CHARLOTTE, N.C., Oct. 30, 2024 (GLOBE NEWSWIRE) -- NN, Inc. (NASDAQ: NNBR), a global diversified industrial company that engineers and manufactures high-precision components and assemblies, today reported its financial results for the third quarter ended September 30, 2024.
Highlights
- New business wins in the quarter were $15 million, bringing year-to-date and trailing-21-month totals to $49 million and $113 million, respectively; on pace with full-year guidance;
- Continuing to lower the cost structure of our North American Mobile Solutions footprint to achieve a minimum 10% adjusted EBITDA margin rate through footprint optimization and overhead cost reduction;
- China sales growth continues on track with top global tier-1 customers; up 19% versus prior year period;
- Implemented operational and cost reduction plans in Q3'24, including a ~$2 million annualized cost-out program, with additional cost-out initiatives in Q4'24 and first half of 2025;
- Leverage ratio declined to 2.97x, as cash proceeds from the sale of Lubbock plant were deployed towards debt reduction;
- Strategic refinancing process continues, evaluating future growth capital needs driven by successful new business wins program;
- End markets are opportunity-rich with current focus on increasing new business wins in Stamping and Medical markets.
"We achieved a faster pace in our enterprise transformation across cost-out and growth programs within our current capital structure," said Harold Bevis, President and Chief Executive Officer of NN, Inc. "Our continued focus and execution across the pillars of our transformation initiatives delivered another quarter of results broadly across our business, evidenced by advances in operational efficiency, structural cost reductions, and commercial growth through our new business win program."
"During the quarter, we remained focused on improving our profitability and launched a new round of successful cost reduction measures, which we believe will carry a meaningful impact to growing and sustaining the earnings power of our business, particularly as we begin to capture the embedded future top-line growth from the initial success of our new business program. Additionally, as was previously announced, we completed the sale of our non-core plastics products plant, which allows us to focus on our core competencies and further corrects our balance sheet."
Mr. Bevis concluded, "NN is working to enhance its business model and adjust the revenue and margin mix, primarily in Mobile. We are underway installing new equipment to support global new wins for high-end next generation products, including steering and braking components. Additionally, as part of our focus on strategically realigning volumes in our group of underperforming plants, we announced the closure of our Dowagiac plant, reflecting our continued capacity shift towards lower cost geographies, particularly in China. We expect these optimization actions to support our adjusted EBITDA run rate and margin performance moving forward. As we look to the fourth quarter and fiscal 2025, we will judiciously invest our cash flows into electrical, medical, and other high return projects, and are excited about the opportunity set in front of us. We are encouraged with the pace and results of our transformation."
Third Quarter GAAP Results
Net sales were $113.6 million, a decrease of 8.7% compared to the third quarter of 2023 net sales of $124.4 million, which was primarily due to the sale of our Lubbock operations, rationalized volume at plants undergoing turnarounds, a customer settlement received in 2023, and unfavorable foreign exchange effects of $1.1 million. Excluding these items, net sales decreased 0.5%.
Loss from operations was $3.8 million compared to a loss from operations of $2.7 million in the third quarter of 2023. The increased loss from operations was primarily due to lower sales volume.
Income from operations for Power Solutions was $2.5 million compared to income from operations of $3.9 million for the same period in 2023. Loss from operations for Mobile Solutions was $1.4 million compared to loss from operations of $1.3 million for the same period in 2023.
Net loss was $2.6 million compared to net loss of $5.1 million for the same period in 2023.
Third Quarter Adjusted Results
Adjusted income from operations for the third quarter of 2024 was $1.3 million compared to adjusted income from operations of $3.7 million for the same period in 2023. Adjusted EBITDA was $11.6 million, or 10.2% of sales, compared to $14.5 million, or 11.6% of sales, for the same period in 2023. The prior year adjusted EBITDA benefited by $2.5 million from a customer settlement, a favorable precious metals adjustment, and results of now divested Lubbock operations, partially offset by rationalized business of $0.9 million. Excluding these items, adjusted EBITDA declined $1.3 million.
Adjusted net loss was $2.5 million, or $0.05 per diluted share, compared to adjusted net income of $0.1 million, or $0.01 per diluted share, for the same period in 2023. Free cash flow was a generation of cash of $0.3 million compared to a generation of cash of $11.3 million for the same period in 2023.
Power Solutions
Net sales for the third quarter of 2024 were $42.9 million compared to $45.5 million in the same period in 2023. Prior year sales were $39.9 million, excluding the recently sold Lubbock operations, an increase of $3 million. The increase in sales when removing the impact from Lubbock was primarily due to higher precious metals pass-through pricing and pricing.
Adjusted income from operations was $5.2 million compared to adjusted income from operations of $7.1 million in the third quarter of 2023. The decrease in adjusted income from operations was primarily due to the lower revenue resulting from the sale of the Lubbock operations and unfavorable product mix.
Mobile Solutions
Net sales for the third quarter of 2024 were $70.7 million compared to $79.0 million in the third quarter of 2023, a decrease of 10.5%. The decrease in sales was primarily due to rationalized volume at plants undergoing turnarounds, contractual reduction in customer pass-through material pricing, a customer settlement received in 2023, and unfavorable foreign exchange effects of $1.0 million.
Adjusted income from operations was $0.9 million compared to adjusted income from operations of $1.6 million in the third quarter of 2023. The decrease in adjusted income from operations was primarily due to lower revenue, partially offset by lower depreciation expense.
2024 Outlook
- Revenue in the range of $465 million to $485 million;
- Adjusted EBITDA in the range of $47 million to $51 million;
- Free cash flow in the range of $8 million to $12 million; and
- New business wins in the range of $55 million to $70 million.
Chris Bohnert, Senior Vice President and Chief Financial Officer, commented, "We expect to perform within our guidance ranges, subject to market demand. Importantly, our operational transformation remains on track, and we are maintaining our outlook for new business wins to continue at a strong rate."
Mr. Bohnert concluded, "The refinancing of our ABL and Term Loan is still in process and remains a top priority. We continue to refine based on the needs of our long-term growth capital requirements and cost reduction plans."
Conference Call
NN will discuss its results during its quarterly investor conference call on October 31, 2024, at 9 a.m. ET. The call and supplemental presentation may be accessed via NN's website, www.nninc.com. The conference call can also be accessed by dialing 1-877-255-4315 or 1-412-317-6579. For those who are unavailable to listen to the live broadcast, a replay will be available shortly after the call until October 31, 2025.
NN discloses in this press release the non-GAAP financial measures of adjusted income (loss) from operations, adjusted EBITDA, adjusted net income (loss), adjusted net income (loss) per diluted common share, and free cash flow. Each of these non-GAAP financial measures provides supplementary information about the impacts of restructuring and integration expense, acquisition and transition expenses, foreign exchange impacts on inter-company loans, amortization of intangibles and deferred financing costs, and other non-operating impacts on our business.
The financial tables found later in this press release include a reconciliation of adjusted income (loss) from operations, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net income (loss), adjusted net income (loss) per diluted share, free cash flow to the U.S. GAAP financial measures of income (loss) from operations, net income (loss), net income (loss) per diluted common share, and cash provided (used) by operating activities.
About NN, Inc.
NN, Inc., a global diversified industrial company, combines advanced engineering and production capabilities with in-depth materials science expertise to design and manufacture high-precision components and assemblies for a variety of markets on a global basis. Headquartered in Charlotte, North Carolina, NN has facilities in North America, Europe, South America, and Asia. For more information about the company and its products, please visit www.nninc.com.
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 statements may discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to NN, Inc. (the "Company") based on current beliefs of management as well as assumptions made by, and information currently available to, management. Forward-looking statements generally will be accompanied by words such as "anticipate," "believe," "could," "estimate," "expect," "forecast," "guidance," "intend," "may," "possible," "potential," "predict," "project" or other similar words, phrases or expressions. Forward-looking statements involve a number of risks and uncertainties that are outside of management's control and that may cause actual results to be materially different from such forward-looking statements. Such factors include, among others, general economic conditions and economic conditions in the industrial sector; the impacts of pandemics, epidemics, disease outbreaks and other public health crises on our financial condition, business operations and liquidity; competitive influences; risks that current customers will commence or increase captive production; risks of capacity underutilization; quality issues; material changes in the costs and availability of raw materials; economic, social, political and geopolitical instability, military conflict, currency fluctuation, and other risks of doing business outside of the United States; inflationary pressures and changes in the cost or availability of materials, supply chain shortages and disruptions, the availability of labor and labor disruptions along the supply chain; our dependence on certain major customers, some of whom are not parties to long-term agreements (and/or are terminable on short notice); the impact of acquisitions and divestitures, as well as expansion of end markets and product offerings; our ability to hire or retain key personnel; the level of our indebtedness; the restrictions contained in our debt agreements; our ability to obtain financing at favorable rates, if at all, and to refinance existing debt as it matures; our ability to secure, maintain or enforce patents or other appropriate protections for our intellectual property; new laws and governmental regulations; the impact of climate change on our operations; and cyber liability or potential liability for breaches of our or our service providers' information technology systems or business operations disruptions. The foregoing factors should not be construed as exhaustive and should be read in conjunction with the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Company's filings made with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date of this press release, and the Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for the Company to predict their occurrence or how they will affect the Company. The Company qualifies all forward-looking statements by these cautionary statements.
With respect to any non-GAAP financial measures included in the following document, the accompanying information required by SEC Regulation G can be found in the back of this document or in the "Investors" section of the Company's web site, www.nninc.com, under the heading "News & Events" and subheading "Presentations."
Investor & Media Contacts:
Joe Caminiti or Stephen Poe
NNBR@alpha-ir.com
312-445-2870
| Financial Tables Follow | |||||||||||||||
| NN, Inc. Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| (in thousands, except per share data) | 2024 | 2023 | 2024 | 2023 | |||||||||||
| Net sales | $ | 113,587 | $ | 124,443 | $ | 357,777 | $ | 376,737 | |||||||
| Cost of sales (exclusive of depreciation and amortization shown separately below) | 97,131 | 104,543 | 299,474 | 320,648 | |||||||||||
| Selling, general, and administrative expense | 10,257 | 11,693 | 37,116 | 35,833 | |||||||||||
| Depreciation and amortization | 10,844 | 11,577 | 35,152 | 34,643 | |||||||||||
| Other operating income, net | (895 | ) | (631 | ) | (3,285 | ) | (526 | ) | |||||||
| Loss from operations | (3,750 | ) | (2,739 | ) | (10,680 | ) | (13,861 | ) | |||||||
| Interest expense | 5,404 | 5,739 | 16,643 | 15,484 | |||||||||||
| Other expense (income), net | (5,315 | ) | (1,463 | ) | (4,623 | ) | 1,970 | ||||||||
| Loss before benefit (provision) for income taxes and share of net income from joint venture | (3,839 | ) | (7,015 | ) | (22,700 | ) | (31,315 | ) | |||||||
| Benefit (provision) for income taxes | (903 | ) | 245 | (1,194 | ) | (1,381 | ) | ||||||||
| Share of net income from joint venture | 2,185 | 1,713 | 6,597 | 3,087 | |||||||||||
| Net loss | $ | (2,557 | ) | $ | (5,057 | ) | $ | (17,297 | ) | $ | (29,609 | ) | |||
| Other comprehensive income (loss): | |||||||||||||||
| Foreign currency transaction gain (loss) | 3,970 | (3,072 | ) | (1,763 | ) | (3,606 | ) | ||||||||
| Interest rate swap: | |||||||||||||||
| Change in fair value, net of tax | - | - | - | (230 | ) | ||||||||||
| Reclassification adjustments included in net loss, net of tax | (109 | ) | (449 | ) | (1,007 | ) | (1,366 | ) | |||||||
| Other comprehensive income (loss) | $ | 3,861 | $ | (3,521 | ) | $ | (2,770 | ) | $ | (5,202 | ) | ||||
| Comprehensive income (loss) | $ | 1,304 | $ | (8,578 | ) | $ | (20,067 | ) | $ | (34,811 | ) | ||||
| Basic and diluted net loss per common share: | |||||||||||||||
| Basic and diluted net loss per share | $ | (0.13 | ) | $ | (0.18 | ) | $ | (0.59 | ) | $ | (0.84 | ) | |||
| Shares used to calculate basic and diluted net loss per share | 48,997 | 47,539 | 48,522 | 46,410 | |||||||||||
| NN, Inc. Condensed Consolidated Balance Sheets (Unaudited) | |||||||
| (in thousands, except per share data) | September 30, 2024 | December 31, 2023 | |||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 12,449 | $ | 21,903 | |||
| Accounts receivable, net | 64,447 | 65,545 | |||||
| Inventories | 69,600 | 71,563 | |||||
| Income tax receivable | 12,956 | 11,885 | |||||
| Prepaid assets | 4,095 | 2,464 | |||||
| Other current assets | 10,357 | 9,194 | |||||
| Total current assets | 173,904 | 182,554 | |||||
| Property, plant and equipment, net | 172,947 | 185,812 | |||||
| Operating lease right-of-use assets | 40,821 | 43,357 | |||||
| Intangible assets, net | 47,816 | 58,724 | |||||
| Investment in joint venture | 39,843 | 32,701 | |||||
| Deferred tax assets | 1,177 | 734 | |||||
| Other non-current assets | 6,590 | 7,003 | |||||
| Total assets | $ | 483,098 | $ | 510,885 | |||
| Liabilities, Preferred Stock, and Stockholders' Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 44,983 | $ | 45,480 | |||
| Accrued salaries, wages and benefits | 15,027 | 15,464 | |||||
| Income tax payable | 546 | 524 | |||||
| Short-term debt and current maturities of long-term debt | 8,085 | 3,910 | |||||
| Current portion of operating lease liabilities | 5,805 | 5,735 | |||||
| Other current liabilities | 14,126 | 10,506 | |||||
| Total current liabilities | 88,572 | 81,619 | |||||
| Deferred tax liabilities | 4,960 | 4,988 | |||||
| Long-term debt, net of current maturities | 135,548 | 149,369 | |||||
| Operating lease liabilities, net of current portion | 44,001 | 47,281 | |||||
| Other non-current liabilities | 14,154 | 24,827 | |||||
| Total liabilities | 287,235 | 308,084 | |||||
| Commitments and contingencies | |||||||
| Series D perpetual preferred stock | 89,289 | 77,799 | |||||
| Stockholders' equity: | |||||||
| Common stock | 499 | 473 | |||||
| Additional paid-in capital | 459,245 | 457,632 | |||||
| Accumulated deficit | (312,645 | ) | (295,348 | ) | |||
| Accumulated other comprehensive loss | (40,525 | ) | (37,755 | ) | |||
| Total stockholders' equity | 106,574 | 125,002 | |||||
| Total liabilities, preferred stock, and stockholders' equity | $ | 483,098 | $ | 510,885 | |||
| NN, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||||
| Nine Months Ended September 30, | |||||||
| (in thousands) | 2024 | 2023 | |||||
| Cash flows from operating activities | |||||||
| Net loss | $ | (17,297 | ) | $ | (29,609 | ) | |
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 35,152 | 34,643 | |||||
| Amortization of debt issuance costs and discount | 1,718 | 1,409 | |||||
| Paid-in-kind interest | 2,064 | 1,491 | |||||
| Total derivative loss, net of cash settlements | 582 | 3,139 | |||||
| Share of net income from joint venture, net of cash dividends received | (6,597 | ) | 851 | ||||
| Gain on sale of business | (7,154 | ) | - | ||||
| Share-based compensation expense | 2,347 | 2,058 | |||||
| Deferred income taxes | (477 | ) | (1,531 | ) | |||
| Other | (658 | ) | (776 | ) | |||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable | (3,957 | ) | 335 | ||||
| Inventories | (1,916 | ) | 9,692 | ||||
| Other operating assets | (2,873 | ) | (8,223 | ) | |||
| Income taxes receivable and payable, net | (1,078 | ) | (576 | ) | |||
| Accounts payable | 1,794 | 5,240 | |||||
| Other operating liabilities | 2,739 | 5,747 | |||||
| Net cash provided by operating activities | 4,389 | 23,890 | |||||
| Cash flows from investing activities | |||||||
| Acquisition of property, plant and equipment | (15,352 | ) | (16,292 | ) | |||
| Proceeds from sale of property, plant, and equipment | 266 | 2,876 | |||||
| Proceeds received from sale of business | 17,000 | - | |||||
| Net cash provided by (used in) investing activities | 1,914 | (13,416 | ) | ||||
| Cash flows from financing activities | |||||||
| Proceeds from long-term debt | 38,000 | 52,000 | |||||
| Repayments of long-term debt | (75,320 | ) | (55,522 | ) | |||
| Cash paid for debt issuance costs | (746 | ) | (55 | ) | |||
| Proceeds from sale-leaseback of equipment | 8,324 | - | |||||
| Proceeds from sale-leaseback of land and buildings | 16,863 | - | |||||
| Repayments of financing obligations | (492 | ) | - | ||||
| Proceeds from short-term debt | - | 3,648 | |||||
| Other | (2,262 | ) | (1,276 | ) | |||
| Net cash used in financing activities | (15,633 | ) | (1,205 | ) | |||
| Effect of exchange rate changes on cash flows | (124 | ) | (287 | ) | |||
| Net change in cash and cash equivalents | (9,454 | ) | 8,982 | ||||
| Cash and cash equivalents at beginning of year | 21,903 | 12,808 | |||||
| Cash and cash equivalents at end of quarter | $ | 12,449 | $ | 21,790 | |||
Reconciliation of GAAP Income (Loss) from Operations to Non-GAAP Adjusted Income (Loss) from Operations
| (in thousands) | Three Months Ended September 30, | ||||||
| NN, Inc. Consolidated | 2024 | 2023 | |||||
| GAAP loss from operations | $ | (3,750 | ) | $ | (2,739 | ) | |
| Professional fees | 22 | 32 | |||||
| Personnel costs (1) | 734 | 903 | |||||
| Facility costs (2) | 874 | 1,893 | |||||
| Amortization of intangibles | 3,405 | 3,563 | |||||
| Non-GAAP adjusted income from operations (a) | $ | 1,285 | $ | 3,652 | |||
| Non-GAAP adjusted operating margin (3) | 1.1 | % | 2.9 | % | |||
| GAAP net sales | $ | 113,587 | $ | 124,443 | |||
| (in thousands) | Three Months Ended September 30, | ||||||
| Power Solutions | 2024 | 2023 | |||||
| GAAP income from operations | $ | 2,505 | $ | 3,936 | |||
| Personnel costs (1) | 113 | 122 | |||||
| Facility costs (2) | 16 | 324 | |||||
| Amortization of intangibles | 2,567 | 2,725 | |||||
| Non-GAAP adjusted income from operations (a) | $ | 5,201 | $ | 7,107 | |||
| Non-GAAP adjusted operating margin (3) | 12.1 | % | 15.6 | % | |||
| GAAP net sales | $ | 42,935 | $ | 45,484 | |||
| (in thousands) | Three Months Ended September 30, | ||||||
| Mobile Solutions | 2024 | 2023 | |||||
| GAAP loss from operations | $ | (1,441 | ) | $ | (1,283 | ) | |
| Personnel costs (1) | 598 | 462 | |||||
| Facility costs (2) | 858 | 1,569 | |||||
| Amortization of intangibles | 838 | 838 | |||||
| Non-GAAP adjusted income from operations (a) | $ | 853 | $ | 1,586 | |||
| Share of net income from joint venture | 2,185 | 1,713 | |||||
| Non-GAAP adjusted income from operations with JV (a) | $ | 3,038 | $ | 3,299 | |||
| Non-GAAP adjusted operating margin (3) | 4.3 | % | 4.2 | % | |||
| GAAP net sales | $ | 70,678 | $ | 78,961 | |||
| (in thousands) | Three Months Ended September 30, | ||||||
| Elimination | 2023 | 2022 | |||||
| GAAP net sales | $ | (26 | ) | $ | (2 | ) | |
(1) Personnel costs include recruitment, retention, relocation, and severance costs
(2) Facility costs include costs of opening / closing facilities and relocation / exit of manufacturing operations
(3) Non-GAAP adjusted operating margin = Non-GAAP adjusted income (loss) from operations / GAAP net sales
| Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA | |||||||
| Three Months Ended September 30, | |||||||
| (in thousands) | 2024 | 2023 | |||||
| GAAP net loss | $ | (2,557 | ) | $ | (5,057 | ) | |
| Benefit (provision) for income taxes | 903 | (245 | ) | ||||
| Interest expense | 5,404 | 5,739 | |||||
| Change in fair value of preferred stock derivatives and warrants | 1,858 | (2,104 | ) | ||||
| Gain on sale of business | (7,154 | ) | - | ||||
| Depreciation and amortization | 10,844 | 11,577 | |||||
| Professional fees | 22 | 32 | |||||
| Personnel costs (1) | 734 | 903 | |||||
| Facility costs (2) | 874 | 1,893 | |||||
| Non-cash stock compensation | 812 | 1,208 | |||||
| Non-cash foreign exchange (gain) loss on inter-company loans | (164 | ) | 520 | ||||
| Non-GAAP adjusted EBITDA (b) | $ | 11,576 | $ | 14,466 | |||
| Non-GAAP adjusted EBITDA margin (3) | 10.2 | % | 11.6 | % | |||
| GAAP net sales | $ | 113,587 | $ | 124,443 | |||
(1) Personnel costs include recruitment, retention, relocation, and severance costs
(2) Facility costs include costs of opening / closing facilities and relocation / exit of manufacturing operations
(3) Non-GAAP adjusted EBITDA margin = Non-GAAP adjusted EBITDA / GAAP net sales
| Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted Net Income and GAAP Net Income (Loss) per Diluted Common Share to Non-GAAP Adjusted Net Income (Loss) per Diluted Common Share | |||||||
| Three Months Ended September 30, | |||||||
| (in thousands) | 2024 | 2023 | |||||
| GAAP net loss | $ | (2,557 | ) | $ | (5,057 | ) | |
| Pre-tax professional fees | 22 | 32 | |||||
| Pre-tax personnel costs | 734 | 903 | |||||
| Pre-tax facility costs | 874 | 1,893 | |||||
| Pre-tax foreign exchange (gain) loss on inter-company loans | (164 | ) | 520 | ||||
| Pre-tax change in fair value of preferred stock derivatives and warrants | 1,858 | (2,104 | ) | ||||
| Pre-tax change in gain on sale of business | (7,154 | ) | - | ||||
| Pre-tax amortization of intangibles and deferred financing costs | 4,018 | 4,092 | |||||
| Tax effect of adjustments reflected above (c) | (113 | ) | (162 | ) | |||
| Non-GAAP adjusted net income (loss) (d) | $ | (2,482 | ) | $ | 117 | ||
| Three Months Ended September 30, | |||||||
| (per diluted common share) | 2024 | 2023 | |||||
| GAAP net loss per diluted common share | $ | (0.13 | ) | $ | (0.18 | ) | |
| Pre-tax personnel costs | 0.01 | 0.02 | |||||
| Pre-tax facility costs | 0.02 | 0.04 | |||||
| Pre-tax foreign exchange (gain) loss on inter-company loans | - | 0.01 | |||||
| Pre-tax change in fair value of preferred stock derivatives and warrants | 0.04 | (0.04 | ) | ||||
| Pre-tax change in gain on sale of business | (0.15 | ) | - | ||||
| Pre-tax amortization of intangibles and deferred financing costs | 0.08 | 0.09 | |||||
| Preferred stock cumulative dividends and deemed dividends | 0.08 | 0.07 | |||||
| Non-GAAP adjusted net income (loss) per diluted common share (d) | $ | (0.05 | ) | $ | 0.01 | ||
| Shares used to calculate net earnings (loss) per share | 48,997 | 47,539 | |||||
| Reconciliation of Operating Cash Flow to Free Cash Flow | |||||||
| Three Months Ended September 30, | |||||||
| (in thousands) | 2024 | 2023 | |||||
| Net cash provided by operating activities | $ | 4,958 | $ | 15,247 | |||
| Acquisition of property, plant, and equipment | (6,300 | ) | (4,096 | ) | |||
| Proceeds from sale of property, plant, and equipment | 29 | 99 | |||||
| Transaction costs incurred from sale of business | 1,566 | - | |||||
| Free cash flow | $ | 253 | $ | 11,250 | |||
The Company discloses in this presentation the non-GAAP financial measures of adjusted income (loss) from operations, adjusted EBITDA, adjusted net income (loss), adjusted net income (loss) per diluted common share, and free cash flow. Each of these non-GAAP financial measures provides supplementary information about the impacts of acquisition, divestiture and integration related expenses, foreign-exchange impacts on inter-company loans, reorganizational and impairment charges. The costs we incur in completing acquisitions, including the amortization of intangibles and deferred financing costs, and divestitures are excluded from these measures because their size and inconsistent frequency are unrelated to our commercial performance during the period, and we believe are not indicative of our ongoing operating costs. We exclude the impact of currency translation from these measures because foreign exchange rates are not under management's control and are subject to volatility. Other non-operating charges are excluded as the charges are not indicative of our ongoing operating cost. We believe the presentation of adjusted income (loss) from operations, adjusted EBITDA, adjusted net income (loss), adjusted net income (loss) per diluted common share, and free cash flow provides useful information in assessing our underlying business trends and facilitates comparison of our long-term performance over given periods.
The non-GAAP financial measures provided herein may not provide information that is directly comparable to that provided by other companies in the Company's industry, as other companies may calculate such financial results differently. The Company's non-GAAP financial measures are not measurements of financial performance under GAAP and should not be considered as alternatives to actual income growth derived from income amounts presented in accordance with GAAP. The Company does not consider these non-GAAP financial measures to be a substitute for, or superior to, the information provided by GAAP financial results.
(a) Non-GAAP adjusted income (loss) from operations represents GAAP income (loss) from operations, adjusted to exclude the effects of restructuring and integration expense; non-operational charges related to acquisition and transition expense, intangible amortization costs for fair value step-up in values related to acquisitions, non-cash impairment charges, and when applicable, our share of income from joint venture operations. We believe this presentation is commonly used by investors and professional research analysts in the valuation, comparison, rating, and investment recommendations of companies in the industrial industry. We use this information for comparative purposes within the industry. Non-GAAP adjusted income (loss) from operations is not a measure of financial performance under GAAP and should not be considered as a measure of liquidity or as an alternative to GAAP income (loss) from operations.
(b) Non-GAAP adjusted EBITDA represents GAAP net income (loss), adjusted to include income taxes, interest expense, write-off of unamortized debt issuance costs, interest rate swap payments and change in fair value that was recognized in earnings, change in fair value of preferred stock derivatives and warrants, depreciation and amortization, charges related to acquisition and transition costs, non-cash stock compensation expense, foreign exchange gain (loss) on inter-company loans, restructuring and integration expense, costs related to divested businesses and litigation settlements, income from discontinued operations, and non-cash impairment charges, to the extent applicable. We believe this presentation is commonly used by investors and professional research analysts in the valuation, comparison, rating, and investment recommendations of companies in the industrial industry. We use this information for comparative purposes within the industry. Non-GAAP adjusted EBITDA is not a measure of financial performance under GAAP and should not be considered as a measure of liquidity or as an alternative to GAAP income (loss) from continuing operations.
(c) This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the respective table. NN, Inc. estimates the tax effect of the adjustment items identified in the reconciliation schedule above by applying the applicable statutory rates by tax jurisdiction unless the nature of the item and/or the tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment.
(d) Non-GAAP adjusted net income (loss) represents GAAP net income (loss) adjusted to exclude the tax-affected effects of charges related to acquisition and transition costs, foreign exchange gain (loss) on inter-company loans, restructuring and integration charges, amortization of intangibles costs for fair value step-up in values related to acquisitions and amortization of deferred financing costs, non-cash impairment charges, write-off of unamortized debt issuance costs, interest rate swap payments and change in fair value, change in fair value of preferred stock derivatives and warrants, costs related to divested businesses and litigation settlements, income (loss) from discontinued operations, and preferred stock cumulative dividends and deemed dividends. We believe this presentation is commonly used by investors and professional research analysts in the valuation, comparison, rating, and investment recommendations of companies in the industrial industry. We use this information for comparative purposes within the industry.
