Nn, Inc. · NASDAQ:NNBR
Nn — Investor Day (2014)
48 slides from Nn's investor day presentation, January 2014
Slide 1: 2014 Investor Day
2014 Investor Day Honor the Legacy • Embrace the Change Westin Hotel New York City
Slide 2: Forward-Looking Statement
Forward-Looking Statement With the exception of the historical information contained in this presentation, the matters described herein contain forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking sta
Slide 3: The Story
The Story • 1980 – Company founded • 1986 – Second manufacturing facility opens • 1994 – Company completes IPO • 1995 – Named to Forbes “200 Best Small Companies” • 1997 – Rock Baty named President and CEO • 1997 – First European manufacturing facility opens • 1999 – First of six acquisitions comple
Slide 4: Acquisitions Contribute to Growth
Acquisitions Contribute to Growth • Global reach, local depth • NN Product solutions • Continuous investment in technology leadership • Proven capability in five countries 1980 1999 2000 2001 2003 2005 2007 Industrial NN founded Euroball Delta Rubber Veenendaal SNR Ball Whirlaway Molding in Erwin, T
Slide 5: NN, Inc. CEO
NN, Inc. CEO Richard Holder • Joins NN from Eaton Corporation • Held several leadership positions at Eaton Corporation • Most recently served as President of Eaton Electrical Components • Held leadership positions at US Airways, AlliedSignal and Parker Hannifin Corporation prior to joining Eaton • S
Slide 6: Vision Statement
Vision Statement Our vision is to be the leading manufacturer of high-performance precision components. 6
Slide 7: Mission Statement
Mission Statement Our mission is to provide high-quality products and superior customer service that continuously exceed our customers’ expectations while providing enhanced value for our stakeholders. 7
Slide 8: Core Values
Core Values • To demonstrate ethical behavior in every aspect of our business • To empower employees to do their best by recognizing innovation and superior performance • To promote personal responsibility at every level • To serve as a good corporate citizen in the communities in which we operate •
Slide 9: How do we see the future?
How do we see the future? 9
Slide 10: Our Future Vision: 2018
Our Future Vision: 2018 $800+ million in revenue • $260 million in revenue from acquisitions • $145 million from organic and adjacent market growth • $20 million from European recovery Improving segment operating margins • Metal Bearing Components: 13.5% • Precision Metal Components: 12.0% • Plastic
Slide 11: Our Future Vision: 2018 - End Markets
Our Future Vision: 2018 End Markets 2013 2018 Revenue of $370M Revenue of $800M Medical Consumer- HVAC Medical Consumer- 2% Other 5% <1% 6% Other HVAC Aerospace 4% 5% <1% Aerospace 7% General Industrial 25% Light Auto Light Auto 50% 60% General Industrial 25% Heavy Truck 5% Heavy Truck 5% 11
Slide 12: Our Future Vision: 2018 - Market Segments
Our Future Vision: 2018 Market Segments 2013 2018 Revenue of $370M Revenue of $800M Plastic and Plastic and Rubber Rubber Components Components 9% 9% Precision Metal Components Precision 21% Metal Metal Components Bearing Metal Bearing 33% Components Components 58% 70% 12
Slide 13: Our Future Vision: 2018 - Geographic Profile
Our Future Vision: 2018 Geographic Profile 2013 2018 Revenue of $370M Revenue of $800M Europe Europe 26% 41% NAFTA 51% NAFTA 50% Asia Asia 8% 24% 13
Slide 14: Megatrends
Megatrends • New Capital Cycle: the manufacturing world is coming off of a low period in capital investment. As customers consider make vs. buy decisions, NN is positioned to become the feeder company of choice in our markets. • Tier 1 and Tier 2 auto suppliers are concentrating on purchasing with f
Slide 15: Megatrends
Megatrends • Healthy U.S. automotive industry is providing opportunities for growth. • China is now the world’s largest market for personal cars. • Rigorous gas mileage requirements are creating opportunities for new designs. • European markets are recovering. 15
Slide 16: Strategic Goals
Strategic Goals How will we accomplish these goals? 16
Slide 17: Creating an Integrated Company
Creating an Integrated Company The NN Way of Doing Things Corporate Identity and Branding Functional Excellence Operational Excellence 17
Slide 18: Corporate Identity and Branding
Corporate Identity and Branding Establish one identity across all divisions: • One corporate identity • Redesigned website • Common customer solutions • Application specific One Company. One Standard. Common Values. 18
Slide 19: Divisional Names
Divisional Names Building the Brand Metal Bearing Components (MBC) Group • NN U.S. Ball & Roller • NN Asia • NN Italy • NN Netherlands • NN Slovakia Precision Metal Components (PMC) Group • Whirlaway Product Line Plastic and Rubber Components (PRC) Group • NN Precision Plastics (Industrial Molding P
Slide 20: Improved Group Sales and Marketing
Improved Group Sales and Marketing Newly Redesigned Introduce Customer Tech Days Website and Trade Show Support 20
Slide 21: Creating an Integrated Company
Creating an Integrated Company The NN Way of Doing Things Corporate Identity and Branding Functional Excellence Operational Excellence 21
Slide 22: Functional Excellence: Supply Chain
Functional Excellence: Supply Chain New Supply Chain Operations •Opportunities •Leveraging of Spend • Direct material • MRO • Services 22
Slide 23: Functional Excellence: Supply Chain
Functional Excellence: Supply Chain New Supply Chain Operations •Supplier long-term agreements •Supplier value analysis/value engineering •Material alternatives •Process improvements 23
Slide 24: Functional Excellence: Finance
Functional Excellence: Finance • Single common finance and business intelligence system • Key talent development program • Standard financial processes • Shared services for common functions • Critical M&A skill sets at all locations 24
Slide 25: Functional Excellence: Information Tech.
Functional Excellence: Information Tech. Strategic Actions • “Top Down” strategy • Minimum standards policy Infrastructure • Disaster recovery and business continuity plan • Acquisition integration plan • Common financial consolidation/business intelligence platform • Shared knowledge database 25
Slide 26: Creating an Integrated Company
Creating an Integrated Company The NN Way of Doing Things Corporate Identity and Branding Functional Excellence Operational Excellence 26
Slide 27: Operational Excellence
Operational Excellence • Level 3: Offset Economic Costs • Quality: Drive a Zero Defect Culture • Safety: Drive a Zero Incident Culture • Delivery: Exceed Customers’ Expectations 27
Slide 28: Inspired by iQiovation
Inspired by iQiovation
Slide 29: Innovation
Innovation • Driving innovation and differentiated value proposition in all our business groups • Positioning ourselves so the whole is more than the sum of the parts • Jointly going after opportunities, bringing the best of to all our markets 29
Slide 30: Innovation
Innovation • Specialty machine design and construction • Manufacturing process design • Customer solutions • Distributed capabilities • Sharing of best practices 30
Slide 31: Enhanced R&D Efforts
Enhanced R&D Efforts Established 3 R&D Centers of Excellence • Adjacent markets • (e.g. spherical rollers) • Game changing manufacturing processes • (e.g. ball cells) • Enhanced quality • (e.g. noise reduced product) 31
Slide 32: Divisional Strategies
Divisional Strategies Plastic and Metal Bearing Precision Metal Rubber Components Components Components (MBC) Group (PMC) Group (PRC) Group 32
Slide 33: MBC Business Overview
MBC Business Overview • Precision Steel Balls • Cylindrical Rollers Products • Tapered Rollers • Precision Stampings • Automotive • Hydraulics Applications • Oil and Gas • Aerospace • Industrial • NN U.S. Ball & Roller • NN Europe Operations • NN Asia 33
Slide 34: Strategic Building Blocks 2018: MBC Division
Strategic Building Blocks 2018 MBC Division 23% EPS 17% ROIC CAGR 18% Sales 23% EBIT 7% FCF to CAGR CAGR Sales 34
Slide 35: PMC Business Overview
PMC Business Overview • Highly Engineered Precision Metal Components • Fluid Control Components and Products Assemblies • Shafts • Precision Components • Automotive • HVAC Applications • Aerospace • Fluid Power • Whirlaway: Wellington, OH Operations 35
Slide 36: Strategic Building Blocks 2018: PMC Division
Strategic Building Blocks 2018 PMC Division 40% EPS 15% ROIC CAGR 30% Sales 35% EBIT 6% FCF to CAGR CAGR Sales 36
Slide 37: PRC Business Overview
PRC Business Overview • Bearing Seals • Plastic Retainers Products • Precision Plastic Components • Automotive • Oil and Gas Applications • Industrial • Retail • Industrial Molding: Lubbock, TX Operations • Delta Rubber: Danielson, CT 37
Slide 38: Strategic Building Blocks 2018: PRC Division
Strategic Building Blocks 2018 PRC Division 70% EPS 10% ROIC CAGR 20% Sales 70% EBIT 4% FCF to CAGR CAGR Sales 38
Slide 39: PRC Strategic Plan
PRC Strategic Plan Appropriately Restructure Group • One integrated business • Enhance sales and marketing resources Growth Focus: $35M to $70M by 2018 • Profitability through restructure • Scale through end market penetration and adjacent acquisitions • Partition retail business from industrial/aut
Slide 40: Financial Building Blocks
Financial Building Blocks Achieving $50+ NNBR Stock Price 35% EPS 13% ROIC CAGR 21% Sales 35% EBIT 5% FCF to CAGR CAGR Sales Achieve a fundamental revaluation of our business 40
Slide 41: The Numbers
The Numbers 41
Slide 42: Road to $800M
Road to $800M Outpace the Market with Expanded Focus and Investment $ Millions European Economic $800 $800 $800 Recovery $700 Organic Growth 3% per Year $600 $540 $500 $450 Adjacent Markets 5% per Year $400 $390 $373 $300 Acquisitions $260 million in Sales $200 $100 $0 2013 Base 2018 SP NN will be g
Slide 43: Reducing Cyclicality
Reducing Cyclicality • We operate today in primarily early cycle end markets • Our strategic plan will reduce volatility by increasing counter cyclical market exposure • Our goal is to have a continuously predictable earning stream 43
Slide 44: Our Future Vision: 2018 - End Markets
Our Future Vision: 2018 End Markets 2013 2018 Revenue of $370M Revenue of $800M Medical Consumer- HVAC Medical Other Consumer- 2% 5% <1% 6% Other HVAC Aerospace 4% 5% <1% Aerospace 7% General Industrial 25% Light Auto Light Auto 50% 60% General Industrial 25% Heavy Truck 5% Heavy Truck 5% 44
Slide 45: Guide Companies
Guide Companies Performance Comparisons Top 24 Industrial Small Cap Public Companies - $500 Million to $1 Billion Company Name Symbol Company Name Symbol Alamo Group Inc. ALG HEICO Corporation HEI American Railcar Industries, Inc. ARII Lindsay Corporation LNN Bally Technologies, Inc. BYI Littelfuse,
Slide 46: Guide Companies
Guide Companies Performance Comparison We will target financial and valuation measures against the top portion of the Guide Companies. 46
Slide 47: Share Valuation at Guide Co. Multiples
Our Future Vision: 2018 Share Valuation at Guide Co. Multiples $60 $50 $40 $30 $20 $10 $0 2014 2015 2016 2017 2018 47
Slide 48: The New NN
The New NN • Aggressive Growth in Adjacent Markets • Enhanced R&D • Active acquisition pipeline • Comprehensive Marketing and Communications • New website, trade show presence, increased sales staff • Enhanced Operating Margins • Operating margin from 7.5% to 10.5% Double in Size and Triple EPS by 2