported its financial results for the third quarter and nine months ended September 30, 2012. Net sales for the third quarter of 2012 were $86.6 million, a decrease of $14.5 million or 14.3% (10.3%, net of the effect of foreign currency), compared to net sales of $101.1 million for the third quarter of 2011. Approximately $11.5 million of the decrease was due primarily to lower demand for the Company’s products in European and Asian automotive end markets. The negative impact of foreign currency exchange of approximately $4.1 million offset the positive effect of price increases and positive raw material pass through of approximately $1.1 million.

Reported net income for the current quarter of $3.1 million, or $0.18 per diluted share included approximately $0.7 million, net of tax, in non-operating foreign currency exchange losses on intercompany loans. Excluding this loss, net income from normal operations was $3.8 million, or $0.22 per diluted share, up 12.8% from the same period in 2011. Reported net income for the third quarter of 2011 of $4.7 million, or $0.28 per diluted share included approximately $1.4 million, net of tax, non-operating foreign currency exchange gains on intercompany loans. Excluding these gains, net income from normal operations was $3.3 million, or $0.20 per diluted share.
Net sales for the first nine months of 2012 were $289.9 million, a decrease of $38.5 million, or 11.7% (8.4% net the effect of foreign currency) compared to net sales of $328.4 million for the first nine months of 2011. Approximately $31.1 million of the decrease was attributable to lower demand for the Company’s products in European and Asian automotive end markets. The negative effect of foreign currency translation accounted for another $11.0 million of the decrease. Price increases and the positive effect of raw material pass through of $3.7 million slightly offset these decreases.

Reported net income for the first nine months of 2012 of $16.1 million, of $0.94 per diluted share included a net of tax, non-operating foreign currency exchange loss of $0.3 million on intercompany loans. Excluding this loss, net income from normal operations was $16.3 million, up 8.7% from the same period in 2011, or $0.96 per diluted share. Reported net income for the first nine months of 2011 of $16.0 million, or $0.95 per diluted share included the net of tax benefit of $0.8 million in restructuring gains and $0.2 million in foreign currency exchange gains on intercompany loans. Excluding these gains, the Company generated $15.0 million, or $0.88 per diluted share in net income from normal operations for the first nine months of 2011.

As a percentage of net sales, cost of products sold for the quarter decreased to 79.0% from 82.6% for last year’s third quarter. Cost of products sold for the first nine months of this year was 79.1% as compared to 81.8% for the same period last year. The decrease in the cost of products sold as a percentage of sales was attributable to improved levels of profitability at Whirlaway and operational cost improvements driven by our Level 3 programs in each of our global manufacturing facilities.

Debt, net of cash, was $60.8 million at September 30, 2012, a decrease of $12.8 million over the December 31, 2011 amount of $73.6 million. During the first nine months of the year, capital spending totaled $12.4 million, or 73% of the mid-point of the planned 2012 capital budget of approximately $17.0 million.

On October 26, 2012, the Company’s improving credit profile allowed it to amend and restate its $100 million revolving credit agreement agented by KeyBank and the long-term fixed rate notes with Prudential Capital. These amendments will result in a significant reduction in borrowing costs. At current borrowing levels, the reduction in interest rates will result in approximately $0.6 million of annual savings. Additionally, the amended facilities provide for added flexibility to continue acquisitions and allows for the reinstatement of dividends and the repurchase of common stock. Covenant levels have also been adjusted to reflect the Company’s improved credit profile.

Roderick R. Baty, Chairman and Chief Executive Officer, commented, “Weak economic conditions and uncertainty in our served end markets continued to negatively impact the demand for our products, predominately in the European and Asian automotive markets. Additionally, due to increasingly cautious end markets, we feel that overall reductions in inventory levels throughout the supply chain further negatively impacted short-term demand. Despite this weaker demand, our cost structure and operating performance allowed us to significantly improve margins and earnings over the same periods in the prior year. Operational improvements at Whirlaway, coupled with excellent Level 3 led cost controls and improved cost flexibility in our European and Chinese facilities, have been the primary drivers in our margin and profitability improvement from 2011, on much lower sales.”

Mr. Baty concluded, “Looking ahead, we expect demand to remain sluggish for the remainder of the year. We expect the fourth quarter to be sequentially down from the third quarter in terms of revenue. However, we are well positioned to manage through this downturn and expect to continue to leverage our improved cost structure and flexibility by carefully managing our working capital and expenses and by making necessary adjustments to production schedules to match customer demand.”


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.

Other News:
NN REPORTS THIRD QUARTER AND NINE MONTHS RESULTS
Timken Names Tom Tecklenburg Director Of Commercial Vehicle
BDI Acquires Bearing Sales Inc.
NTN Exhibits at ＂China Wind Power 2012＂
NSK Develops a Super-Clean Package for High-Precision Angular Contact Ball Bearings
NMB Singapore, a subsidiary of Minebea, Certified as a Friend of Water by Singapore's Public Utilities Board
MISUMI Announces the Completion of the Acquisition of US Die Components Makers
NSK Develops a Robust Series E-Type Angular Contact Ball Bearing for Machine Tools