NN(US:NNBR)2024-05-07 19:15Financial Data and Key Metrics Changes - In Q1 2024, net sales were $121.2 million, a decrease of 4.6% year-over-year, while adjusted EBITDA was $11.3 million, an increase of 39% from $8.1 million in the previous year [11][37]. - The trailing 12-month adjusted EBITDA reached $46.3 million, up 20% from the previous year, reflecting a $7.7 million improvement [9][43]. - The adjusted EBITDA margin improved to 9.3%, up 290 basis points year-over-year [33][37]. Business Line Data and Key Metrics Changes - In the Power Solutions segment, sales decreased by 1.7% year-over-year to $48.2 million, impacted by facility closures [38]. - The Mobile Solutions segment saw a 6.4% decline in sales to $73.1 million, primarily due to rationalization of underperforming business [40]. - Adjusted EBITDA for the Mobile Solutions segment improved significantly to $8.6 million, up from $5.6 million in the prior year [16]. Market Data and Key Metrics Changes - The company reported strong demand in the U.S. electrical grid market, although this was partially offset by volume rationalization due to facility closures [38]. - Key growth areas identified include the China automotive market and U.S. electrification and grid technologies [20]. Company Strategy and Development Direction - The company is focused on a multi-year transformation strategy aimed at improving operational efficiency and profitability, particularly in underperforming plants [13][15]. - The goal is to achieve an additional $10 million in adjusted EBITDA improvement through ongoing operational initiatives [13][132]. - The company is selectively pursuing new business opportunities, particularly in capital-efficient markets, while being cautious about capital expenditures [69][72]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to continue improving profitability despite lower sales volumes, attributing this to cost reduction actions and operational improvements [14][47]. - The outlook for 2024 includes expectations for net sales in the range of $485 million to $505 million, with a reaffirmation of free cash flow and new business win outlooks [21][70]. - Management noted that the company is experiencing steady end-market demand, despite some observed weakness in North American industrial markets [47]. Other Important Information - The company has successfully secured $17 million in new business awards in Q1 2024, contributing to a total of $80 million in new business wins since the beginning of the year [68][125]. - The company is committed to maintaining positive free cash flow and is exploring equipment sale-leaseback transactions to supplement capital expenditures [57][77]. Q&A Session Summary Question: How much of the $100 million in revenue from underperforming plants is returning to profitability? - Management indicated that about half of the $100 million is now returning to profitability, with a goal for the remaining plants to achieve profitability by year-end 2024 [49]. Question: Can you provide updates on the medical efforts in the Connect and Protect segment? - Management mentioned that they have been selective in pursuing growth opportunities in medical markets due to capital intensity concerns [50][69]. Question: What is the anticipated capital investment needed to achieve the $10 million EBITDA improvement? - Management stated that minimal capital investment would be required to reach break-even, but some capital would be needed for equipment modifications [133][135]. Question: What is the current status of the interest expense costs? - The interest expense for Q1 was reported at $5.4 million, with a majority attributed to a term loan at a rate of 14.3% [101][102].