NN(NNBR) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Financial Highlights and Business Update 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 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] - The company is actively leveraging the market environment to increase business development activities and investments[2] Strategic Initiatives and Management Commentary 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] - Strategic growth initiatives include: investing in growth capex and hiring personnel for targeted areas like medical, stampings, and electrical products[4] - Evaluating an organic entry into the electrical harness market[4] - Activating an M&A program to seek strategic targets and address the refinancing of preferred stock[4] Consolidated Financial Results 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 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 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 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 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 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] - 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] Key Guidance Metrics 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 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 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 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 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 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 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 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 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 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 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) |