By a News Reporter-Staff News Editor at China Weekly News -- NN, Inc. (NASDAQ: NNBR) reported its financial results for the period ended June 30, 2014. Net sales for the second quarter of 2014 increased $10.4 million, or 10.8% to $106.7 million, compared to net sales of $96.3 million for the second quarter of 2013. This increase included approximately $4.1 million in net sales from the acquisition of the assets of V-S Industries that was announced on February 4, 2014. Continued strong demand in Asia and improved demand from European automotive markets accounted for the remainder of the increase.
Reported net income for the second quarter of 2014 was $5.2 million, or $0.29 per diluted share included approximately $0.8 million of after-tax integration and acquisition costs as compared to $4.8 million, or $0.28 per diluted share for the same period last year. Excluding these costs, net income from normal operations for the second quarter of 2014 was $6.0 million, or $0.33 per diluted share, an increase of 22.2% as compared to diluted earnings per share from normal operations for the same period in the prior year of $4.6 million, or $0.27 per diluted share. Acquisition and integration costs were funded by continued growth and improved operating performance.
Net sales for the first six months of 2014 increased $19.1 million, or 10.0 % to $209.2 million, compared to net sales of $190.1 million for the first six months of 2013. This included approximately $5.9 million in net sales from the acquisition of the assets of V-S Industries. Continued strong demand in Asia and improved demand from European automotive and heavy truck markets accounted for the remainder of the increase.
Reported net income for the first six months of 2014 was $10.4 million, or $0.58 per diluted share, compared to net income of $7.6 million, or $0.45 per diluted share, for the comparable period last year. Net income from normal operations for the first six months of 2014 excluding after-tax integration and acquisition costs was $11.6 million, or $0.64 per diluted share.
As a percentage of net sales, cost of goods sold in the second quarter of 2014 of 79.0% increased slightly as compared to 78.7% for last year's second quarter. Cost of products sold for the first six months of 2014 of 78.7% decreased slightly as compared to 79.0% for the same period last year.
Debt, net of cash, was $50.7 million at June 30, 2014, an increase of $17.3 million compared to $33.4 million at December 31, 2013. The increase was due primarily to the acquisition activity in the first six months of 2014. As of June 30, 2014, approximately $5.8 million, or 25.2% of the planned capital budget of $23.0 million for the year had been utilized. Typically, capital expenditures are more weighted to the second half of the year.
Richard Holder, President and Chief Executive Officer, commented, "Second quarter and six month results were largely in line with our expectations. The strong sales momentum that began in 2013 continued into the second quarter of this year. We again benefited from sustained growth, share gains and product expansion in our Asian and European markets. Sales in North America were in line with our markets. We also continued to strengthen our bottom line while funding acquisition and integration costs.
"Looking forward, we remain optimistic about the second half of the year. We expect continued strong demand in Asia and improving demand in Europe. RFK and Chelsea will be accretive to earnings in our current quarter and V-S Industries is expected to become accretive to earnings later this year. These three acquisitions combined represent approximately $30 million in increased annual revenues.
"Additionally, last month, we announced the signing of a definitive agreement to acquire Autocam Corporation, a global leader in the engineering, manufacture and assembly of highly complex, system critical components for fuel systems, engines and transmission, power steering and electric motors. This transaction will contribute over $250 million to our top line revenues. Further, it will both leverage NN's and Autocam's complementary core strengths and values and position this business segment to outgrow its end markets by taking advantage of global market trends in fuel efficient technologies. Subject to customary closing conditions and regulatory approval, we expect our proposed acquisition of Autocam to close in this quarter."
Mr. Holder concluded, "While we are pleased with what we have been able to accomplish so far this year, we are continually working toward further improvement to the benefit of all stakeholders. We will continue to focus on growing our business organically as well as through strategic acquisitions while simultaneously improving our cost structure."
NN, Inc. manufactures and supplies high precision metal bearing components, industrial plastic and rubber products and precision metal components to a variety of markets on a global basis. Headquartered in Johnson City, Tennessee, NN has 14 manufacturing plants in the United States, Mexico, Western Europe, Eastern Europe and China. NN, Inc. had sales of US $373 million in 2013.
Keywords for this news article include: Asia, China, NN Inc., Automobiles, Transportation.
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