NN Inc. (NASDAQ:NNBR) Q3 2019 Earnings Conference Call - Final Transcript

Nov 08, 2019 • 09:00 am ET


NN Inc. (NASDAQ:NNBR) Q3 2019 Earnings Conference Call - Final Transcript


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Good day and welcome to the NN, Incorporated Third Quarter Earnings Conference Call. Today's conference is being recorded. At this time, it is now my pleasure to turn today's call over to Mr. Mark Schuermann. Please go ahead, sir.

Mark Schuermann

Thank you, operator. Good morning, everyone, and thanks for joining us. I'm Mark Schuermann, VP, Treasurer and Investor Relations. I'd like to welcome you to NN's Third Quarter 2019 Earnings Conference Call. Our presenter this morning is Interim President and Chief Executive Officer, Warren Veltman; also attending the call is Tom DeByle, SVP and Chief Financial Officer. If anyone needs a copy of the press release or the supplemental presentation, please contact Abernathy MacGregor at (212) 371-5999 and they'll be happy to send you a copy.

Before we begin, I'll ask that you take note of the cautionary language regarding forward-looking statements contained in today's press release, supplemental presentation and the Risk Factors section of this company's 10-K for the year ended December 31, 2018. The same language applies to comments made on today's conference call, including the Q&A session as well as the live webcast. Our presentation today will contain forward-looking statements regarding sales, margins, foreign exchange rates, cash flow, tax rate, acquisitions, synergies, future operating results, performance of our worldwide markets and other topics. These statements should be used with caution and are subject to various risks and uncertainties, many of which are outside the company's control. The presentation also includes certain non-GAAP measures as defined by SEC rules. A reconciliation of such non-GAAP measures is contained in the tables in the final section of the press release and the supplemental presentation.

Warren and Tom will now provide commentary on the business and discuss results, and we'll open the line for questions after our prepared remarks. With that said, Warren, I'll turn the call over to you.

Warren Veltman

Thanks, Mark. As this is Tom and my first NN's earnings call, we revisited some of the previous earnings calls to gain a better understanding of the information that our shareholders and analysts would like us to present. Based on that review, we have revised the company's earnings presentation to present additional information regarding the Group's financial performance and outlook, adjusted results, and the financial analysis of working capital and capital expenditures. I hope you find our presentation more informative.

Let's start with an overview of the third quarter. Our sales for Q3 were $213.9 million, up 4% from the prior year, and were driven primarily by organic sales from our Life Sciences group, where sales were up $15.6 million or 20% from one year ago. The third quarter operating income and EPS both improved over Q3 2018. GAAP operating income margin expanded 70 basis points from 2.9% last year to 3.6% this year. EPS also improved from a loss of $0.48 per share one year ago to a loss of $0.13 per share in Q3 2019. Adjusted operating income margin in 2019 was up slightly to 12.9% from 12.8% in 2018, and