NN, Inc.

Good morning and welcome to the NN Incorporated first quarter 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. And if you object to this, you may disconnect from the conference. I would now like to turn the call over to Jeff Trika. Please go ahead.

Thank you, Operator. Good morning, everyone, and thanks for joining us. I'm Jeff Trika, Investor Relations Contact for NN Inc., and I'd like to thank you for attending today's business update. Yesterday afternoon, we issued a press release announcing our financial results for the first quarter ended March 31, 2022, as well as a supplemental presentation for which have been posted on the investor relations section of our website. If anyone needs a copy of the press release or the supplemental presentation, you may contact Lambert and Company at 315-529-2348. Our presenters on the call this morning will be Warren Veltman, President and Chief Executive Officer, and Mike Felcher, Senior Vice President and Chief Financial Officer. Before we begin, I'd 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 factors section in the company's annual report on Form 10-K for the fiscal year ended December 31, 2021. 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, input cost inflation, supply chain constraints, the impact of the automotive semiconductor chip shortage, foreign exchange rates, cash flow, tax rates, acquisitions, synergies, cash and cost savings, future operating results, performance of our worldwide markets, the impacts of the coronavirus or COVID-19 pandemic, and the Russian-Ukrainian conflict on the company's financial conditions 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. 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. Reviewing the agenda for today's call. Warren will provide a business update from the first quarter, then Mike will provide a detailed update for the financial results before turning the call back over to Warren to discuss our segment results and markets, as well as the outlook for the remainder of the 2022 fiscal year. There will be a Q&A session following the conclusion of the prepared remarks. At this time, I would like to turn the call over to Warren Beltman, President and CEO.

Warren? Thanks Jeff and good morning everyone. If you would turn to page 5, we will review some of the highlights and accomplishments of our team during the first quarter of 2022. I am pleased with the results for the quarter. Our sales were up 1% over a very strong first quarter last year and we generated $13.4 million in adjusted EBITDA, which is our best result since the strong first quarter of last year. Additionally, We posted a solid progression from Q4 2021 to Q1 2022. Sales growth grew 17.7 million or 16% sequentially and our adjusted EBITDA and our adjusted operating margin improved 130 basis points. Our results were impressive given several headwinds experienced during the quarter. First, COVID-19 continued to impact our operations. Employee absenteeism in several of our North American facilities reached a peak during Q4 2021 and early Q1 2022 as the Omicron variant spread throughout the United States. This absenteeism and other supply chain interruptions, including those related to semiconductor chips, continued to place pressure on our ability to operate efficiently. Second, our first quarter cost structure was adversely impacted by inflationary cost pressures. Our sales team did a tremendous job concluding on numerous customer negotiations to secure additional pricing to mitigate a substantial majority of the inflation impact. Likewise, our operations teams maintained strong delivery and quality metrics in spite of the difficult first quarter environment. The inflationary cost pressures have impacted our material, labor, material supplies, manufacturing supplies, and utilities among other cost drivers. The nature of our customer ordering patterns in power solutions, which is typically through discrete POs versus long-term supply agreements, allows us an opportunity to recover nearly all inflationary costs. Mobile solutions customer relationships are typically governed by long-term agreements, which have required more direct customer negotiation and interaction. We have been successful in securing 100% pass-through on material costs for most mobile customers. As for labor and other cost inflation, we have continued to work with our mobile solutions customers on balancing cost recovery with expectations for productivity gains within those relationships. Free cash flow was a use of $9.5 million this quarter, driven by increased accounts receivable as a result of this sequential increase in sales. Our net debt and liquidity remain within our target ranges at the end of the first quarter. On page six, we will review our sales pipeline, which grew 149% compared to the prior year. Consistent with our long-term goals, we saw electric vehicle projects in our pipeline increase from 6% of the total pipeline a year ago to 29% of the current pipeline. Likewise, residential and commercial electrical increased from 8% to 13%. Conversely, we have seen automotive gasoline ice-dependent pipeline decrease from 31% to 14%. These movements are aligned with our strategic focus on electric vehicle and electric grid opportunities with more selective pursuit of ice-dependent opportunities with higher return on invested capital expectations. Now I'd like to turn it over to Mike Felcher so he can provide a more in-depth review of our financial performance for the quarter. Mike?