NN,INC.Reports First Quarter 2007 Results

NN,INC.Reports First Quarter 2007 Results NN, Inc. today reported its financial results for the first quarter ended March 31, 2007. Net sales for the first quarter of 2007 were $107.9 million, an increase of $21.9 million or 25.5% from $86.0 million for the same period of 2006. The acquisition of Whirlaway, which occurred on December 1, 2006, contributed $18.0 million of this increase. Net income for the first quarter of 2007 totaled $3.8 million or $0.22 per diluted share as compared to $5.3 million or $0.30 per diluted share for the same period in 2006. First quarter net income for 2006 included 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 $0.7 million or $0.04 per diluted share. James H. Dorton, Vice President and Chief Financial Officer commented, evenues of $107.9 million for the first quarter of 2007 were up $21.9 million, an increase of 25.5% million over the $86.0 million recorded in the first quarter of 2006. Included in this increase was $18.0 million of revenue from the Whirlaway acquisition. Additionally, the positive effect of currency translation of approximately $5.4 million more than offset product mix/price reductions of $1.5 million. a percentage of net sales, 2007 first quarter cost of goods sold was 78.8% as compared to the 2006 first quarter cost of goods sold of 76.7%. Approximately 50% of the increase of cost of goods sold as a percentage of net sales was associated with the addition of our Whirlaway operation. The remaining factors for the increased costs were efficiency issues related to volume reductions in domestic operations and price/mix issues in European operations. As a percentage of net sales, selling, general and administrative expenses for the first quarter of 2007 was 8.7% as compared to 8.9% for the same period in 2006. Mr. Dorton continued, reported net income of $3.8 million or $0.22 per diluted share compares to 2006 first quarter net income of $5.3 million or $0.30 per diluted share. Of note, the 2006 first quarter income includes a net gain of approximately $0.8 million 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 $0.7 million or $0.04 per diluted share, after-tax. Mr. Dorton added, during the first quarter our net debt, which is total debt minus cash increased by $1.9 million. This increase was due to our traditionally higher working capital needs during the first quarter of the year and the timing of inter-company cash flows to pay down debt balances during the quarter. We continue to anticipate meeting our business plan goal of $12.0 million in total debt reduction for the year. Roderick R. Baty, Chairman and Chief Executive Officer commented, during the first quarter we continued to make excellent progress regarding the integration of Whirlaway and the development of our new precision metal component platform. We also are continuing to experience improvements from our Level 3 program. These improvements should more than offset the volume reductions associated with planned market share loss in Europe and general cost inflation in our business. Although our Slovakian and Chinese facilities continued to negatively impact earnings for the quarter, we are expecting improved operating results in both of these facilities for the remainder of the year. Mr. Baty concluded, we look forward to the challenges and the opportunities for the remainder of 2007. As previously stated, we are continuing to forecast relatively flat economic conditions for our businesses. We are forecasting continued weakness in certain North American markets, notably, automotive and housing, offset by continuing strength in European automotive markets and industrial markets. We therefore remain committed to our previously stated guidance for estimated total year revenues of approximately $400 million and full year earnings to be in the range of $0.98 to $1.04 per diluted share