EXHIBIT 99.1
NEWS
FINANCIAL
RELATIONS BOARD
RE: NN, Inc.
2000 Waters Edge Drive
Johnson City, TN 37604
FOR FURTHER INFORMATION:
| AT THE COMPANY | AT FINANCIAL RELATIONS BOARD | |
| Will Kelly | Marilynn Meek | Susan Garland |
| Vice President and Chief Administrative Officer | (General info) | (Analyst info) |
| (423) 743-9151 | 212-827-3773 | 212-827-3775 |
FOR IMMEDIATE RELEASE
May 3, 2006
NN, INC. REPORTS FIRST QUARTER 2006 RESULTS
Earnings Per Diluted Share Up 30%, Includes Net Gain On Disposal
Of Assets of $0.04 Per Diluted Share
Johnson City, Tenn, May 3, 2006 - NN, Inc. (Nasdaq: NNBR) today reported its financial results for the first quarter ended March 31, 2006. Net sales for the first quarter of 2006 were $86.0 million, a decrease of 1.0% from $86.7 million for the same period of 2005. Net income for the first quarter of 2006 totaled $5.3 million or $0.30 per diluted share and includes an after-tax gain from the sale of excess land of $1.5 million or $0.08 per diluted share and an after-tax write-off of certain unused equipment of $667,000 or $0.04 per diluted share. This compares to net income of $4.0 million, or $0.23 per diluted share for the first quarter of 2005.
James H. Dorton, Vice President and Chief Financial Officer commented, “Revenues of $86.0 million in the first quarter of 2006 were down slightly from $86.7 million recorded in the first quarter of the prior year. Increases in volume and mix of approximately $1.6 million as well as selling price increases related to material cost pass through of approximately $2.8 million were offset by the negative result of currency translation of $5.1 million.
“As a percentage of net sales, 2006 first quarter cost of goods sold was 76.7% of net sales as compared to the 2005 first quarter cost of goods sold of 78.0%. Our Level 3 initiatives made a major contribution to this margin improvement. As a percentage of net sales, selling, general and administrative expenses for the first quarter of 2006 was 8.9% as compared to 8.6% for the same period in 2005. This increase was mainly due to stock compensation related expenses.”
Mr. Dorton continued, “Our reported net income of $5.3 million or $0.30 per diluted share includes a net gain of approximately $784,000 or $0.04 per diluted share comprised of an after-tax gain from the sale of excess land located at our Pinerolo, Italy facility of $1.5 million or $0.08 per diluted share and offsetting this gain, the write-off of certain unused and obsolete equipment of $667,000 or $0.04 per diluted share, after-tax.
“Due to the proceeds realized from the sale of this land, we were able to pay down debt during the quarter by $3.2 million. We anticipate reducing debt by approximately $10 million for the full year. This assumes fully funding the previously announced stock repurchase plan up to $10 million and excludes the impact of any potential new acquisitions that may occur during 2006.”
Mr. Dorton concluded, “During the quarter we purchased 20,474 shares under our recently announced stock repurchase program. This program allows for the purchase of up to $10.0 million of the Company’s outstanding stock which commenced in mid March of 2006 and will continue for 18 months thereafter.”
Roderick R. Baty, Chairman and Chief Executive Officer commented, “We are very pleased with the financial results for the first quarter of 2006. Each of our business units contributed positively to the excellent operating results. Our Level 3 program continues to play a major role in achieving significant improvements in cost reductions and operating efficiencies. The cost savings realized by this program have allowed us to offset substantially higher energy costs in our global operations as well as start-up expenses associated with our new facility in China.”
Mr. Baty concluded, “We look forward to both the challenges and the opportunities for the remainder of 2006. As I previously stated in our 2005 fourth quarter earnings release, we are forecasting relatively flat economic conditions in the U.S. and Europe for 2006, therefore our guidance for the total year remains unchanged with estimated total year revenues at approximately $325 million and full year earnings to be in the range of $0.86 to $0.92 per diluted share.”
NN, Inc. manufacturers and supplies high precision bearing components consisting of balls, rollers, seals, and retainers for leading bearing manufacturers on a global basis. In addition, the company manufactures a variety of other plastic components. NN, Inc. had sales of US $321 million in 2005.
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 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 10-K for the fiscal year ended December 31, 2005.
Financial Tables Follow
NN, Inc.
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
& #160; Three Months Ended
& #160; March 31,
| | | | | | 2006 | | 2005 |
| | | | | | | | |
Net sales | | | | | $ 86,017 | | $ 86,715 |
Cost of goods sold (exclusive of depreciation shown separately below) | | | | | 65,999 | | 67,666 |
| Selling, general and administrative | | | | | 7,681 | | 7,484 |
| Depreciation and amortization | | | | | 4,162 | | 4,174 |
| (Gain) loss on disposal of assets | | | | | (730) | | 4 |
Income from operations | | | | | 8,905 | | 7,387 |
| | | | | | | | |
| Interest expense, net | | | | | 986 | | 984 |
| Other income | | | | | (209) | | (171) |
Income before provision for income taxes | | | | | 8,128 | | 6,574 |
| Provision for income taxes | | | | | 2,866 | | 2,551 |
| | | | | | | | |
| Net income | | | | | $ 5,262 | | $ 4,023 |
| | | | | | | | |
| Diluted income per common share | | | | | $ 0.30 | | $ 0.23 |
| | | | | | | | |
| Weighted average diluted shares | | | | | 17,376 | | 17,261 |
NN, Inc.
Condensed Balance Sheets
(In thousands)
(Unaudited)
| | March 31, 2006 | | December 31, 2005 |
Assets | | | |
| Current Assets: | | | |
| Cash | $ 7,537 | | $ 10,856 |
| Accounts receivable, net | 59,881 | | 47,297 |
| Inventories, net | 36,770 | | 38,096 |
| Other current assets | 10,596 | | 9,701 |
| Total current assets | 114,784 | | 105,950 |
| | | | |
| Property, plant and equipment, net | 117,605 | | 118,829 |
| Assets held for sale | -- | | 1,072 |
| Goodwill, net | 42,090 | | 41,648 |
| Other assets | 2,084 | | 2,156 |
| Total assets | $ 276,563 | | $ 269,655 |
| | | | |
Liabilities and Stockholders’ Equity | | | |
| Current liabilities: | | | |
| Accounts payable | $ 41,270 | | $ 41,660 |
| Dividends payable | 1,377 | | -- |
| Accrued salaries and wages | 12,062 | | 12,407 |
| Income taxes payable | 3,960 | | 2,093 |
| Short-term portion of long-term notes payable | 1,509 | | 4,668 |
| Other liabilities | 4,833 | | 4,011 |
| Total current liabilities | 65,011 | | 64,839 |
| | | | |
| Deferred income taxes | 15,337 | | 15,128 |
| Long-term notes payable | 57,900 | | 57,900 |
| Accrued Pension and Other | 12,212 | | 11,783 |
| Other liabilities | 3,963 | | 3,931 |
| Total liabilities | 154,423 | | 153,581 |
| | | | |
| Total stockholders’ equity | 122,140 | | 116,074 |
| | | | |
| Total liabilities and stockholders’ equity | $ 276,563 | | $ 269,655 |
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