NN, Inc.

Good day and welcome to the Earnings, Inc. Fourth Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Should you need assistance, please signal a conference specialist by pressing the dog key followed by zero. Please note this event is being recorded. I would now like to turn the conference over to Mark Sherman, Investor Relations. Please go ahead.

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 Beltman and Tom DeBile, Senior Vice President and Chief Financial Officer. Last night, we issued a press release announcing our financial results for the fourth quarter and full year ended December 31st, 2020, as well as a supplemental presentation which has been posted to the investor relations section of our website. If anyone needs a copy of the press release or the supplemental presentation, you may also contact Lambert and Company at 616-258-5788. 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 of the company's annual report on Form 10-K for the fiscal year ended December 31, 2019, the company's quarterly report on Form 10-Q for the three months ended September 30, 2020, and when filed, the company's annual report on Form 10-K for the fiscal year ended December 31, 2020. 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 rate, acquisitions, synergies, cash and cost savings, future operating results, performance of our worldwide markets, the impact of the coronavirus COVID-19 pandemic on the company's financial condition, and other topics. These statements should be used with caution and are subject to various risks and uncertainties many of which are outside of the company's control. 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. Reviewing the agenda for today's call, Warren will provide an overview of the year, then Tom will provide a detailed update of the financial results before turning the call back over to Warren to discuss our segment results and markets as well as the outlook for 2021. At the conclusion of the prepared remarks, there will be a Q&A session. At this time, I will turn the call over to Warren Veltman, President and CEO.

Thanks, Mark, and good morning, everyone. If you would turn to page four, we will review some of the highlights for the year. By almost any measure, 2020 was a significant year for our company. We worked to overcome the adverse impact of the COVID-19 pandemic while making significant progress on our business transformation. I would like to take this opportunity to acknowledge the tremendous efforts of all our employees over the past year. The COVID-19 pandemic took the world by storm, but our team showed resilience in servicing our customers while affirming their commitment to our company and the strategic transformation process we initiated. For those efforts, we are deeply thankful. Throughout the year, we executed on our initiatives to conserve cash and improve our operating performance. We reduced our overall office and operational footprints to better reflect our ongoing needs and restructured our group leadership. By far the largest transition we accomplished during the year was the completion of our review of strategic alternatives, which resulted in the sale of the Life Sciences Group for $825 million, consisting of $755 million in cash and a $70 million earn-out based on 2022 performance. The cash received from the sale was used to significantly reduce our debt levels and provide a stronger foundation upon which we will build our mobile and power solutions business for long-term growth. Overall, it was an eventful year, but one which we believe marks a significant turning point in the ongoing growth and the development of our company. Turning to page six, we have summarized some of the key highlights for the fourth quarter. As a reminder, results from Life Sciences have been reclassified as discontinued operations within our financial statements and SEC filings from our third quarter 2020 Form 10Q filing onward. Through the sale and the resulting debt reduction, we have positioned NN as a company with greater financial stability and flexibility to support long-term growth. This improved financial position also inspires greater confidence with customers, suppliers, and the communities where we operate. During the quarter, we saw ongoing recovery in our businesses from the pandemic-related depths of the second quarter, and we are optimistic that this recovery will continue into 2021. The improvement in sales, translated into improvements in the bottom line as well, is thanks to many of the initiatives we put in place to conserve cash and reduce operating expenses. As we look ahead, we're excited about our refreshed and dedicated prospects towards growing the mobile solutions and power solutions group. Both groups demonstrated resilience in the face of the pandemic-induced shutdowns by our customers and the broader economy, and we believe our competitive advantages will be driving factors in growth in the automotive, electrical, general industrial, aerospace and defense, and medical industries. Turning to page seven, we have summarized some of the other key highlights for the quarter. Overall, our business continued a strong rebound from the significant impact of the COVID-19 pandemic, as we not only posted a sequential but year-over-year growth during the quarter. Sales for the quarter were $119 million, up 7.5% from a year ago, and up 4.6% from the last quarter. The year-over-year comparison was also adversely impacted by foreign currency of $1.4 million, or 1.3%. The improvement in sales volume, coupled with the operational improvements we have implemented, resulted in solid gains at the bottom line. Reported operating loss improved significantly to 1 million versus 10.1 million one year ago. Non-GAAP-adjusted EBITDA was 16.8 million, or 14.2% of sales, up 5 million from a year ago when EBITDA was 10.6% of sales. Gap EPS from continuing operations was a loss of 44 cents per share versus a 25 cent per share loss from a year ago. I would note that the loss for the current period was driven primarily by the $14.8 million loss from hedge accounting that was recognized in the fourth quarter of 2020. Our adjusted net income from continuing operations was a profit of 17 cents per share. versus a loss of two cents per share from the prior year. Page 8 of the presentation summarizes our results for the full year. Our overall results for the year were significantly impacted by three main factors. First, the impact of the pandemic, which caused a significant decrease in sales, mainly in the second quarter, as well as the impact of the goodwill impairment that was recognized in the first quarter of 2020 and the impact of hedge accounting in the fourth quarter. Consolidated sales for the year were $427.5 million, down 12.7% from a year ago. The year-over-year comparison was also adversely impacted by foreign currency of $6.2 million, or 1.3%. The decrease in sales volume, combined with the goodwill impairment of $92.9 million, resulted in a reported operating loss of $117.5 million versus a loss of 17.6 million in 2019. Non-GAAP adjusted EBITDA was 46.5 million or 10.9% of sales compared to 56.4 million from a year ago when EBITDA was 11.5% of sales. The reductions in adjusted EBITDA reflect the significant impact of the pandemic on net sales as well as our efforts to reduce operating costs. Finally, Our non-GAAP adjusted EBITDA fell to a loss of $0.16 per share versus a profit of $0.19 per share last year, largely reflecting the impact of the decrease in sales for the year. Now I'd like to turn it over to Tom DeBile so he can provide a more in-depth review of our financial performance for the quarter. Tom?