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NN,INC.Reports 2006 Financial Results
NN, Inc. today reported its financial results for the fourth quarter and year ended December 31, 2006. These results include for the first time the operations of Whirlaway Corporation, a precision metal component manufacturing operation, with locations in Ohio and Arizona, which was acquired on December 1, 2006. Pro-forma financial statements, which would include the full fourth quarter and full year results of Whirlaway are not included in this press release. These pro-forma financial statements will be included in the Company Annual Report on Form 10-K for the fiscal year ended December 31, 2006.
Excluding the impact of the Whirlaway acquisition, net sales for the fourth quarter of 2006 were $81.2 million, up $5.3 million or 6.9% from $75.9 million for the same period of 2005. Net income for the fourth quarter totaled $3.7 million, or $0.21 per diluted share. This compares to net income of $5.1 million, or $0.30 per diluted share for the fourth quarter of 2005. Net sales for the full year 2006 were $325.6 million, up $4.2 million or 1.3% compared to $321.4 million for 2005. Net income for 2006 totaled $15.0 million, or $0.87 per diluted share, compared to $15.0 million, or $0.87 per diluted share for 2005.
As a percentage of net sales, cost of products sold was 78.1% in the fourth quarter of 2006 compared to 75.1% in the fourth quarter of 2005. For the full year 2006 and 2005, cost of products sold as a percentage of net sales was 77.7% and 77.4% respectively. The main factors for the increased costs in the fourth quarter of 2006, as compared to the same period in 2005, were operating inefficiencies at the Chinese and Slovakian facilities and volume reductions related to weak automotive demand.
Selling, general and administrative expenses for the fourth quarter of 2006 were 9.5% as a percentage of net sales as compared to 9.4% for the same period in 2005. For the full year 2006, selling, general and administrative expenses as a percentage of net sales were 9.1% as compared to 9.0% in 2005.
James H. Dorton, Vice President and Chief Financial Officer, commented, exceeded the revised full year guidance given on October 30, 2006 and ended the year with results within the range of our beginning year guidance. Revenue for the full year of 2006, not including the impact of the Whirlaway acquisition, was up $4.2 million, or 1.3% from the same period in 2005. Accounting for the increase was net price increases associated with material inflation of $7.8 million and positive currency translation of Euro-denominated sales of $1.6 million which were offset by volume and mix related decreases of $5.2 million.?
Mr. Dorton continued, excluding the funds borrowed for the acquisition of Whirlaway in December 2006, we paid down approximately $8.0 million in debt for the year. However, due to higher than expected working capital needs in the fourth quarter of this year, this was short of our debt reduction goal of $10.0 million for the year.?
Mr. Dorton concluded, during the fourth quarter of 2006, we purchased an additional 249,199 shares of our common stock pursuant to our previously announced stock repurchase plan. This plan was announced in March of this year and continues for 18 months thereafter and allows us to purchase up to $10.0 million of the Company common stock. The total amount we have purchased under this plan is 462,735 shares at a cost of $5.3 million.?
Roderick R. Baty, Chairman and Chief Executive Officer, commented, enerally, our 2006 results were in-line with our original expectations. Sales growth with several of our bearing component customers was offset by down economic conditions driven by weak automotive demand in the U.S. and share loss to one of our largest customers. We were also able to offset start-up costs at our China and Slovakian facilities with excellent operating results in our other domestic and European facilities. Additionally, our Level 3 initiatives continue to produce impressive results which helped to offset negative economic conditions.?
Operating Results of NN, Inc. Including Whirlaway Corporation for the Period Beginning December 1, 2006 and Ending December 31, 2006
For the period beginning December 1, 2006 and ending December 31, 2006, Whirlaway Corporation had net sales of $4.7 million and a net loss of $0.6 million. December sales at Whirlaway are historically impacted by seasonal factors. Additionally, 70% of the $0.6 million net loss for the month of December is attributed to the negative impact of purchase accounting adjustments and will not impact future quarterly results.
Including Whirlaway Corporation for the period beginning December 1, 2006 and ending December 31, 2006, consolidated net sales for the fourth quarter of 2006 were $85.9 million, up $10.0 million or 13.2% from $75.9 million for the same period of 2005. Net income for the fourth quarter totaled $3.1 million, or $0.18 per diluted share. This compares to net income of $5.1 million or $0.30 per diluted share for the fourth quarter of 2005. Net sales for the full year 2006 were $330.3 million, up $8.9 million or 2.8% compared to $321.4 million for 2005. Net income for 2006 totaled $14.4 million, or $0.83 per diluted share, compared to $15.0 million or $0.87 per diluted share for 2005.
As a percentage of net sales, cost of products sold was 79.3% in the fourth quarter of 2006 compared to 75.1% in the fourth quarter of 2005. For the full year 2006 and 2005, cost of goods sold as a percentage of net sales was 78.0% and 77.4% respectively.
Selling, general and administrative expenses for the fourth quarter of 2006 were 9.4% as a percentage of net sales as compared to 9.4% for the same period in 2005. For the full year, selling, general and administrative expenses as a percentage of net sales were 9.1% as compared to 9.0% in 2005.
Mr. Baty continued, we are enthusiastic regarding the acquisition of Whirlaway. We believe Whirlaway will be a solid cornerstone for our new precision metal platform and will provide us with excellent growth opportunities. Additionally, this acquisition and platform provides us with a diversification of products, manufacturing technology, end markets and customers, yet remains complementary with our core competencies and growth strategy. We expect Whirlaway to be accretive to 2007 earnings by $0.10 to $0.12 per diluted share.?
| Product Model | Inside Diameter | Outside Diameter | Thickness |
| GR26×34×4 bearing | 26 | 4 | |
| GR25×35×4 bearing | 25 | 4 |