Not much more was said on the call than what was in the news release, and there was only 1 question, which wasn't really helpful from my perspective.
They said Q1 sales would be down 40% from 2008 (I assume, like the prior poster said, they were comparing to Q1 of 2008, not Q4), and that they had cut costs to the point that they would be break even from a cash flow perspective. Also, break even from a cash flow perspective for the year. So altho NNBR will report losses, they shouldn't lose too much cash, they think.
But then they said there has never been this little visibility ever in the business, so I don't put too much faith in the cash flow projections.
They talked a little (the questioner did not ask about this) about the possibility of generating cash flow by reducing inventory, which I assume will happen, but even that is only a 1 time event. I also assume that business will be worse than expected.
Auto companies are 20% of sales (maybe that's the US%), and those sales are down the most. But industrial sales are also down a lot, too. Sales don't seem any too good in any area.
They've cut everywhere - people, salaries, plants, dividend. I assume they could cut more if (unfortunately) sales drop further, but I don't know how much more they can cut. I think they said that on an ongoing basis they have cut $ 50 million in annual cash costs.
Anyway, this was a small investment for me (got in at $ 2 and a little) and I sold the last of my shares yesterday. Unless there is a dramatic turn around, which I don't forsee, I think we'll be able to buy under a buck in a month or 2. I honestly hope I'm wrong, because that would mean more trouble for lots of similar companies, but I'm not optimistic about the government's ability to stop the correction.
For a $ 1 stock, maybe it's a reasonable bet, but not for me any more.
FWIW. Good luck, all.
I agree with the caller during the CC, good work, not a happy outcome, but good work nonetheless.
i put a lot of faith in mgmts statement that they see no improvement in revenues until possibly end of 4Q when de-stocking of inventory comes to an end.
Therefore i will keep this on the radar but not invest until at least August.
On the brightside, it is one of the few stocks still sitting around a dollar after the bear rally of the last 2 months, so for those who have a few years time horizon they are a suitable investment, if GM continues.
eventually it will rise up to the $3-$5 range but there's no need to rush in at this stage.
best to you jrad, thank you, hope you jump back in! good luck !a strong close for the week.the only thing that was missing in the cc was enthusiasm.
meet and greet four times a year ,thats it sell yourself the "company",i like the no bs.approach yet dang .it was like listing to stien say "CLASS---CLASS " when you go to the party be ready to dance!,. i was surprised of the 10% salary cuts by mgmt. had allways thought they were under paid. dissapointed that Will as IR did not address any of the questions forwarded by livin on all our behalf. perhaps,a little out of his league. will be calling monday to get a responce. hope all are well , enjoy the week end ,jim
After listening to the call in the body of the call there were answers to a few of the questions we asked.
They addressed the percent of auto and non-auto, the spoke about the need to refinance the debt to stay in line with the covenants, they spoke also about the concern about being in technical violation as well.
My general reaction to the call is that management wanted to keep it short and to the point. They did not and were not under any circumstances state any projected numbers other then that they were looking to stay cashflow neutral for the year. Considering the current state of things that would be good. And making a few cents a quarter might even be better.
I think the general trend in the call was "Times are hard, we are going to make it, but times are hard."
Not much news but good review of what has been going on. Still a good deal at this price and I think we will see a general uptrend but not at a very rapid pace.
This all changes if GM and the Pres are not able to cut a deal.
Livin just listened to the conference call. Nothing new that we have not beat up on this board in my opinion. No new risks other than the macro economic ones that are out of all of our control....
20% NA Automotive
45% European Automotive
Economic forecasts call for a 35% reduction in NA Automotive and 25% in European automotive.
Managing to cash flow/survive 09. Not going to make any money in 09 and hopefully not incur any additioanl debt. aka cash flow neutral/breakeven.
This will roar when volume comes back as cyclical manufacture. If you buy anywhere in the zone between .80 and 1.25 and can carry for 2-3 years or till volume comes back you should make some good cash. That is the gamble/big question. WHEN IS THE VOLUME COMING BACK? If you wait till it is back it is too late.
Lastly, from the risk management side. They got a line a credit. At current volumes are breakeven. Managing in dire times to a breakeven point. Still do not see much downside unless volume drops another 30% on continued economic contraction. Then we are all screwed anyhow. Worst case they put up the closed sign even as a common we might get close to a $1 back.
AS far as entry point or future buy opportunity when Chrysler or GM go to Chapter 11 we will test the lows again in alot of places in the market. I think.
LONG - Wealth Building Opportunity
You say that if you buy from 80 cents to $ 1.25 and can hold for 2-3 years, you'll make some good money. I agree, but there's one problem: you could say the same thing about 100 stocks right now. If you go by stocks that have had similar percentage drops rather than by absolute stock prices, you could probably name 250 companies with similar propects for price appreciation down the road. So what makes NNBR so special that you want to take the risk here? I think management is being honest, which is one good thing, but they're telling you they can't see what's happening this year. I don't know enough about the business to know if NNBR has any special expertise that another company can't duplicate (I doubt it), and think about it: they say they should be break even on a cash flow basis if sales drop by as much as they think they will drop. What if sales drop an extra 10%? Where does that put them?
If you look at the 10-K, you will see that while receivables dropped by 23% (from Dec 2007 to Dec 2008), the bad debt reserve dropped by 55%. So NNBR has less coverage for bad receivables now than a year ago, which makes no sense to me. The company has committed to buy $ 48 million of steel in Europe in 2009, while last year the commitment was for $ 53 million to be purchased in 2008, for a drop of only $ 5 million. I think the commitment is for purchases equal to 70% of the prior year's purchases. The point is that if sales are dropping by 40%, and your commitment to buy steel is dropping by only 30%, you've got a cash commitment that bothers me. And inventory is way too high. I'm sure that NNBR's management has these things covered, and it's hard to get upset about warts on a $ 1.25 stock, but I think I can find something better elsewhere.
Great comments from both of you. Much hinges on Gm and Chrysler, not to mention the other auto companies. In my opinion this country hasn't seen the worst of this yet. Tlak show host can say the bottom has been reached but that's Wall St talking not Main St. Everytime you pick up a paper more jobs have been lost. On Friday, by the ADP numbers released today, we will be pushing almost 9% unemployment. By the time Chrysler, Honda, and GM get through cutting back we'll almost be at 10% or more. God help us.
I think, like others have wrote, the only way to make money on this stock for the time being is to make it at .10-.15 cents at a time. Right now it's a weekly trading stock like Citibank. This to me is a better play since the Socolist Govt we have isn't running the show or holding the purse strings.
Good things are in this companies future if we (the USA)can hold out for a couple years.