Good day, ladies and gentlemen, and thank you standing by. Welcome to the NN Incorporated First Quarter 2015 Conference Call. During today's presentation all parties will be in a listen-only mode. Following the presentation the conference will be opened for questions. [Operator Instructions] This conference is being recorded today, May 07, 2015. I would now like to turn the conference over to your host to Mr. Robbie Atkinson. Please go ahead, sir.

Thank you, operator. Good morning everyone and thanks for joining us. I'm Robbie Atkinson, Corporate Treasurer and Investor Relations Manager and on behalf of our team I'd like to welcome you to NN’s first quarter 2015 earnings conference call. Our presenters this morning are President and Chief Executive Officer, Richard Holder and Vice President and Chief Financial Officer, James Dorton. Also here is Tom Burwell, Vice President and Chief Accounting Officer. If anyone needs a copy of the press release or the supplemental presentation, please call the financial relations board at 212-827-3746 and they'll be happy to send you a copy. Before we begin I'd 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 10K for the year ended December 31, 2014. This same language applies to the comments made on today's conference call including the Q&A session, as well as the live webcast available at www.earnings.com. Our presentation today will contain forward-looking statements regarding sales, margins, foreign exchange rates, cash flow, tax rate, acquisition synergies, future operating results, performance of our worldwide markets, 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. This 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. First, we'll give an update and overview of the quarter and then afterwards we’ll open up the line for questions. With that said, Rich I’ll turn the call over to you.

Thanks Robbie and good morning everyone. We are pleased with the solid start to the year. So let me offer a few highlights and then I'll turn it over to Jim to walk through the financials. Our net sales for the first quarter were inline with our expectations as we continue to gain share and expand into our adjacent markets. We saw our legacy businesses grow at a rate of 7.6% during the quarter, acquisitions contributed $62 million of net sales and our team continued to execute ahead of acquisition integration schedules. Our North American and Asian operations produced steady results and we were encouraged by our European businesses, as they appeared to pick up speed economically. Our gains in Europe offset the slowing economic conditions that exist in our Brazilian business. The currency translation headwinds during the quarter impacted our earnings per share to the tool of $0.04. We continue to drive the implementation of the NN operating system across our businesses. With this focus on disciplined execution and operational excellence, we were able to improve our adjusted operating margins 140 basis points compared to Q4 and position ourselves to take advantage of new business wins, as well as continuing to drive progress on our new platforms towards their expected operating performance targets. Now moving into the business groups, the Autocam integration is ahead of plan as expected and we remain focused on achieving our stated synergy goal of 15 million for this year. Our North American, European and Asian operations within the APC Group are operating largely inline with our expectations. However, as stated before Brazil is presenting a temporary challenge given the current economic conditions. With that in mind, we have already taken appropriate action and has enabled to manage our costs effectively in the region. We continue to believe and invest in Brazil and to that end we secured new program wins in the geography. Lastly, our Chinese joint venture continues to deliver the expected net incomes for our bottom line and we maintain a very positive view on its growth. Turning to the Metal Bearing Components Group, we are seeing increased market windows of opportunity as we expand our focus into new end markets and grow our shares with existing customers. We've made new entries into the rail market, as well as linear system and expect growth outperformance in our enhanced taper, roller platform. The acquisition integration of RFK remains on track and is laying in a better than expected foundation for growth. And finally, our Plastic & Rubber Components Group simply continuing the overall repositioning as we execute the plan for that business during this year. With that, I will turn it over to Jim, to walk through the financials and then I’ll return with some final commentary and we can take questions. Jim?

Thanks Rich. Good morning and welcome everyone. As Rich said, the first quarter of 2015 results were consistent with our strategic plan and as we have discussed before, 2015 has a ramp up in new business programs throughout the year as both in terms of volume and profitability. And Q1 was really right on track even with the weakness in Brazil that Rich mentioned. We had adjusted earnings per share of $0.36 in the quarter with net sales $164 million. This was very consistent with our plan for the year. Weakness in Brazil was offset by strength in Europe and North America and Asia were on plan. As mentioned in the press release and as Rich mentioned, we had core growth of 7.6% year-over-year which is trending well toward our annual 8% organic and adjacent market growth from the strategic plan. Compared with Q1 of last year, adjusted EPS were up 16% from $0.31 to $0.36. But our currency adjusted basis, the comparison is $0.31 to $0.40 or 29% increase. And of this increase we calculate that our acquisitions were added 6% or $0.06 or that was $0.06 accretive and the remainder of the increase is from growth in the legacy businesses. Regarding the impact of foreign exchange, you will recall I think that we revised the Euro exchange rate used in our 2015 guidance during last quarter. So currency was not a significant factor in our results versus expectations. However it was significant in the prior year comparison. The lower Euro rate reduced sales by $8.3 million and EPS by $0.04 of share as Rich mentioned. Gross margins were slightly lower in Q1 compared with Q1 of last year and the fourth quarter, primarily because of the startup costs associated with the ramp up of new sales programs. SG&A…

Thanks Jim. So to wrap it up, we think first quarter represents solid start to 2015 and we feel pretty strongly that our results are inline with our expectations. Our organic and adjacent market expansion is on track and several of our key platforms are approaching targeted performance levels in the second and third quarters. Three of our four geographies are performing at or above expectations and are offsetting the weakness that we are seeing in Brazil. Moving forward, the teams continued implementation and execution of the NN operating system along with our focus on expanding it to new end markets will drive our outperformance and enhance competitive position. We remain confident that our focus on diversification of our portfolio and seizing adjacent market growth opportunities will allow us to build the balance and substantial business. That concludes my comments and now we can open the line up for questions.

[Operator Instructions] We'll take our first question from Daniel Moore with CJS Securities.

Good morning. Did I hear correct Jim, MBC, the metal bearings adjusting for currency revenue has been up or about 15%?

That's right. Part of which is fundamental core growth and part from which came from the acquisition of RFK in Chelsea.

Got it. And we talked a lot about APC but maybe focus on the metal bearings for a moment. Just update us on the pipeline of new business opportunities both of the existing customers increasing outsourcing as well as new customers and maybe new adjacent markets and new verticals.

Okay. There is a number of things I could probably speak all morning on that particular topic but we have, maybe pull it down to three things around metal bearing. Number one, we have increased the portfolio especially with the acquisitions and some recent product development activities that we have in the business. And so, we are playing in a wider range of product, which is allowing us to go into some new end markets. So, on the far side of growers, we are entering into the real markets, which is a completely new and adjacent business for us with taper, rollers in the past but never in the real space. We are also playing in the - what we call the small ball arena. We have never had - our goal in the dimensions but we have never had a ball before, let's call it a micro ball. And so we are able to get into that business and that plays in a number of different end markets. So, that's kind of the new entries. When you think about the RFK acquisition that really gave us the appropriate capacity and put us inline to work with one of the larger bearing manufacturers in fact they’re the largest taper, roller bearing manufacturers in the world. They have recently gone through a bit of a breakup and they’re reevaluating their business, which is - has put us in a great place to help them just aggregate and take over some of their processors and we're in the midst of doing that. We’re actually making products of them already and we've actually hired a resident person to be in their facility to match and coordinate the outsourcing activity. So we're pretty excited about that. It's not an expeditious process. It takes quite a sometime to move these products there as key topping, homologation and lots of things that have to happen, but the exciting part is, we started the process and we’re seeing gains on both sides and look forward to later in the year as that continues to ramp. And maybe number three, we’re just playing in completely different arena today and many people have heard me talk about the fluid power space that we - we use the acquisition of Chelsea to move us into the fluid power space and we continue to expand that space which is very exciting for us. Albeit that market is a little depressed right now, it is the perfect time for us to position ourselves to be ready for - let's call it the bounce in that market.

Very helpful.

I think its fair to say that, let me bounce a little bit, we had a business that I think for many, many years our market window was a bit narrow. Now that we've expanded that to more of a panoramic view, I would argue that our market window is probably more than triple and we are playing in spaces that before we didn’t even think about it.

Very helpful. Just maybe switching gears a little bit on plastics and rubber maybe you said at times if you couldn't gain scale in that business, you consider divesting what your thoughts at this point and what is the roadmap if there is one to getting to significant scale in double-digit target margins?

Yes, and that's a correct statement. I think we said in the original strap line, if we didn’t see a way clear to get this business to surf $100 million, that would be a distraction and we have to do something with it. I think where we've landed is something sort of in the middle. I think we're pretty convinced that we can grow a very robust plastic business. We have some very definitive moves that we’re working through in that business I think it's fair to say that, substance have changed and it’s probably mere in that business and so we’re pretty excited about it. I’m not sure I can get any further into that.

Understood. And one more perhaps jump back in queue just EBIT margin of 8.5%. You obviously have that 10% sort of EBIT goal out there for the full year. I know you don’t get at the quarterly guidance, but just give us a sense Q2 how should we think about that ramping toward that full year margin goal as to the world right now?

I think we’re feeling very comfortable with our numbers and our margin targets for the year. I think we will start to circle the wagons pretty closely, I wouldn't be surprised if we’re will probably be within less than a point of the goal we're ramping to. We have a number of projects in Q2 and Q3 that are coming online at the appropriate performance levels and volume metric targets that are going to push it - I would think and I’m not giving guidance, but I would certainly expect it to push it 9 or above and that's kind of how we expect the things to go. So I think in short we feel pretty comfortable about our targets for this year and getting there towards the middle of the year and sustain it.

I appreciate color.

[Operator Instructions] We’ll move on to Steve Barger with Keybanc Capital Markets.

Good morning everyone. First question is on Autocam, did it specifically hit your revenue and margin target in the quarter and how should we think about sequential revenue growth there?

I think I guess the answer to the first part is yes and no. Ex Brazil Autocam was inline so our well hard was Brazil the economic conditions there are certainly not what we had expected them to be. So fundamentally Autocam was really only off by Brazil. And there was a little bit of FX also really associated partly with Brazil, a little bit with Poland to the tune of little over $1 million bucks.

I was to say how big is Brazil from a dollar standpoint for you.

Overall for the year Brazil is about $40 million business for the year. We are still kind of circling the wagons of what we think and this – we're a little bit more bullish about second half and first half but we think – we'll probably had - I would guess similar topline this in second quarter we did in first quarter we think. The second half of the year will be a little bit more robust simply because we’ve won a number of programs down there. One of which will be coming online in the third quarter that may offset, the first two quarters of depression. We think we can bring Brazil in sort of even then end of the year but it will be pushed towards the second half of the year. And again that's of course that’s depending on the current economics conditions, we don’t think they’re going to worse but I think if you look at data it sort of all over the place right now.

Right. And second question, I guess on the margin side you were inline with your expectation in the quarter for Autocam?

Yes, Autocam margins were definitely inline. You heard me mention a couple of times, number of programs ramping up in second and third quarter. That was basically, that's our profile. There is a number of programs that will hit the appropriate volume, as well as margin targets in kind of late second and be coming along in third quarter. So by all accounts, everything is as it should be right now.

Okay. More broadly on Autocam, I know there is no perfect answer this but, trying to think about your capacity as you’re currently configured, could you sustainably run at $100 million per quarter without a significant investment there, if the work comes into you.

Well, as the entire Autocam group, you want it -

Yes.

Absolutely, I mean I'll say that - let's be careful we can volume metrically handle that if the mix is maintained. If mix changes for instance, if we win a new program, there is always capital associated with that. So if we could simply see volume, yes we can absolutely we can do that. If it's a new programs it comes with, it will come with a capital investment somewhere in the 50% to 70% of PK revenue range.

Right. It's a good segway to next question. Given your ability to hold launches at production volumes, it seems like the big challenges getting in front of the customers there going to appropriately value your engineering and you manufacturing skill set. So what are you doing to make sure you’re maximizing the value of those sales efforts so you can optimize the mix from a profitability standpoint?

Yes, we’ve been building, our Autocam came with a very profession sales organization. We are continuing to build that sales organization. It is, we are becoming more applications specific. We're in the process of bringing on an application sales person specific to the industrial market and a few other end markets that we are driving into. These kinds of sales is more of a spec sale, right, you walk-in and you got to kind of sale that value to the customer around getting spec into the product and that requires again applications specific knowledge. So the individual that we are bringing on, has the industry knowledge, they had the engineering knowledge and it’s an engineered kind itself.

If there is a limitation or as you think about the gaining factors to winning more business for Autocam, is it on the sales side or is it on engineering capacity to be able to ramp up for a program once you get it in the door.

I think candidly our limitation right now would be more on how we allocate and manage capital spending for the year than our potential wins. We are seeing and we are viewed as a class organization, to some degree we have some customers knocking on the door. Our issue continues to be managing capital spend again because every time we win something new, we see revenue 12 to 18 months out. So we’ll have to make a significant investment today and not see the profitability for some 12 to 18 months. So managing how we work our capital is our biggest challenge. I mean I guess, I said a number of times, we got to be careful not to grow our way in the trouble.

Right. On the last call, you talked about working on organizational systems to give you a better forecasting and current information. Can you talk a little about what you put in place, if you have the data analytic support that you need internally, how long it will be to have the system that you envision in place?

Yes, I think we will have the bulk of the system. I would say towards the end of this year and probably no later than Q1 of next year and what that system really would entail is, an SAP financial overlay that will get down into everyone of the businesses. So we can compile the information we need in three minutes rather than kind in three days which we, which is where we started. We've done a number of caseins in the process, we've implemented share point and we are using share point as our knowledge transfer system so we can move information quickly and have greater ease of access and with that, we're giving - I won’t say smarter but we’re giving smarter faster is probably the best way to put it. Middle of last year to compile the data we needed on, for our work based 7 deep dive was a three to five day all hand on that kind of exercise. Today, it's more of a one to two days and we need this thing to be kind of a couple of hours in order to function in with the ease of access and the speed that we design. So I’m looking forward to it. We are getting there everyday. We just laid in the new system. This RIET has been tested, its working, it’s still a little cozy but its significantly better than what we had and we continue to take these steps. We think middle of next year, we will have a world-class system that is comprised of four ERP system and/or instances with one financial overlay and a single knowledge transfer system and that will allow us to literally access information in minutes to hours rather than days to weeks.

Understood. Thanks. I’ll hop back in the line and see anybody else is there.

[Operator Instructions] We'll move on to Larry Pfeffer with Avondale Partners.

Good morning. gentlemen. Nice quarter. So just to give you quick opportunity didn’t see in the press release, I assume the revenue guidance range for the full year remains unchanged.

Correct.

And then just for a housekeeping item there what’s your assumption for the euro for the full year?

I think we’re building about or building right now about 108.

Okay. Yes, just wanted to make sure on that one. And then looking at the Autocam piece, looking at the sequential ramp in revenues, should we be looking for kind of a low 90 million number in the second quarter and then mid-to-high 90 million into the third and the fourth I guess depending on where Brazil shakes out in the back half?

Yes, Brazil continues to be the wild part. I would say certainly it's circling the wag as I think on those numbers pretty close.

Okay. And just on the first quarter and I know there is some product startup cost going on at Autocam. Do you have a ballpark for what you think the gross margin number would have been without the startup cost?

I think gross margins would have been up inline with what we saw last year. I think if you look at the loss - if you look at the gross margin line, it's almost entirely startup cost. And just to be clear, and in the interest of transparency, the bulk of it was an Autocam, but we did have a little on new program wins in metal bearings as well.

Okay. And just again sticking with Autocam on the integration process there what inning would you guys say you were in on the IT integration?

On the IT integration, well specific to Autocam, Autocam today has the most mature IT system of all of our businesses. So Autocam has - the bulk of Autocam, the legacy Autocam business is probably in kind of sixth, seventh inning. The pieces that we added to it, so the VS business we literarily just implemented the MFG Pro instance this week and we’re going through beta testing to make sure the system works right after that and two or three weeks we’re implementing Wellington. So by the close of the end of the quarter or middle of next quarter we’ll have the entire Autocam business on single instance of MFG Pro and so that business will be kind of a singular business if you will by in the fourth quarter. So I would say extending - I'm not a baseball guy so -

I appreciate the color. And Jim just a quick housekeeping question. Where would you expect kind of the midpoint of the full year tax rate to win I know what to move around with where you see revenues coming from but just what the ballpark number to use for modeling?

Well I guess I would go with the midpoint of our guidance, which is 26% to 28%. So 27% - we're comfortable anywhere in that range.

Okay. Thank you, gentlemen.

And we'll take a follow-up from Daniel Moore.

Thank you, again. Just on the synergies you mentioned we're running ahead of the $15 million, is it enough to get sort of we've been charting just $20 million you think over the next year or two. And I guess more critically, where are we in Q1 and how much of those synergies on an annualized basis were in the numbers in Q1?

Well I would say that we - I feel we have a larger internal target than the$15 million and so which is one of the reasons why I said fundamentally we’re ahead of target as expected right, we're driving a bigger number internally. There is certainly a certain amount of those synergy that have showed up in Q1. Unfortunately in some respect, it was offset by Brazil, I’m not sure we're prepared to give that level of detail but certainly it has worked to our benefit to be ahead of plan. The reason we won't stand up and raise the external plan is because something always goes bump in the night, just like we didn't expect Brazil to be doing what it’s doing, we think fundamentally things will balance out and the $15 million is a good number and so we’re sticking with that target.

Fair enough. Thank you.

Thank you. Gentlemen, it does look like we have no further questions at this time. I'll turn it back over to management for any additional or closing remarks.

Okay. We would just close by saying because of solid start to our year, our expectations and appreciate everyone coming in the call this morning. We look forward to catching up with you soon. Thank you.