Core Insights - NN, Inc. is expanding its presence in the data center market, particularly focusing on liquid-cooled computing systems, which aligns with the growing demand for AI infrastructure [1][2][3] Group 1: Market Opportunities - NN has secured multiple awards with a leading global provider of AI infrastructure, specifically for liquid cooling positions on AI reasoning racks [2][3] - The AI data center market is identified as a multi-billion dollar opportunity that is rapidly scaling, driven by the increasing use of AI and cloud computing [3] - The company aims to achieve $70 to $80 million in new business during 2026, supported by these recent wins [3] Group 2: Technological Capabilities - NN's existing liquid management products meet the stringent requirements of AI data center and cloud customers, showcasing the company's expertise in fluid management [2][3] - The company has a long history of delivering six sigma quality components, which positions it well to meet the demands of the liquid-cooled data center market [2][3] - NN is investing in 17 next-generation high-speed CNC machines to enhance its production capabilities, which will be operational throughout 2026 [3] Group 3: Strategic Direction - The company is intentionally shifting its business focus towards non-automotive, higher-growth, and higher-margin markets, including data centers and electric vehicle recharging solutions [3] - NN's reputation for reliability and precision in manufacturing is expected to attract more clients in the AI infrastructure sector [3][4] - The company is actively prospecting with other AI reasoning and data center equipment providers to further expand its market reach [3]

Core Viewpoint - NN, Inc. is experiencing a transformation with significant new business wins and a strategic shift towards higher-value markets, despite facing ongoing market volatility and challenges in the automotive sector [1][4][17]. Business Transformation - Since launching its transformation plan in mid-2023, NN has secured over $200 million in new business and anticipates record program launches in 2026, with a pipeline exceeding $800 million [2][7]. - The company has completed most of its heavy restructuring, including the consolidation of four plants and a reduction of approximately 800 employees, while shifting focus from low-value automotive parts to higher-value markets [3][7]. Financial Performance - For Q4 2025, NN reported net sales of $104.7 million and full-year sales of $422.2 million, with adjusted EBITDA of $12.9 million for Q4 and $49 million for the full year, reflecting improved margins despite softer sales [6][9]. - The adjusted gross margin was approximately 18.5% for the full year, indicating margin expansion due to a leaner operating model and the exit from low-margin businesses [6][9]. 2026 Guidance and Capital Plan - Management targets net sales of $445–465 million for 2026, with expectations of $70–80 million in new business wins and a planned $10 million cost reduction [5][17]. - Capital expenditures are expected to double to about $20 million, primarily supporting new business initiatives, as the company shifts cash flow towards growth-related spending [18][19]. Segment Performance - In the Power Solutions segment, Q4 net sales increased by 14.9% year-over-year, driven by higher precious metals pricing and new program launches [12]. - Conversely, the Mobile Solutions segment saw a decline in Q4 net sales to $59.3 million, impacted by the rationalization of unprofitable business and lower volumes from North American auto customers [13][14]. Commercial Momentum - NN's new business momentum is expected to yield significant growth, with over 100 program launches anticipated in 2026, contributing an estimated $20 million to $25 million in revenue [15][16]. - The company aims for a long-term adjusted gross margin goal of 20% and an adjusted EBITDA target of $80 million by 2030, supported by market growth and share gains in strategic sectors [16].

Financial Data and Key Metrics Changes - For Q4 2025, net sales were $104.7 million, a decline of $1.8 million compared to Q4 2024. On a pro forma basis, net sales increased by $1.4 million, or 1.4% year-over-year [25] - Adjusted operating income for Q4 was $3.3 million, up from $2.4 million in the prior year. On a pro forma basis, operating income decreased slightly by 5.7% [25] - Adjusted EBITDA for Q4 was $12.9 million, an increase from $12.1 million a year ago, with a pro forma increase of $1.1 million or 9.3% year-over-year [26] - For the full year 2025, net sales were $422.2 million, a decline of $42.1 million compared to the previous year. On a pro forma basis, net sales decreased by $7.4 million or 1.7% [28] Business Line Data and Key Metrics Changes - In the Power Solutions segment, Q4 net sales were $45.5 million, up 14.9% year-over-year, driven by new program launches in electrical and defense business [30] - The Mobile Solutions segment saw Q4 net sales of $59.3 million, down from $63.8 million, primarily due to the rationalization of dilutive business [32] - Power Solutions adjusted EBITDA for the full year was $30.7 million, an increase of 10.8% compared to the previous year [31] - Mobile Solutions adjusted EBITDA for the full year was $33.5 million, a decline of 4%, but with adjusted EBITDA margins expanding by 70 basis points [34] Market Data and Key Metrics Changes - The global automotive market is expected to grow slightly by 2% in 2026, with specific regional growth outlooks [18] - The commercial vehicle market is anticipated to begin growing in 2026, supported by strong orders [19] - The defense electronics market is growing strongly, particularly with customers like Raytheon [49] Company Strategy and Development Direction - The company is shifting its sales profile towards higher value end markets and capabilities, moving away from low-value commodity automotive parts [7] - A record level of program launches is expected in 2026, with a pipeline of over $800 million in high-quality prospects [8] - The company aims to achieve between $70 million and $80 million in new business wins for the year [22] Management's Comments on Operating Environment and Future Outlook - Management noted that volatility remains high in markets due to global supply chain issues and geopolitical unrest [9] - The company is optimistic about returning to net sales growth in 2026, with a strong start in Q1 [9] - Management highlighted the importance of tactical maneuvering in response to ongoing market volatility [22] Other Important Information - The company completed a significant transformation plan, including the closure of four plants and the exit of unprofitable business lines [7] - Adjusted gross margin performance was 18.8% in Q4, trending towards a five-year goal of 20% [16] - The company achieved cost-out targets of $15 million for the year, offsetting inflation and pricing pressures [17] Q&A Session Summary Question: Can you expand on the data center end market opportunity? - The company is focused on high precision products for data centers, including watertight couplings and cable assemblies, with an immediate ramp-up expected due to high demand [60][62] Question: What does the roadmap for sustaining sales growth in 2026 look like? - The company plans to double capital spending, with growth primarily driven by new wins that have already been secured [64] Question: What is the cadence of ramp in 2026 in terms of revenue? - The company expects to see between $20 million and $25 million of revenue from new launches in 2026, alongside revenue from programs launched in 2025 [72]

Financial Data and Key Metrics Changes - Q4 net sales were $104.7 million, a decline of $1.8 million compared to the previous year's Q4, while full year net sales were $422.2 million, down $42.1 million year-over-year [10][25][27] - Adjusted operating income for Q4 was $3.3 million, up from $2.4 million in the prior year, and for the full year, it was $14.2 million, an increase of $9.1 million from the previous year [11][27] - Adjusted EBITDA for Q4 was $12.9 million, up from $12.1 million a year ago, and for the full year, it was $49 million, compared to $48.3 million for the prior year [12][26][28] - Adjusted EBITDA margin for Q4 was 12.3%, representing a 100 basis point improvement on an as-reported basis [26] Business Line Data and Key Metrics Changes - Power Solutions segment net sales for Q4 were $45.5 million, up 14.9% year-over-year, driven by new program launches in electrical and defense business [30] - Mobile Solutions segment Q4 net sales were $59.3 million, down from $63.8 million in the prior year, primarily due to the rationalization of dilutive business [32] - Power Solutions adjusted EBITDA for Q4 was $6.4 million, an increase of $0.8 million year-over-year, while Mobile Solutions adjusted EBITDA for Q4 was $10 million, showing slight improvement [31][34] Market Data and Key Metrics Changes - The global automotive market is expected to grow slightly by 2% in 2026, with specific growth outlooks varying by region [18] - The commercial vehicle market is anticipated to begin growing in 2026, supported by strong orders and an upcoming EPA mandate [19] - The defense electronics market is growing strongly, with increased production capacity to meet demand from customers like Raytheon [49] Company Strategy and Development Direction - The company is shifting its sales profile towards higher value end markets and capabilities, moving away from low-value commodity automotive parts [7] - A record level of program launches is expected in 2026, with a pipeline of over $800 million in high-quality prospects [8][37] - The company aims to achieve adjusted gross margins of 20% and is focusing on cost rationalization programs to offset inflation [39] Management's Comments on Operating Environment and Future Outlook - Management noted that volatility remains high in markets due to global supply chain issues, tariffs, and geopolitical unrest [9][21] - The company is optimistic about returning to net sales growth in 2026, with a forecast of $445 million to $465 million in sales [55] - Management emphasized the importance of new business wins, targeting $70 million to $80 million in new business for the year [22][55] Other Important Information - The company completed a significant transformation plan, including the closure of four plants and the exit of unprofitable business lines [7][51] - The company achieved cost-out targets of $15 million for the year, which offset inflation and pricing pressures [17] Q&A Session Summary Question: Can you expand on the data center end market opportunity? - Management highlighted the precision requirements for products in the data center market and the immediate ramp-up potential due to supply chain needs [60][63] Question: What does the roadmap for sustaining sales growth in 2026 look like? - Management indicated that growth will primarily come from new wins, with a significant increase in capital spending allocated to growth initiatives [64][65] Question: What is the cadence of ramp in 2026 in terms of revenue? - It was noted that approximately $20 million to $25 million of revenue is expected from launches occurring in 2026, alongside revenue from programs launched in 2025 [72] Question: What sort of CapEx activity are you planning? - The majority of CapEx will be directed towards growth programs, with over $15 million allocated for launching new business [73] Question: How much visibility do you have beyond Q1? - Management confirmed a healthy backlog and strong orders for Q2, indicating positive momentum [74]

Financial Data and Key Metrics Changes - For Q4 2025, net sales were $104.7 million, a decline of $1.8 million compared to Q4 2024, while full-year sales were $422.2 million, down $42.1 million year-over-year [9][25][27] - Adjusted operating income for Q4 was $3.3 million, up from $2.4 million in the prior year, and for the full year, it was $14.2 million, an increase of $9.1 million from $5.1 million in 2024 [10][27] - Adjusted EBITDA for Q4 was $12.9 million, up from $12.1 million a year ago, and for the full year, it was $49 million compared to $48.3 million in the prior year [11][27] Business Line Data and Key Metrics Changes - In the Power Solutions segment, Q4 net sales were $45.5 million, up 14.9% year-over-year, driven by new program launches in electrical and defense business [29] - The Mobile Solutions segment saw Q4 net sales of $59.3 million, down from $63.8 million, primarily due to the rationalization of dilutive business [31] - Power Solutions adjusted EBITDA for Q4 was $6.4 million, an increase of $0.8 million from the previous year, while Mobile Solutions adjusted EBITDA was $10 million, reflecting successful shedding of unprofitable sales [30][33] Market Data and Key Metrics Changes - The global automotive market is expected to grow slightly by 2% in 2026, with specific growth outlooks varying by region [17] - The commercial vehicle market is anticipated to improve in 2026, supported by strong orders and a forthcoming EPA mandate [18] - The defense electronics market is growing strongly, with increased production capacity to meet demand from customers like Raytheon [47] Company Strategy and Development Direction - The company is shifting its sales profile towards higher value end markets and capabilities, moving away from low-value commodity automotive parts [6] - A record level of program launches is expected in 2026, with a pipeline of over $800 million in high-quality prospects [7][35] - The company aims to achieve adjusted gross margins of 20% and is focusing on cost rationalization programs to offset inflation [14][38] Management's Comments on Operating Environment and Future Outlook - Management noted that volatility remains high in markets due to global supply chain issues, tariffs, and geopolitical unrest [8][20] - The company is optimistic about returning to net sales growth in 2026, with a forecast of $445 million to $465 million in sales [50][51] - Management emphasized the importance of tactical maneuvering in response to ongoing market volatility and supply chain disruptions [21] Other Important Information - The company has completed the majority of its transformation plan, including plant closures and workforce reductions, which are now behind them [6][76] - The company is looking at financial and strategic options to address its capital structure, which includes high levels of debt [49] Q&A Session Summary Question: Can you expand on the data center end market opportunity? - The company is focused on high precision products for data centers, including watertight couplings and cable assemblies, with an immediate ramp-up expected due to high demand [57][59] Question: What does the roadmap for sustaining sales growth in 2026 look like? - The company plans to double its capital spending, with growth primarily driven by new wins that have already been secured [61][62] Question: What is the cadence of ramp in 2026 in terms of revenue? - The company expects to see between $20 million and $25 million of revenue from new launches in 2026, alongside continued revenue from programs launched in 2025 [68] Question: What sort of CapEx activity are you planning? - The bulk of CapEx will be directed towards growth programs, with over $15 million allocated for launching new business [70] Question: How much visibility do you have beyond Q1? - The company has a healthy backlog and expects Q2 to be consistent with sales guidance, although firm releases for Q3 and Q4 are not yet available [71][72]

Q4 & Full Year 2025 EARNINGS PRESENTATION Transforming Precision and Powering the Next Generation of Innovation FORWARD LOOKING STATEMENTS This presentation contains express and implied forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our financial outlook forthe full year of fiscal2026, the impact of, and our ability to execute, ourcorporate strategies and businessinitiatives, the potential impact tariffs, high interest ra ...

Financial Performance - NN Inc. reported break-even quarterly earnings per share, compared to a loss of $0.02 per share a year ago, representing an earnings surprise of -100.00% [1] - The company posted revenues of $104.72 million for the quarter ended December 2025, missing the Zacks Consensus Estimate by 1.48%, and down from $106.51 million year-over-year [2] - Over the last four quarters, NN has surpassed consensus EPS estimates two times but has not beaten consensus revenue estimates [2] Stock Performance - NN shares have increased by approximately 16.4% since the beginning of the year, while the S&P 500 has declined by 0.4% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating it is expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the coming quarter is $0.01 on revenues of $108.24 million, and $0.14 on revenues of $452.47 million for the current fiscal year [7] - The estimate revisions trend for NN was mixed ahead of the earnings release, which could change following the recent report [6] Industry Context - The Metal Products - Procurement and Fabrication industry, to which NN belongs, is currently in the top 10% of over 250 Zacks industries, indicating a favorable outlook [8]

Financial Performance - Q4 2025 net sales were $104.7 million, a decrease of 1.7% compared to Q4 2024 net sales of $106.5 million[7] - Full-year 2025 net sales were $422.2 million, a decrease of $42.1 million or 9.1% compared to $464.3 million in 2024[10] - Q4 2025 adjusted EBITDA was $12.9 million, or 12.3% of net sales, compared to $12.1 million, or 11.3% of net sales, for Q4 2024[14] - Full-year 2025 adjusted EBITDA was $49.0 million, or 11.6% of net sales, reflecting a significant improvement[4] - The net loss for the year ended December 31, 2025, was $34,004, compared to a net loss of $38,273 in 2024, showing an improvement of 7.9%[37] - The company reported a loss from operations of $18,915 for the year ended December 31, 2025, an improvement from a loss of $27,548 in 2024[37] - GAAP net sales for Q4 2025 were $104,715, a decrease of 1.5% from $106,513 in Q4 2024[42] - GAAP loss from operations for Q4 2025 was $10,414, an improvement from a loss of $16,868 in Q4 2024[43] - GAAP net loss for Q4 2025 was $12,538, reduced from a loss of $20,976 in Q4 2024[49] - For the year ended December 31, 2025, GAAP net sales were $422,207, down from $464,290 in 2024[46] - Non-GAAP adjusted EBITDA for the year ended December 31, 2025, was $49,017, compared to $48,338 in 2024, with a non-GAAP adjusted EBITDA margin of 11.6% versus 10.4% in 2024[52] - GAAP loss from operations for the year ended December 31, 2025, was $18,915, an improvement from a loss of $27,548 in 2024[46] - Non-GAAP adjusted income from operations for the year ended December 31, 2025, was $14,247, significantly higher than $5,086 in 2024, leading to a non-GAAP adjusted operating margin of 3.4% compared to 1.1% in 2024[46] Future Guidance - For fiscal 2026, the company is guiding net sales in the range of $445 million to $465 million, indicating a return to year-over-year growth[27] - Adjusted EBITDA for 2026 is expected to range between $50 million and $60 million, reflecting improved operating performance[28] - The company plans to launch approximately 100 new programs in 2026, which are expected to carry accretive margins[6] - The sales pipeline exceeds $800 million across more than 800 programs, concentrated in targeted areas[11] Strategic Initiatives - The company formed a Strategic Committee to evaluate alternatives to enhance shareholder value[11] - The company plans to continue focusing on strategic reviews and corporate strategies to navigate economic uncertainties and improve financial performance[34] Asset and Liability Management - Total current assets decreased to $164,007 as of December 31, 2025, down from $167,562 in 2024, a decline of 2.3%[39] - Total liabilities increased to $294,377 as of December 31, 2025, compared to $288,874 in 2024, an increase of 1.7%[39] - Cash and cash equivalents at the end of the year were $11,377, down from $18,128 at the end of 2024, a decrease of 37.4%[41] - The company’s total stockholders' equity decreased to $33,998 as of December 31, 2025, from $74,522 in 2024, a decline of 54.4%[39] Cost Management - Pre-tax personnel costs increased to $8,738,000 in 2025 from $3,437,000 in 2024, reflecting a 154% rise[54] - Pre-tax facility costs for 2025 were $9,825,000, up from $8,280,000 in 2024, marking a 18.7% increase[54] - The company incurred pre-tax professional fees of $977,000 in 2025, up from $648,000 in 2024, indicating a 50.9% increase[54] Shareholder Metrics - Non-GAAP adjusted net income per diluted common share for 2025 was $(0.03), an improvement from $(0.17) in 2024[54] - Weighted average common shares outstanding increased to 49,437,000 in 2025 from 48,653,000 in 2024[54] - GAAP net loss per diluted common share for 2025 was $(1.07), slightly better than $(1.11) in 2024[54]

Operations and Facilities - As of December 31, 2025, NN, Inc. operated 27 facilities across North America, South America, Europe, and China, with over 1.5 million square feet of manufacturing space[15][26]. - Approximately 12% of the workforce consists of management/staff employees, while 88% are production employees, totaling around 2,300 full and part-time employees[33]. - The company has a complex network of suppliers and manufacturing locations, making it vulnerable to disruptions from natural disasters, political unrest, and other unforeseen events[63]. - The company has a total of 27 facilities across six countries, including a manufacturing facility owned by the joint venture in China[151]. Customer Base and Sales - In 2025, the top ten customers accounted for approximately 49% of net sales, with 60% of products sold to North American customers[28]. - In 2025, sales to the ten largest customers accounted for approximately 49% of the company's consolidated net sales, indicating a heavy reliance on a limited customer base[62]. - Sales to customers located outside of the U.S. represented 46% of the company's consolidated net sales for the year ended December 31, 2025, highlighting significant international operations[65]. - A customer in the Mobile Solutions segment represented 11% of consolidated net sales for the year ended December 31, 2025[173]. Market Segments - The Mobile Solutions segment focuses on automotive, general industrial, and medical markets, producing high-precision components for applications such as power steering and braking systems[17]. - The Power Solutions segment targets electrical, automotive, and medical markets, manufacturing high-precision metal components and assemblies for applications including power control and transportation electrification[18]. Financial Performance - Net sales decreased by $42.1 million, or 9.1%, to $422.2 million for the year ended December 31, 2025, primarily due to rationalization of underperforming business and lower volumes[176]. - Cost of sales decreased by $32.0 million, or 8.1%, during the same period, primarily due to the decrease in sales[177]. - Selling, general, and administrative expenses decreased by $3.3 million, or 6.7%, primarily due to lower compensation expenses from headcount reduction[177]. - Depreciation and amortization decreased by $9.4 million, or 20.7%, primarily due to the full depreciation of historical purchase accounting step-up basis[178]. - Cash provided by operations was $5.7 million for the year ended December 31, 2025, compared to $11.1 million for the previous year[192]. Supply Chain and Raw Materials - The company maintains a diverse supplier network to minimize concentration risk and ensure stable raw material supply at competitive prices[43]. - The company has been affected by upward price pressure on raw materials, passing fluctuations to customers through changes in selling prices[44]. - The company purchases large quantities of steel, aluminum, copper, and precious metals, with recent volatility in prices potentially affecting liquidity and operating profits[72]. Risks and Compliance - The company is subject to extensive federal, state, local, and foreign regulatory requirements, which could have a material adverse effect on its business if not complied with[49]. - The company faces risks related to international operations, including import tariffs and trade regulations, which could increase raw material costs and reduce demand for its products[68]. - The company is subject to extensive environmental, health, and safety laws, which may impose substantial costs and limitations on operations[97]. - Compliance with evolving data privacy and security laws is critical, with potential fines and penalties for non-compliance[80]. - Cybersecurity threats, including ransomware attacks, pose significant risks to operations and could lead to reputational harm and financial losses[87]. Debt and Financial Obligations - As of December 31, 2025, the company had $159.5 million in total indebtedness, including $120.3 million in term loans and $4.7 million in revolving loans[112]. - Annual cash interest payments on the term loans are approximately $10.9 million, with an additional $5.4 million in paid-in-kind interest[112]. - The company may incur substantial additional indebtedness in the future, which could exacerbate existing risks associated with its current debt levels[115]. - The covenants in the company's debt agreements require compliance with specified financial ratios, impacting operational flexibility[119]. Strategic Initiatives - The company is focused on executing its enterprise transformation plan and maintaining strategic partnerships in growing markets such as grid distribution and automotive parts[167]. - Acquisitions are a key part of the company's growth strategy, but borrowing agreements limit the ability to complete acquisitions without lender approval[129]. - The integration of acquired businesses may disrupt operations and delay the realization of anticipated benefits[130]. Legal and Regulatory Matters - The company is engaged in various legal proceedings, as disclosed in Note 12 of the Notes to Consolidated Financial Statements[155]. - Investigating and defending against intellectual property infringement claims could divert management attention and incur substantial costs[46]. Sustainability and Environmental Impact - The company released its inaugural Sustainability Report in May 2022, establishing a global sustainability strategy and prioritizing investments based on a comprehensive ESG materiality assessment[52]. - The company has not identified any material impacts on its business or financial condition due to compliance with climate change legislation or regulatory rules in the near term[51]. - Climate change risks could lead to increased business interruptions and costs, impacting overall operations and revenues[94]. Labor Relations and Workforce - Labor relations are crucial, as work stoppages or disputes could materially impact business operations and financial condition[79]. - The company is dependent on key personnel, and the loss of such individuals could disrupt operations significantly[78].

Core Insights - NN, Inc. has achieved its third consecutive year of improved financial performance, with expectations for continued growth in 2026, including a return to organic net sales growth [4][6] - The company has completed the most capital-intensive phase of its transformation plan, which involved plant closures and realignment of headcount, positioning itself as a healthier and more focused entity [4][6] - NN forecasts adjusted EBITDA for 2026 to be between $50 million and $60 million, indicating a fourth consecutive year of improvement [4][27] Financial Highlights - Q4 2025 net sales were $104.7 million, a decrease of 1.7% from Q4 2024's $106.5 million, primarily due to rationalization efforts and lower volumes [5][7] - Full-year 2025 net sales totaled $422.2 million, down 9.1% from $464.3 million in 2024, attributed to business rationalization and unfavorable foreign exchange effects [10] - Q4 2025 adjusted EBITDA was $12.9 million, representing 12.3% of net sales, compared to $12.1 million or 11.3% of sales in Q4 2024 [13][51] Operational Highlights - The company secured approximately $70 million in new business wins in 2025, exceeding guidance and bringing the three-year cumulative total to over $200 million [5][6] - NN achieved a hit rate of over 20% on new business opportunities, with more than 170 new sales program awards launched in 2025 or set to launch in 2026 [5][6] - The sales pipeline exceeds $800 million across more than 800 programs, focusing on higher-growth markets such as data centers and electrical infrastructure [5][6] 2026 Outlook - For fiscal 2026, NN is guiding net sales between $445 million and $465 million, reflecting a return to year-over-year growth [27][34] - The company plans to launch approximately 100 new programs in 2026, which are expected to enhance EBITDA and cash flow profiles [6][34] - New business wins are anticipated to increase to a range of $70 million to $80 million in 2026 [6][34]