NNBR - Earnings call transcript Q4 2019

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Operator

Good day and welcome to the NN, Inc. Fourth Quarter and Full Year 2019 Earnings Conference Call. Today's conference is being recorded.

At this time, I would now like to turn today's conference over to Mr. Mark Schuermann, Vice President, Treasurer and Investor Relations. sir. ahead, go Please

Mark Schuermann

conference Good the and welcome call. quarter XXXX NN's operator. joining you you us fourth earnings year full for I'd and morning, you, thank everyone, for to call. Thank like to

at Our contact SVP Officer, the Veltman. XXX-XXXX Executive a and release (XXX) Warren of Financial Chief the morning Abernathy Officer. presenters presentation, Tom needs Also or DeByle, the will a will copy this they is President you Chief be copy. call MacGregor and attending please If supplemental and anyone press with

same take Before statements we XXXX, the begin, year note release, the XXXX I'll live of for when report XX, today's this quarterly XX-K the the as in company’s section cautionary ask fiscal and supplemental forward-looking year the Form on the that company's the regarding factors well made Q&A December and call, XX-Q for in filed, session, you including risk ended language the XX, The applies September months press December Form on ended presentation Annual Report the contained on today's for in language XX-K as three ended conference webcast. to comments XX, company’s XXXX.

of statements which by non-GAAP the caution exchange are contain certain regarding the risks outside forward-looking These presentation synergies, and Our uncertainties, subject are will today with rules. used many control. various SEC be defined flow, sales, rates, margins, also tax The operating to company's as measures performance should includes presentation and statements and of topics. markets other foreign results, cash future acquisitions, rate, the worldwide

we tables presentation. update open of press non-GAAP the for Tom provide Warren such release our then measures and questions. line will business the in final the section supplemental of the review and a reconciliation and will results, the and is contained A in

call said, you. over turn that to With I'll the Warren,

Warren Veltman

our a numerous overview Mark, Thanks, start of today’s to with to actions everyone. third management been quarter since working good like on team call. call brief our morning and has the I’d conference

we aligns plan. committed establishing indicated During that that to our capital strategic I structure a call, were with

significant In December of improvements XXXX, resulted in completed our structure. we in capital actions that two

issued we retire borrowings revolver. on that outstanding proceeds preferred from $XXX stock First, million to and all the our issuance utilized of

a action, net XXX million December was As September reduced XXXX. XXX debt result XXXX this million of our from to XX, at XX, at

XXXX have results and pursue October These amended strategic existing maturities. our Second, agreement liquidity credit of maturities perspective extend The review. revolving with the the flexibility to we April of actions XXXX, to a been respectively. term these enhanced are and to XXXX B our maturities credit facility associated and July timing improved evaluate both extended loan the from announced options and

to responsibilities with of our We Qualters our I with group. fourth Chris took Mobile the goal improving also and made existing Power efficiency Sciences significant Life his to the the during group Buchan role our EVP lead Solutions group along for of appointed as the Solutions John our over and culture, quarter our reducing operational organizational structure some management changes transforming overhead structure.

synergies experience roles can Life that Solutions. our track XX are strategic in the well potential John’s suited and Sciences and opportunities direction. experience growth be his senior realized excellent the through continue of Chris to Power operational as has helping maximize management record operational has in significant an participating a over and organization’s commercial to platform. years be and and as will shape John of Likewise, various grow execution of leading we invaluable combination executive operations Mobile and skills

I reductions eliminated XXXX. have XX.X we company costs will identified detail additional cost later million initiatives in presentation. announced have we discuss significant To-date, the are October have this and X progress an process. in in throughout in made cost-reduction We in on more million the in the that

and where with market announced range review review a evaluate the leverage remains an a financial evaluation operational, subject of we broad and The shareholder to ongoing strategic stability. in the will options process conditions and global goal of strategic enhancing strategic economic company value. Lastly, of reducing

We necessary, have or the this previously consequently indicated or further would comment patience. understanding will we that call. on outcomes this and unless not your speculating process we during appreciate about disclosure commenting not We is timetable and be potential

our were after foreign that we of flat our XXX.X performance, roughly As can to move sales consideration million, you with on financial exchange fourth XXXX see quarter differences.

a to in up overall sales from of a which Motors Our year most Life auto Mobile X.X in slowness ago. million, and Sciences XX.X October was of XXXX. or increase X.X offset million Solutions due the General the in million strike the reported This sector XX% by substantially impacted of adversely reduction group sales year-over-year group

acquired in sales million The increase Life businesses XXX.X XXXX Our XXX.X versus totaled million. in is X.X of organic and this the XXXX XXXX. million growth Sciences majority attributable to of sales

fourth and reported Our adjusted was XX.X was million. EBITDA million EBITDA quarter XX.X

Mobile EBITDA with Adjusted had million performance, X.X slightly the million. but a the the Life for up EBITDA provided the adjusted line we down group year sale a was with from in the was quarter on Sciences ago, from down ago was Solutions X.X guidance year fourth quarter. EBITDA while Consistent

the share. share EPS to were due $XXX a primarily The of operating goodwill write-down income both $X.XX of per $X.XX and loss quarter over while reported fourth in adjusted non-GAAP improved of EPS of EPS XXXX. QX fourth quarter XXXX, million income GAAP

Our the terms the at current the to end year terms keep of free cash suppliers been with decision made our expectations. in we fourth done payment has lengthening was $X.X quarter as appropriate the This than payment years. of result instead less for million. year, Near is previous prior flow end our

previous our concerns given were Form rating third at XX, basis was year. in included payable supply accounts XX-Q. our reports the going Consequently, certain This X.X the less language action concern that quarter December was appropriate and XXXX our surrounding versus agency million

XXXX as we flow accounts cash see in have first will flow to to quarter year-end We not a reduce to cash expect flows a free benefit use payable our cash higher balance.

to focus we’ll terms a manage cost-effective continue XXXX, programs. reduce will capital through payment expect and receivable we in as be customer customer lengthy accounts levels working to inventory Reducing

X, improve Page flow. a have our to and summary of cash costs efforts we reduce On

million in $XX October Our improving XXXX goal in dividend of flow $XX was thereby This three done per XXXX. our cash cash announced quarterly company year. eliminating consisted One, saving of the components. million

per Second, year. of annual third, another spend reducing capital reducing overall million $XX including $XX expenditures, SG&A million costs, on And annually. the saving savings

X.X our three corporate by personnel with primarily respectively. operating associated in office consisting annual We in eliminating million issued of reductions groups, million the and cost expenses XX.X reduction million $XX and X.X million

we Charlotte addition, lease on have $X.X two-thirds saving annually. In of agreed our space million to our terminate office

million improvement cost fees, consisting to $X.X incur and incentives. landlord We including $XXX,XXX costs, rent total terminate lease will of months our termination tenant for in realtor six

cash We quarters. the be XX-XX split and expect between outlay this that first will second

on reduction We comparison are shy million potential capital our spend. opportunities our and still in The expenditures cash goal facility fees, XXXX in synergies. cost falls to for reductions focused slightly additional million annual $X.X associated consolidation professional with reduction travel of with $XX

will capture the As continue to to of opportunities for goal. this balance XXXX look we unfolds,

to basis, reduction details X.X% which consolidated X, the to total the revenues a revenues fourth segment. Turning foreign primarily down and X.X% for Life fourth sales versus our Power global Solutions prior with by Mobile and decreased XX% On coupled due Sciences was headwinds strike. due Slide quarter quarter year economic over grew losses. in posted the exchange Solutions XX% GM to automotive

acquisition On foreign the by XXXX, May against of Foreign as currencies. exchange the Solutions. organic our exchange X.X%. most grew of also a organic growth primarily sales strengthened sales continued and accounted dollar foreign in to Life a XX% a Paragon of with growth headwind in U.S. reduce growth basis, growth overall sales of X.X% to year-to-date Overall, X.X%, Sciences was lesser for acquisitions within and extent, Power driven

over it more Now provide for I'd Tom our the review DeByle, so can in-depth like a to performance Tom to financial of quarter. turn

Thomas DeByle

Warren. X, adjusted a special results Slide excluding a items, non-GAAP, quarter Thanks, our turn Please fourth GAAP, which on and includes basis. non-GAAP total to

categories our in better adjustments the into I two As further I break prior transparency. quarter, down for did

is and made number to are special number unusual integration expenses; company activities expenses transition few the one-time over category acquisition the past One the and has and due captured years. items, of integration which two, historically

three like would get I There points to today. key across are

improving relate to are profit dollars in and focus improvement higher profits efforts, the cost conditions. in gross total a First, as value-added gross improvements The programs percent managing integration margin based sales. customers, market on continuous of upon and our with

of QX excluding items, approximately million in special versus expense income a flat loss X XXXX bonus XXXX. million essentially in non-GAAP showed the reversals increase Second, year-over-year and on and management’s of X.X considering of amortization depreciation was X.X and of basis, million operating a

of as items. titled cash bonuses annual is note were the year. circled sales that last column in EBITDA in there executive percent item special excluding that The no I’ll paid either a non-GAAP

improved see EBITDA You year-over-year. can

Let’s which high adjusted more go this and of special and page, I a non-GAAP non-GAAP. items a with total There parts try points. to excluding will X, hit granularity are moving between Slide on reported bridge provides lot to the GAAP,

upper the and issuance were in for tax our the items affected X.X focus let’s First, quarter special million debt The portion attention costs. X.X on of for severance write-off of million the bridge. dollar large

divesting charges asset In related JV million the and prior were goodwill special impairment million fixed XXX.X prior X.X year, affected component million of impairment, segment. tax precision-bearing for the to large items and X.X

transformation the to section of and and amortization the bridge. X.X the million X.X affected were large capacity professional million fees attention for Now let’s QX integration of of and X.X XXXX, lower tax million turn financing of development, adjustment non-operational our and of In dollar deferred intangibles million, costs. X.X of capabilities

prior and tax X.X million in and of of million the deferred X.X capabilities professional X.X capacity dollar for non-operational million fees, and X.X amortization affected of development, large and intangibles integration financing were adjustments The costs. million for transformation year

time Please years. integrate of made to spend was as Slide much acquisitions not XXXX the page. continue transition we the I'm large going too year on over the this turn to X. to

I a However, things. out point few will

due the First, sales acquisitions to XX% organic primarily year of growth for and partial in Sciences. carryover up were year Life

profit in the direction right our to the fourth Second, activities as previously mentioned gross results. read similar XXXX quarter, through margin-focused in our moved

of management year-over-year. causing earnings in $X, mentioned in as year, earlier bonuses were The X.X the drag a XXXX million prior on

no mentioned, As bonuses annual either paid were executive cash year. in there previously

severance, parts issuance X hit bridge. on On I to costs bridge large for and million Page lot in debt moving this important X.X the and of segment. a write-off the will million year there special related full the ones. divestiture component items X items of discrete text for our precision-bearing affected of dollar year were tax XX million The for is prior are Again,

prior dollar of charges precision-bearing component asset impairment, JV fixed the for X.X the large million and affected In divesting year, impairment related tax X.X XXX.X million million and items were segment. prior to special goodwill

attention Now of professional our X.X financing of let's tax million, the turn lower capabilities of and integration XXXX, was transformation of non-operational bridge. deferred costs. to million XX.X the for large dollar capacity X.X In affected amortization and intangibles of development, section the million XX.X adjustment and million and fees

were affected year intangibles XX.X and capabilities X.X and capacity million and professional tax of prior adjustments non-operational financing deferred XX.X integration of X.X the dollar costs. million million, large of million of of The in fees and transformation development, amortization

behind we down Note and of that to XXXX. to put development, in reduce a are as capabilities acquisition focus These are integration XXXX expenses capacity these expenses three in the and minimal be transition under integration over fees the management and come professional categories and transformation and key us. of planned XX%

the to XXX.X DSO of Slide X.X million inventory capital improved prior were prior quarter at turns fiscal compared and payable year, accounts in were working turns versus end fourth versus Turning the the million. XXX.X the prior was year, increase million with days X.X decreased. Working in Net of XX. flat year. X.X an capital

on quarter, terms. fourth capital accelerated to relationships. and efforts, made will a order XXXX, In through suppliers decision improve we the strategic Warren to focus as on maintain reductions In payable good collection we in pay working mentioned, reducing inventory time in

a year, million. versus end Slide agreement the of million debt the to debt, was of credit the to EBITDA, at turn quarter million XXX.X XX. in XXX.X the at versus in decrease fourth by year. prior prior X.XXx the XX.X was measured as Please funded Net X.XXx

Warren Several mentioned. financial positive flexibility. the things as quarter, our improved happened We in

the preferred the we company. allows million time revolver us we our B extended company, to This term XXX For our efforts and delever continue issued and to of off paid loans. and the revolver stock

for the XXXX million flow the in of year. flow XXXX. cash Slide of XX of shows free our cash cash million and We full quarter quarter fourth X.X compared an the for X.X adjusted fourth free to free generated flow quarter

prior component the that to out the point to precision-bearing tax refund has important year segment. is a it comparability, For of million related sale XX.X the

a a cash negative flow million. year, flow free free and XXXX adjusted XX.X cash the was X.X billion For was negative

working forward, and limiting bottom-line Looking to concentrating we free capital, flow improving our cost reductions, improving cash drive productivity reducing on by are results. expenditures capital

and summarizes Cash fourth the XX capital million in capital million trends. year. to Slide our expenditures XX XX.X amortization in the spending, prior depreciation quarter approximately were compared

percentage For in XXXX the of QX units quarter, X.X% lower was year. prior year’s spending from the There business prior of company's capital to spending compared the across sales, was down all X.X%.

or a XX.X the XXXX. NN basis, million of in capital year-to-date spent sales million of XX On sales in XX in X.X% prior the million company X.X% anticipates or year. versus spending

With the that, to Warren. I’ll turn call back

Warren Veltman

driven XX% group. to by go or case the yielding been prior sales the year Page we in Adjusted over operating year. If information presented XX.X% orthopedic and margins system has our XX, tray an XX.X% improvement from delivery and The Tom. Sciences for Thanks, some has primarily increase additional period. there profit increased Life for our year-over-year to products, we prior

note GAAP operating are XX% the to from adjustments intangible Please amortization. due income that of

our adjusted margins. and EBITDA reported We seen expansion also have of

positive process improved and of result automation Our improvement, of a performance international operations. in installation is margin our continuous trend

million Our backlog a reduction QX. is $XX XXX million, from

us process As and sales have expected requirements last of improve dates. our quarter, ops new interact launched the matching that recently to planning we with allows application discussed our proactively delivery customers with we product and

backlog. reduction this We the full byproduct of a expected be that more would total of in a a implementation application

be targeting our will and improvement, XXXX on products. forward, focus on of of coronavirus our managing our growth the impact continuous business MedSurg the Looking

in repeat in will to growth expect that modest product We to due the introductions orthopedic be XXXX segment significant XXXX. in not the XXXX

orthopedic-related product sales round new introductions expect We when are in expand next scheduled. to of XXXX the

on business new ago, did declines started UAW are business not The Mobile and in year the moving tariff XX.X% Page delays until from end of North environment which end October. due sales Motors, strike down of programs to to production, launches, is of the primarily included summary mid-September impact America to Mobile unfriendly XX. a against sales General and conclude an in in Solutions due the

XXXX. neutralizing reported sales XX.X on the to by EBITDA Adjusted of spite of to impairments due declined variance, EBITDA primarily X.X and indirect significant reductions, reductions reflecting in the In sales a from goodwill in equipment the offset to from X.X X.X million increased and write-down the after million idle margin related million partially bonuses. obsolete million loss labor benefits and

end benefits $X.X the of basis. related XXXX, December an indirect on labor Through SG&A by reduced million and were annualized labor,

the We expect new start-up some and the improvement through and labor of additional margin due of production the group costs, some modest XXXX of growth be for improvements focus indirect reductions process on to XXXX fixed in impact this will including carryover programs completed reductions. manufacturing of

from reduced reduced is including In levels. addition, capital expenditures improved cash improvement expected flow capital management, and working inventory in free

XX. to fourth due chosen the due X.X% sales lower year-over-year to China, Page export to to reduce electrical a lower Chinese primarily as increased sales customers Customers Solutions Power to quarter products have Power’s on both to levels China, to to volumes. on inventory that sales reaction on these primarily decreased direct Moving tariffs. also sales

SG&A sales both the but fourth and to X.X X.X XX.X% Margin Adjusted improved for due XXXX. EBITDA over reductions million million, EBITDA In of quarter manufacturing XXXX of indirect and efficiencies. million the spite was was in improvement $X sales XX.X% versus an increased labor is of reduction, fourth in in to quarter. reported primarily increase periods XXXX

Coast Fairfield, our facility other and Ohio Irvine, have complete We substantially by the in facility operation facility construction move The there is and for group. expect Taunton into California the of the two the facilities quarter. underway second the finalized are consolidations readied to Several closure. West we facility in of this early consolidate

footprint improvement. of moderate and and our expect XXXX optimization and sales We from due facility margin growth coming process continued electrical to both expansion with continuous in aerospace defense

we groups. created through the leadership also Mobile reductions synergies Power cost We from of common expect that realize and will

due expect low free expenditure will We its to group continue profile. flow that capital Power cash to significant generate the

Lastly, we XX. guidance have and first summarized on the XXXX quarter for our Page

our Before continues review operations. and discuss has the it’s guidance, important coronavirus to we to had and global have on discuss that our impact

securing has of potential supply meet to and health chain striving customers’ on Our employees, weaknesses focus requirements. been volume mitigating our the our in our

Chinese for From an to employee health the facilities, Chinese traveled measures during authorities implement New a at standpoint, we Year. have isolation coordinated that with period appropriate governmental XX-day safety our including employees

have removed where miss financial We also, sick. them appropriate, encouraging staying to thereby they disincentive for work if to employee are home any an

staffing operations May our all currently levels above currently or are product full resumed Chinese than that XXXX. have customers to our China, early We ordering are our production at until normalized production XX% not and less customers return levels and estimate Within will at levels.

we from China On are steel and side, disruption monitoring situation closely in of certain product the suppliers. to the supply the have location due seen Italy some sourced in

for components continue products stock and to We actions outages. our operations manufacturing prevent of appropriate versus levels our will critical the necessary evaluation or safety take

delivered level the certainly have with coronavirus their award week, outbreak. a major consistent we customer support our at of to just to Chinese from this albeit excellence product since our will support. of reduced requirements, We volumes. received delivered strive the We has team fact, customers recognizing Matter this continue an

supply As requirements of we customer the outbreak cause our chain have today, and to fluctuate. seen disrupt our

impact global economy to the on highly the our of the difficult predict. However, and and coronavirus are overall uncertain business

regarding current appropriate customer supplies, presentation to secure our attendance the the ability employees. and materials schedules, included in our this is continue and our to Therefore, guidance representative our of of knowledge ongoing

American the disruption North or European economies in on disruptions long-term continent. any contemplate Asian or not does It further

oversight ever-changing to team Our our landscape. will of in this remain continue management vigilant

that XXX per of to our a million $XX will that all in range generating range This mind earnings XXX million. sales income. from estimate million to result of share $X.XX with $X.XX per for an loss $XX million to We in share QX of EBITDA will of

is reported recent represents $X.XXX including, QX range factors, one, per due below our our the approximately several expense facility to increased the quarter. additional share volume for per of similar share amendment to sales This earnings an cost credit which due on interest to

Two, increased international And an our part three, performance of QX capital; coronavirus QX financial due our to compensation costs efficiency operations the reduction under impact joint inventory XXXX. absorption the of in as of focus venture. both XXXX on our working and on incentive of the a four, employee over Chinese in overhead

not that are JV statements. roughly Recall for we the our joint financial XX% of to saw expected the sales QX Chinese consolidated what And in QX XXXX. in be reported venture volumes are

We and favorably the million the will the high positive side negative side. cash the quarter on free with our XXXX. that expect be cash on low compares flow million This outflow $XX $X very in million of first $X

year, per $X.XX of XXXX million to XXX expect XXX of per sales with million. range XX million. XX of Adjusted to to the million in XXX EBITDA share cash share to we with $X.XX projected For million are flow to the be XXX free adjusted million earnings

That the concludes our prepared turn remarks, to and I questions. call back will the for operator now

Operator

Instructions]. Thank you. [Operator

will CJS from Our Securities. be from question first Moore Daniel

Daniel Moore

with, one. questions to morning. for color morning, Good I the challenging Thanks taking start gentlemen. this and the obviously a wanted

it the at color in I’m your formulated there said You last current gave as it’s that’s You the all? it, based changed wondering over around has if how how context good week, thinking. guide. you on

the to maybe relative world was adjusted operating been how X, that’s days if ago? XX wondering Just

Warren Veltman

on and what’s in Yes. forecast. the globally been it’s we best fluid our as obviously have very situation reflecting can going results Dan, of a we

in continent. everything key supplier of line on of steel. to the the so side. genesis supply us in indicated, I as from mid focused some future to And a point on right, disruptions got really or I regarding the opinion. much formulate the last in especially was the we late we’re no commentary that, we the European we provides the draw teams something update North finalize received America sand, week there could our a very mentioned have some Italy, I that and It’s specialty last at time the you that’s think – nature

ordered So we’ve actually ahead.

So this changing we evaluate is the and take might raw quarter going first inventories it’s as additional some in early second as every day. how on thing you material know, because, we quarter actually to supplies, unfold, or

Daniel Moore

customers XX, would you XX% XX that Helpful. Just going you you best And what’s levels. ordering Back at the in I any that normal are guess? say sort percentage color context Roughly your of yet customers of not said in what on not -- is operating. they right? the your to staffing, China, at ordering And ago? relative Is to today days that May, early guess mentioned

Warren Veltman

Yes.

sorry saw So – to interrupt. we

open employees the facilities we So there after get were side. customers when take to the from facilities an their essentially travelled them released period. into they schedules they was going was they where through up, into but were auto trying we had the our and because state, expected the to state of on trapped real the timing if back or OEMs isolation getting go – it province out saw the – back get to on the The working Chinese New drag all Year, they to back

right Life side. So we’re full the much pretty at on now staff Sciences

tell probably then – would normalized my in to maybe taking on a anywhere production looking the comment I our to we from we XX% and we Mobile are that levels. volumes now four facility production joint might you the would at be at there. more expect and five consider And venture right customers back of on the where – XX% our May hence to to We’re what improve weeks, side next period over XX% normalized

Daniel Moore

sell-in MedSurg product year. big little, Perfect. you a last Switching of [ph] gears mentioned you a had obviously pretty Sciences, Life

how we the the growth back And overall year? and questions where now of are chain get normal? Sciences continuum for in what maybe from that expect contemplate So until supply this guide Life line guidance we to interruptions, does on does quickly similar the

Warren Veltman

X% When we’ve is at customers in And we the X% couple side our a trim that basis. last, caused range of had there. talked seen growth of going some pegged developments inventory their needs the what seen there. We’ve to that. there’s production an couple the overall a two on consolidations inventory we One of seen Sciences the I the to on dynamics in we’ve coronavirus in coronavirus, levels. is customers Life Number on think look Yes, Sciences levels. back to solely Life as of them space the large it have impact some the several relates managing harder other

as actually maybe at at to So flat up that point at look business lower we profile at looking in we on an marginally as we’re look a this overall basis now, growth XXXX time.

Daniel Moore

contemplating And lastly if about then auto industrial much become in would how bit me, have reduce and and costs to any costs talk Perfect. it you perspective? little does from longer reduce you to flexibility a sustained a disruption from steps further, just maybe do be particularly demand

Warren Veltman

of able good our have Yes, we think typically with of all business flex is a so a production. pretty that North one run that the track in variable auto we of costs being if ways work XX-hour we week. side do can there record on America, you look facilities I that to on the the And

a production It we issues there go-forward sort have dial to it any is without absenteeism basis. if XX% significant that on allows are us of and also have we opportunity to affords down, a health-related an us certain level back So layoffs. – volumes of can any

ability that the side. think have the I variable to on we flex So

we’ve job side, of for the I We’ve of fixed-based reducing for this cost a good further. opportunity that year, we’ve that. they that that business to the an do our indirect sales plan either fixed sales back think there’s there’s that understands what The very can below business on labor. auto, indirect done range labor to an mobile some taken down the team that that X% side. for track that And flex in think I expectation on the that if On an group targeted indirect even

facility those some consolidation synergies the we And that now of in underway. for on exists to efforts opportunities together, SG&A as at think especially capture some can we’ve functional combination additional been well. together addition, right teams of already how bring some to have groups. I We’ve closely there the looked human us financial opportunity very in bring side resource capture and we the teams with working the best of cost two kind to the

we on us going making right we’re are do personnel So now. a enough that our out sure of just It’s ability forward that. everything I matter as our appropriate taking focused reductions start think robust afford level to processes to that can the processes of do, improved the

Daniel Moore

helpful. luck. very best of the and appreciate I color Okay,

Warren Veltman

you. Thank Okay.

Operator

you. Thank

Rob Our Lake Markets. next question from from will be Brown Capital Street

Rob Brown

Good morning information. and all thank you for the detailed

First business and overall, in or the market, the there? how with question you of do the aero business Power is have the what’s Solutions point you’re sort commercial exposure this much program activity doing at

Warren Veltman

at and and look approximately it’s business, the for But last of overall aerospace that defense considerable that we up spent side, XX% ready. overall year of us. it’s area when the getting clearly, amount Power Solutions group. a the Rob, growth Yes. resources over targeted We’ve business

entails lot today we that. ago, year type eight months on Matter talk the the of profitable. that ago, probably None You’ve that a so was of were fact development a to profitable at customers, total supplier business list not minimal. and with like effort extremely seven or of thing. heard manufacturing that is of approved it’s fact, early on type It not do that And XX. of about work prototypes, that us XX or is

point at are that lot a some So that programs in line. on bottom bring to looking we’ll actually of and time buy the this contributing to

total today. Power the Solutions I business, about like of size relates group of it that said, as the So to XX% it’s

Rob Brown

visibility Okay. up heads up, visibility pick the when do Thank of off do starting much there? you get of you you. do around much tail how how to sort And demand you then order in or sort terms get typically of see and flow,

Warren Veltman

really think on depends I it the group.

is planning-related the purposes. eight the If in might would I theoretical is zero short their customers weeks uncommon get firm tell from four case everybody our we timeframe. our XX-week take would for you out Mobile, is though as where But look not example, to next for demand weeks be customers that to, that the an you relatively and a it operating even are forward typically a

So make we’re well where long-term demand inventory where that as trying their we levels that constantly would be. watching understand customers sure evaluate our are to to and

what On new are a better their put what monitor and in in us inventory program that are our we levels their forward. their closely the into customer, from And very this it’s side, place the standpoint a backlog. we Sciences what forecasting with operations insight with Life expectations supply delivery going expectations given are,

So want a we from somewhere out. scenario, like want at to would don’t look lead times operate to XX-week we’re nice we window to that backlog to. – XX don’t be exactly XX weeks at have that our for we need really best to and hoping deliver it to what understand but have when would customers to case that long, We a that’s what

Rob Brown

you. Thank great. Okay, over. I’ll turn it

Operator

Thank you.

Steve KeyBanc Our be next question Markets. Barger with Capital will from

Steve Barger

Good Hi. morning, guys.

Warren Veltman

Steve. morning, Good

Thomas DeByle

Good morning, Steve.

Steve Barger

the are you is want get questions get I place the still us the all if but about that talk to talks or specifics if tell there I predictions, don’t external overnight internal? were of portfolio and review most can on taking Warren, you or review

Warren Veltman

Steve. I’m some Yes. that now, we’re this external tell right as having process well. and the trying to I about conversations be are will in you we coy not

Steve Barger

aggressive with the progress of cost maturity detailed you some of and sheet balance save lot actions. a the Okay. And along

talk already manage in on how view of a can through things to the ability environment some NN’s you you current has your evolved? sustainable way about Beyond tactical the discussed,

Warren Veltman

– our the it view question. relates very the commentary throughout management good much and we pervasive I a and flow I this focus would morning we’re business this business. team, side of was That’s – think gearing tell you the is the as how Yes. that how our to cash on

We’re flow focused on the to And debt. marketplace, absorption of talked quarter EPS. generating needs I that feel in under type But in some focus thing. the and that uncertainly that’s why on of be inventory our and first primary down the paying given about we cash

that that. I teams if even And cash thing where a trying are a we’re do Life Chris down that in John between standpoint free this platform guys. I know a lead we’ve get that the that a side. frequently. to trying groups. I see Power to up reduction neutral we improved Sciences, be we I very the we’re to and I’m at on those three point And better significantly can focused So Chris them we’re and communication the other with from where on Mobile operating together business engaged been having talking think I’m operating And at we’ve expenditure to to the geared still capital volume over daily. talk is business. communications and by that We’ve done create minimum John think XX% Buchan the today. a flow think and

when a there’s improvement. this difficult that think significant situation. was from it be I So going been I I standpoint into knew came a to

team good a have We here.

where and got pretty pretty we’re that this I’m good we place progress footing of feel substantial excited that. think in pay to We $XX that to a and going million going million more about forward, range. made we’ve some about I the on $XX year plan down puts sound that that company

Steve Barger

record forecasting a I a great there been think few my question. not has segue the of into cash free flow Obviously last years. over that’s EPS track and great next

talk Tom a of line midpoint or feel can that to and in So you the better forecast, confidence are like reasonable can hit you the you but now about still just the ranges? there the Do numbers? your that conservative you these sight this and is enough on seats,

Thomas DeByle

That’s That’s goal. definitely. our our goal

up of suppliers because lengthening, that focused we get suppliers, where that cost be can to the we terms, reductions, inventory. stuff and we Warren IRR controllables capital, improve our payable Once start, talked we improvement focus to a of more the payback everything we levers working like capital our upon. example, can sure improved on have and pull and point definitely and then for ways receivables, making the we’re for, have spending really ongoing about consolidating it. that, course signed continuous on It’s our and We our

Warren Veltman

everything were that of diligent take relates it back tell possibly just to this put with to that, together. said, environment you into I we the would Tom today. as I you the as And But in be agree I to would uncertainty range I the the Steve. comments, trying some could lead we think in

first to XX So impact volumes did anything quarter. to obviously this in difficult beyond like of to if quarter if time. this volumes, because it is seen the the automotive first disruption our at in it’s that, the that, stability not go did we and that’s We second point America. we’ve from relates of to XX, thing going months of couple significant as But to in project We predict there’s incorporate in where to what going expect go see guidance. a North corona what

Steve Barger

from question understandable. Right. That’s really me. Last

growth Mobile, talking rates in and you expect what’s three then As on this free growth cash the for and with segments CapEx Sciences the do on Life lower all about segments, positive flow some year? three about start-ups happening think you

Warren Veltman

Yes.

Steve Barger

Thanks. great. That’s

Operator

Thank you. Instructions]. [Operator

Our Management. Paresh next Asset from from will come question Shah Telos

Paresh Shah

taking morning my Good question. thanks for and

One the of right is the company. the things liquidity I at guess every now lender concerned is

there today, in could is is considering So balance covenants what what the MAC that of something the as is you else? on everything and the cash of discuss clause availability and sheet and terms

Warren Veltman

quarter and typically that borrowings the expectation our as sheet to We period to quarter to $XX build shows and is a is well. cash on on we the have and of sure. Yes, X negative guess understand outside that finished is cash-intensive of slower going balance a that up the for guidance the receivables And our come year and what it’s million us million important out the million our X in XXXX. XX, at on we’re the as no December revolver from December flow cash And I usually first be build balance inventory first some to in quarter we back positive. with

– something a from liquidity think feel that feel to good. we I Tom, want So we do standpoint, tell that? on I add pretty would you you

Thomas DeByle

giving about room, good feel we cash pretty and that are place path but preferred in our balances financing where good with about we the us the put the In forward. our liquidity, feel we

Paresh Shah

Okay.

if I that $XX ways, borrowings to this some today, in be million there to saying had that million revolver So your still would estimate range? at in the $XX are point and no you is liquidity cash like

Warren Veltman

net cash net position. We’re even have I But would positive we still position still point. on the the we’re this a in where America in position, revolver, that in cash revolver North a at Significant today. minimal okay. classify is positive positive cash borrowings net

Paresh Shah

Thank Okay, you. that’s helpful.

Warren Veltman

Thank you.

Operator

the this at showing Instructions]. in further Thank [Operator queue time. I’m you. no questions

Warren Veltman

bring a we’ll joining for us. call Thank to close. operator. you, that, Thank With the you

If Mark you Thank or Relations weekend. need further at to have information, please MacGregor. Investor reach you good out and Schuermann again Abernathy a

Operator

concludes today’s and this Thank gentlemen, teleconference. you. Ladies

may disconnect. You now

NN (NNBR) 13 Mar 202019 Q4 Earnings call transcript