NN, Inc.

Good day and welcome to the NN Third Quarter 2020 Earnings Conference. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mark Sherman. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and thanks for joining us. I'm Mark Sherman, Vice President, Treasurer, and Investor Relations. I'd like to thank you for attending today's business update. Our presenters this morning will be President and Chief Executive Officer Warren Veltman, and Tom DeBile, Senior Vice President and Chief Financial Officer. If anyone needs a copy of the press release or the supplemental presentation, please contact Abernathy McGregor at 212-371-5999. Before we begin, I ask that you take note of the cautionary language regarding forward-looking statements contained in today's press release, supplemental presentation and in the risk factor section and the company's annual report on Form 10-K for the fiscal year ended 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 rates, acquisitions, synergies, cash and cost savings, and others. 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. At this time, I will turn the call over to Warren Veltman, President and CEO.

Thanks, Mark, and good morning, everyone. As everyone is likely aware, October 6, 2020, our strategic initiative process concluded with the sale of our life sciences group for $825 million, consisting of $755 million in cash and a $70 million earn-out based on 2022 performance. Our third quarter public filings for the quarter will reflect some significant changes as a result of this sale, including treating our life sciences group as a discontinued operation, including all life sciences assets as current assets held for sale, and reporting the October debt paid on to our lenders as current maturities of long-term debt. The closure of the life sciences sale is more significant than the reporting changes in our Form 10-2 filings, as it represents a major transformation of NN's capital structure and substantially reduces our risk profile, providing us a solid foundation from which to grow the business. This substantial reduction in leverage also enhances our reputation as a stable long-term supplier and provides a more secure income stream for our employees. Prior to the sale, we had an unsustainable capital structure where NN was leveraged at over six times EBITDA. Management had assessed that the company had substantial doubt regarding its ability to continue as a going concern, and we had to seek covenant relief from our lenders. Subsequent to this sale, we now have a more manageable capital structure with leverage below two times EBITDA. We no longer consider NN as a going concern, and we are in compliance with the financial covenants in our credit agreement. Additionally, the company has adequate liquidity of approximately $75 million at the end of October, including $28.5 million of cash holdings and the ability to borrow on an untapped revolving credit facility. Standard & Poor's has recognized this improvement by upgrading our rating two notches to B+, and we expect an upgrade from other rating agencies as well. Obviously, we have had a tremendous focus on improving our cash flow over the last year and placing significant reductions on capital expenditures and focusing on working capital were two primary areas of focus. We will continue to focus on these areas. However, our new leverage profile allows us to view the future more optimistically and pursue growth programs that fit with our growth strategy and provide the appropriate level of return for the investment. As we move forward, We are excited about the prospect of growing the mobile solutions and power solutions group. We have demonstrated that both groups can be profitable in a difficult economic environment, and we maintain a diverse product portfolio that includes components and sub-assemblies for automotive, electrical, general industrial, aerospace and defense, and the medical industries. The combination of mobile and power capabilities in the automotive and electric space are unique and strongly position us to participate and capitalize in innovative programs in the evolution from the internal combustion engine to hybrid and full electric vehicles. We expect the momentum that we have built with our aerospace and defense customers to continue, and fully utilizing the capacity we have in place for these product offerings will be a focus. Lastly, it is noteworthy that we retained within our power group a medical business that manufactures specialty surgical instruments for lower volume application that complements the manufacturing expertise of our aerospace and defense business. We expect that we will continue to support and grow with these customers in the future. Turning to page five, we have summarized some of the other key highlights of the quarter. Overall, our business rebounded from the significant impact that the COVID pandemic had on our second quarter results, with reported monthly sales increasing sequentially throughout the third quarter. Sales for the quarter were $113.8 million, down $5.6 million from a year ago, but up 44.9% from the COVID-19 impacted second quarter. The year-over-year comparison was adversely impacted by foreign currency of $2.4 million. In spite of the lower sales volume, reported EBITDA and operating margin both outpaced the results from a year ago. EBITDA was $11.4 million, or 10% of sales, up $2.3 million from a year ago when EBITDA was 7.6% of sales. Reported operating loss was $1.5 million versus $1.8 million one year ago. The FEPS from continuing operations was a loss of $0.04 per share versus a $0.12 per share loss from a year ago. The Q3 results were negatively impacted by 2.1 million deferred tax asset reserve due to uncertainty associated with the utilization of certain tax attribute carry-forwards. Our adjusted net income from continuing operations was $0.07 per share versus $0.08 per share in the prior period. Cash flow for the quarter, including the sold life sciences group, was a negative $1.4 million due primarily to working capital needs driven by significant sales increases since the second quarter. Although working capital increased in monetary terms, we generated a significant increase in working capital turns over Q2. Tom will provide more detail on this in his presentation. Page six of the presentation summarizes the revenue metrics for our groups. As I indicated, our consolidated sales for the third quarter were down 5.6% from a year ago. Our power solutions group experienced an 8.5% year-over-year decrease in the third quarter and a 14.2% year-over-year decrease for the nine months ended September 30th. Both periods were adversely impacted by the COVID pandemic. In addition, 2020 third quarter sales were positively impacted by approximately $1.9 million due to the increase in the cost of precious metals that were directly passed through to our customers. Mobile solution sales were down 3.7% in the third quarter from a year ago due primarily to the COVID pandemic and decreased in differences in foreign exchange rates. The 2020 year-to-date results are down 21.4% from 2019 due to the effect of COVID, especially in the second quarter of 2020. Now I'd like to turn it over to Tom DeVile so Tom can provide a more in-depth review of our financial performance for the quarter. Tom?