NN, Inc.

Robbie Atkinson - Treasurer and Investor Relations Manager Richard D. Holder - Chief Executive Officer, President and Director James H.

Dorton - Chief Financial Officer, Senior Vice President of Corporate Development and General Manager of Plastic & Rubber Components Thomas C. Burwell - Chief Accounting Officer, Vice President and Corporate Controller

Steve Barger - KeyBanc Capital Markets Inc., Research Division Keith Maher - Singular Research

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 Third Quarter 2014 Earnings Conference Call.

Our presenters this morning are President and Chief Executive Officer, Richard Holder; and Senior Vice President and Chief Financial Officer, James Dorton. Also here are Will Kelly, Vice President and Chief Compliance Officer; and Tom Burwell, Vice President and Chief Accounting Officer.

If anyone needs a copy of today's press release, 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, and in the Risk Factor section of the company's 10-K for the year ended December 31, 2013.

The same language applies to 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.

The presentation also includes certain non-GAAP measures as defined by SEC rules. A reconciliation of non-GAAP measures is contained in the tables in the final section of the press release.

Before we begin, I'd like to mention our upcoming second annual Analyst Day, Thursday, February 5, 2015 in New York. We hope everyone will be able to join us.

First, we'll give an update and an overview of the quarter and then afterwards we'll open up the line for questions. With that said, Rich, I'll now turn the call over to you.

Thanks, Robbie. Good morning, and thank you for joining our Q3 investor call.

Q3 2014 will undoubtedly be remembered as one of the most exciting quarters of NN history. The summary of the quarter is a true testament of teamwork, focus and drive by all involved.

In Q3, we closed 2 acquisitions, RFK in Bosnia and Chelsea Grinding in Jackson, Michigan. We did so, while continuing to improve our operating performance and our market penetration.

As positive as those events have been, our fourth acquisition and most transformative deal was finalized during the quarter. A wonderful deal that allowed us to fill out our precision machining components portfolio and I think it's safe to say, as you look back on the quarter, that the speed at which the team has executed the transformation of NN into a diversified industrial company has been credible, and has certainly set a reference point for our future.

With that said, I'll turn it over to Jim to walk through some of the financials and I'll return in a minute to talk to some other issues. Jim?

Okay. Okay.

Thanks, Rich. As Rich mentioned, the third quarter was a very exciting time for NN.

Our financial performance, it could be broken down into the tale of 2 companies, the old NN, i.e. before acquisitions, and the new NN.

And geographically it's a tale of 4 continents, North America and Asia and Europe and South America. I'll try to break these -- this analysis out in a simple way so that you can clearly understand how we did in the quarter.

Of course, we had significant acquisition and integration related expenditures during the third quarter. We are calling out and excluding the costs that were expensed from normal operations, so that we can focus on actual operating results.

During the quarter, we expensed $11.4 million pretax or $9.2 million after tax of the acquisition and integration costs. This equates to $0.50 per share.

We'll put all this detail in the 10-Q, which will be filed most likely next week. But for those of you working on your financial models now, let me go over the details.

The $11.4 million of excluded costs breaks down as follows: $5.7 million in SG&A for advisory, consulting and legal costs; $2.4 million in cost of goods sold, primarily for the step up in acquired inventory valuation, plus some integration costs; and $3.3 million in interest expense and other expense for the write-off of deferred financing costs and prepayment penalties related to replacing our financing. So to recap, $11.4 million -- the $11.4 million is $5.7 million SG&A, $2.4 million in cost of goods sold, and $3.3 million in interest expense and other.

In addition to those changes, we made an adjustment for nonoperating foreign-exchange losses on intercompany loans that totaled $9.9 million after tax or $0.05 a share. This is a normal adjustment we make each quarter.

We're pulling these costs of -- all of these costs out of normal operations in our financial review and on the reconciliation contained in the press release and we're calling it adjusted income from operations, adjusted net income and adjusted EPS. In addition to all of the costs we expensed, we also capitalized some costs related to the issuance of new debt, totaling $14.7 million, and this shows up on the balance sheet and will be amortized over the life of the debt facilities.

Taking out these costs, adjusted gross margins were 22% in the third quarter, and that included only 1 month of Autocam in the mix. This was exactly in line with our acquisition model.

Looking forward, the acquisition model showed a 23% gross margin for 2015, without synergies, and we still expect to achieve this. And I just bring those numbers up from the original acquisition presentation to point out the impact of the adjustments we're making in the one-time costs.

Now regarding our revenue performance, let's look first at the old NN without considering all of the acquisitions we made this year. Sales were $96.8 million compared with $93 million last year, an increase of 4.1%.

We experienced the normal expected European seasonal decline in Europe in the third quarter. Sales in Europe were down versus the first half, also due to lower heavy truck sales, which Rich will comment on in a moment.

And this is also combined with a continued slow, but still recovering business in auto and industrial sales in Europe. Europe continued -- does continue to improve but at a fairly slow pace.

Despite this, all of our European operations are still performing quite well. Adjusted income from operations was up 9.5% versus last year on the 4% increase in sales.

So you can see that we have maintained as promised, good incremental profitability on the higher sales, combined with good cost control, which led to the earnings improvement. Going to the tale of the 4 continents that I mentioned, the U.S.

and Asia continue to be positive for NN and are meeting our sales growth goals. Europe is recovering slowly and South America, particularly Brazil, is weak right now and a bit below expectations.

In addition, for the first 3 quarters of the year, the euro exchange rate averaged a little above $1.35. In the fourth -- in the third quarter, the euro weakened significantly and is now currently at about $1.25.

The change in the euro reduced Q3 revenues by about $1.4 million and will reduce the fourth quarter revenue of -- by about $3 million compared with the first half. In total, we remain ahead of plan for the year, but we expect the fourth quarter will see slower growth in Europe and Asia, and will be down due to the currency numbers I just mentioned.

The tax rate in the quarter, without acquisitions, was 30.3%, which was consistent with the average tax rate last year of 30.5%. You'll see that the tax rate on the consolidated income statement looks odd, including all the effects of the acquisitions.

For the reported pretax loss of $4.6 million, we only have a tax benefit of $0.6 million for a 13% effective rate. This is because of the permanent difference -- permanent tax difference arising from the fact that acquisition expenses incurred after the signing of the original acquisition agreement are not tax-deductible.

Looking at overall results with acquisitions. Sales were $125.6 million, and were 35% above the same quarter last year.

Adjusted net income of $6.3 million was up 26% over last year, despite higher interest expense related to the acquisitions. Adjusted EPS of $0.34 was up 17.2% over last year, and this is a lower percentage increase than net income due to the growth in shares we -- due to the new shares we issued into the Autocam acquisition.

These numbers do point to the quality of earnings that we got with the Autocam acquisition, and the very positive accretion to earnings that we expected from the acquisition. And earnings will improve further considering the significant projected synergy numbers as we complete the integration process.

Regarding our year-to-date performance without acquisitions. Sales were up 6% over 2013 and adjusted net income was up 34.5%.

Again, good incremental profitability on the higher revenue, good cost control and lower depreciation were the key factors. Now I'll move on to the balance sheet.

You will see some significant changes versus last quarter due to the acquisitions, and with regard to acquisition impact, I'll only discuss Autocam since those were the most significant. Regarding fixed assets, because Autocam had gone through several recent recapitalizations, the property plant and equipment on their books was pretty close to fair market value.

Therefore, there was only a small adjustment to the value and the historic depreciation will not change that much. In total, we added $146.1 million to property plant and equipment on the NN balance sheet, and we added an annual depreciation -- a quarterly depreciation of $3.6 million for those new assets.

Further balance sheet adjustments. We added $35.6 million in value to other long-term assets for the 49% of the Autocam Chinese joint venture that we acquired.

And I'll just remind you we're accounting for that on an income-statement basis using the equity method. We also added net working capital of $42.3 million.

Regarding intangibles, we added $77.5 million to non-amortizable goodwill, and we added amortizable intangibles of $51.1 million. We acquired $29.2 million of capital leases and other Autocam long term debt, plus other noncurrent liabilities of $49 million.

As you can see, all of the adjustments -- you can see all of these adjustments in detail when the 10-Q is published next week. Also, I'll point out that last month, we filed an 8-K with the Autocam 2013 audited financials and the first half of 2014 results with a pro forma combination with NN.

You should realize however, when you look at this that the filing was done in the prescribed way and it does not include any synergies. Also, Autocam's performance is much stronger in 2014 than in 2013.

So while the combination looks good, it is not really indicative of the actual combined results we expect to achieve in the future. If you take out the impact on the balance sheet of the acquisitions, NN had a fairly normal quarter.

DSO remained in the 60-day range. Inventory terms improved slightly and vendor payments were normal.

I should mention as I have in the past, that we are seeing increased pressure from our larger customers for longer collection terms. And we're working with our key customers to minimize the impact on NN as we try to be a reasonable partner.

Total bank debt was $360.5 million at quarter end and cash was at $26.9 million. These balances reflect the impact of our acquisitions, primarily Autocam.

As previously stated, at this debt level, we have a pro forma forward-looking debt-to-EBITDA ratio of a little over 3x. We will be applying out positive cash flow to reduce debt over the next 12 months.

All of our debt is covenant-lite, meaning that we are not subject to any leverage or covenant measures at our current usage level and this gives us maximum flexibility over any changes in the business cycle. We believe that our debt-to-EBITDA ratio will be reduced significantly over the coming 12 to 24 months, even assuming further tuck-in acquisitions as we generate positive cash flow and increase EBITDA.

As you can see from the debt balances, cash flow was highly negative during Q3 due to the acquisitions. But if you remove the impact of the acquisitions, cash flow exhibited our normal seasonal trend, which usually results in positive cash flow in the seasonally slower quarters of Q3 and Q4.

We estimate the cash flow, excluding acquisitions, would have been approximately $6 million positive for the quarter. Year-to-date, capital spending has totaled $14.8 million compared with our announced plan of $23 million for the full year.

The slower recovery in Europe has delayed some projects, but the adoption of the Autocam capital plan has added that capital spending. But we think that the combined companies will likely be in the range of the original spending target of $23 million by year end.

That concludes my comments, and now back to Rich.

Thanks, Jim. In just a moment, I'll address our integration efforts, followed by some commentary around the legacy business.

But first I want to speak to the change that we made in our financial reporting. As Jim mentioned, starting with this quarter and moving forward, we'll be highlighting income from operations as a key metric for measuring our performance.

We believe adjusted income from operation -- operations, which strips out nonoperating, nonrecurring and items specifically around acquisition-related costs is the best and truest indicator of our performance. So as you look forward into '15, that will really be our focus.

We think you can really see into the operations by looking at these numbers and so we'll be talking about it on a consistent basis. Now let me change gears.

As you're well aware, during the first 8 months of 2014, we closed 4 acquisitions, V-S, RFK, Chelsea Grinding, and of course, Autocam. These 4 acquisitions combined represent approximately $280 million in increased full year revenues.

Each of these acquisitions contributes key elements of growth to our -- within our strategic plan. Some of these elements include our enhanced product offerings, entry into adjacent markets, increasing global footprint and a whole host of other things.

We can't say enough about how happy we are around how these fell into place relative to our strategic plan. In order to appropriately execute and continue executing the strategic plan, during the third quarter, we moved forward and got a really strong start to our integration efforts, especially around Autocam.

We named J. R.

Widders, Senior Vice President of Integration and Transformation and began to position the appropriate functional and operational leaders and teams under his leadership. The focus of the integration and transformation team is to manage the integration of our acquired businesses and more broadly drive the processes and tactics necessary to transform the entire NN into a premier diversified industrial organization.

The combining of NN and Autocam is truly a transformational event. The acquisition brings NN access to critical growth markets and the ability to capture global market share and fuel-efficient technologies, such as gasoline direct injection systems, high-pressure diesel injection systems, variable valve, variable cam timing and all of this, in addition to our legacy businesses, which was electronic power steering and a high precision shaft portfolio.

Additionally, Autocam brings a very strong management team and a robust fully integrated information systems platform. We have renamed our Precision Metal Components group, the Autocam Precision Components Group as we believe the Autocam name is clearly the leading brand in the precision machining space.

The Autocam management team has been given operational ownership of our former Precision Metal Components group, with the expectations that we will create a much stronger combined operating system for the new integrated business. From the beginning, we have planned to take the best of Autocam and the best of NN and apply it throughout what we will now call the new NN.

Again, this job, the shepherding of this integration effort and this overall corporate transformation, will be the job of the integration and transformation team. Beyond the depth of talent, quality of systems and new markets that Autocam brings, the most exciting part may very well be the way the 2 cultures have merged.

Throughout the due diligence process and through the integration, the management teams of the 2 businesses have always worked extremely well together. During the third quarter, we've had numerous integration events between the management teams and we now have a level of business alignment that I personally have not had the pleasure to witness this early in the process.

Changing gears to the other 3 acquisitions. The other 3 acquisition integrations are going just as well.

We've made great improvements at the former V-S Wheeling in Juárez facility and we're beginning to see wonderful sales growth coming out of that organization. We've made numerous operational, safety, information systems and accounting/internal control improvements at the former RFK in Bosnia, along with capital and infusion of capital spending, and we're seeing great successes there.

And finally, we successfully moved the integrated production of the former Chelsea operation into our Erwin, Tennessee operation and shut down the factory in Jackson. As important as our acquisitions are to the future growth plans, so is the continuous improvement of the legacy business.

We've demonstrated for the last 6 quarters that we continue to gain momentum in revenue -- in revenue growth and more importantly, in margin expansion. Excluding the effects of acquisitions, sales grew approximately 3.9% in Q3 2014 versus Q3 2013.

Sales volumes drove that increase, with Asia and North America being the 2 largest growth areas. Our Asian location benefited from the 10% plus increase in China auto production, plus growth on filling the additional capacity that we added to the plant in the first half of 2014.

Our North American operations continue to benefit from a robust North American auto production, as well as stronger sales in the HVAC market globally. Europe, on the other hand, was a bit of a mixed story.

We continue to see growth outpacing the European auto production as we continue to benefit from our share gains and our current trend -- I'm sorry, in the current trend of growth in the exports of premium European brands to Asia. However, the heavy truck market declined quarter-over-quarter as the Class 8 engine cycle pre-buy cools in Europe, and we -- we've seen that in this quarter and I think Jim mentioned earlier, we will certainly see the effects of that in the fourth quarter.

Additionally, we continue to be impacted by still a weak European industrial business. I'd be remiss if I didn't highlight as I have done probably every 1 of the last 6 or so quarters, that we are still off our historical highs in Europe.

We expect the market to come back and we are well positioned from a cost perspective to drop substantive incrementals to the bottom line when the market comes back. We think as these markets display a pulse in 2015, we continue to position ourselves to take greater share in Europe and enhance our market position.

Regarding the 2014 outlook, we now expect 2014 revenues to be in the range of $490 million to $500 million, including approximately $103 million of incremental revenues from our 4 acquired companies. These sales levels will equate to about a 3% to 7% growth over 2013 for the base business and an overall 31% to 34% growth for the entire corporation.

That concludes my comments and now, we can open the line for questions.

It sounds like you're really feeling good about future profitability, and just to start, can we confirm the prior view? You previously had guided to 2015 at $725 million in revenue, $125 million to $135 million in EBITDA.

Any change to that?

Yes, yes. At this point in time, we have no changes to that.

We feel pretty good about those numbers and we're not seeing any real indication that economically, that there’ll be any issues.

Great. And Jim, if I caught it, it sounds like it sounds, like quarterly D&A is going to be around $8 million or $32 million annually.

Is that a good number?

Let me take a quick look.

Steve, this is Tom. I think it’ll be more like $11 million on a go forward basis with all the acquisitions in.

Plus you've got to add in a couple of more months of Autocam because we only have one month of Autocam in there.

So you're saying annual D&A closer around 40, 44?

It would be about 13 a quarter with Autocam in.

Okay. 13 a quarter.

Got it. Can you help us with quarterly SG&A?

I think the recurring number was around...

I'm sorry, that was...

I'm talking about D&A, D&A. So SG&A, you're saying is going to be 13 a quarter, that's good.

Yes.

It looks like it should be about $9.8 million a quarter.

Yes. $10 million a quarter.

$10 million a quarter.

And that is for depreciation and amortization?

Right. And there's significant amortization because of the upfront cost on the debt financing that we did.

Got it. Okay.

I just wanted to get some of those housekeeping things out of the way. I know it’s early in this process but as you've gone out and talked to customers about Autocam in the broader PMC segment now, how -- can you talk about just what the reaction has been?

What are the -- what's the early read on how they're feeling about the new NNBR exposure?

Yes. I've got gotten out personally to see, I would say, all of our probably top 10-ish customers on both sides of the equation.

And the response has been extremely positive. I think we went into this deal thinking that the customers would really like the combination and I think we walked away after meeting with customers realizing that they love the combination.

There's a couple of things that putting this together really excites the customers about and most notably, the fact that we have the expanded portfolio and we can handle our product across the entire life cycle of the parts. So we have the low-volume, high-mix production.

We have the high-volume, low-mix production and maybe the most exciting thing across the board is we have a Mexican low-cost country facility, which really seems to be exciting for the customer base.

And what are your goal...

No. I think the other thing that they appreciate is just the overall scale of the organization.

I think we had a thesis that said that the automotives, especially, would appreciate a larger organization that can bring R&D efforts and other pieces of the value equation to the table. And I think we're seeing that appreciation as a larger more scalable organization.

And one of the goals out of the gate when you came on board, Rich, was deeper penetration into existing customers. Do you think this new product set or manufacturing expertise or prowess allows you to pursue that as well?

Yes, yes. Absolutely.

And there's a number of ways that, that's taking place. First and foremost is probably the cross-selling efforts.

We now have, again, a wide portfolio that we can take a look at all of our blue-chip customers and sell the entire company to that customer. And most notably, our plastic business is probably gaining from that more than any single business within the company.

They have a fairly stellar set of RFQs out there, more than probably this business has seen in, I don't know, maybe ever, as a result of this cross-selling effort. So that's pretty exciting.

I think the other thing that is allowing us to penetrate is when we acquired RFK, we acquired -- one of the things that came with it was a low-cost, high-quality tooling expertise. So when you look at RFK, when you look at Autocam, when you look at the former Whirlaway business, all of -- we have our own robotics, we have our own specialty machining and we have our own tooling capabilities, which is -- you put that together, it's allowing us to bring some value to the customers that our competitors, quite frankly, were struggling to bring and we've seen that already taking place.

So we're pretty excited about it.

And you talked about a level of alignment that's ahead of your expectations or I think you said you hadn't seen that before in other situations you've been in. Given that success, how's you're thinking about how you can leverage the entire platform evolved?

Or is it too early in the process to really flush that out?

Yes. I think all it's really done was serve to further validate our original integration thesis.

We clearly think that we're moving faster, and we're ahead of schedule from where we thought we would be, especially given the alignment of the management teams and so on. But I don't think we're at a point yet where we're willing to say the timing is a little bit better or the number is bigger.

We're just feeling even better about the numbers we have out there as the timing we have out there.

Got it. I'll ask one more and then get back in line.

Your focus on operating income going forward, I think, makes sense. Are you going to give us historical operating income by segment to help us model the company that way going forward?

Yes, yes. And we kind of floated that out there last year in the -- we've talked about OP in the Investor Conference last year and what it looked like by segments and where we thought we needed to get to.

So absolutely, we'll float that out there.

Could you talk -- I remember -- could you talk maybe a little bit more about the synergy you talked about just from the Autocam previously? I know we're only 2 months in but it sounds like things are going pretty well, and if there's any change to kind of your expectations of the amount of synergy you're going to get out of the integration.

No. I think the numbers we've floated out there -- and it's on the website in the presentation, are still good.

I think if anything, we are more secure around those numbers than we have been throughout this entire process and we're as secure around the timing, as well. I think the difference today is it was a small group of leaders and folks that did the due diligence, that came up with the -- with those numbers, and today, it is 3 levels of management that's completely bought in and working detailed plans to execute those numbers.

So we feel very good about the synergies.

Okay. That makes sense.

I have a question, going back to the depreciation and amortization, just want to understand that, that the number you gave, it includes the debt expense amortization, as well as intangible amortization, that's the all-in number?

Yes. Yes.

That would be the all-in number.

Okay. And what are the intangibles?

And the numbers are preliminary and we have not finalized our purchase accounting but we believe they'll be in that -- right around that $10 million.

And what are the intangibles to $51 million? What is it related to?

Primarily customer relationship intangibles.

But there's also the trade name of the various companies that we purchased.

Okay, cool. And I don't know if you could give us maybe your thoughts on what the gross margin is going to look like kind of in the short-term, then maybe at quarter end and just longer term where you think that might end up?

Yes, again, we're not trying to guide you to any particular numbers here but we did say in our acquisition model, that we've tradition -- NN has traditionally been in about the 20% gross margin, that's about the appreciation. After Rich came, we made some changes, we moved that up a couple of -- maybe 100 basis points or so.

The acquisition model showed that we should be, for the first full year, without synergies, in the 23% range, and right now we're not changing that.

Okay. Great, that's helpful.

And in terms of debt, obviously, you're going to work to start paying that down. Do you have any target, say, by the end of 2015 where you expected that level to be?

Well, we've made projections, we -- in general, NN is positive cash flow after CapEx of a fairly significant amount and we think about applying most of that to the debt. With the growth in EBITDA, I can't remember what we have on the website.

I don't think we showed that but we would get into the 2x debt to EBITDA pretty quick. Yes, or let's say, higher end of that after year 1 but...

Okay. That's helpful.

And any guidance on CapEx, for the balance of the year? Are you -- or you're thinking about, say, for 2015?

I don't -- we're not ready to give 2015 yet. We're still looking at the plans.

And what I said about this year is I think we're going to fall in about the $23 million range even with the Autocam due to delay in some projects that we originally had on the table in Europe. So that's where I think we'll be.

The margin profile of the other 3 acquisitions, Chelsea, V-S and RFK in the quarter. And specifically on V-S, has that kind of crossed -- is it tracking to your expectations and any sense on profitability for that one?

Yes, it's tracking a little ahead of the model. I think we said -- I want to say it was second quarter call, we saw the integration efforts was going a little faster than we originally anticipated and we thought we would enter into the wonderful world of profitability earlier.

Well, we've done that and we're pretty excited about that. In addition, we're seeing some nice things happening on the top line.

So pretty excited about V-S.

Inventory of $87 million on the balance sheet in the quarter. Is that the right level on a go-forward basis or will there be -- do you need more inventory through the system?

And then in general, I'm just trying to get to whether working capital is going to be a source or a use as we go into 2015.

As far as we know, that's a pretty good level. It does represent the seasonal -- there's usually some adjustments in Q3 because of the seasonal drop in shipments in Europe but that's probably a reasonable level.

Our days inventory outstanding seem to be about right.

Okay. And just trying to back into the implied organic growth in 4Q.

It looks to me like it's probably low single digit, 2% or 3%. Is that -- how should I think about that in the context of the original guidance of 400 to 415 versus the 490 to 500?

Is there actually a step down in organic for the legacy?

No. I will tell you that I think we are almost dead on the number.

If you -- without going into too much detail, I think what you'll find is if there's any deviation at all, its FX.

Okay. So just from a pure business standpoint, you're -- if things are tracking the way you had expected it at this point in the year?

Yes.

And you had mentioned...

It always look like something better, but yes, we think the outlook is -- has been pretty accurate.

Got it. And the -- Rich, I think you mentioned that some of your customers were pushing for longer payment terms in the auto space.

Anything -- has something changed there? Or what's really driving -- any background color around that comment?

Yes, candidly, I don't think the environment has changed. I think we -- I think we're just more noticeable.

I really do. I think that's what happened to us, so there's good and bad for -- associated with performance and I think we've just fallen on a couple of people's radar screens relative to this issue so the discussions have started.

Do you feel like you have a good position to be able to hold the line?

Yes. With some of the bigger customers, we think we can strike an agreement that won't be too painful for us, or at least an agreement that we can make up the difference.

Could you give more color on Europe? I mean, it seems like in certain areas, we've seen some improvement, I guess, in the last 3 quarters.

Is it getting worse? Or is it just kind of -- I mean, just kind of your color on Europe, is it...

Yes. I think -- I don't think Europe is getting worse.

I think candidly, when you look at the continent, it's fundamentally flat, right? For us, it is a more positive feel because we're taking advantage of the export market of the premium brands.

So we're seeing sort of our unfair share of that piece of the equation, as well as we've taken share from our competitors. So it feels a little bit better to us, I think, than maybe some others or that the market would indicate.

With that said, the truck market is -- has cooled. So in Q4, if you look at our business, we really benefited nicely, volumetrically at least, from the truck market in Q1 and Q2.

That's just not going to be there in -- it wasn't there in Q3 and it won't be there in Q4. So net of it all, I think it's a positive story but it's a bumpy road.

I think at the risk of maybe putting too much out there, I think -- I don't think we can look at Europe anymore, right? France is going one way and Italy is going in the opposite direction.

So if you look at it, in our market, Italy is growing and France is shrinking. We are at the point where we are disaggregating Europe to figure out what we do, where and when, but I think as a continent, we think it's flat.

And it's flat, it's probably flat next year.

Okay. I'm guessing this might be in the Q but I guess SKF is, obviously, falling.

I mean, I guess as a percentage of sale. It seems SKF is still your biggest customer.

And did Autocam have any large customers?

Yes. Autocam -- Robert Bosch is Autocam's largest customer.

But the combined organization, SKF is still our largest customer. They are 20% to 23% of our business.

Okay. And you didn't mention -- were there any discontinued operations in the quarter?

Any -- anything you got rid of or sold?

No.

Thank you. I guess in summary, I would actually like to pass along my personal congratulations to the management team for what I think is a wonderful job that has been done the entire year, but most notably in the third quarter.

It was a lot of work to complete this acquisition and to continue to run the business while doing it and I think the team performed at an admirable and elegant fashion, so I want to pass along my personal congratulations to the team. I think we're extremely excited about the future and we're pretty comfortable about integration and with that, I think we'll close the meeting.

Thank you.