Core Insights - NN, Inc. has appointed Mohamad Farhat as the new Chief Technical Officer for its electrical, defense, and medical businesses, aiming to enhance innovation and customer solutions [1][2][3] Company Overview - NN, Inc. is a global diversified industrial company that specializes in engineering and manufacturing high-precision components and assemblies for various markets [4] Leadership and Strategy - The appointment of Mr. Farhat is part of NN's strategy to strengthen its technical capabilities and innovation focus, particularly in the electrical, defense, and medical sectors [2][3] - Tim French, COO, emphasized the importance of technology leadership in solving customer problems and expanding into new markets [3] Market Focus - NN has a distinct focus on electrical, defense, and medical products, with recent promotions within the company to enhance its Mobile Solutions segment, which targets automotive and industrial markets [2][3] Background of New CTO - Mohamad Farhat brings extensive experience in engineering leadership, having previously served as Vice President of Engineering for Commercial Vehicle Group, Inc., and held roles at Sumitomo, Rigaku, and Flex [3]

Financial Data and Key Metrics Changes - The company reported net sales of $107.9 million for Q2 2025, a decline of approximately $15.1 million compared to the previous year [29] - Adjusted EBITDA for the quarter was $13.2 million, with an adjusted EBITDA margin of 12.2%, reflecting an increase of 130 basis points year-over-year [29] - Adjusted operating income increased to $4.9 million, marking a strong increase of $2.8 million compared to the prior year [29] Business Line Data and Key Metrics Changes - In the Power Solutions segment, net sales were $44.6 million, down $5.5 million year-over-year, primarily due to the sale of the Lubbock operations [30] - The Mobile Solutions segment reported net sales of $63.4 million, a decrease from $72.9 million in the previous year, impacted by rationalized business and lower automotive volume [32] - Adjusted EBITDA in the Mobile Solutions segment was $8.6 million, reflecting a slight year-over-year growth due to cost control actions [33] Market Data and Key Metrics Changes - The automotive market accounted for 39% of the company's revenue, with overall light vehicle production remaining flat globally [12] - The U.S. GDP-linked businesses showed a rebound in the second quarter after a weak first half, although trade uncertainty continues to impact demand [14] - The medical equipment market is growing, with the company increasing its participation significantly above market growth [18] Company Strategy and Development Direction - The company aims to achieve approximately 20% gross margin as part of its long-term plan, with a focus on margin expansion and operational efficiency [22] - A commitment to increase personnel in specialized growth areas, including the hiring of a new Chief Commercial Officer, indicates a strategic focus on expanding into electrical and medical markets [38] - The company is actively pursuing M&A opportunities to enhance its growth strategy and improve its operational footprint [90] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth despite uncertainties in the automotive market, emphasizing the importance of new business launches [41] - The company is leaning towards the lower end of its revenue guidance due to macroeconomic uncertainties and customer feedback [41] - The outlook for the electrical market remains positive, with growth opportunities identified in power generation and distribution sectors [50] Other Important Information - The company plans to launch approximately 112 new programs in 2025, contributing an estimated $48 million in annual revenue at peak run rate [36] - The company is preparing for an Investor Day in December 2025 to provide further insights into its strategy and performance [42] Q&A Session Summary Question: Can you remind us about the incremental margin from new business wins? - New business wins are accretive by three to four points on the EBITDA line overall, with a focus on existing open capacity and strategic investments [46] Question: What are the growth opportunities in the electrical market? - The company is seeing growth in power generation, particularly with customers like Cummins, while residential distribution has been softer [50] Question: How does the company plan to achieve its revenue guidance? - The company expects to benefit from new business launches and a consistent performance from its base business, without relying on market rebounds [55] Question: What is the status of the Group of Five facilities? - All facilities are on track to be profitable this year, with expectations for run rate profitability by the end of the year [60] Question: Can you provide details on the M&A program? - The company is actively pursuing specific acquisitions that align with its strategy, focusing on synergies and operational improvements [90]

Financial Performance - Net sales for Q2 2025 were $107.9 million, a decrease compared to $123.0 million in Q2 2024[17] - Adjusted EBITDA for Q2 2025 was $13.2 million, representing 12.2% of sales, compared to $13.4 million in Q2 2024, which was 10.9% of sales[17] - Adjusted operating income for Q2 2025 was $4.9 million, or 4.6% of net sales, compared to $2.1 million in Q2 2024[17] - The company's adjusted gross margin improved to 19.5% in Q2 2025[8] Business Segment Highlights - Power Solutions business net sales were $44.6 million, up 2.3%, with adjusted EBITDA of $9.1 million, up 5.8%[22] - Mobile Solutions business net sales were $63.4 million, down 5.4%, but adjusted EBITDA increased by 6.2% to $8.6 million[27] Growth and Outlook - The company secured $32.7 million in new business wins year-to-date in Q2 2025[8] - The company is launching 112 programs in 2025, expected to generate $48 million in revenue at full run-rate[35] - The company is reiterating its 2025 outlook, with net sales expected to be in the range of $430 to $460 million and adjusted EBITDA in the range of $53 to $63 million[40, 41]

[Second Quarter 2025 Financial Highlights and Business Update](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights%20and%20Business%20Update) NN, Inc. reported a 2.4% pro forma decrease in net sales to $107.9 million for Q2 2025, but demonstrated improvements in operating income, adjusted operating income, and adjusted EBITDA [Overall Performance Summary](index=1&type=section&id=Overall%20Performance%20Summary) NN, Inc. reported a 2.4% pro forma decrease in net sales to $107.9 million for Q2 2025, but demonstrated improvements in operating income, adjusted operating income, and adjusted EBITDA Q2 2025 Key Performance Indicators | Metric | Value | Note | | :--- | :--- | :--- | | Net Sales | $107.9 million | Down 2.4% on a pro forma basis | | Gross Margin | 16.9% | Adjusted Gross Margin of 19.5% | | Operating Loss | ($1.5) million | Adjusted Operating Income of $4.9 million | | Adjusted EBITDA | $13.2 million | 12.2% margin | | New Business Wins (H1 2025) | $32.7 million | >100 programs launching in 2025 | | Future Sales from 2025 Launches | >$45 million | At full run-rate | - Management expressed satisfaction with the quarter's performance in gross margins, operating income, and adjusted EBITDA, despite a soft top-line primarily due to certain automotive customers[2](index=2&type=chunk) - The company is actively leveraging the market environment to increase business development activities and investments[2](index=2&type=chunk) [Strategic Initiatives and Management Commentary](index=1&type=section&id=Strategic%20Initiatives%20and%20Management%20Commentary) The company is accelerating its transformation by investing in growth capex, hiring key commercial personnel, and exploring organic entry into the electrical harness market - The company is increasing its investment in business development and new program launches, with plans to invest **$18 million to $20 million** in capital projects in 2025 to lower costs and drive growth[2](index=2&type=chunk) - Strategic growth initiatives include: investing in growth capex and hiring personnel for targeted areas like medical, stampings, and electrical products[4](index=4&type=chunk) - Evaluating an organic entry into the electrical harness market[4](index=4&type=chunk) - Activating an M&A program to seek strategic targets and address the refinancing of preferred stock[4](index=4&type=chunk) [Consolidated Financial Results](index=2&type=section&id=Consolidated%20Financial%20Results) Q2 2025 net sales were $107.9 million, a 12.3% decrease from Q2 2024, but profitability improved with adjusted operating income increasing to $4.9 million and adjusted EBITDA stable at $13.2 million Q2 2025 vs. Q2 2024 Consolidated Results | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $107.9M | $123.0M | -12.3% | | Pro Forma Net Sales | - | - | -2.4% | | Loss from Operations | ($1.5M) | ($2.1M) | +28.6% Improvement | | Adjusted Income from Operations | $4.9M | $2.1M | +133.3% | | Adjusted EBITDA | $13.2M | $13.4M | -1.5% | | Adjusted EBITDA Margin | 12.2% | 10.9% | +130 bps | | Adjusted Net Income (Loss) | $0.7M | ($0.7M) | N/A | | Adjusted EPS | $0.02 | ($0.02) | N/A | | Free Cash Flow | ($3.2M) | ($1.3M) | -$1.9M | [Segment Performance](index=2&type=section&id=Segment%20Performance) Power Solutions sales declined due to divestiture but improved operating income, while Mobile Solutions saw lower sales but a significant turnaround in profitability [Power Solutions](index=2&type=section&id=Power%20Solutions) Power Solutions net sales decreased to $44.6 million from $50.2 million, mainly due to a divestiture, but adjusted income from operations increased to $8.4 million Power Solutions Q2 2025 vs. Q2 2024 | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Sales | $44.6M | $50.2M | | Income from Operations | $5.8M | $5.3M | | Adjusted Income from Operations | $8.4M | $8.1M | [Mobile Solutions](index=2&type=section&id=Mobile%20Solutions) Mobile Solutions net sales fell to $63.4 million from $72.9 million due to rationalized business and lower automotive volume, but adjusted income from operations turned positive Mobile Solutions Q2 2025 vs. Q2 2024 | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Sales | $63.4M | $72.9M | | Loss from Operations | ($1.1M) | ($1.6M) | | Adjusted Income (Loss) from Operations | $2.3M | ($0.7M) | [2025 Full-Year Outlook](index=2&type=section&id=2025%20Outlook) NN, Inc. is maintaining its full-year 2025 outlook, with the CFO guiding expectations towards the lower end of ranges due to tariff and macroeconomic uncertainties [Guidance Reiteration and CFO Commentary](index=3&type=section&id=Guidance%20Reiteration%20and%20CFO%20Commentary) NN, Inc. is maintaining its full-year 2025 outlook, with the CFO guiding expectations towards the lower end of ranges due to tariff and macroeconomic uncertainties - The company is maintaining its full-year 2025 outlook[14](index=14&type=chunk) - The CFO directs expectations towards the lower end of guided ranges due to uncertainties from tariffs and potential shifts in trade policy and interest rates[15](index=15&type=chunk) [Key Guidance Metrics](index=4&type=section&id=Key%20Guidance%20Metrics) The company reiterated its full-year 2025 guidance ranges for net sales, adjusted EBITDA, free cash flow, and new business wins Full Year 2025 Guidance | Metric | Guidance Range | | :--- | :--- | | Net Sales | $430M - $460M | | Adjusted EBITDA | $53M - $63M | | Free Cash Flow | $14M - $16M | | New Business Wins | $60M - $70M | [Financial Statements](index=7&type=section&id=Financial%20Statements) The company reported a net loss of $8.1 million for Q2 2025, influenced by a loss on debt extinguishment, with total assets of $460.8 million and increased long-term debt [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a net loss of $8.1 million for Q2 2025, an increase from the prior year, influenced by a $3.0 million loss on extinguishment of debt Statement of Operations Highlights (in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $107,921 | $122,992 | $213,609 | $244,190 | | Loss from Operations | $(1,464) | $(2,147) | $(6,253) | $(6,930) | | Net Loss | $(8,102) | $(2,203) | $(14,787) | $(14,740) | | Diluted Net Loss per Share | $(0.26) | $(0.12) | $(0.48) | $(0.46) | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were $460.8 million, with cash decreasing to $9.5 million and long-term debt increasing to $154.0 million from year-end 2024 Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $9,542 | $18,128 | | Total current assets | $171,979 | $167,562 | | Total assets | $460,760 | $456,893 | | Total current liabilities | $89,153 | $83,912 | | Long-term debt, net | $154,047 | $143,591 | | Total liabilities | $298,702 | $288,874 | | Total stockholders' equity | $59,540 | $74,522 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For H1 2025, net cash used in operating activities was $4.0 million, with total cash decreasing by $8.6 million, primarily due to operating and investing activities Cash Flow Highlights - Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,041) | $(569) | | Net cash used in investing activities | $(7,179) | $(8,815) | | Net cash provided by financing activities | $1,563 | $1,569 | | Net change in cash and cash equivalents | $(8,586) | $(8,157) | [Reconciliation of GAAP to Non-GAAP Measures](index=10&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) This section reconciles GAAP figures to non-GAAP measures, showing improvements in adjusted gross profit, operating income, EBITDA, and a shift to adjusted net income for Q2 2025 [Gross Profit Reconciliation](index=10&type=section&id=Gross%20Profit%20Reconciliation) Q2 2025 GAAP gross profit of $18.2 million was adjusted to a non-GAAP **$21.1 million**, resulting in an improved adjusted gross margin of **19.5%** Gross Profit Reconciliation - Q2 (in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | GAAP gross profit | $18,222 | $21,735 | | Adjustments | $2,833 | $1,086 | | **Adjusted gross profit** | **$21,055** | **$22,821** | | **Adjusted gross margin** | **19.5%** | **18.6%** | [Income from Operations Reconciliation](index=11&type=section&id=Income%20from%20Operations%20Reconciliation) Q2 2025 GAAP loss from operations of $1.5 million was reconciled to a non-GAAP adjusted income of **$4.9 million**, a significant improvement from Q2 2024 Income from Operations Reconciliation - Q2 (in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | GAAP loss from operations | $(1,464) | $(2,147) | | Amortization of intangibles | $3,405 | $3,456 | | Personnel costs | $2,614 | $826 | | Other adjustments | $352 | $(63) | | **Adjusted income from operations** | **$4,907** | **$2,072** | | **Adjusted operating margin** | **4.6%** | **1.7%** | [Adjusted EBITDA Reconciliation](index=12&type=section&id=Adjusted%20EBITDA%20Reconciliation) Q2 2025 GAAP net loss of $8.1 million was reconciled to a non-GAAP adjusted EBITDA of **$13.2 million**, with an improved margin of **12.2%** Adjusted EBITDA Reconciliation - Q2 (in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | GAAP net loss | $(8,102) | $(2,203) | | Depreciation and amortization | $8,918 | $11,761 | | Interest expense | $5,657 | $5,873 | | Loss on extinguishment of debt | $3,007 | $— | | Other adjustments | $3,701 | $(1,621) | | **Adjusted EBITDA** | **$13,179** | **$13,405** | | **Adjusted EBITDA margin** | **12.2%** | **10.9%** | [Adjusted Net Income and EPS Reconciliation](index=13&type=section&id=Adjusted%20Net%20Income%20and%20EPS%20Reconciliation) Q2 2025 GAAP net loss of $8.1 million was reconciled to a non-GAAP adjusted net income of **$0.7 million**, or **$0.02** per share, a positive shift from the prior year Adjusted Net Income & EPS Reconciliation - Q2 | Metric | 2025 | 2024 | | :--- | :--- | :--- | | GAAP net loss (in thousands) | $(8,102) | $(2,203) | | **Adjusted net income (loss) (in thousands)** | **$746** | **$(738)** | | GAAP net loss per diluted share | $(0.26) | $(0.12) | | **Adjusted net income (loss) per diluted share** | **$0.02** | **$(0.02)** | [Free Cash Flow Reconciliation](index=14&type=section&id=Free%20Cash%20Flow%20Reconciliation) Q2 2025 net cash used in operating activities of $0.7 million was reconciled to a free cash flow use of **$3.2 million**, a greater use than the prior year Free Cash Flow Reconciliation - Q2 (in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(696) | $(1,281) | | Acquisition of property, plant, and equipment | $(3,723) | $(3,592) | | Proceeds from sale of property, plant, and equipment | $274 | $139 | | Proceeds from sale-leaseback of equipment | $946 | $3,415 | | **Free cash flow** | **$(3,199)** | **$(1,319)** |

Core Viewpoint - NN, Inc. reported a solid second quarter for 2025, maintaining its full-year guidance despite challenges in the automotive sector and a decrease in net sales [2][12][13]. Financial Performance - Net sales for Q2 2025 were $107.9 million, a decrease of 12.3% compared to $123.0 million in Q2 2024, primarily due to the rationalization of underperforming businesses and lower automotive volumes [3][5]. - Loss from operations was $1.5 million, an improvement of 28.6% from a loss of $2.1 million in Q2 2024 [3]. - Adjusted operating income was $4.9 million, an increase of $2.8 million from the same period in 2024 [5][6]. - Adjusted EBITDA was $13.2 million, with an adjusted EBITDA margin of 12.2%, compared to $13.4 million and 10.9% in Q2 2024 [6][7]. Business Development and Strategy - The company has launched 70 new business programs in the first half of 2025 and expects over 100 launches in total for the year, projected to add over $45 million in future sales at run-rate [2][5]. - NN plans to invest $18 to $20 million in capital projects in 2025 to drive growth while maintaining cost controls [2][5]. - The company is actively pursuing M&A opportunities that align with its strategy to refinance preferred stock [2][12]. Segment Performance - Power Solutions segment net sales were $44.6 million, down from $50.2 million in Q2 2024, but income from operations increased to $5.8 million from $5.3 million [8][9]. - Mobile Solutions segment net sales decreased to $63.4 million from $72.9 million in Q2 2024, with an operating loss of $1.1 million, improved from a loss of $1.6 million [10][11]. Outlook - The company is maintaining its full-year 2025 outlook, with net sales expected to range between $430 to $460 million and adjusted EBITDA between $53 to $63 million [12][15]. - Free cash flow is projected to be between $14 to $16 million, assuming receipt of a CARES Act refund in 2025 [15].

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for NN, Inc., including statements of operations, balance sheets, cash flows, and changes in stockholders' equity, along with detailed notes explaining the company's business, accounting policies, segment information, and specific financial line items for the periods ended June 30, 2025 and 2024 [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) This statement details the company's revenues, expenses, and net income or loss over specific periods Consolidated Statements of Operations and Comprehensive Income (Loss) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net sales | $107,921 | $122,992 | $213,609 | $244,190 | | Cost of sales | $89,699 | $101,257 | $181,345 | $202,343 | | Selling, general, and administrative expense | $12,095 | $13,511 | $23,265 | $26,859 | | Depreciation and amortization | $8,918 | $11,761 | $17,692 | $24,308 | | Loss from operations | $(1,464) | $(2,147) | $(6,253) | $(6,930) | | Interest expense | $5,657 | $5,873 | $10,851 | $11,239 | | Loss on extinguishment of debt | $3,007 | — | $3,007 | — | | Net loss | $(8,102) | $(2,203) | $(14,787) | $(14,740) | | Basic and diluted net loss per share | $(0.26) | $(0.12) | $(0.48) | $(0.46) | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement presents the company's assets, liabilities, and equity at specific points in time Consolidated Balance Sheets | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total current assets | $171,979 | $167,562 | | Total assets | $460,760 | $456,893 | | Total current liabilities | $89,153 | $83,912 | | Total liabilities | $298,702 | $288,874 | | Total stockholders' equity | $59,540 | $74,522 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes the cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(4,041) | $(569) | | Net cash used in investing activities | $(7,179) | $(8,815) | | Net cash provided by financing activities | $1,563 | $1,569 | | Net change in cash and cash equivalents | $(8,586) | $(8,157) | | Cash and cash equivalents at end of period | $9,542 | $13,746 | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) This statement outlines changes in equity components, including net loss, dividends, and other comprehensive income - **Total stockholders' equity** decreased from **$74,522 thousand** at December 31, 2024, to **$59,540 thousand** at June 30, 2025, primarily due to **net loss** and dividends accrued for preferred stock, partially offset by other comprehensive income[23](index=23&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the financial statements [Note 1. Interim Financial Statements](index=10&type=section&id=Note%201.%20Interim%20Financial%20Statements) This note describes the company's business, operations, and significant accounting policies for interim reporting - **NN, Inc.** is a diversified industrial company manufacturing high-precision components globally, operating **24 facilities** across North America, South America, Europe, and China as of June 30, 2025[26](index=26&type=chunk) - The company adopted ASU 2023-07 (Segment Reporting) for the year ended December 31, 2024, and plans to adopt ASU 2023-09 (Income Taxes) in its 2025 Form 10-K. ASU 2024-03 (Expense Disaggregation) is effective for fiscal years beginning after December 15, 2026, with impact yet to be determined[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) - The Mobile Solutions plant in Dowagiac, Michigan, ceased production and its land and building, with a **net book value of $1.4 million**, are classified as held for sale as of June 30, 2025[33](index=33&type=chunk) [Note 2. Segment Information](index=11&type=section&id=Note%202.%20Segment%20Information) This note provides financial data and operational details for the company's reportable business segments - **NN, Inc.** operates two reportable segments: Mobile Solutions (automotive, general industrial, medical) and Power Solutions (electrical, general industrial, automotive, medical), plus a Corporate category for unallocated costs[34](index=34&type=chunk)[37](index=37&type=chunk) Segment Sales and Income (Loss) from Operations (Three Months Ended June 30) | Segment (in thousands) | 2025 Sales | 2024 Sales | 2025 Income (Loss) from Operations | 2024 Income (Loss) from Operations | | :--------------------- | :--------- | :--------- | :--------------------------------- | :--------------------------------- | | Mobile Solutions | $63,391 | $72,855 | $(1,110) | $(1,630) | | Power Solutions | $44,641 | $50,151 | $5,782 | $5,320 | | Corporate and Eliminations | $(111) | $(14) | $(6,136) | $(5,837) | | Total | $107,921 | $122,992 | $(1,464) | $(2,147) | Segment Sales and Income (Loss) from Operations (Six Months Ended June 30) | Segment (in thousands) | 2025 Sales | 2024 Sales | 2025 Income (Loss) from Operations | 2024 Income (Loss) from Operations | | :--------------------- | :--------- | :--------- | :--------------------------------- | :--------------------------------- | | Mobile Solutions | $125,635 | $145,915 | $(3,797) | $(3,773) | | Power Solutions | $88,149 | $98,389 | $8,805 | $9,299 | | Corporate and Eliminations | $(175) | $(114) | $(11,261) | $(12,456) | | Total | $213,609 | $244,190 | $(6,253) | $(6,930) | Segment Capital Expenditures and Depreciation & Amortization (Six Months Ended June 30) | Metric (in thousands) | 2025 Capital Expenditures | 2024 Capital Expenditures | 2025 Depreciation & Amortization | 2024 Depreciation & Amortization | | :-------------------- | :------------------------ | :------------------------ | :------------------------------- | :------------------------------- | | Mobile Solutions | $5,531 | $6,182 | $10,180 | $16,119 | | Power Solutions | $1,212 | $2,036 | $6,718 | $7,362 | | Corporate | $887 | $834 | $794 | $827 | | Total | $7,630 | $9,052 | $17,692 | $24,308 | Total Assets by Reportable Segment | Segment (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Mobile Solutions | $297,796 | $294,204 | | Power Solutions | $131,057 | $124,460 | | Corporate | $31,907 | $38,229 | | Total | $460,760 | $456,893 | [Note 3. Revenue from Contracts with Customers](index=13&type=section&id=Note%203.%20Revenue%20from%20Contracts%20with%20Customers) This note details the company's revenue recognition policies and disaggregation of net sales by industry - Revenue is recognized when control of goods or services is transferred to the customer. The company's products serve automotive, commercial vehicle, general industrial, and residential/commercial electrical industries[44](index=44&type=chunk)[45](index=45&type=chunk) Net Sales by Customer Industry (Three Months Ended June 30) | Industry (in thousands) | 2025 Sales | 2024 Sales | | :---------------------- | :--------- | :--------- | | Automotive and Commercial Vehicle | $65,612 | $58,283 | | General Industrial | $12,210 | $31,203 | | Residential/Commercial Electrical | $18,444 | $21,486 | | Other | $11,655 | $12,020 | | Total net sales | $107,921 | $122,992 | Net Sales by Customer Industry (Six Months Ended June 30) | Industry (in thousands) | 2025 Sales | 2024 Sales | | :---------------------- | :--------- | :--------- | | Automotive and Commercial Vehicle | $125,736 | $115,514 | | General Industrial | $26,192 | $63,054 | | Residential/Commercial Electrical | $38,976 | $41,718 | | Other | $22,705 | $23,904 | | Total net sales | $213,609 | $244,190 | - A single customer in the Mobile Solutions segment accounted for **13% of consolidated revenue** during the six months ended June 30, 2025[49](index=49&type=chunk) - **Deferred revenue** increased from **$0.2 million** at December 31, 2024, to **$0.5 million** at June 30, 2025. Revenue recognized from prior period **deferred revenue** was **$0.1 million** for the six months ended June 30, 2025[50](index=50&type=chunk) [Note 4. Accounts Receivable](index=14&type=section&id=Note%204.%20Accounts%20Receivable) This note provides information on accounts receivable, including the allowance for credit losses and customer concentrations Changes in Allowance for Credit Losses (Six Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | | :-------------------- | :--- | :--- | | Balance at beginning of year | $1,515 | $1,241 | | Additions | $134 | $582 | | Write-offs and other | $(86) | $(148) | | Currency impact | $37 | $(15) | | Balance at end of period | $1,600 | $1,660 | - Fees related to the sale of receivables decreased from **$0.6 million** in the six months ended June 30, 2024, to **$0.3 million** in the same period of 2025[53](index=53&type=chunk) - One customer represented **12% of consolidated accounts receivable** as of June 30, 2025, primarily related to the Mobile Solutions segment[54](index=54&type=chunk) [Note 5. Inventories](index=14&type=section&id=Note%205.%20Inventories) This note presents the breakdown of inventory components, including raw materials, work in process, and finished goods Inventories (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Raw materials | $23,058 | $20,664 | | Work in process | $21,194 | $22,139 | | Finished goods | $18,541 | $19,074 | | Total inventories | $62,793 | $61,877 | [Note 6. Intangible Assets](index=15&type=section&id=Note%206.%20Intangible%20Assets) This note details the carrying value and amortization of the company's intangible assets by segment Changes in Intangible Assets, Net (in thousands) | Segment | Balance as of December 31, 2024 | Amortization | Balance as of June 30, 2025 | | :-------------- | :------------------------------ | :----------- | :-------------------------- | | Mobile Solutions | $15,649 | $(1,677) | $13,972 | | Power Solutions | $28,761 | $(5,134) | $23,627 | | Total | $44,410 | $(6,811) | $37,599 | - No impairment charges were recognized for **intangible assets** during the six months ended June 30, 2025 and 2024[57](index=57&type=chunk) [Note 7. Investment in Joint Venture](index=15&type=section&id=Note%207.%20Investment%20in%20Joint%20Venture) This note describes the company's equity method investment in a joint venture and changes in its carrying value - **NN, Inc.** holds a **49% equity method investment** in Wuxi Weifu Autocam Precision Machinery Company, Ltd. (the 'JV') in Wuxi, China[58](index=58&type=chunk) Changes in Investment in Joint Venture (in thousands) | Metric | Amount | | :-------------------------- | :----- | | Balance as of December 31, 2024 | $34,971 | | Share of earnings | $4,620 | | Foreign currency translation gain | $721 | | Balance as of June 30, 2025 | $40,312 | [Note 8. Debt](index=15&type=section&id=Note%208.%20Debt) This note provides details on the company's debt facilities, including term loans, ABL, and financing obligations Debt Facilities Outstanding (in thousands) | Debt Facility | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :------------ | :---------------- | | Term loan facilities | $118,901 | $114,397 | | ABL Facility | $5,000 | $5,400 | | Financing obligations from sale-leaseback transactions | $30,493 | $24,496 | | International loans | $9,140 | $8,485 | | Unamortized debt issuance costs and discount | $(3,907) | $(4,148) | | Total debt | $159,627 | $148,630 | - On April 16, 2025, **NN, Inc.** entered into a new **$128.0 million** senior secured Term Loan Facility, consisting of a **$118.0 million** funded term loan and **$10.0 million** in delayed draw commitments, maturing on April 16, 2030. Proceeds were used to repay the previous 2021 Term Loan Facility[63](index=63&type=chunk) - The Term Loans currently bear interest at Adjusted Term SOFR plus **9.25%** (subject to a **2.00% floor**) or Base Rate plus **8.25%**. A portion of interest can be paid in-kind (PIK Election) before April 16, 2027, with an applicable margin increase of **0.50%**. At June 30, 2025, the rate was **14.18%**[64](index=64&type=chunk)[66](index=66&type=chunk) - The company was in compliance with the financial covenants of the Term Loan Facility and ABL Facility as of June 30, 2025[69](index=69&type=chunk)[77](index=77&type=chunk) - In 2024 and 2025, **NN, Inc.** completed sale-leaseback transactions for properties and equipment, generating **$21.2 million** and **$10.6 million** in proceeds, respectively. These are recognized as financing obligations with weighted average effective interest rates of **9.500%** for properties and **9.170%** for equipment[78](index=78&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk) [Note 9. Preferred Stock](index=18&type=section&id=Note%209.%20Preferred%20Stock) This note describes the terms, classification, and carrying value of the company's Series D Perpetual Preferred Stock - The Series D Perpetual Preferred Stock, issued in March 2021, has an initial **liquidation preference of $1,000 per share** and earns cash dividends at **10.0% per year**, or **12.0%** in-kind if not paid in cash. Rates increase by **2.5%** annually starting March 22, 2026[82](index=82&type=chunk) - The Series D Preferred Stock is classified as mezzanine equity due to potential redemption upon a change of control. Its **carrying value** was **$102.5 million** as of June 30, 2025, including **$55.8 million** of accumulated unpaid and deemed dividends[83](index=83&type=chunk)[85](index=85&type=chunk) Changes in Series D Preferred Stock Carrying Value (in thousands) | Metric | Amount | | :-------------------------- | :----- | | Balance as of December 31, 2024 | $93,497 | | Accrual of in-kind dividends | $6,199 | | Amortization | $2,822 | | Balance as of June 30, 2025 | $102,518 | [Note 10. Leases](index=19&type=section&id=Note%2010.%20Leases) This note provides supplemental cash flow information and balances related to the company's operating and finance leases Supplemental Cash Flow Information Related to Leases (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :----------------------------------------- | :---- | :---- | | Operating cash flows used in operating leases | $4,315 | $4,731 | | Operating cash flows used in finance leases | $256 | $162 | | Financing cash flows used in finance leases | $1,960 | $1,105 | | Right-of-use assets obtained in exchange for new operating lease liabilities | — | $692 | | Right-of-use assets obtained in exchange for new finance lease liabilities | $276 | $645 | - **Sublease income** remained consistent at **$1.9 million** for both the six months ended June 30, 2025 and 2024[88](index=88&type=chunk) Finance Lease-Related Assets and Liabilities (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Finance lease assets | $17,174 | $16,579 | | Finance lease current liabilities | $3,671 | $3,565 | | Finance lease non-current liabilities | $4,133 | $5,469 | | Total finance lease liabilities | $7,804 | $9,034 | [Note 11. Commitments and Contingencies](index=19&type=section&id=Note%2011.%20Commitments%20and%20Contingencies) This note outlines the company's legal proceedings, tax matters, and other contingent liabilities - The company is involved in a Brazil ICMS tax matter, disputing tax credits claimed on intermediary materials. While anticipating a favorable resolution, the **cumulative potential liability** for remaining open lawsuits is estimated to be less than **$2.0 million**, inclusive of interest and penalties[91](index=91&type=chunk)[92](index=92&type=chunk) - **NN, Inc.** expects indemnification from former Autocam shareholders for any losses related to the Brazil ICMS tax matter, mitigating material impact on financial results[93](index=93&type=chunk) - Other legal proceedings are considered ordinary and routine, and management believes they will not have a material adverse effect on the company's business, financial condition, results of operations, or cash flows[94](index=94&type=chunk) [Note 12. Income Taxes](index=20&type=section&id=Note%2012.%20Income%20Taxes) This note details the company's effective tax rates and factors influencing income tax expense or benefit Effective Tax Rates | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Effective Tax Rate | (8.1)% | 4.7% | (12.0)% | (1.5)% | - The **effective tax rate** for the three and six months ended June 30, 2025, was unfavorably impacted by tax accruals on non-permanently reinvested unremitted foreign earnings and limitations on tax benefits for losses in certain jurisdictions[95](index=95&type=chunk) - The company is assessing the impact of the newly signed H.R.1, the One Big Beautiful Bill Act (OBBBA), on its consolidated financial statements, with effects to be reflected in the period of enactment and future periods[96](index=96&type=chunk) [Note 13. Net Loss Per Common Share](index=20&type=section&id=Note%2013.%20Net%20Loss%20Per%20Common%20Share) This note presents the calculation of basic and diluted net loss per common share, including antidilutive securities Basic and Diluted Net Loss Per Common Share | Metric (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net loss | $(8,102) | $(2,203) | $(14,787) | $(14,740) | | Adjustment for preferred stock dividends | $(4,614) | $(3,843) | $(9,021) | $(7,513) | | Numerator for basic and diluted net loss per common share | $(12,716) | $(6,046) | $(23,808) | $(22,253) | | Shares used to calculate basic and diluted net loss per share | 49,433 | 48,839 | 49,255 | 48,281 | | Basic and diluted net loss per common share | $(0.26) | $(0.12) | $(0.48) | $(0.46) | Antidilutive Securities Excluded from EPS Calculation (in thousands) | Security Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Stock options | 134 | 207 | 151 | 232 | | Warrants | 1,500 | 1,500 | 1,500 | 1,500 | | Performance share units | 820 | 820 | 820 | 783 | | Total antidilutive securities | 2,454 | 2,527 | 2,471 | 2,515 | [Note 14. Share-Based Compensation](index=21&type=section&id=Note%2014.%20Share-Based%20Compensation) This note details the share-based compensation expense recognized and information on restricted stock and performance share units Share-Based Compensation Expense (in thousands) | Award Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Restricted stock | $470 | $532 | $1,020 | $1,119 | | Performance share units | $331 | $158 | $620 | $417 | | Total | $801 | $690 | $1,640 | $1,536 | - During the six months ended June 30, 2025, **664,000 restricted stock shares** were granted, vesting pro-rata over three years for employees and one year for non-executive directors. The **total grant date fair value** of vested restricted stock was **$1.9 million**[106](index=106&type=chunk) - **231,000 Performance Share Units (PSUs)** were granted to executive officers during the six months ended June 30, 2025, vesting based on relative total shareholder return against a specified index over a three-year performance period ending December 31, 2027[108](index=108&type=chunk) [Note 15. Accumulated Other Comprehensive Income](index=22&type=section&id=Note%2015.%20Accumulated%20Other%20Comprehensive%20Income) This note provides a breakdown of the components of accumulated other comprehensive income or loss Components of Accumulated Other Comprehensive Income (Loss) (in thousands) | Metric | Balance as of March 31, 2025 | Other comprehensive income (loss) before reclassifications | Net other comprehensive income (loss) | Balance as of June 30, 2025 | | :-------------------------- | :--------------------------- | :--------------------------------------------------------- | :------------------------------------ | :-------------------------- | | Foreign Currency Translation | $(45,042) | $4,454 | $4,454 | $(40,588) | | Interest rate swap | — | — | — | — | | Total | $(45,042) | $4,454 | $4,454 | $(40,588) | - **Accumulated other comprehensive loss** improved from **$(48,167) thousand** at December 31, 2024, to **$(40,588) thousand** at June 30, 2025, primarily due to foreign currency translation gains[111](index=111&type=chunk) [Note 16. Fair Value Measurements](index=22&type=section&id=Note%2016.%20Fair%20Value%20Measurements) This note describes the fair value hierarchy and measurements for the company's financial instruments and derivatives - Certain features of preferred stock and long-term debt are bifurcated and accounted for as embedded derivatives[113](index=113&type=chunk) - As of June 30, 2025, **1.5 million** of the 2023 Warrants (exercisable at **$0.01 per share**) remain outstanding. All 2021 Warrants were exercised in Q1 2024, resulting in **1,896,000 common shares** issued. 2019 Warrants (exercisable at **$11.03 per share**) for **1.5 million shares** remain outstanding[114](index=114&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) Changes in Embedded Derivatives Liability (in thousands) | Metric | Amount | | :-------------------------- | :----- | | Balance as of December 31, 2024 | $5,192 | | Change in fair value | $(2,036) | | Balance as of June 30, 2025 | $3,156 | - The **fair value** of the 2023 and 2021 Warrants is determined using Level 1 observable market prices, while the 2019 Warrants use a Level 3 valuation model with unobservable inputs[120](index=120&type=chunk)[121](index=121&type=chunk) - The 2021 Interest Rate Swap, terminated in Q1 2023, generated an interest benefit of **$0.4 million** and **$0.9 million** for the three and six months ended June 30, 2024, respectively, recognized as a reduction to interest expense[122](index=122&type=chunk)[123](index=123&type=chunk) - The **fair value** of the company's debt was **$166.1 million** (**carrying amount $159.6 million**) as of June 30, 2025, and **$147.8 million** (**carrying amount $148.6 million**) as of December 31, 2024, calculated using Level 3 inputs[124](index=124&type=chunk) [Note 17. Plant Optimization Activities](index=24&type=section&id=Note%2017.%20Plant%20Optimization%20Activities) This note details the costs and expected benefits associated with the company's facility closures and restructuring efforts - **NN, Inc.** substantially completed facility closures and organizational changes by June 30, 2025, including ceasing production at Mobile Solutions plants in Juarez, Mexico, and Dowagiac, Michigan, to reduce costs and improve efficiency[126](index=126&type=chunk)[127](index=127&type=chunk) - **Estimated total charges** for plant optimization are **$13.6 million**, with cumulative costs of **$13.4 million** recognized as of June 30, 2025. **Annual benefits** of approximately **$5.4 million** are expected once fully implemented[127](index=127&type=chunk) Summary of Plant Optimization Costs Incurred and Accrued (in thousands) | Category | Balance as of December 31, 2024 | Restructuring costs (6M 2025) | Amounts paid (6M 2025) | Balance as of June 30, 2025 | | :------------------------------------- | :------------------------------ | :---------------------------- | :--------------------- | :-------------------------- | | Severance and employee related | $2,686 | $380 | $(2,195) | $871 | | Impairment of property and equipment | — | — | — | — | | Costs associated with exit or disposal activities | — | $401 | $(401) | — | | Total | $2,686 | $781 | $(2,596) | $871 | - A Voluntary Early Retirement Program (ERIP) resulted in **$0.4 million** recognized during the six months ended June 30, 2025, with an **estimated total cost of $1.6 million**[130](index=130&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on NN, Inc.'s financial performance, condition, and liquidity [Forward-Looking Statements](index=25&type=section&id=Forward-Looking%20Statements) This section highlights the inherent risks and uncertainties associated with forward-looking statements in the report - The report contains forward-looking statements subject to risks and uncertainties, including general economic conditions, impacts of pandemics, tariffs, competitive influences, raw material costs, geopolitical instability, inflation, supply chain disruptions, dependence on major customers, and debt restrictions[132](index=132&type=chunk) [Overview](index=25&type=section&id=Overview) This section provides a high-level description of NN, Inc.'s business as a diversified industrial company - **NN, Inc.** is a diversified industrial company specializing in advanced engineering and materials science to design and manufacture high-precision components and assemblies for various global end markets[134](index=134&type=chunk) [Factors That May Influence Results of Operations](index=25&type=section&id=Factors%20That%20May%20Influence%20Results%20of%20Operations) This section discusses macroeconomic, geopolitical, and operational factors impacting the company's financial results - Macroeconomic and geopolitical events, including global trade negotiations, tariffs, inflationary cost pressures on raw materials, elevated interest rates, supply chain disruptions, and military conflicts, continue to influence the company's results[136](index=136&type=chunk) - The company is undertaking footprint optimization by closing two manufacturing facilities (Juarez, Mexico, and Dowagiac, Michigan) due to volume rationalization to reduce costs and improve operational efficiency, with further consolidation actions possible[138](index=138&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) This section analyzes the company's consolidated and segment-level financial performance over comparative periods [Three Months Ended June 30, 2025 compared to the Three Months Ended June 30, 2024](index=26&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20compared%20to%20the%20Three%20Months%20Ended%20June%2030%2C%202024) This section compares the company's financial results for the three months ended June 30, 2025 and 2024 Consolidated Results (Three Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | $ Change | % Change | | :-------------------- | :-------- | :-------- | :-------- | :------- | | Net sales | $107,921 | $122,992 | $(15,071) | (12.3)% | | Cost of sales | $89,699 | $101,257 | $(11,558) | (11.4)% | | SG&A expense | $12,095 | $13,511 | $(1,416) | (10.5)% | | Depreciation & amortization | $8,918 | $11,761 | $(2,843) | (24.2)% | | Loss from operations | $(1,464) | $(2,147) | $683 | 31.8% | | Interest expense | $5,657 | $5,873 | $(216) | (3.7)% | | Loss on extinguishment of debt | $3,007 | — | $3,007 | N/A | | Other income, net | $(619) | $(3,461) | $2,842 | (82.1)% | | Net loss | $(8,102) | $(2,203) | $(5,899) | 267.8% | - **Net sales** decreased by **$15.1 million** (**12.3%**) due to rationalization of underperforming businesses/plants, the sale of Lubbock operations, lower volumes, and unfavorable foreign exchange effects, partially offset by new business launches and higher precious metals pass-through pricing[139](index=139&type=chunk) - **Depreciation and amortization** decreased by **$2.8 million** due to historical purchase accounting step-up basis becoming fully depreciated in the second half of 2024[141](index=141&type=chunk) - A **$3.0 million loss on extinguishment of debt** was recognized due to the termination of the 2021 Term Loan Facility[143](index=143&type=chunk) - Mobile Solutions **net sales** decreased by **$9.5 million** (**13.0%**), while Power Solutions **net sales** decreased by **$5.5 million** (**11.0%**). Mobile Solutions' **loss from operations** decreased by **$0.5 million**, and Power Solutions' **income from operations** increased by **$0.5 million**[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk) [Six Months Ended June 30, 2025 compared to the Six Months Ended June 30, 2024](index=28&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20compared%20to%20the%20Six%20Months%20Ended%20June%2030%2C%202024) This section compares the company's financial results for the six months ended June 30, 2025 and 2024 Consolidated Results (Six Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | $ Change | % Change | | :-------------------- | :-------- | :-------- | :-------- | :------- | | Net sales | $213,609 | $244,190 | $(30,581) | (12.5)% | | Cost of sales | $181,345 | $202,343 | $(20,998) | (10.4)% | | SG&A expense | $23,265 | $26,859 | $(3,594) | (13.4)% | | Depreciation & amortization | $17,692 | $24,308 | $(6,616) | (27.2)% | | Loss from operations | $(6,253) | $(6,930) | $677 | 9.8% | | Interest expense | $10,851 | $11,239 | $(388) | (3.5)% | | Loss on extinguishment of debt | $3,007 | — | $3,007 | N/A | | Other expense (income), net | $(2,788) | $692 | $(3,480) | (502.9)% | | Net loss | $(14,787) | $(14,740) | $(47) | 0.3% | - **Net sales** decreased by **$30.6 million** (**12.5%**) due to rationalized business/plants, sale of Lubbock operations, lower volumes, and unfavorable foreign exchange effects (**$3.5 million**), partially offset by new business launches and higher precious metals pass-through pricing[151](index=151&type=chunk) - Other expense (income), net, favorably changed by **$3.5 million**, primarily due to noncash derivative mark-to-market gains and favorable foreign exchange effects[156](index=156&type=chunk) - Share of **net income from joint venture** increased by **$0.2 million** due to higher sales and increased margin, despite higher fixed costs, depreciation, and interest expense[159](index=159&type=chunk) - Mobile Solutions **net sales** decreased by **$20.3 million** (**13.9%**), with **loss from operations** remaining unchanged. Power Solutions **net sales** decreased by **$10.2 million** (**10.4%**), and **income from operations** decreased by **$0.5 million**[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk) [Changes in Financial Condition from December 31, 2024 to June 30, 2025](index=29&type=section&id=Changes%20in%20Financial%20Condition%20from%20December%2031%2C%202024%20to%20June%2030%2C%202025) This section analyzes changes in the company's balance sheet, cash flows, and liquidity position - **Total assets** increased by **$3.9 million**, driven by increases in accounts receivable, property, plant and equipment, and **investment in a joint venture**, partially offset by decreased **intangible assets**[163](index=163&type=chunk) - **Total liabilities** increased by **$9.8 million**, primarily due to increases in accounts payable, other current liabilities, and long-term debt, partially offset by a decrease in accrued salaries, wages, and benefits[164](index=164&type=chunk) - **Working capital** decreased by **$0.8 million**, mainly due to increased accounts receivable and decreased accrued salaries, wages, and benefits, partially offset by increases in accounts payable and other current liabilities[165](index=165&type=chunk) - **Cash used in operations** increased to **$4.0 million** (from **$0.6 million** in prior year) due to lower gross margin and increased **working capital**. **Cash used in investing activities** decreased by **$1.6 million** due to lower capital expenditures. **Cash provided by financing activities** remained stable at **$1.6 million**[166](index=166&type=chunk)[167](index=167&type=chunk) - The company manages liquidity through credit facilities, sale-leaseback transactions, **working capital** management, accounts receivable sales programs, and expects a **$12.6 million tax refund** from the IRS in 2025[168](index=168&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) [Seasonality and Fluctuation in Quarterly Results](index=31&type=section&id=Seasonality%20and%20Fluctuation%20in%20Quarterly%20Results) This section discusses the impact of seasonal trends and other factors on the company's quarterly financial performance - While certain businesses experience seasonal trends (e.g., weaker European sales in summer, stronger OEM sales around new product launches), the company as a whole is not materially impacted by seasonality[177](index=177&type=chunk) [Critical Accounting Estimates](index=31&type=section&id=Critical%20Accounting%20Estimates) This section confirms no material changes to the company's significant accounting policies or critical estimates - There have been no material changes to the company's significant accounting policies or **critical accounting estimates** during the six months ended June 30, 2025[178](index=178&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the company's exposure to interest rate and foreign currency risks and their management [Interest Rate Risk](index=31&type=section&id=Interest%20Rate%20Risk) This section details the company's exposure to interest rate fluctuations on its variable-rate debt - The company is exposed to **interest rate risk** due to its variable rate debt, which constitutes a majority of its outstanding indebtedness. A **one-percent increase in one-month SOFR** would result in a **$1.2 million net increase in annualized interest expense** on the Term Loan Facility[180](index=180&type=chunk)[181](index=181&type=chunk) [Foreign Currency Risk](index=31&type=section&id=Foreign%20Currency%20Risk) This section describes the company's exposure to foreign currency exchange rate fluctuations from international operations - **NN, Inc.** faces **foreign currency risk** from operating cash flows, customer invoicing, and intercompany loans denominated in various foreign currencies. The company did not hold any foreign currency derivatives as of June 30, 2025[182](index=182&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and reports on internal control over financial reporting [Disclosure Controls and Procedures](index=31&type=section&id=Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures - The Chief Executive Officer and Chief Financial Officer concluded that **NN, Inc.'s disclosure controls and procedures** were effective as of June 30, 2025[183](index=183&type=chunk) [Changes in Internal Control Over Financial Reporting](index=31&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports on any material changes in the company's internal control over financial reporting - No changes in **internal control over financial reporting** occurred during the fiscal quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, the company's **internal control over financial reporting**[184](index=184&type=chunk) [PART II. OTHER INFORMATION](index=32&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal and risk factors [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) This section references disclosures regarding the company's legal proceedings, including the Brazil ICMS tax matter - Legal proceedings, including the Brazil ICMS tax matter, are detailed in Note 11 of the Condensed Consolidated Financial Statements[186](index=186&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) This section updates the company's risk factors, emphasizing the impact of changes in U.S. administrative policy - No material changes to **risk factors** were disclosed, except for an emphasis on the adverse effects of changes in U.S. administrative policy, including tariffs and trade restrictions, especially from countries like Mexico and China[187](index=187&type=chunk) - Uncertainty regarding tariffs and potential trade wars could lead to decreased consumer spending, lower **net sales**, and reduced **operating cash flows**, materially impacting financial statements[188](index=188&type=chunk)[189](index=189&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's purchases of equity securities related to employee share-based awards Issuer Purchases of Equity Securities (Quarter Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :-------------------------- | :------------------------------- | :--------------------------- | | April 1, 2025 to April 30, 2025 | 32,959 | $2.19 | | May 1, 2025 to May 31, 2025 | 131,100 | $1.90 | | June 1, 2025 to June 30, 2025 | 10,981 | $1.95 | | Total | 175,040 | $1.96 | - Shares were withheld to pay for tax obligations upon the vesting of share-based awards granted under the Incentive Plans, which allow for such withholding without specifying a maximum number of shares[191](index=191&type=chunk) [Item 3. Defaults Upon Senior Securities](index=32&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms that there were no defaults on senior securities during the reporting period - There were no defaults upon senior securities[192](index=192&type=chunk) [Item 4. Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company's operations - Mine Safety Disclosures are not applicable to **NN, Inc.**[194](index=194&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) This section confirms no Rule 10b5-1 or non-Rule 10b5-1 trading arrangements by directors or executive officers - No directors or executive officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[195](index=195&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate organizational documents, credit agreements, certifications, and XBRL interactive data files - Exhibits include Restated Certificate of Incorporation, Amended and Restated By-Laws, Term Loan Credit Agreement, First Amendment to Revolving Credit and Security Agreement, Certifications of Principal Executive and Financial Officers, and XBRL Interactive Data Files[196](index=196&type=chunk) [SIGNATURES](index=34&type=section&id=SIGNATURES) This section provides the official signatures and dates for the filing of the report - The report was signed on August 6, 2025, by Harold C. Bevis, President, Chief Executive Officer and Director, and Christopher H. Bohnert, Senior Vice President and Chief Financial Officer[198](index=198&type=chunk)

Company Announcement - NN, Inc. will release its second quarter 2025 financial results on August 6, 2025, after market close [1] - A conference call to discuss the results will take place on August 7, 2025, at 9:00 a.m. E.T. [1] - Participants are required to register five to ten minutes prior to the call [1] Webcast Information - The conference call will be webcast live through the NN, Inc. Investor Relations website [2] - Registration for the webcast is available on the company's Investor Relations section [2] - A replay of the call will be accessible on the website until August 8, 2026 [2] Company Overview - NN, Inc. is a global diversified industrial company specializing in high-precision components and assemblies [3] - The company combines advanced engineering and production capabilities with materials science expertise [3] - NN, Inc. is headquartered in Charlotte, North Carolina, with facilities across North America, Europe, South America, and Asia [3]

Core Insights - NN, Inc. has appointed Timothy Erro as the new Vice President and Chief Commercial Officer to lead its global commercial team [1][3] - The company is expanding its new business program due to early successes, with a commitment to increase its overall new business objectives [2][4] Business Performance - NN has achieved approximately $160 million in new business wins since launching its initiative in 2023, primarily in traditional markets and emerging success in electrical and medical end markets [4] - The new business pipeline is robust, exceeding $700 million across all products and targeted growth areas [4] Strategic Goals - The company aims to increase targets and pace for new wins, particularly in electrical and medical markets, and set higher annual award goals [4] - NN plans to strategically expand its product offerings and solutions [4] Leadership Background - Timothy Erro brings over 30 years of experience in electrical and electronic products, having led successful global programs in previous roles [3][6] - Prior to joining NN, Erro held significant positions at Commercial Vehicle Group, Inc., Aptiv, Leoni Wiring Systems, General Motors, and United Technologies Automotive [6] Market Focus - NN is focusing on various markets including on-road commercial vehicles, aerospace and defense platforms, automotive, and medical products [5][6]

Summary of NN Inc. Conference Call Company Overview - **Company Name**: NN Inc. (NNBR) - **Industry**: Precision component manufacturing, focusing on automotive, industrial, and medical applications - **Key Products**: Machined and stamped parts, custom metal parts for automotive and industrial applications, medical components Core Points and Arguments 1. **Transformation and Growth**: NN Inc. is undergoing a significant repositioning and transformation program, with an experienced management team that has successfully executed transformations in the past. The company has delivered seven consecutive quarters of results and is launching new programs worth over $50 million at peak annual sales, with $30 million expected this year [5][4][6]. 2. **Market Conditions**: The core markets are primarily in North America, with about 70% of volume coming from the U.S. The company initially planned for a 3% growth in the base business but is currently experiencing a 3% decline due to external factors, including changes in the presidential administration and supply chain issues. However, a rebound is anticipated [6][7][8]. 3. **Automotive Sector Focus**: Approximately 48% of NN's business is tied to the automotive sector, which is undergoing significant innovation. The company is well-positioned to benefit from this trend, with a large existing pipeline of opportunities valued at around $750 million [8][9]. 4. **Global Manufacturing Footprint**: NN operates 24 facilities across six countries, with a significant presence in North America (65% of revenue) and a joint venture in China. The company is strategically positioned to service customers regionally [10][14][15]. 5. **Financial Performance**: For the year, NN expects net sales in the range of $430 million to $460 million, with adjusted EBITDA projected between $53 million and $63 million. The company is also focused on rationalizing costs and improving EBITDA margins [28][29][30]. 6. **New Business Development**: NN has secured $160 million in new business wins over the past two years, with a strong pipeline of approximately 700 programs. The company is launching 20 new programs this year and has already won an additional 57 programs [12][22][20]. 7. **Medical Segment Growth**: The medical segment has seen growth from sub-$15 million to over $15 million, with new wins expected to launch this year. The company is focusing on orthopedics and robotic surgery equipment [45][47][50]. 8. **Tariff Impact**: NN's business model is not directly impacted by tariffs, as materials are sourced and sold within the same region. However, the uncertainty caused by tariffs has led to a slight decline in revenue, which is expected to rebound [33][34][35]. Additional Important Insights 1. **Capacity Utilization**: The company is currently operating at around 50% capacity utilization, with significant room for growth in various regions [41][43]. 2. **Cash Flow and Debt Management**: NN is on track to improve free cash flow and reduce net debt throughout the year, with expectations of receiving approximately $12.5 million from the CARES Act [30][51][52]. 3. **Strategic Focus**: The management emphasizes a strategic approach to new business development, focusing on complex and high-value products that align with the company's capabilities [22][24][36]. This summary encapsulates the key points discussed during the conference call, highlighting NN Inc.'s current position, market dynamics, and future outlook.

Financial Performance & Outlook - NN achieved net sales of $449 million and an adjusted EBITDA of $48 million, resulting in an adjusted EBITDA margin of 10.6%[9] - The company's 2025 outlook includes net sales between $430 million and $460 million, and adjusted EBITDA between $53 million and $63 million[35] - NN China's sales are $75 million with >20% EBITDA margins, while NN's China JV sales are ~$125 million with >25% EBITDA margins[34] Business Segments & Strategy - Auto sector accounts for 48% of NN's FY2024 net sales, while Industrial, Electrical, and Other sectors account for 25%, 17%, and 10% respectively[11] - NN has secured ~$160 million in new business wins in the first 2 years, with $25.6 million YTD as of May 2025[12] - The company is targeting $65 million in new wins per year as part of its new wins program[31] - NN's prospecting pipeline is approaching 2x the company's size, indicating significant potential for new wins[7] Global Operations - NN has a global manufacturing platform with 24 facilities in 6 countries and a 49% ownership in a China Joint Venture machining plant with more than $120 million in sales annually[12] - Approximately 65% of NN's revenue comes from North America, 10% from South America, 10% from Europe, and 15% from Asia[14] - NN's China operations have won >$50 million in new business and are on track to double in size[34] Growth Initiatives - NN is targeting organic sales growth to $600 million, or $650 million with M&A, by 2028[38] - The company plans to launch 120 programs in 2025 with $55 million in peak annual sales value[38] - NN is pursuing a sales growth & pivot program with a $740+ million overall pipeline[31]