2 Precision Metal Components NN, Inc. TodayBearing ComponentsPrecision Metal Components
3 NN, Inc. TodayA leading independent supplier of high precision components and assemblies14 manufacturing facilities in North America, Europe and AsiaGlobal manufacturing presenceServing diverse industrial end markets
4 NN makes the Forbes “200 Best” List for the 4th Time
6 + NN Inc. \ Whirlaway Whirlaway NN Inc. Diversified public company with history of financial stabilityCompany with global footprint to accelerate support of customer globalizationCommitment to quality and customer serviceBroad depth of technical and manufacturing resourcesIntegrated marketing and technical services approachCustomer solutions focusWhirlaway+NN Inc.
7 NN Inc. \ Whirlaway Whirlaway NN Inc. Proven provider of collaborative technical solutions - Value added engineeringComprehensive manufacturing process technology experienceCompetent mechanical engineering team for design, build, and integration of equipment and softwareProgram management systemDiversified global market presenceExperience in metal components manufacturingFocused on Lean manufacturing, six sigma, TPMExpertise in applications marketingPublicly traded company with solid financial history
8 Competitive Advantages NN StrengthsResult InCustomer needs driven cultureHigh precision component and assembly manufacturingCollaborative component and tooling designComponent and tooling design“Level 3” - Six Sigma, Lean Manufacturing, Total Productive MaintenanceUnparalleled serviceHigh qualityValue-enhancing, engineering capabilityCost competitive global structure
9 Global Market Presence Veenendaal, The NetherlandsKilkenny, IrelandEltmann, GermanyWellington, OHHamilton, OHSlovakiaDanielson, CTTempe, AZErwin, TNMt. City, TNPinerolo, ItalyLubbock, TXKunshan, Jiangsu,ChinaPlant Locations:NN Ball and RollerWhirlawayNN Europe - EuroballNN Europe - VeenendaalIMCDelta RubberChinaCustomer/Country Locations
10 Facilities and Employment US Ball andRoller DivisionWhirlaway DivisionPlastic and Rubber DivisionErwin, TNEmployees: 215Mt. City, TNEmployees: 92Wellington, OH 1Employees: 230Wellington, OH 2Employees: 200Hamilton, OHEmployees: 30Triumph LLCTempe, AZEmployees: 200Industrial MoldingLubbock, TXEmployees: 286Delta RubberDanielson, CTEmployees: 196NN AsiaNN EuropeKunshan, ChinaEmployees: 47NN ItalyPinerolo, ItalyEmployees: 336NN NetherlandsVeenendaal, NLEmployees: 377NN IrelandKilkenny, IrelandEmployees: 76NN GermanyEltmann,GermanyEmployees: 129NN SlovakiaKysucke,NM SlovakiaEmployees: 4914 Manufacturing Facilities- North America - Europe - Asia2,450 Global Employees
12 Business Unit Revenue $405 MM NN Americas Balls $53 MM Cylindrical Rollers$13 MMNN EuroballBalls $128 MMDelta RubberBearing Seals $26 MMWhirlawayMetal Components $80 MM$405 MMVeenendaalTapered Rollers Metal Cages $69 MMIMCPlastic Components $22 MMIMCPlastic Bearing Retainers $10 MM
13 Precision Metal Components Served MarketsBearingComponentsPrecision Metal ComponentsAutomotiveGeneral IndustrialDiesel EnginesCommercial Refrig.Thermal SystemsOil and GasAerospaceMedicalAutomotiveGeneral IndustrialCurrent MarketFuture Market
14 Served Markets Serves wide variety of industrial end markets 55% 45% AutomotiveEngineBrake/ChassisSteeringPower TrainIndustrialThermal SystemsCommercial Refrig.Diesel EngineMaterial HandlingConstructionGeneral Industrial55%45%Future MarketsOil & GasAerospaceMedical
15 Precision Metal Components Product PlatformsBearingComponentsPrecision Metal ComponentsPrecision BallsRollersRetainersSealsFluid ControlComponentsAssembliesShaftsPrisms, RingsHousings, Brackets
18 Financial Highlights Thank you Rock,. Good Morning. I joined NN last June, and it has certainly been nice to have the company start out with a record year in my first reporting year.This company has a tremendous amount of strategic focus. I think you’ve seen it in our very focused growth since Rock has been in charge, and I think you will see it continue into the future.
19 Historical Sales 22% CAGR (2006 Proforma) ($Millions)$405$321$325$304$253$192$180As I mentioned, 2005 was a record year for sales, capping off a solid growth trend. Sales last year were $321 million, up 6% from the previous year. We made only one relatively small acquisition at the end of the year, so the growth in 2005 was primarily due to strong organic growth in our rollers and cages business combined with price increases to pass through higher steel costs. Since the strategic plan was begun in 1998, we have achieved a 25% CAGR on sales, which, as a newcomer, I think is pretty impressive for a company in our industrial space.$132$85
20 Annual EBITDA14% CAGR$ millions$45$44$37$36$31$27$26$18EB ITDA increased to $44 million from $36 million the previous year. The primary driver was an increase in earnings due to improved gross margins and lower SG&A costs due to lower SOX compliance costs in our 2nd year of SOX. We also had a significant improvement in our plastics business during the year, due mostly to improved operations and partly to price increases passing thru increased resin costs.
21 EPS from Operations 8% CAGR $’s/Share$0.86-$0.92$0.87Earnings per share dramatically improved over the previous year, from $.57 per share in 2004 to .$87 per share in 2005, which is a 53% increase. If you eliminate the effects of currency conversion, we would have had been 5 cents per share better, which lines up exactly with our initial guidance for the year.
22 Historic EBITDA To Debt Levels Debt/EBITDA*This chart shows our net debt levels over the past five years with our debt to EBITDA ratio shown at the bottom. Our pattern has been to pay for acquisitions with borrowed cash, then repay the loans with cash flow from the acquisitions. In today’s debt market, we have relatively low leverage at 1.4 times EBITDA, and we have a lot of excess debt capacity to fund acquisitions over the next few of years.1.5X2.0X1.4X2.2X2.1X1.4X1.9X*Year end ratio. EBITDA adjusted to include full year EBITDA for acquisitions made duringindicated year and to exclude effects of one-time unusual charges.
24 Strategic PlanOperational Execution Initiatives:Enhance R&D and create applications marketing expertiseContinue growth and expansion of operations in Asia regionAccelerate Level 3 Initiatives (Lean, Six Sigma, TPM)
25 2006 - 2010 Strategic Plan Grow existing bearing components: Growth Initiatives:Double Revenue and Income in 5 YearsGrow existing bearing components:Roller product expansionGeographic expansion of existing productsCreation of new metal related component product platform via acquisition
26 Sales Development 2006 – 2010 By Product Group 2006 Business Plan2010 Pro-Forma$325 million$720 million
27 Sales Development 2006-2010 By End Market 2006 Business Plan2010 Pro-Forma$325 million$720 million
28 ConclusionsNN has developed a strong core business in high precision bearing componentsNew strategy provides for growth via following strategic initiatives:Continued growth of core bearing components core businessCreation of new high precision metal components product platformGrowth goals are achievable and closely related to our core
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