NN Inc

Ticker
$NNBR
Industry
Auto Supplier
Type
Balance Sheet Transform
Rating
Not Rated
Category
General
Target Price
$5.50
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NN Inc falls into the “balance sheet transformation” theme — they were previously operating as a multi-industry conglomerate (auto supplier, industrial supplier, and healthcare) with high leverage. Then sold the healthcare business at a high multiple to massively delever (6x+ leverage to below 2x) the remaining auto/industrial business where it sits today.

Notes

Investor presentation — April 2021
Growth outlook — targeting 7.5% annual revenue growth from 2020-2025 with minimal dependence on ICE (from 28% of sales in 2020 to 21% in 2025)
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NN operates 2 segments — Mobile Solutions and Power Solutions — the latter is more an “industrial” business rather than an automotive business
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Financials & Valuation

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FY21 Valuation — Short-term, NNBR should trade closer to its long-run average EBITDA multiple of 7.5x. On $60m 2020 EBITDA = $450m EV. Backing out $125m net debt and $86m preferred equity nets a $239m market cap. Add in the $10m CARES Act funds for $249m equity value or $5.50 per share — 80%+ upside over the next 12 months.

Resources

NN Inc ($NNBR) — Initiation (4/23/21)
NN Inc ($NNBR) — FY21 Update