Nn, Inc. · NASDAQ:NNBR
Nn — Investor Day (March 2016)
70 slides from Nn's investor day presentation, Mar 24, 2016
Slide 1: Investor Day, March 24, 2016, New York City
Exhibit 99.1 Annual24, March Exhibit Investor 99.1 2016 •Day New York City
Slide 2: Disclaimer: Forward Looking Statements
Forward provisions looking captive and Report With Company’s 2Disclaimer: www.nninc.com developments. other respect on production, statements. Looking risk 10-K ofweb NN to the factors any for disclaims site, Private Statements Statement: the risks non-GAAP Such www.nninc.com, and fiscal Securities
Slide 3: Presenters
Richard Presenters President James Robbie Corporate Chris Vice John Warren Jeff 3Senior www.nninc.com Manzagol President Manzi Qualters Dorton Vice Atkinson Veltman Holder & Treasurer President President/GM Chief & Chief Executive &&Investor Commercial Chief Autocam Precision Metal Officer Financial
Slide 4: Agenda
1 The 476532Agenda www.nninc.com Strategic Sales End Debt Financial Summary NN Markets Structure Strategy Operating Review Performance / Q&A Discussion Overview System
Slide 5: Strategic Review
Strategic Review LY I Ke
Slide 6: History
History Rolling 1980 1994 1999 2000 All 2004 2006 2009 Phase A 2013 2014 2015 6PDP www.nninc.com Diversified Things PRECISION –III IAcquires IIFounded IPO Expands Repays Richard New Completes Elements Bearings raises strategic Industrial down Holder into in Whirlaway Industrial $32.2M ENGINEERED fou
Slide 7: Strategy at a Glance
2018 $1 Organic Adjacent Disciplined Build Market Counter Comprehensive Operating Margin Improved 7EPS www.nninc.com Billion Growth Strategic a Segments Diversified Expansion Growth Cyclical Market ROIC Performance Revenue Acquisition Plan Geographic Expansion MixBusiness at a Strategy Glance Footpr
Slide 8: Value Proposition
Value 42 Full Global High 7Precision In-house Engineered Application 4Total Comprehensive World-class Applications 8Wide www.nninc.com Billion+ Innovation Facilities service Precision life reaching Proposition Reach Supply machine cycle capabilities components Solution in specific, process on Center
Slide 9: The Diversified Journey Continues
The Automotive Aerospace Medical A Electrical 1980 9Industrial Products Diversified Journey 1999Technology Precision & 2000 Continues Defense Industrial 2001 NN2003 founded 2006Delta 2014 Rubber 2015 Whirlaway Chelsea Molding Euroball Veenendaal Slovakia VS Industries RFK Autocam Caprock Engineered
Slide 10: Where We Are in the Cycle
WhereCycle Early CAFE Stable Electrical Medical Growth Peak Automotive Aerospace Industrial Trough Decline Slowing 10 www.nninc.com /Technology We Improvin Growt Technology are &Mid Defense Today Cycle – End LateMarkets Cycle
Slide 11: A Balanced Business Mix
A Balanced 2016 In $1,000 Auto $890M & *Mid-Point Cyclical Early 38% 39% 23% 11 www.nninc.com Defense Millions Market CAFE Cycle $900 MixTech of Business Mid Tech $800 Segment 2016 Revenue* Cycle Medical $700 Guidance –Revenue Cyclical Late $600 Electrical Cycle $500 Mix$400 Aerospace $300 $200 Indu
Slide 12: Balanced Revenue Breakdown
Balanced Revenue 25% 5% *Mid-Point 42 12 www.nninc.com Manufacturing Latin Europe Breakdown* America Strategic of 2016Facilities Global Guidance 60%Footprint United on FourStates Continents 10% Asia
Slide 13: Balanced End Markets
Balanced 2013 1% 5% 60% Segments 2016 3% 13% Automotive 27% 18% *Mid-Point 13 www.nninc.com 1% 25% 5% 27% 12% End asof Industrial CAFE a Markets % 2016 ofTechnology revenue revenue* Guidance Tech Commerical IndustrialVehicles Tech Electrical HVAC Aerospace & Defense Consumer Medical Products
Slide 14: Balanced Business Groups
Balanced 2013 Metal 60% 21% 9% *Mid-Point Segments 2016 31% 14 www.nninc.com 33% 36% Bearing Business asofa % 2016 Components ofGroups revenue revenue* GuidancePrecision Metal Components Plastic & Rubber Components
Slide 15: Sales Strategy
Z % SS ad YT Ws. N \ Bess
Slide 16: The World We Live In: Mega Trend More
Thelive Global We Technology More 16 www.nninc.com World drives Mega in aofadvancements world our Trend: “More” business that demands today are needed and More will to continue achieve the to do next so levels well into of More the future
Slide 17: Our Customers Need New Engineered Solutions
Our NN Their New Requiring The Making Engineered 17 www.nninc.com Customers product new the global unprecedented products solutions seemingly technologies platform are working and through impossible….Possible technologies ofprecision are design, onpushing the Next process, levels need beyond Big toa
Slide 18: Engineered Solutions: The Next Big Thing
Engineered “The R&D: In-Depth Development, Integral Leverage Identify 18 www.nninc.com Next part technical Customer technology Big Solutions: ofValidation Thing” ourgaps: customer Relationships platform: How Process & Continuous we project Engineered go & Design toteams market Improvement analysis S
Slide 19: Innovative Customer Solutions
Innovative Medical An Automotive Ultra Electrical Customer Industrial A Encountered NN 50 19 www.nninc.com Doctor production Leading producer million Automotive helped developed used provided precise our and Technology obtained produced, smart Solutions optimize ofaapplication hole astrategy areside
Slide 20: Cross-Selling Innovation Platform
CrossINNOVATION Industrial Aerospace Electrical Medical Automotive Technology Application Customer Global Industry THE 20 www.nninc.com Selling Sales Reach, Input Certifications Technology Relationships &Innovation Co-Development Expertise Structure Defense System Drives Local Support PLATFORM Solut
Slide 21: Precision Sub-assemblies Add Value
Precision Value Sub-assemblies Sub-Assemblies Higher Cross 21 www.nninc.com added selling Order Components sub-assemblies is Systems the using with gateway Technical our total to higher process application order platform and systems design responsibility
Slide 22: End Markets Discussion
End Markets Discussion
Slide 23: Medical & Electrical
Medical & Electrical
Slide 24: Precision Engineered Products Group Introduction
Precision Manufactures Acquired Group 19 Former Specializes Medical Diversified PRECISION John Senior 24 www.nninc.com manufacturing Manzi Headquarters: Vice NN Innovation by Engineered in end Precision President/GM NN ENGINEERED highly material markets inoperations October Center engineered Attlebo
Slide 25: Precision Medical Products and Capabilities
Precision Completed Efficient Automation Mfg. Tooling Hearing Scalability Cerebral Sternum Septoplasty Biopsy Bipolar Surgical Laproscopic Joint Glucose Plate Additive Medical 25 www.nninc.com Replacement processes and Jaw Forceps –& Technologies Products Monitaring Staples Closure Tissue technical
Slide 26: Medical End Market Overview
Cardiovascular Anesthesia Neurology Medical 9.0% 2015 Market The OEM’s 26 www.nninc.com total 2016 8.0% Overview are End Device global 2017 Orthopedics expected and 7.0% Market Diagnostic/Imaging Respiratory medical Market 2018 6.0% to 5.0% increase Urology ($395B) NN device Care Segment 4.0% market
Slide 27: Addressable Medical Market
Addressable 6% 8% 9% Cardiovascular 14% Anesthesia NN’s 2% 12% 29% Medical General Orthopedics Diagnostics Drug *Based 27 www.nninc.com 4% 22% 15% 11% 46% Delivery Medical 2015 Surgery End Devices 8%and ooUrology Market Market Pro Device Devices Business* oDiagnostic/Imaging Ophthalmology Precision
Slide 28: Medical: Market Growth Strategy
Medical: Market Comprehensive 1) Capability Global Strategic Expanding Supporting 2) 3) 4) Expanded The Innovation NN’s In $125 2015 $100 $123 28 www.nninc.com Revenue OEMs Drug Growth Millions “More”–new $120 Base estimated footprint growth delivery partnerships How increase engineering within port
Slide 29: Electrical Applications
Electrical Mission-critical Applications Transmission Residential Non-residential Comprehensive Material/design/prototype/mfg. Material Components Engineered Transformers Electric Wind Automation Recharging 29 www.nninc.com Turbines Smart Science Products devices Solutions Overload && include Genera
Slide 30: Electrical End Market Overview
Electrical 61% 30% 9% Non-Residential & Transmission 9.0% 2015 The Market Long-term 30 www.nninc.com Equipment electrical 2016 8.0% Overview requirements End Market 2017 relationships 7.0% & products Market Distribution Automation 2018 6.0% (>$250B) align 5.0% market with with 4.0% & many isControls
Slide 31: Electrical Addressable Market
Electrical Addressable NN’s 28% 48% 24% & Distribution Transmission Materials Residential Non-Residential 31 www.nninc.com Equipment *Based Electrical and End 2015 Devices Control Market & and components Market Business* Distribution Pro Automation Distribution and (>$25B) Forma and Equipment Protec
Slide 32: Electrical: Market Growth Strategy
Electrical: Market Comprehensive 1) 2) 3) NN’s In $125 2015 $100 $123 32 www.nninc.com Target Revenue Provide Growth Millions $120 Base estimated growth How within total 2016 $115 expansion rate: growth engineered platform We 2017 $110 andGrow 5—7% across $105 2018 with rate: forsolutions existing $
Slide 33: Industrial Technology & Aerospace
Industrial Technology & Aerospace
Slide 34: Precision Bearing Components Group Introduction
Precision Global 8Group United Market Benefits PRECISION Jeff Senior 34 www.nninc.com manufacturing Manzagol Headquarters: Vice leader States outperformance ofBearing new President/GM BEARING Netherlands in global the operations Components manufacture Johnson organization oCOMPONENTS High China Prec
Slide 35: Industrial End Market Overview
8% 15% Industrial 22% 15% 40% Wtd. 8.0% 2015 Market Outsourcing OEM Stronger 35 www.nninc.com Global 2016 7.0% cycles Overview performance Technology Distribution 2017 6.0% IDP trend balanced 2018 5.0% NN for Segment precision in End Market by Heavy/Specialized 4.0% selected significant Market 3.0%
Slide 36: Addressable Industrial Market
Addressable 8% Industrial 22% 15% 40% NN’s 2% 1% 28% 19% Fluid Wind Railway: application 36 www.nninc.com *Based 15% 8%Industrial Machinery Power: Energy: 32%Safety Technology Distribution 2015 ofMarket 10% Compressors, precision High Technology critical Pro Commercial volume, ($3B) Forma End Heavy/
Slide 37: Industrial Market Growth Strategy
Industrial Market Outsourcing White Cross NN’s In $220 2015 $135 $200 37 www.nninc.com Target Millions $200 Base estimated engineered space growth Technology 2016 $180 activity trend rate: growth 2017 $160 solutions on2.5% orollers 2018 $140 End Expanded rate:Market: oStrategic $120 6—7% and Cross-t
Slide 38: Aerospace Market Overview
Aerospace Boeing 70% 30% Units Growth Commercial Defense CFM 38 www.nninc.com –45,000 LEAP Commercial Replacement o Domestic &Aircraft Overview 40,000 Defense Turbofan Aircraft spending 35,000 oRetained End Driven Engine Market 30,000 Build stable by 43,560 increasing Forecast 25,000 but 21,960 prog
Slide 39: Aerospace & Defense: How We Grow
Aerospace PEP NN Industry 39 www.nninc.com capabilities acquisition demand & Defense: fit provides and market technical How market needs Wedrivers Grow opresence Highprovide precision o Regulatory opportunities o Exacting certifications to quality expandstandards o our Customer business o Manufactur
Slide 40: Automotive
Automotive VE '— Ape > A
Slide 41: Autocam Precision Components Group Introduction
Manufactures Acquired Group 15 Targets Specializes More Autocam Warren Senior 41 www.nninc.com manufacturing than Headquarters: Vice Veltman transportation Precision by 2in President/GM million NN close single-digit inoperations Components August tolerance parts Kentwood, and produced micron industr
Slide 42: Automotive End Market Overview
Automotive 44% 27% Engine GDI ADOPTION 100.0% 35.0% 2015 CAGR End Light Fuel Bearing Electric NN 42 www.nninc.com has Market Multi-Speed saving 9% 2016 Vehicles 30.0% Transmission significant 90.0% motor components 20% 2017 technologies ($650B) Overview End RATE 25.0% and expected 80.0% 2018 Market
Slide 43: Automotive Addressable Market
Automotive Addressable 36% 23% 9% NN’s 29% 5% 4% Fuel Advanced Sensor Safety Bearings *Based 43 www.nninc.com 18% 13% Systems 9% 31% Automotive Power Components on 5% 6%Powertrain mid-point End Market 12% Steering Market Business* (non-electrical) ($5.6B) of Steering Electric 2016($510M) guidance Ac
Slide 44: Automotive Market Growth Strategy
Automotive Market Pursue Localization South NN’s Cross-selling In $575 2015 $463 $549 44 www.nninc.com Target Millions $550 Base estimated American markets customers growth 2016 $525 End (Mexico, that rate: market 2017 Market $500 Market: that deliver 2.5% 2018 $475 value Poland, growth oHow OEMs gr
Slide 45: CAFE Requirements per Global OEMs
CAFEper Global ~36% OEMs Major Miles 45 www.nninc.com by increases –are have fuel Requirements 2025 Gallon on efficiency large track oin China 70 gap fuel to65or to standards economy and 60 have close 55 Japan 50 already toare 45 meet are will increasing 40 needed passed aggressive both 35 30require
Slide 46: CAFE Rapidly Shifting to GDI
CAFE Rapidly oShift GDI MPFI $6 216Precision $60 46 www.nninc.com GDI Injectors High per per operates program inV6 vehicle improves –pressure fuel vehicle increasing NN Turned GDI injection Content at life V62,200psi fuel fittings efficiency Part around standards pump Per from content: Vehicle vs. 1
Slide 47: CAFE Technology Content Per Vehicle
CAFE Direct Technology Multi-Speed Variable Electric High Efficiency 3—5% 4—6% 5—10% 15—20% Key Bosch, ZF, Denso, ZF-TRW, Cummins, Content $0 Regulatory 47 www.nninc.com $20 Bosch, Customers Pressure Injection –$40 Denso, BorgWarner, 20-30% Power Increase NN Valve/Cam Bosch, Bosch, Increase Fiat sta
Slide 48: Automotive Industry Growth Summary
Automotive Industry Growth CAFE Safety Electrical 48 www.nninc.com Power related of leader Switch new Summary Steering technologies in CAFE Sensor manufacture technologies Electric Components require Accessory of complex more will Advanced substantially components Motors precision Powertrain Climate
Slide 49: Capital Structure Overview
Capital Structure Overview
Slide 50: Capital Structure Overview
Capital Parent WACD Required Covenant Pricing Right Total $829 Term Senior Revolver 50 www.nninc.com *Excludes million Interest Senior Loan Capital Credit Notes Structure Profile negatively = Principal 7.10% Lite BDebt $250 Expense* Ratings $573 Structure amortization Execution Overview Overview Out
Slide 51: Secured Debt Overview
Secured Total $829 *variable Summary Facility Required Covenant Optional Interest Revolver Ample Term 51 www.nninc.com million Senior Loan capacity Rate*: Rate: Rating: Debt soft Principle rate Lite Overview BDebt is call $573 the LIBOR loan, 5.75% Ba3 toonly beginning Outstanding satisfy Payments:
Slide 52: Senior Notes Overview
Total million $829 Senior Summary Facility Maturity: Callable Interest Required Covenant Flexible, 52 www.nninc.com Senior Notes Rate: Rating: in Patient Principal: October Lite Overview November Debt $250 10.25% Caa1 Capital Outstanding 2020 million None /2017 B
Slide 53: De-Leveraging Profile
$De-Leveraging $900 Net $0 YE Leverage 2.00x 2.50x 3.00x 3.50x 4.00x 4.50x 5.00x 5.50x Notes Institutional Flexible Free With 53 www.nninc.com In2015 Debt Millions cash no $800 Term EBITDA call 2016 Outstanding flow $700 Loan focus provisions 2017 will Profile $600 Leverage growth on be 2018 delever
Slide 54: Capital Structure Summary
Capital Correct Despite Flexible Soft More Our Power Significant Continuous 54 www.nninc.com debt call toofStructure Capital pricing the Repricing options service Free free proactive story Cash Structure being cash begin coverage Summary Provisions Flow flow management wide in April allows isofbette
Slide 55: Financial Performance
Financial Performance
Slide 56: Road to $1 Billion: Completed Plan
2014 In $900 $260 $60 $90 2013 Completed Grew Ahead 56 www.nninc.com Millions $17 –the $800 Base of Road $373 legacy plan European $700 four toentering $800 acquisitions $600 business Organic Million $500 2015 ~8% $400 including Adjacent $300 Autocam Acquistion $200 $100 $0 2018 Strategic Market Gro
Slide 57: Road to $1 Billion in Sales
Road In $1,200 $110 2013 $373 $488 $666 Focused Electrical, Acquisitions 57 www.nninc.com Millions *Based $1,000 Base to$1,000 $1 organic Medical 2014 on Billion $890 will mid-point $800 2015 growth beand $600 focused 2016 Aerospace of that $400 2016 Organic out on $200 tuck-ins paces guidance segme
Slide 58: Strategic Plan Targets 2013-2018
2013—2018 EPS Sales 32% ROIC 22% 18% 58 www.nninc.com 13%-16% 20% 26%*Top CAGR Gross EBITDA Operating CAGR to bottom Margin Strategic Margin Margin* of economic Targets cycle range
Slide 59: Sales Growth by Group
Sales $1,200 2014 $488 $667 $890 $1,000 PRECISION Continued Steady 59 www.nninc.com *Based 2015 Growth growth $1,000 growth on 2016* BEARING mid-point $800 in core 2018 in$600 CAFE business Target of COMPONENTS $400 2016 technologies markets $200 guidance $0 driven drives AUTOCAM by growth outsourci
Slide 60: Adjusted Operating Margin Target
Adjusted 16.0% 2014 8.4% 9.8% 12.9% 14.0% End Operational 60 www.nninc.com Synergies *Based market 2015 14.0% Operating on 2016* diversification efficiency 12.0% mid-point 2018 Margin 10.0% driven Target of 2016 8.0% by Base guidance the 6.0% Continous NN4.0% Operating 2.0% Improvement 0.0% System /
Slide 61: Adjusted EBITDA Margin and Free Cash Flow
Adjusted 22.0% 20.0% 2014 13.3% 15.7% Expansion Free Less 61 www.nninc.com +Free *Based Cash than 2015 Cash 20.0% 19.0% EBITDA 3x Flow+ on driven 2016* Flow levered 18.0% mid-point will available 2018 primarily Margin by 16.0% exceed Target end of 2016 for by 14.0% of$200 Base debt the 2018 guidance
Slide 62: Return on Invested Capital
Return 20.0% 2014 8.0% 10.5% 14.4% 18.0% Growing Capital Continuous 62 www.nninc.com *Based 2015 18.0% on intensity profits Invested on 2016* improvement 16.0% mid-point on reduced 2018 Capital 2016 14.0% Target of base from and 2016 (ROIC) 12.0% synergies of Base ~8% guidance invested 10.0% Contino
Slide 63: Adjusted EPS Growth
Adjusted $4.0 2014 $1.37 $1.51 $1.70 $4.00 Margin Reduction Flex 63 www.nninc.com *Based $3.5 Productivity 2015 Improvement EPS $3.0 in on 2016* interest mid-point Expansion $2.5 leverages 2018 $2.0 expense driven Target of $1.5 2016 increased by $1.0 Base the guidance $0.5 NN Continous Sales $0.0 O
Slide 64: The NN Operating System
The NN Operating System
Slide 65: NN Operating System Premise
Premise Integrated Common Flex Maximizing Leverage One Prescriptive Disciplined A 65 www.nninc.com Disciplined Platform, Productivity ofTechnology methodologies Operating the execution Processes performance & one NNFlexible company Operating Company of the delivering Operation no operating matter Sy
Slide 66: NN Operating System Components
NNsite FUNCTIONAL Sales IR/Treasury Finance—Legal—IT Supply Corporate ASSESSMENT Integration Customer Lean OPERATIONAL Continuous Safety Zero By PLANNING Transferable Strategic Organic GROWTH Outgrowing Acquisitive CONTINUOUS Branding Education Talent 66 www.nninc.com Operating incident maturity and
Slide 67: Flex Productivity Foundation
Flex Productivity Foundation Prescriptive Integrated Close Bottom Hitting Declining Synchronized Immediate Expense Defined 35% 25% 67 www.nninc.com incremental decremental loop the Line Targets Management Sales system labor bottom system of mechanics variable theadjustment average average NN lineOpe
Slide 68: Summary / Q&A
Summary / Q&A
Slide 69: 2016 Priorities Summary
2016strong Leverage Integrate Remain Continued De-Leveraging Our Transform Deliver Focused 69 www.nninc.com – Aengineered focused on PEP Year the progress our free becoming NN on of Sales acash on Transformation the priority Operating solutions our on Platform flow platform aour Strategic well-oiled
Slide 70: Who We Are: Engineered Solutions
Who We by Engineered Automotive Inspired 70 www.nninc.com Areinnovation Solutions… Industrial Technology Medical Aerospace Electrical