NN(NNBR)2022-03-11 18:47Financial Data and Key Metrics Changes - Sales for Q4 2021 were $110.4 million, down 7.3% year-over-year, with a 1.8% increase in Power Solutions but a 12.6% decrease in Mobile Solutions due to supply chain challenges [24][25] - Non-GAAP adjusted EBITDA for Q4 was $12.1 million or 10.9% of sales, down from $16.8 million or 14.2% of sales a year ago [28] - GAAP EPS from continuing operations was a loss of $0.07 for Q4 2021, an improvement from a loss of $0.44 per share in Q4 2020 [29] - Full year sales increased 11.7% to $477.6 million, with GAAP operating loss improving to a loss of $9 million from a loss of $117.5 million in the prior year [31] Business Line Data and Key Metrics Changes - Mobile Solutions experienced a significant decline in sales due to the semiconductor chip shortage, impacting production volumes [44] - Power Solutions saw a year-over-year increase in sales driven by recovery in demand in the electrical market, despite reductions in automotive sales [46] Market Data and Key Metrics Changes - The global automotive industry faced a 14% decrease in light vehicle production in Q4 2021 compared to Q4 2020, primarily due to semiconductor shortages [40] - The LMC global production outlook for 2022 was revised upward to approximately 85.8 million units, indicating a recovery trend [41] Company Strategy and Development Direction - The company aims to grow its business around applications independent of internal combustion engines, focusing on electric vehicles and the expansion of the electrical grid [9] - A significant increase in the pipeline for Power Solutions (161% year-over-year) indicates a strategic shift towards larger, more consistent contracts [9][65] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing supply chain challenges and inflation pressures but expressed optimism about future growth driven by strategic initiatives and market recovery [17][39] - The company anticipates net sales to increase between 8% and 13% in 2022, with adjusted EBITDA expected to rise by 9% to 21% [48][49] Other Important Information - The company has taken steps to improve its operating margins and cash flow, including the closure of the Taunton facility, which is expected to yield annual savings of $5 million starting in 2023 [52] - The company plans to enhance investor communications and is developing its first corporate sustainability report [21][22] Q&A Session Summary Question: How much of the revenue guidance is in backlog or firm line of sight? - Management indicated that the revenue guidance is primarily based on awarded contracts and existing business, with macroeconomic conditions being a potential uncertainty [60][63] Question: What does the 161% increase in the power pipeline represent? - The increase reflects a combination of identified opportunities, customer requests for quotes, and actual quotes in the marketplace, indicating effective sales strategies [65] Question: How confident is the company in achieving better contribution margins? - Management expressed cautious optimism about achieving better margins due to successful negotiations for material cost pass-throughs and the potential for larger, more complex contracts [69][80] Question: How has visibility changed compared to the previous quarter? - Management noted that while there are still uncertainties, particularly regarding COVID-19 and geopolitical issues, overall visibility has improved compared to a year ago [86]