NN(NNBR) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis Item 1. Financial Statements 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) 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 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 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 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] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures for the financial statements Note 1. Interim Financial Statements 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] - 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][31][32] - 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] Note 2. Segment Information 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][37] 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 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][45] 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] - 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] Note 4. Accounts Receivable 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] - One customer represented 12% of consolidated accounts receivable as of June 30, 2025, primarily related to the Mobile Solutions segment[54] Note 5. Inventories 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 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] Note 7. Investment in Joint Venture 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] 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 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] - 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][66] - The company was in compliance with the financial covenants of the Term Loan Facility and ABL Facility as of June 30, 2025[69][77] - 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][79][80] Note 9. Preferred Stock 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] - 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][85] 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 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] 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 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][92] - 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] - 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] Note 12. Income Taxes 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] - 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] Note 13. Net Loss Per Common Share 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 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] - 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] Note 15. Accumulated Other Comprehensive Income 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] Note 16. Fair Value Measurements 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] - 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][116][117] 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][121] - 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][123] - 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] Note 17. Plant Optimization Activities 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][127] - 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] 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on NN, Inc.'s financial performance, condition, and liquidity Forward-Looking Statements 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] 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] Factors That May Influence Results of Operations 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] - 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] Results of Operations 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 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] - 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] - A $3.0 million loss on extinguishment of debt was recognized due to the termination of the 2021 Term Loan Facility[143] - 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][148][149][150] Six Months Ended June 30, 2025 compared to the Six Months Ended June 30, 2024 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] - 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] - 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] - 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][161][162] Changes in Financial Condition from December 31, 2024 to June 30, 2025 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] - 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] - 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] - 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][167] - 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][173][174][175][176] Seasonality and Fluctuation in Quarterly Results 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] Critical Accounting Estimates 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] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section outlines the company's exposure to interest rate and foreign currency risks and their management Interest Rate Risk 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][181] Foreign Currency Risk 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] Item 4. Controls and Procedures This section confirms the effectiveness of disclosure controls and reports on internal control over financial reporting Disclosure Controls and Procedures 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] Changes in Internal Control Over Financial Reporting 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] PART II. OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal and risk factors Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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] - 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][189] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] Item 3. Defaults Upon Senior Securities This section confirms that there were no defaults on senior securities during the reporting period - There were no defaults upon senior securities[192] Item 4. Mine Safety Disclosures 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] Item 5. Other Information 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] Item 6. Exhibits 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] 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]