NN(US:NNBR)2023-05-05 22:05Financial Data and Key Metrics Changes - Sales for Q1 2023 were $127.1 million, down 0.8% from Q1 2022, primarily due to lower volumes and foreign exchange headwinds, partially offset by pricing actions [33][50] - Free cash flow was a use of $3.7 million, an improvement of $5.7 million compared to an outflow of $9.4 million in Q1 2022 [27][34] - Non-GAAP adjusted EBITDA was $8.1 million, or 6.4% of sales for Q1 2023 [34] Business Line Data and Key Metrics Changes - Power Solutions sales decreased 5.7% year-over-year, driven by lower electric component volume and customer inventory reductions [52] - Mobile Solutions sales increased 2.6% from the prior year, primarily due to pricing actions taken throughout 2022, partially offset by lower volume [54] Market Data and Key Metrics Changes - The global light vehicle production is forecasted to increase approximately 5% in 2023, with a positive production outlook in all key regions [4] - Current macroeconomic conditions and increasing interest rates have presented a drag on construction activity, impacting demand for residential and commercial electrical components [24] Company Strategy and Development Direction - The company is focused on new business opportunities in the EV and universal auto segments, with nearly 80% of its $546 million new business pipeline aligned with this strategy [22][49] - The company is modernizing its compensation programs to incentivize sales force performance, emphasizing a target for electrical and EV hybrid new business wins [19] Management's Comments on Operating Environment and Future Outlook - Management noted that the ongoing slowdown in residential and commercial construction has impacted the Power Solutions business, but they remain resilient in managing the macroeconomic challenges [2] - The company anticipates stronger sales in Q2 compared to Q1, driven by new business wins and market dynamics [67] Other Important Information - The company has strong liquidity of $43 million and is evaluating a potential preferred equity raise to improve domestic liquidity [13][28] - The company is closing five facilities, expected to generate approximately $11 million improvement in adjusted EBITDA versus 2022 results [36] Q&A Session Summary Question: What is the visibility for the Power Solutions business for the rest of the year? - Management indicated that the volume softness was more weighted towards Power Solutions, and they are monitoring the situation closely [62] Question: What are the challenges at the Juarez facility? - The challenges include high labor turnover, process capabilities for new business launches, and machine condition affecting overall efficiency [79][91] Question: What is the outlook for capital expenditures this year? - The capital expenditure outlook remains in the $17 million range, net of proceeds from equipment sales [92]