NNBR - NASDAQ

Good day. And welcome to the NN, Inc. Fourth Quarter 2023 Earnings Conference Call [Operator Instructions]. Please note, today's event is being recorded. I would now like to turn the conference over to Stephen Poe with Alpha IR Group. Please go ahead, sir.

Thank you, operator. Good morning everyone, and thanks for joining us. I'm Stephen Poe, Investor Relations contact for NN, Inc. and I'd like to thank you for attending today's business update. Last evening, we issued a press release announcing our financial results for the fourth quarter and full year ended December 31, 2023, as well as a supplemental presentation, which has been posted on the Investor Relations section of our Web site. If anyone needs a copy of the press release or the supplemental presentation, you may contact Alpha IR Group at [email protected]. Our presenters on the call this morning will be Harold Bevis, President and Chief Executive Officer; and Mike Felcher, Senior Vice President and Chief Financial Officer. Tim French, our Senior Vice President and Chief Operating Officer will also join us for the Q&A portion of the call. Please turn to Slide 2, where you'll find our forward-looking statements and disclosure information. 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 when filed the Risk Factors section in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023. The same language applies to comments made on today's conference call, including the Q&A session as well as the live webcast. Our presentation today will contain forward-looking statements regarding sales, margins, inflation, supply chain constraints, foreign exchange rates, cash flow, tax rates, acquisitions and divestitures, synergies, cash and cost savings, future operating results, performance of our worldwide markets, general economic conditions and economic conditions in the industrial sector, the impacts of the pandemic and other public health crises military conflicts on the company's financial condition 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. The reconciliation of such non-GAAP measures is contained in the tables in the final section of the press release and the supplemental presentation. Please turn to Slide 3 and I will now turn the call over to our CEO, Harold Bevis.

Thank you Stephen. And good morning everyone. Before reviewing our results for the quarter and full year I'd like to thank and recognize all of our NN team members globally for their ongoing commitment to delivering on our business transformation strategy. Our collective efforts were evident in our 2023 results as the renewed culture of winning new business, increased accountability and strong focus on operational excellence have yielded quick improvements in our EBITDA, free cash flow and new business results. Our momentum is clearly building and we're proud of how hard our associates have embraced the necessary changes that NN needs to make. Looking at Slide 3 in your deck, our results were largely in line with our expectations. Net sales were $113 million and $489 million for the fourth quarter and full year respectively. These results were down slightly compared to the prior year due in part to the closing of some underperforming facilities earlier in 2023 as well as our strategic decision to exit certain unprofitable business areas. Those decisions allowed us to deliver strong adjusted EBITDA results delivering $10 million for the quarter and $43 million for the full year. The EBITDA performance helped drive free cash flow of $12 million in 2023, which was up $21 million year-over-year. As we have stated since the launch of our transformation plan, we reset the thinking on cash flow generation and that imperative is now ingrained in the company. While we're seeing immediate improvements in our EBITDA and free cash flow performance, it's important to note that our top line expansion efforts to win more business are on track but take a little more time to fully flow into the reported results. And we continue to address and fix underperforming areas of the company globally while simultaneously executing refresh and refocus growth initiatives. Our expanded growth program includes the launch of two internal startup programs, we call them Connect and Protect and NN Medical, both of which are headed up by new leadership that bring extensive experience and capabilities. Our Connect and Protect program is already generating solid new business wins that will contribute to our revenue growth in the coming year and helps us balance our vehicle platform participation across powertrain types. Given that our newly relaunched NN Medical division is being built from the ground up and from a dead start, our traction and growth through this program is likely to be more evident in 2025 top line results. But all in, we were able to deliver approximately $63 million in new awards in 2023, which was up over 50% compared to the prior year. Our momentum is building here, and we have organized to prospect, quote and win at certain [hit] rates and continue at this rate. Please turn to Slide 4. I'd like to provide an update on our transformation plan, which we unveiled roughly halfway through last year. As a reminder, our goals have been focused on strengthening our leadership team, overall accountability, fixing unprofitable areas, expanding our margins, driving consistent annual free cash flow and winning new business. We're only a few months into this plan really and in the first phase. We are having early success and we believe that there is significantly more value to drive as we look forward. Let's talk through a quick update. We've made some early additions and changes to the leadership team and at the second level of leadership and we have more to go. We've already changed out about 20% of our plant managers and have added multiple experts in both operational and commercial areas. As we continue to progress and perform at higher levels and reset our goals higher, we will continue to upgrade our team. This is ongoing and inevitable. Second, NN remains committed to isolating and fixing the unprofitable parts of the company. As previously mentioned, we have approximately $100 million of business that loses a 10 plus million of EBITDA, is centered in seven plants but touches a lot of customers, many of which are customers and other money making plants. So this is complicated to fix and requires customer notifications and engagement. This initiative is fully underway at all plants and is a pillar of our 2024 EBITDA improvement goals. Third, we are intently focused on cost productivity and improving our overall margin profile and our healthy plants as well. Cost reduction and optimization is a top priority for our teams and I'm proud to say that we deliver cost savings in 2023 with a targeted program that has now been expanded going into 2024. While we're proud of the cost savings we delivered in the early days of the transformation, there's lots of opportunities here. We continue to identify cost reduction opportunities as we go along across the organization and drive margins higher this year. Next, our team's very committed to free cash flow generation in the business. We will deliver free cash flow in 2024 again. Our transformation program helped generate significant improvements in the back half of ‘23. And we expect this to continue through 2024 and into 2025, which supports our stated goal of debt reduction and a future refinancing of our outstanding debt. Mike will cover this in greater detail when he speaks. And lastly, new business wins are becoming core to our culture at NN and accelerating the growth of these wins is key to our transformation plan. We want a record level of new business awards in ‘23 at $63 million, as I mentioned, and this positive momentum is continuing into 2024. We're growing with both new and existing customers. Our sales team is growing also in expanding its commercial reach and we have multiple initiatives in place as I've spoken. So in summary, we're in the early stages of a transformation. And while we're proud of the progress that we've made in the second half of ‘23, we feel that we're just really at the beginning of value creation here. And we're looking forward to progressing further along these initiatives and reporting to you as we deliver results. Please turn to Page 5. We’d like to speak a little bit more about the new business and give you a couple highlights. We delivered record annual new business wins, as we mentioned, on a multitude of product platforms, particularly in the second half as we ramped up and focused more acutely onto winning new business. We've won business from 60 programs across new and existing customers and our new wins exhibit a healthy balance across multiple end markets, which are highlighted on this slide. Additionally, and more importantly, profitability on the new wins is accretive to our company average at full production rates. And although small, we've had our first medical win with a top orthopedic products company and we're pretty proud of that. Moving to Page 6. We've showcased one of the new markets that we're entering, electrical connectors and electrical shielding. We've participated in this market historically to a very limited degree, but we believe it represents a great forward opportunity given our skill sets and our operating assets. This is a market we're very well positioned to grow. We have a very strong expertise in precision engineered metal products and especially multi station progressive dye design. Plating and deep knowledge of electrical components, and these are competitive advantages which differentiates us. And when coupled with a skilled and knowledgeable sales force is leading to some early victories here. And as we look to 2024, we're using the same approach to reenter the medical products market by adding knowledgeable leaders, take advantage of our existing capacity and targeting specific new customers. Our early conversations with potential customers are exciting and eye opening and large, and we are entering this market in a patient manner so that we build a solid business foundation and deliver great operational results as we go along growing. And over the long term, we thoroughly expect this to become a market leadership business for us, and it will help us support strong, consistent, long term growth. With that, I'd like to turn the call over to Mike. If you flip to Page 7, where Mike will walk us through the financials. Mike?

Thanks, Harold, and good morning, everyone. I'll start on Slide 7 where we will detail our results for the fourth quarter. Net sales for the quarter of $112.5 million were down 4.6% compared to last year's fourth quarter. While our discipline on pricing helped drive an additional $5 million benefit to the top line versus last year's fourth quarter, this pricing strength was more than offset by the impact of lower sales volume driven in part by $3 million associated with the closure of our Taunton and Irvine facilities. Looking to profitability, our operating loss of $7.9 million improved by $3.1 million compared to the $11 million operating loss in last year's fourth quarter. On an adjusted basis, our fourth quarter operating loss was $1.4 million, which also improved compared to the adjusted operating loss of $3.3 million seen in the prior year. As Harold referenced earlier, adjusted EBITDA result of $10 million grew by $2.2 million or 28% versus last year's $7.8 million result. Our profitability results reflect the impact of the early transformative initiatives we've applied to our operations, including targeted cost reductions and better operational planning. These efforts allowed us to improve profitability despite lower volume. Our cost savings efforts contributed approximately $3 million of benefit in the quarter and the closures of Taunton and Irvine facilities contributed approximately $2 million of benefit. We also had favorable overhead absorption of $1 million compared to the prior year. Our consolidated adjusted EBITDA margin results expanded by 230 basis points to 8.9% versus last year's fourth quarter. Turning to Slide 8, I'll summarize our full year 2023 financial performance. For the full year, net sales were $489.3 million, a number that declined marginally relative to full year 2022. The slight decline in year-over-year sales was driven largely by the $32 million observed decline in total sales volumes, the $6 million impact from the previously mentioned facility closures and a $1 million negative impact from foreign currency translation. Additionally, while both periods included favorable customer settlements, the impact was $2 million lower on a comparative basis. These negative impacts were partially offset by our continued efforts to drive pricing to recover inflation, representing approximately $31 million for the full year. Our GAAP operating loss for 2023 totaled $21.8 million, which marked a marginal increase in net loss of $0.7 million. On an adjusted basis, our full year operating income results of $3.1 million grew by $1.2 million versus the $1.9 million of adjusted operating income in the prior year. Full year adjusted EBITDA results of $43.1 million were down $0.8 million compared to the $43.9 million of adjusted EBITDA generated in full year 2022. Our adjusted EBITDA results were driven largely by the same items that impacted our net sales performance with lower overall net sales volumes and the impact of lower customer settlements in 2023. These headwinds were largely offset by the positive impacts of the facility closures and a benefit of approximately $5 million attributable to cost out actions and improved operating performance, further supported by favorable overhead absorption of approximately $2 million. These efforts led to adjusted EBITDA margins that were flat to the prior year at 8.8% of revenue. As we move into 2024, our focus on attacking any and all underperforming areas of the business will continue to anchor our priorities as part of a multiyear transformation effort. In particular, we expect to see a more pronounced pull through of the impacts from our operational improvement initiatives and total cost productivity programs with those results accreting more thoroughly to our profitability figures as many of these only begin benefiting us in the third and fourth quarters in 2023. As we have stated in the past, we remain committed to capturing an additional $10 million in adjusted EBITDA improvement once all our actions are completed. Turning to Slide 9. Sales in our Mobile Solutions segment, which covers our machine products business, increased 1.8% versus the prior year fourth quarter, improving by $1.2 million to $69.2 million for the period. The increase was primarily driven by improved pricing and foreign currency translation, partially offset by the impact of lower sales volume. Profitability in the Mobile Solutions segment grew versus last year's fourth quarter as the segments adjusted EBITDA results of $7.1 million increased by $1.7 million compared to the $5.4 million in the fourth quarter of 2022. This improved quarterly adjusted EBITDA was driven in part by a positive shift in our overall sales mix across our machine parts products, as well as the observed benefits of stronger operating performance at multiple facilities and our cost and productivity programs. Looking back on the year, we were able to perform in line with our original expectation against our plans to generate and deliver new business wins, which gives us a strong platform to build upon as we enter 2024. Additionally, we're pleased by the traction we're seeing from our China based operations as this area within our Mobile Solutions business has demonstrated solid momentum and new business wins. We're capturing attractive growth as we enter into more non-fuel applications on electric platforms, helping the China business perform ahead of our original planning. Regarding our efforts within the business to grow and deliver new business wins, we've set attractive growth targets for the business. But ones we believe we are very capable of achieving our efforts we’ll ultimately be supported by the stronger and improved global sales team that we have been able to expand and enhance over the recent months, further supplemented by the addition of new digital sales and lead generation tools, including our recently launched SEO and targeted marketing efforts. We expect to continue seeing the benefits of our efforts to improve overall operating productivity and structurally improve our costs as we progress through 2024 in conjunction with our multiyear improvement plan. Turning to Slide 10, in the Power Solutions segment, where we engineer and manufacture stamp products. Quarterly sales decreased 13.4% year-over-year to $43.3 million, down $6.7 million from the $50 million of sales in last year's fourth quarter. This was driven by the impact of the previously mentioned facility closures, lower sales of automotive component sales due to customer inventory levels and softness in the heavy truck and general industrial markets. Despite the lower sales volume, the positive impacts from facility closures and cost reduction actions have driven solid results as seen through our improved adjusted EBITDA. Our quarterly adjusted EBITDA of $6.6 million improved by $1 million compared to the $5.6 million delivered in last year's fourth quarter. We believe it is a testament to our refocused efforts and commitment to our strategic transformation plans, both operationally and commercially that the business delivered higher adjusted EBITDA and expanded margin rates by 400 basis points year-over-year despite the 13% headwind in our top line. As we begin to layer in stronger sales figures from new business wins, we expect to continue expanding our profitability as we capture improved fixed cost absorption through operating leverage, combined with the commitment to our cost and productivity programs that Harold walked through earlier on the call. Our Q4 results showed an improvement to average daily sales rates versus the third quarter, and that metric has continued to strengthen thus far into the first quarter of 2024. One particular element of our sales growth that will drive improved power solutions segment volume going forward is the program we announced in December called Connect and Protect where we are advancing our core capabilities in stamp products to get more heavily involved in the connectors and shields market, which we believe carries a significant opportunity for growth. Demand indicators are improving in electrification and grid product verticals and this effort to get more deeply involved and drive stronger capture of market share in the shielding and connector space is going to be a solid contribution to the business going forward. Now turning to Slide 11, you can see a summary of our free cash flow and leverage, as well as the steps we're taking to optimize our balance sheet. As Harold highlighted, we continued to be encouraged by our free cash flow and we were able to generate $1 million in the fourth quarter, bringing full year 2023 free cash flow generation to $11.7 million. While our fourth quarter free cash flow was lower than the fourth quarter of last year, we've seen a dramatic improvement on a trailing 12 month basis throughout the year with full year free cash flow improving by over $21 million, driven in part by significant improvement in working capital. While we expect continued improvement in working capital terms, we expect future free cash flow generation to be more driven by the profitability initiatives we have previously outlined. Looking ahead, we expect to deliver similar level of full year free cash flow performance as we did in 2023. This free cash flow generation serves another strategic function and that is to help further advance our progress towards balance sheet improvement. We plan to use excess cash generated by our business results to pay down debt balances, our term loan in particular, while positioning the company for anticipated refinancing transaction when market conditions are favorable. Our strategy to deliver consistent positive free cash flow will be a vital tool in helping reshape our balance sheet and achieving a lower overall cost of capital. Our growth strategy will be supported by lower leverage, improved liquidity, and a lower cost of capital. In line with our balance sheet optimization and cost of capital improvement plan, last week we announced we have entered into a sale leaseback transaction for three of our operating facilities. The transaction will not impact our EBITDA and the net proceeds will be used to repay a portion of the outstanding balance of our term term loan. Turning to the balance sheet. Our net debt at the end of the year was $138 million versus $137.7 million at the end of the third quarter and $147.9 million in Q2 2023 when we launched our transformation. Our net debt to adjusted EBITDA ratio stood at 3.2 times at the end of the year compared to 3.37 times at the end of the third quarter of 2023. Looking ahead to 2024, we will continue to bring down our leverage profile through debt pay down, free cash flow generation and margin expansion. We expect to bring our leverage to below 3 times during 2024 and doing so while still making the necessary capital investments into the business to ensure we are maintaining our assets for expected performance. Our net capital spending outlay in the fourth quarter was $4.2 million compared to $4.1 million in the third quarter of 2023. Now I'd like to cover our full year 2024 outlook on Slide 12. For the full year 2024, we were projecting net sales in the range of $485 million to $510 million, up slightly at the midpoint; adjusted EBITDA in the range of $47 million to $55 million, up over 18% at the midpoint; free cash flow in the range of $10 million to $15 million, up slightly at the midpoint compared to the significantly improved free cash flow generation we delivered in 2023. We're also pleased to provide an expected range for new business wins in 2024, which is $55 million to $70 million. Finally, as we remain focused on continued improvements in leverage, we expect to lower our net leverage to less than 3 times during 2024. Several factors, both internal and external, helped inform our full year guidance ranges. Notably, our guidance reflects steady and market demand despite some observed weakness in the North America commercial vehicle market relative to 2023. Specific to NN, we expect to continue executing our aggressive growth program, ultimately, driving free cash flow and profitability across several new market and customer platforms. In closing, we are confident in our business transformation plan, which was launched earlier this year and has driven early improvements in our results. We have the right strategy in place, platform and capabilities to execute and accelerate growth, and most importantly, a great team who help drive positive change every day. I look forward to sharing our successes with you in the coming quarters. I will now turn the call back to the operator for questions.

[Operator Instructions] And our first question today comes from Rob Brown with Lake Street Capital Markets.

First question's on the outlook and the, I guess, the automotive environment, I just wanted to clarify or understand your assumptions on the sales outlook. Are you assuming kind of overall steady end market but seeing some North American headwinds, or do you do factor in some of the headwinds here in the guidance?

We are looking and -- so our two big markets really are the Americas, North America and South America and China specifically. So China outlook for passenger vehicle production is flat with the indigenous consumption of vehicles being added to with a strong export market. And as you know, Rob, that's all over the news about what China's doing with exporting their vehicles. We're benefiting from that as an in-country supplier. And then in the Americas, South America, North America, we're assuming a flat to single digit increase in the platforms that we're on. So we look specifically at our platform exposure to the market and it's flattish to slightly up.

And then on the new business activity, you've got the strength there. Just wanted to get a little more color on the drivers, are you sort of engaging more, is it sales efforts or are you seeing some competitive sort of weakness that you're taking advantage of, some understanding of the new business traction?

Yes, it's a good point. And we highlighted on Page 5 kind of the categories where we're winning, steerings, by far the biggest, electric power steering and it's platform independent. There's a little bit higher content on the BEV vehicles. But generally speaking, we're on steering systems that are platform independent. It's a very high tolerance machine parts. We have the same competitors. There's been no decrease in competitive intensity per se, but there's a lot of innovation going on in vehicles. As everyone jocking for the same level of autonomy and vehicle safety and features, it’s leading to a lot of improvements, which lead to precise vehicle control, which leads to additional looks for us. I would say that we're in a target rich environment and we're focused on competing and winning like never before. The big thing that we did is we changed the way that we were quoting, we changed our quoting process. And Tim French, who's on the phone here also, we both noted that we had quite a bit of existing open capacity already within the company. And we were quoting it in the same manner, which we were quoting capacity we didn't have and would need to buy new equipment for, et cetera. So we bifurcated that and expanded our thinking to really at a much higher level try to fill up open capacity. And it gave the sales force a little more competitiveness, if you will. Mike also mentioned that we are using contemporary tools, which the company wasn't using

And then lastly on the medical segment, good -- sounds like you won a program there and good progress. How do you see that business developing over time? I think you said it as a 2025 sort of time frame where that really kicks in but maybe just help understand the steps that that segment takes together?

It's one that -- it's the shielding and connector one, we were in it to a minor degree, as I mentioned, in our legacy business. And now we're basically upsizing something that was there. In the case of the new medical non-tool market, it's a startup. And so we had to hire a commercial leader, Willy Beach, who came from competition. We had to hire an engineering and quote leader Tim Dunham, who came from a competitor. We had to hire a medical plant manager, Brian Barton, who came in operationally. So we had to generate a team from scratch and then we had to focus in on what customers we were going to go call on and what products we’re going to sell them and what plants we’re going to make them in. We have medical certifications at four plants right now and we're expanding it to eight. And when we're getting into our RFQs, we're being careful to note, say it has seven processes, seven manufacturing processes on the five where we are competitive and the two where we're not competitive. And then gathering this and having patterning recognition about what we want to do about it and what equipment we might want to consider buying. We have some initial thoughts. We know that we need to buy what's called gun drills, which are deep, boring, high tolerance drills. We didn't need those so much in the automotive business, if you will, but it's A item in the medical arena. And then on the stamp products, it's about getting certifications and expanded product lines. So we have a weekly meeting. We're going logically. We're not trying to rush out and waste money or waste time. So we're building -- trying to build up to a $50 million business, that's what we've all embraced our goals around. And we have an initial five year plan to get there. So we're don't think it's going to add too much to this year, Rob, in ‘24, unless something happens that we're not expecting. But we are beginning to win business, and you have to go through all the customer certification. So it's a little bit longer lead time. And so I think that in our results, it'll start showing up in ‘25.

And our next question today comes from John Franzreb with Sidoti & Company.

I'd like to start on the sales guidance for 2024, Harold. Can you talk a little bit of how much embedded in that outlook is repriced existing contracts and how much is in that outlook of assumed exited of existing contracts?

So on pricing for this year, we have about the same amount of activity on price up activities versus requested price down. So net price right now in this outlook is minimal up or down. With regards to exiting business, we do have some of that in here. So we have the seven plants, which I've nicknamed the group of seven that are going through negotiations right now and we've already come to terms with a certain piece of business that was negative contribution margin that we're going to walk away from. So right now, John, I'd say the outlook is it's $5 million to $10 million of sales losses from that, so it's not massive, it's not a massive reason, and so really we're being conservative and adopted third party outlooks on our end markets. And I think you probably know the commercial vehicle market in North America has a negative outlook for ‘24 and we participate in that market, it's about 10% of our business. So we're assuming a decline there. So those are your pieces. Not much on the price. $5 million to $10 million hit on volume that we'll walk away from as part of fixing the seven plants and a slight hit in commercial vehicles and a slight lift primarily from ramping in new business.

Since you brought it out on the commercial vehicle side. Have you seen that decline yet or are you assuming that's a second half kind of reality?

We haven't seen it yet, John, and we believe it's going to be the second half. And I still track the ACT and FTR data, like you probably do also, and the build rates in the first half are still there. We're primarily serving into the engine market, into the engine market for those vehicles, John. So they're not a big supply chain, you don't build ahead those, those are pretty much made to order. So first half we're not seeing much activity yet.

And the question on the new business wins, you've got a good number last year and looking at a nice number in this year 55 to 70. Have you got a sense of -- as you readdress the pricing environment, how the contribution margins starting to change in the new business wins from what you used to record, what your company used to record two years ago or so?

Mike, you might be able to help me out on that one. I would -- I'm just going to say right now, John, we're spending money a little bit on ramping up these programs. So one of our largest ones that we won is in a prototype mode. And I don't want to say we're in the hairy edge of technology but we're pushing the technology expansion here and capability expansion. We're kind of breaking even, I would say, initially on these new business wins. We haven't set up budgets for it. So Tim's expensing the startup costs and the plant results as we go along. And that's why in my comment I said they're accretive at full run rate, because we know right now we review our every plant every week and so we know some of these ramp up are costing us a little money. But the run rates that we do, we look at it when we do the CER, the capital requests associated with the wins and as a group they are creative. I'm going to say it's 3 to 5 points better, John, it's not a miracle, it's just a few points better.

And just one last question. You mentioned in your prepared remarks that you replaced roughly 40% of your plant managers. I'm curious how much of those were promoted internally and how many -- how much of those were brought in externally? And any kind of initial feedback about the new plant managers?

Tim are you able to speak?

So the majority of them, they are internal promotions. We have brought in two from the outside, one specifically that's running the medical facility. But for the most part they are coming from internal promotions.

Any initial thoughts?

Initial thoughts regarding the group?

Correct.

Tim, you might want to say the big plan that you're putting in place on metrics and safety and quality and on time.

Well, exactly. Our big focus with the transformation plan is implementing strategic KPIs within the facilities and driving the accountability down to the lowest level possible within the facilities. And the plant managers that we've selected are very in-tuned with the capabilities of the facilities and so far are adopting the new KPIs very well. Very good outlook so far with what we've done.

[Operator Instructions] Our next question today comes from Joe Gomes with Noble Capital.

So you just announced the sale leaseback of three facilities. And I was wondering if those three facilities, are those in the group of seven? And if so kind of what is the lease arrangement for those facilities, the length of the leases?

You want to take that, Mike?

The three facilities are not in the group of seven and we expect the lease term will be an initial term of 20 years. So there's no plan to change the operations at those facilities that we're doing the transaction on.

And our next question today comes from Tom Kerr at

A couple of quick questions. Back on the sale leaseback issue, is that -- are there more opportunities for that or is that kind of a one and done deal?

We've looked at both real estate and equipment. I think, on the real estate side, that's probably what we're going to do in the near term although we'll continue to evaluate it over time. And then on the equipment side that's something that we're also looking at. So there is potential more opportunity for us to use leasing to pay down debt or finance capital.

And back on the 60 program awards mentioned, roughly 60, is that a concentrated customer base in those awards or is it a large number of customers?

It's a large number of customers. But there we had a couple big wins, Tom, so just those data points. We had big wins with specific customers. So there were two big customers in there. And one was an existing customer and one was a new customer, and one was electrical stamped parts for shielding, we announced that in the fourth quarter and one was for diesel engines, high end, off-road, heavy equipment engines, next generation. So two big customers and quite different products.

A couple more quick ones on the -- can you refresh my memory on the Taunton and Irvine closures, the timing of that? In other words, how much does that carry into 2024 in terms of volume hits, is it first and second quarter or can you give me any color on that?

Taunton was closed for the most part in Q1 of 2023 and Irvine ran into Q2. They were both effectively closed by mid-year last year.

So still a little bit of volume hit from that in the first half.

And we had some premium pricing at Irvine associated with the ramp-down. So yes, there will be a little bit of sequential volume pressure still.

Thank you. And ladies and gentlemen, this concludes our question-and-answer session. I'd like to turn the conference back over to the management team for any closing remarks.

Thank you for spending time with us today and speaking about NN's performance, its transformation plans and our value adding focus areas. We're a committed global team and we're pretty excited about 2024 and going forward. And we look forward to speaking with you again. Everyone, have a great day. Thank you.