May 6, 20240000918541falseCharlotteNorth Carolina00009185412024-05-062024-05-06

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 6, 2024
nnbrlogo.jpg
NN, Inc.
(Exact name of registrant as specified in its charter)
Delaware
 001-39268
62-1096725
(State or other jurisdiction of
incorporation)		(Commission File Number)(I.R.S. Employer
Identification No.)

6210 Ardrey Kell Road, Suite 120
Charlotte, North Carolina
28277
(Address of principal executive offices)(Zip Code)

(980) 264-4300
(Registrant’s telephone number, including area code) 
(Former name or former address, if changed since last report)
Check the appropriate box if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d- 2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e- 4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of each exchange on which registered
Common Stock, par value $0.01NNBRThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company. ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐



ITEM 2.02    RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On May 6, 2024, NN, Inc. (the “Company”) issued a press release announcing the Company’s financial results for the quarter ended March 31, 2024. The full text of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K (the "Current Report").
Pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”), the information furnished pursuant to Item 2.02 of this Current Report (including Exhibit 99.1) is deemed to have been furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section. Such information shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

ITEM 7.01    REGULATION FD DISCLOSURE
On May 6, 2024, the Company posted a supplemental presentation to its website, https://investors.nninc.com/, which will be presented during its quarterly investor conference call on May 7, 2024, at 9:00a.m. ET. The supplemental presentation is included as Exhibit 99.2 to this Current Report.
Pursuant to the rules and regulations of the SEC, the information furnished pursuant to Item 7.01 of this Current Report (including Exhibit 99.2) is deemed to have been furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such information shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

ITEM 9.01    FINANCIAL STATEMENTS AND EXHIBITS
 (d)    Exhibits.
Exhibit
No.		  Description of Exhibit
99.1  
99.2
104Cover Page Interactive Data File (embedded within the Inline XBRL document)

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: May 6, 2024

NN, INC.
By:/s/ Michael C. Felcher
Name:Michael C. Felcher
Title:Senior Vice President and Chief Financial Officer


Exhibit 99.1
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newsa.jpg
NN, Inc.
6210 Ardrey Kell Road, Suite 120
Charlotte, NC 28277

FOR IMMEDIATE RELEASE

NN, INC. REPORTS FIRST QUARTER 2024 RESULTS

Business transformation continues to drive improved profitability and new business wins

CHARLOTTE, N.C., May 6, 2024 – NN, Inc. (NASDAQ: NNBR), a global diversified industrial company that engineers and manufactures high-precision components and assemblies, today reported its financial results for the first quarter ended March 31, 2024.
Highlights
•Strategic transformation program drove another quarter of improved results, 3rd quarter in a row;
•First quarter net sales of $121.2 million, down 4.6% versus prior year, driven largely by rationalized volume;
•First quarter operating loss of $4.8 million, an improvement of $2.3 million versus prior year;
•First quarter adjusted EBITDA of $11.3 million, an improvement of 38.9% versus prior year;
•First quarter free cash flow of $0.3 million, an improvement of $4.0 million versus prior year; and
•Secured new business awards of $17.2 million in the first quarter, $80 million in our last 5 quarters.

“In the first quarter, we continued to execute our strategic transformation, which yielded continued improvement in base business profitability and additive new business wins,” said Harold Bevis, President and Chief Executive Officer. “Our trailing-twelve-month adjusted EBITDA of $46 million improved for the fourth consecutive quarter. We are increasing profits on business in house, and we have cumulatively won $80 million of new business over the last 5 quarters. This combination of results is giving us new options to optimize our performance even further. We have begun work on a laddered improvement program reaching into 2025 to continue our sequential improvement. We are balancing between cost-out and growth initiatives, and using our free cash flow to fund our business plan activities. Our cash flow generation has been historically tight due to our current capital structure, but we are improving our credit profile through this same hard work and opening opportunities to improve our capital structure and lower our cost of capital as well.”

Mr. Bevis continued, “We are further refining our targeted growth agendas and reallocating our resources in targeted areas. Our commercial performance year-to-date is on pace with our 2024 targets for new business growth at 3x market rates, and our cost improvement agenda is on track. We are pleased with our overall performance but still have many areas to improve further. Our results over the last year are encouraging us to set our goals high.”

Mr. Bevis concluded, “Our worldwide markets are mostly healthy, particularly in front of our most competitive Mobile plants in China and Brazil and in front of Power plants in the U.S. Steady investment into electric grid, electrification, and climate-friendly vehicle power trains is ongoing and good for us. The soft spots in our end-market demand are the U.S.
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commercial vehicle market and the U.S. residential construction markets, both small markets for us. So overall today, we have a good demand outlook across our market profile. We are comfortable with our 2024 guidance on sales, adjusted EBITDA, free cash flow generation, and new business wins. I want to thank all of our employees globally who deliver beyond-reliable products every day, on-time to some of the world’s most discriminating customers. Together with our customers, we are developing and producing products that improve quality of life and climate conditions for all of us.”

First Quarter GAAP Results
Net sales were $121.2 million, a decrease of 4.6% from the first quarter of 2023, which was primarily due to non-recurring end-of-life pricing received in the first quarter of 2023, rationalized volume at plants undergoing turnarounds, and increased organic volume at healthy plants.

Loss from operations was $4.8 million compared to a loss from operations of $7.1 million in the first quarter of 2023. The decrease in loss from operations was primarily due to items related to its 2023 facility closures - (1) sublease income on closed facilities, and (2) one-time losses during the first quarter of 2023 on sales of machinery and equipment associated with these closures.
For the reporting segments, Income from operations for Power Solutions was $4.0 million compared to income from operations of $1.7 million for the same period in 2023. Loss from operations for Mobile Solutions was $2.1 million compared to loss from operations of $3.3 million for the same period in 2023.
Net loss was $12.5 million compared to net loss of $10.2 million for the same period in 2023. The increase in net loss was primarily due to warrant valuation based on our stock price and higher interest expense, partially offset by cost reductions and higher joint venture income.
First Quarter Adjusted Results
Adjusted loss from operations for the first quarter of 2024 was $0.7 million compared to adjusted loss from operations of $0.4 million for the same period in 2023. Adjusted EBITDA was $11.3 million, or 9.3% of sales, compared to $8.1 million, or 6.4% of sales, for the same period in 2023. Adjusted net loss was $4.0 million, or $0.08 per diluted share, compared to adjusted net loss of $5.7 million, or $0.12 per diluted share, for the same period in 2023. The improvement in profitability was driven primarily by cost-out actions, partially offset by end-of-life pricing in the prior year period.
Free cash flow was a generation of cash of $0.3 million compared to a use of cash of $3.7 million for the same period in 2023.
Power Solutions
Net sales for the first quarter of 2024 were $48.2 million compared to $49.1 million in the first quarter of 2023, a decrease of 1.7%, or $0.9 million. The decrease in sales was primarily due to the non-recurrence of end-of-life pricing received during the first quarter of 2023 associated with the Irvine plant closure, partially offset by higher volume. Adjusted income from operations was $6.8 million compared to adjusted income from operations of $5.5 million in the first quarter of 2023. The increase in adjusted income from operations was primarily due to favorable product mix and improved operating performance, partially offset by the non-recurrence of end-of-life pricing in the first quarter of 2023 associated with the Irvine plant closure.

Mobile Solutions
Net sales for the first quarter of 2024 were $73.1 million compared to $78.0 million in the first quarter of 2023, a decrease of 6.4%, or $4.9 million. The decrease in sales was primarily due to rationalized volume at underperforming plants and the pass-through effect of lower raw material costs. Adjusted loss from operations was $1.2 million compared to adjusted loss from operations of $0.8 million in the first quarter of 2023. The increase in adjusted loss from operations was due to lower volume, partially offset by cost reductions and operational improvements.
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2024 Outlook
Assuming steady end-market demand outlook, with the exception of the North American residential construction market and North American commercial vehicle market, we are confirming and slightly tightening, in part, our outlook for the full year 2024 as follows:
◦Revenue in the range of $485 million to $505 million;
◦Adjusted EBITDA in the range of $48 million to $54 million;
◦Free cash flow in the range of $10 million to $15 million; and
◦New business wins in the range of $55 million to $70 million.

Michael Felcher, Senior Vice President and Chief Financial Officer, commented, “Our strong transformation momentum continued in the first quarter of 2024, and we are both confirming and slightly tightening our full-year 2024 guidance ranges, which are underpinned by our operational initiatives and commercial prospecting. We are focused on generating improved profitability and strong cash flow this year. We expect our improved performance will improve our credit profile and enable opportunities to improve our balance sheet and cost of capital further.”
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Conference Call
NN will discuss its results during its quarterly investor conference call on May 7, 2024, at 9 a.m. ET. The call and supplemental presentation may be accessed via NN's website, www.nninc.com. The conference call can also be accessed by dialing 1-877-255-4315 or 1-412-317-6579. For those who are unavailable to listen to the live broadcast, a replay will be available shortly after the call until May 7, 2025.
NN discloses in this press release the non-GAAP financial measures of adjusted income (loss) from operations, adjusted EBITDA, adjusted net income (loss), adjusted net income (loss) per diluted common share, and free cash flow. Each of these non-GAAP financial measures provides supplementary information about the impacts of restructuring and integration expense, acquisition and transition expenses, foreign exchange impacts on inter-company loans, amortization of intangibles and deferred financing costs, and other non-operating impacts on our business.
The financial tables found later in this press release include a reconciliation of adjusted income (loss) from operations, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net income (loss), adjusted net income (loss) per diluted share, free cash flow to the U.S. GAAP financial measures of income (loss) from operations, net income (loss), net income (loss) per diluted common share, and cash provided (used) by operating activities.
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About NN, Inc.
NN, Inc., a global diversified industrial company, combines advanced engineering and production capabilities with in-depth materials science expertise to design and manufacture high-precision components and assemblies for a variety of markets on a global basis. Headquartered in Charlotte, North Carolina, NN has facilities in North America, Europe, South America, and Asia. For more information about the company and its products, please visit www.nninc.com.
Except for specific historical information, many of the matters discussed in this press release may express or imply projections of revenues or expenditures, statements of plans and objectives or future operations or statements of future economic performance. These statements may discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to NN, Inc. (the “Company”) based on current beliefs of management as well as assumptions made by, and information currently available to, management. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “may,” “possible,” “potential,” “predict,” “project” or other similar words, phrases or expressions. Forward-looking statements involve a number of risks and uncertainties that are outside of management’s control and that may cause actual results to be materially different from such forward-looking statements. Such factors include, among others, general economic conditions and economic conditions in the industrial sector; the impacts of pandemics, epidemics, disease outbreaks and other public health crises, on our financial condition, business operations and liquidity; competitive influences; risks that current customers will commence or increase captive production; risks of capacity underutilization; quality issues; material changes in the costs and availability of raw materials; economic, social, political and geopolitical instability, military conflict, currency fluctuation, and other risks of doing business outside of the United States; inflationary pressures and changes in the cost or availability of materials, supply chain shortages and disruptions, the availability of labor and labor disruptions along the supply chain; our dependence on certain major customers, some of whom are not parties to long-term agreements (and/or are terminable on short notice); the impact of acquisitions and divestitures, as well as expansion of end markets and product offerings; our ability to hire or retain key personnel; the level of our indebtedness; the restrictions contained in our debt agreements; our ability to obtain financing at favorable rates, if at all, and to refinance existing debt as it matures; new laws and governmental regulations; the impact of climate change on our operations; and cyber liability or potential liability for breaches of our or our service providers’ information technology systems or business operations disruptions. The foregoing factors should not be construed as exhaustive and should be read in conjunction with the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s filings made with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date of this press release, and the Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for the Company to predict their occurrence or how they will affect the Company. The Company qualifies all forward-looking statements by these cautionary statements.

With respect to any non-GAAP financial measures included in the following document, the accompanying information required by SEC Regulation G can be found in the back of this document or in the “Investors” section of the Company’s web site, www.nninc.com, under the heading “News & Events” and subheading “Presentations.”

Investor & Media Contacts:
Joe Caminiti or Stephen Poe, Investors
Tim Peters, Media
NNBR@alpha-ir.com
312-445-2870

Financial Tables Follow
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NN, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
Three Months Ended
March 31,
(in thousands, except per share data)20242023
Net sales$121,198 $127,088 
Cost of sales (exclusive of depreciation and amortization shown separately below)101,086 108,421 
Selling, general, and administrative expense13,348 13,165 
Depreciation and amortization12,547 11,516 
Other operating expense (income), net(1,000)1,061 
Loss from operations(4,783)(7,075)
Interest expense5,366 4,288 
Other expense (income), net4,153 (2,208)
Loss before provision for income taxes and share of net income from joint venture(14,302)(9,155)
Provision for income taxes(506)(1,301)
Share of net income from joint venture2,271 281 
Net loss$(12,537)$(10,175)
Other comprehensive income (loss):
Foreign currency transaction gain (loss)(2,346)1,840 
Interest rate swap:
Change in fair value, net of tax— (230)
Reclassification adjustments included in net loss, net of tax(449)(468)
Other comprehensive income (loss)$(2,795)$1,142 
Comprehensive loss$(15,332)$(9,033)
Basic and diluted net loss per share$(0.34)$(0.29)
Shares used to calculate basic and diluted net loss per share47,724 45,309 
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NN, Inc.
Condensed Consolidated Balance Sheets
(Unaudited) 
(in thousands, except per share data)March 31,
2024		December 31,
2023
Assets
Current assets:
Cash and cash equivalents$20,610 $21,903 
Accounts receivable, net71,862 65,545 
Inventories72,718 71,563 
Income tax receivable11,952 11,885 
Prepaid assets5,957 2,464 
Other current assets10,439 9,194 
Total current assets193,538 182,554 
Property, plant and equipment, net179,647 185,812 
Operating lease right-of-use assets42,141 43,357 
Intangible assets, net55,268 58,724 
Investment in joint venture34,409 32,701 
Deferred tax assets734 734 
Other non-current assets7,087 7,003 
Total assets$512,824 $510,885 
Liabilities, Preferred Stock, and Stockholders’ Equity
Current liabilities:
Accounts payable$50,786 $45,480 
Accrued salaries, wages and benefits16,920 15,464 
Income tax payable431 524 
Short-term debt and current maturities of long-term debt7,014 3,910 
Current portion of operating lease liabilities5,177 5,735 
Other current liabilities14,464 10,506 
Total current liabilities94,792 81,619 
Deferred tax liabilities4,739 4,988 
Long-term debt, net of current maturities151,531 149,369 
Operating lease liabilities, net of current portion45,803 47,281 
Other non-current liabilities18,349 24,827 
Total liabilities315,214 308,084 
Commitments and contingencies
Series D perpetual preferred stock81,469 77,799 
Stockholders' equity:
Common stock495 473 
Additional paid-in capital464,081 457,632 
Accumulated deficit(307,885)(295,348)
Accumulated other comprehensive loss(40,550)(37,755)
Total stockholders’ equity116,141 125,002 
Total liabilities, preferred stock, and stockholders’ equity$512,824 $510,885 

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NN, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31,
(in thousands) 20242023
Cash flows from operating activities
Net loss$(12,537)$(10,175)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization12,547 11,516 
Amortization of debt issuance costs and discount544 353 
Paid-in-kind interest730 — 
Total derivative loss, net of cash settlements3,331 386 
Share of net income from joint venture, net of cash dividends received(2,271)(281)
Share-based compensation expense846 381 
Deferred income taxes(260)480 
Other(666)(287)
Changes in operating assets and liabilities:
Accounts receivable(6,888)(5,506)
Inventories(1,554)(447)
Accounts payable6,130 2,813 
Income taxes receivable and payable, net(163)(283)
Other923 1,276 
Net cash provided by operating activities712 226 
Cash flows from investing activities
Acquisition of property, plant and equipment(5,460)(4,997)
Proceeds from sale of property, plant, and equipment98 1,035 
Net cash used in investing activities(5,362)(3,962)
Cash flows from financing activities
Proceeds from long-term debt13,001 17,000 
Repayments of long-term debt(29,808)(17,832)
Cash paid for debt issuance costs(646)(55)
Proceeds from sale-leaseback of equipment4,910 — 
Proceeds from sale-leaseback of land and buildings16,863 — 
Repayments of financing obligations(99)— 
Proceeds from short-term debt— 2,923 
Other(651)(785)
Net cash provided by financing activities3,570 1,251 
Effect of exchange rate changes on cash flows(213)222 
Net change in cash and cash equivalents(1,293)(2,263)
Cash and cash equivalents at beginning of year21,903 12,808 
Cash and cash equivalents at end of quarter$20,610 $10,545 

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Reconciliation of GAAP Income (Loss) from Operations to Non-GAAP Adjusted Income (Loss) from Operations

Three Months Ended March 31,
(in thousands)
NN, Inc. Consolidated20242023
GAAP loss from operations$(4,783)$(7,075)
Professional fees70 264 
Personnel costs (1)300 157 
Facility costs (2)258 2,739 
Amortization of intangibles3,456 3,563 
Non-GAAP adjusted loss from operations (a)$(699)$(352)
Non-GAAP adjusted operating margin (3)(0.6)%(0.3)%
GAAP net sales$121,198 $127,088 

Three Months Ended March 31,
(in thousands)
Power Solutions20242023
GAAP income from operations$3,979 $1,747 
Personnel costs (1)35 — 
Facility costs (2)211 1,033 
Amortization of intangibles2,618 2,725 
Non-GAAP adjusted income from operations (a)$6,843 $5,505 
Non-GAAP adjusted operating margin (3)14.2 %11.2 %
GAAP net sales$48,238 $49,072 

Three Months Ended March 31,
(in thousands)
Mobile Solutions20242023
GAAP loss from operations$(2,143)$(3,319)
Personnel costs (1)86 — 
Facility costs (2)54 1,706 
Amortization of intangibles838 839 
Non-GAAP adjusted loss from operations (a)$(1,165)$(774)
Share of net income from joint venture2,271 281 
Non-GAAP adjusted income (loss) from operations with JV (a)$1,106 $(493)
Non-GAAP adjusted operating margin (3)1.5 %(0.6)%
GAAP net sales$73,060 $78,018 

Three Months Ended March 31,
(in thousands)
Elimination20232022
GAAP net sales$(100)$(2)








(1)Personnel costs include recruitment, retention, relocation, and severance costs
(2)Facility costs include costs of opening / closing facilities and relocation / exit of manufacturing operations
(3)Non-GAAP adjusted operating margin = Non-GAAP adjusted income (loss) from operations / GAAP net sales
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Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA
Three Months Ended March 31,
(in thousands)20242023
GAAP net loss$(12,537)$(10,175)
Provision for income taxes506 1,301 
Interest expense5,366 4,288 
Change in fair value of preferred stock derivatives and warrants3,781 (2,008)
Depreciation and amortization12,547 11,516 
Professional fees70 264 
Personnel costs (1)300 157 
Facility costs (2)258 2,739 
Non-cash stock compensation845 381 
Non-cash foreign exchange (gain) loss on inter-company loans161 (329)
Non-GAAP adjusted EBITDA (b)$11,297 $8,134 
Non-GAAP adjusted EBITDA margin (3)9.3 %6.4 %
GAAP net sales$121,198 $127,088 

(1) Personnel costs include recruitment, retention, relocation, and severance costs
(2) Facility costs include costs of opening / closing facilities and relocation / exit of manufacturing operations
(3) Non-GAAP adjusted EBITDA margin = Non-GAAP adjusted EBITDA / GAAP net sales

10

Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted Net Income and GAAP Net Income (Loss) per Diluted Common Share to Non-GAAP Adjusted Net Income (Loss) per Diluted Common Share

Three Months Ended March 31,
(in thousands)20242023
GAAP net loss$(12,537)$(10,175)
Pre-tax professional fees70 264 
Pre-tax personnel costs300 157 
Pre-tax facility costs258 2,739 
Non-cash foreign exchange (gain) loss on inter-company loans161 (329)
Pre-tax change in fair value of preferred stock derivatives and warrants3,781 (2,008)
Pre-tax amortization of intangibles and deferred financing costs4,000 3,917 
Tax effect of adjustments reflected above (c)(29)(259)
Non-GAAP adjusted net income (loss) (d)$(3,996)$(5,694)
Three Months Ended March 31,
(per diluted common share)20242023
GAAP net loss per diluted common share$(0.34)$(0.29)
Pre-tax professional fees— 0.01 
Pre-tax personnel costs0.01 — 
Pre-tax facility costs0.01 0.06 
Pre-tax foreign exchange (gain) loss on inter-company loans— (0.01)
Pre-tax change in fair value of preferred stock derivatives and warrants0.08 (0.04)
Pre-tax amortization of intangibles and deferred financing costs0.08 0.09 
Tax effect of adjustments reflected above (c)— (0.01)
Preferred stock cumulative dividends and deemed dividends0.08 0.07 
Non-GAAP adjusted net income (loss) per diluted common share (d)$(0.08)$(0.12)
Shares used to calculate net earnings (loss) per share47,724 45,309 





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Reconciliation of Operating Cash Flow to Free Cash Flow
Three Months Ended
March 31,
(in thousands)20242023
Net cash provided by operating activities$712 $226 
Acquisition of property, plant, and equipment(5,460)(4,997)
Proceeds from sale of property, plant, and equipment98 1,035 
Proceeds from sale-leaseback of equipment4,910 — 
Free cash flow$260 $(3,736)
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The Company discloses in this presentation the non-GAAP financial measures of adjusted income (loss) from operations, adjusted EBITDA, adjusted net income (loss), adjusted net income (loss) per diluted common share, and free cash flow. Each of these non-GAAP financial measures provides supplementary information about the impacts of acquisition, divestiture and integration related expenses, foreign-exchange impacts on inter-company loans, reorganizational and impairment charges. The costs we incur in completing acquisitions, including the amortization of intangibles and deferred financing costs, and divestitures are excluded from these measures because their size and inconsistent frequency are unrelated to our commercial performance during the period, and we believe are not indicative of our ongoing operating costs. We exclude the impact of currency translation from these measures because foreign exchange rates are not under management’s control and are subject to volatility. Other non-operating charges are excluded as the charges are not indicative of our ongoing operating cost. We believe the presentation of adjusted income (loss) from operations, adjusted EBITDA, adjusted net income (loss), adjusted net income (loss) per diluted common share, and free cash flow provides useful information in assessing our underlying business trends and facilitates comparison of our long-term performance over given periods.
The non-GAAP financial measures provided herein may not provide information that is directly comparable to that provided by other companies in the Company's industry, as other companies may calculate such financial results differently. The Company's non-GAAP financial measures are not measurements of financial performance under GAAP and should not be considered as alternatives to actual income growth derived from income amounts presented in accordance with GAAP. The Company does not consider these non-GAAP financial measures to be a substitute for, or superior to, the information provided by GAAP financial results.
(a) Non-GAAP adjusted income (loss) from operations represents GAAP income (loss) from operations, adjusted to exclude the effects of restructuring and integration expense; non-operational charges related to acquisition and transition expense, intangible amortization costs for fair value step-up in values related to acquisitions, non-cash impairment charges, and when applicable, our share of income from joint venture operations. We believe this presentation is commonly used by investors and professional research analysts in the valuation, comparison, rating, and investment recommendations of companies in the industrial industry. We use this information for comparative purposes within the industry. Non-GAAP adjusted income (loss) from operations is not a measure of financial performance under GAAP and should not be considered as a measure of liquidity or as an alternative to GAAP income (loss) from operations.
(b) Non-GAAP adjusted EBITDA represents GAAP net income (loss), adjusted to include income taxes, interest expense, write-off of unamortized debt issuance costs, interest rate swap payments and change in fair value that was recognized in earnings, change in fair value of preferred stock derivatives and warrants, depreciation and amortization, charges related to acquisition and transition costs, non-cash stock compensation expense, foreign exchange gain (loss) on inter-company loans, restructuring and integration expense, costs related to divested businesses and litigation settlements, income from discontinued operations, and non-cash impairment charges, to the extent applicable. We believe this presentation is commonly used by investors and professional research analysts in the valuation, comparison, rating, and investment recommendations of companies in the industrial industry. We use this information for comparative purposes within the industry. Non-GAAP adjusted EBITDA is not a measure of financial performance under GAAP and should not be considered as a measure of liquidity or as an alternative to GAAP income (loss) from continuing operations.
(c) This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the respective table. NN, Inc. estimates the tax effect of the adjustment items identified in the reconciliation schedule above by applying the applicable statutory rates by tax jurisdiction unless the nature of the item and/or the tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment.
(d) Non-GAAP adjusted net income (loss) represents GAAP net income (loss) adjusted to exclude the tax-affected effects of charges related to acquisition and transition costs, foreign exchange gain (loss) on inter-company loans, restructuring and integration charges, amortization of intangibles costs for fair value step-up in values related to acquisitions and amortization of deferred financing costs, non-cash impairment charges, write-off of unamortized debt issuance costs, interest rate swap payments and change in fair value, change in fair value of preferred stock derivatives and warrants, costs related to divested businesses and litigation settlements, income (loss) from discontinued operations, and preferred stock cumulative dividends and deemed dividends. We believe this presentation is commonly used by investors and professional research analysts in the valuation, comparison, rating, and investment recommendations of companies in the industrial industry. We use this information for comparative purposes within the industry.
13
First Quarter 2024 Earnings Call May 7, 2024

 
2 Forward Looking Statement & Disclosures Except for specific historical information, many of the matters discussed in this presentation may express or imply projections of revenues or expenditures, statements of plans and objectives or future operations or statements of future economic performance. These statements may discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to NN, Inc. (the “Company”) based on current beliefs of management as well as assumptions made by, and information currently available to, management. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “may,” “possible,” “potential,” “predict,” “project” or other similar words, phrases or expressions. Forward-looking statements involve a number of risks and uncertainties that are outside of management’s control and that may cause actual results to be materially different from such forward- looking statements. Such factors include, among others, general economic conditions and economic conditions in the industrial sector; the impacts of pandemics, epidemics, disease outbreaks and other public health crises, on our financial condition, business operations and liquidity; competitive influences; risks that current customers will commence or increase captive production; risks of capacity underutilization; quality issues; material changes in the costs and availability of raw materials; economic, social, political and geopolitical instability, military conflict, currency fluctuation, and other risks of doing business outside of the United States; inflationary pressures and changes in the cost or availability of materials, supply chain shortages and disruptions, the availability of labor and labor disruptions along the supply chain; our dependence on certain major customers, some of whom are not parties to long-term agreements (and/or are terminable on short notice); the impact of acquisitions and divestitures, as well as expansion of end markets and product offerings; our ability to hire or retain key personnel; the level of our indebtedness; the restrictions contained in our debt agreements; our ability to obtain financing at favorable rates, if at all, and to refinance existing debt as it matures; new laws and governmental regulations; the impact of climate change on our operations; and cyber liability or potential liability for breaches of our or our service providers’ information technology systems or business operations disruptions. The foregoing factors should not be construed as exhaustive and should be read in conjunction with the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s filings made with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date of this presentation, and the Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for the Company to predict their occurrence or how they will affect the Company. The Company qualifies all forward-looking statements by these cautionary statements. With respect to any non-GAAP financial measures included in the following presentation, the accompanying information required by SEC Regulation G can be found at the back of this presentation or in the “Investors” section of the Company’s web site, www.nninc.com, under the heading “News & Events” and subheading “Presentations.”

 
Harold Bevis President & Chief Executive Officer Mike Felcher SVP & Chief Financial Officer 3

 
4 ▪ Successful quarter, highlighted by year-over-year growth in volumes at profitable plants; some rationalized volume at underperforming plants; strong operational improvement of underperforming business areas, which is driving margin expansion; and continuation of new business wins at 3x market growth rates. ▪ Entering 2nd year of a significant step-change transformation, pleased with early results, increasing our goals. ▪ 3rd consecutive quarter of making and meeting commitments for adjusted EBITDA, free cash flow, and above- market rate of new business awards. ▪ Strong focus on operational improvements, culture change, and improving all plants & business areas, especially dilutive areas. ▪ Organic growth program working well overall, continuing at same pace. ▪ Confirming and slightly tightening, in part, the 2024 outlook, and currently in initial phases of creating 2025 improvement agenda and key initiatives, with lots of opportunities. Opening Comments

 
5 ▪ Rationalized some volume at underperforming & closed plant locations, achieved volume growth at profitable locations, and had non-recurring end-of-life premium pricing of $3 million in Q1’23 associated with plant closures. ▪ Improvement in margins due to strong improvements in troubled plants and headcount reductions of over 500 (Q1’24 vs. Q1’23). ▪ 3rd consecutive quarterly year-over-year improvements in adjusted EBITDA. ▪ 20% improvement in trailing twelve months Adjusted EBITDA, from $38.6 million in Q1’23 to $46.3 million in Q1’24. (Dollars in millions) Q1’23 Q1’24 Net Sales $127.1 $121.2 Adjusted EBITDA $8.1 $11.3 Free Cash Flow ($3.7) $0.3 New Business Wins $14.0 $17.2 Transformation is underway, showing continued success $127.1 $121.2 Net Sales ($millions) Q1'23 Q1'24 $8.1 $11.3 Adjusted EBITDA and Adjusted EBITDA Margin ($millions) Q1'23 Q1'24 6.4% 9.3% Financial Summary (4.6%) +290 bps

 
6 Sales ▪ Volume: ($4M) rationalization at underperforming plants, mostly offset by $3M growth at healthy plants​; roughly flat ▪ Pricing: ~($3M) Q1 2023 end-of-life premium pricing during the Irvine plant closure that didn’t reoccur in 2024​​ (Dollars in millions, except per share data) Q1’23 Q1’24 Δ Net Sales $127.1 $121.2 ($5.9) Operating Income (Loss) ($7.1) ($4.8) $2.3 Adjusted Operating Income (Loss) ($0.4) ($0.7) ($0.3) Adjusted EBITDA $8.1 $11.3 $3.2 Adjusted EBITDA Margin 6.4% 9.3% 2.9% Income (Loss) per Diluted Common Share ($0.29) ($0.34) ($0.05) Adjusted Income (Loss) per Diluted Common Share ($0.12) ($0.08) $0.04 Adjusted EBITDA ▪ ($3M) of Q1 2023 end-of-life premium pricing, more than offset through operational improvements of ~$5M and increased China performance of ~$2M​ Q1’24 Financial Results

 
7 Q1 Sales down 1.7%, or $0.9 million, vs. prior year ▪ Some year-over-year volume was rationalized as part of the Irvine, CA and Taunton, MA 2023 facility closures. ▪ Strong demand from US electrical grid business. Q1 adjusted EBITDA and margins increased vs. prior year ▪ Improved product mix and operating performance. ▪ Offset non-recurring Q1’23 end-of-life premium pricing during exit of the Irvine, CA facility. ▪ Strong opportunities to increase profit rates through continued operational excellence initiatives. Current Focus & Looking Forward ▪ Aggressively prospecting for the new ‘Connect and Protect’ business – precision progressive die-stamped parts for electric and hybrid vehicles. ▪ Continuing to optimize cost structure and increase profit rates. ▪ Adding to a healthy and strong sales growth pipeline for precision stamped parts and assemblies. ▪ Observing market stability and strength in key markets and with key customers. Power Solutions – Stamped Products: Q1’24 Highlights $49.1 $48.2 Net Sales Trend ($millions) Q1'23 Q1'24 $6.8 $7.8 Adjusted EBITDA Trend ($millions) Q1'23 Q1'24 (1.7%) +14.7%

 
8 Q1 Sales down 6.4%, or $4.9 million, vs. prior year ▪ Rationalized some business at underperforming plants. ▪ Some negative mix shift in retained business. ▪ Improvement opportunities remain on certain dilutive business, especially at underperforming plants. Q1 adjusted EBITDA strongly improved on rationalized top-line ▪ Strong profits from China Joint Venture which the Company operates. The China market is strong and growing for the JV’s products. ▪ Improved operating performance at underperforming plants. ▪ Negative Mexican peso FX impact on year-over-year EBITDA. ▪ Improvement opportunities remain on certain systemic profit-suppressing issues. Current Focus & Looking Forward ▪ Continue improvement of underperforming plants and optimizing certain customer strips of business. ▪ Continue to right-size the cost structure in areas that are less likely to grow. ▪ Healthy and strong growth pipeline yielding accretive new business wins. ▪ Have several large high-quality, high-profit opportunities in the pipeline for 2024. Mobile Solutions – Machined Products: Q1’24 Highlights $78.0 $73.1 Net Sales Trend ($millions) Q1'23 Q1'24 $5.6 $8.6 Adjusted EBITDA Trend ($millions) Q1'23 Q1'24 (6.4%) +53.6%

 
Cash Flow In Good Shape and Funding Reinvestment 9 Maintaining strong focus on funding transformation from free cash flow ▪ New business wins are 3x market growth rate, $80 million in the last five quarters, with associated CapEx investment. ▪ Pushing into global leadership positions on process capabilities at the nano-level of precision. ▪ Currently operating towards the upper limits of our targeted growth CapEx-spend boundaries and free cash flow goals. ▪ Following a measured, laddered program approach into 2025. (Dollars in millions, except leverage ratio) Q1’24 TTM Q1’24 Free Cash Flow $0.3 $15.7 Capital Expenditures $5.5 $21.0 Net Debt $143.8 -- Net Leverage 3.1x --

 
Operational Productivity Is Increasing and Improving NN’s Cost Profile 10 *Does not include China JV employees $39 $38 $41 $43 $46 $35 $40 $45 $50 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 TTM Adjusted EBITDA ($millions) 3,645 3,357 3,230 3,159 3,087 2,500 3,000 3,500 4,000 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Quarterly Headcount* $10.6 $11.4 $12.7 $13.6 $15.0 $5 $10 $15 $20 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 TTM Adjusted EBITDA Per Headcount* ($thousands) ▪ Global Continuous Improvement Program ▪ Laddered approach into 2025, strategically committing to our CapEx ▪ Structural and process improvements → Adjusted EBITDA per Headcount Increased 42% Since Q1’23 → Increasing Our Competitiveness

 
NN’s Organic Growth Program is Performing Well $14 $19 $37 $63 $80 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Cumulative New Business Wins ($millions) 11 ▪ In 2023, NN secured $63 million of new awards through 28 programs in five countries, which will require CapEx investment. In Q1’24, NN added another $17 million of new business awards, $80 million cumulative. ▪ Operating towards the higher end of our capital allocation towards growth initiatives. NN team is focused on balancing cost improvement and growth initiatives. ▪ Growth focus areas are: China passenger vehicles; US stamped and metalized products; select vehicle programs in NA, SA, EU; and select investment in new adjacent markets including medical orthopedic products. ▪ Strong 3x above-market performance ▪ Targeting another $55 to $70 million of new business wins in 2024, on pace ▪ ~$120 to $135 million of cumulative new business wins in 2023 and 2024 Renewed focus on winning new business is driving clear results

 
12 Confirming and Tightening 2024 Outlook Guidance Metric Forecast Range Net Sales $485 – $505 million Adjusted EBITDA $48 – $54 million Free Cash Flow $10 – $15 million New Business Wins $55 – $70 million ▪ Vehicle innovation, vehicle production, and electrical grid-edge device markets are performing as expected. ▪ General industrial and residential construction markets in the US are slightly softer than expected. ▪ Commercial vehicle and diesel engine markets are performing as expected. ▪ Winning new business at 3x market rate, now stands at $80 million of new business through the last five quarters. ▪ Steadily improving capital structure and credit metrics. ▪ Laddering further profit improvements into 2025, underway with launching many newly won programs while winning more.

 
Appendix 13

 
14 The Company discloses in this presentation the non-GAAP financial measures of adjusted income (loss) from operations, adjusted EBITDA, adjusted net income (loss), adjusted net income (loss) per diluted share, free cash flow and net debt. Each of these non-GAAP financial measures provides supplementary information about the impacts of acquisition, divestiture and integration related expenses, foreign-exchange impacts on inter-company loans, reorganizational and impairment charges. The costs we incur in completing acquisitions, including the amortization of intangibles and deferred financing costs, and divestitures are excluded from these measures because their size and inconsistent frequency are unrelated to our commercial performance during the period, and we believe are not indicative of our ongoing operating costs. We exclude the impact of currency translation from these measures because foreign exchange rates are not under management’s control and are subject to volatility. Other non-operating charges are excluded, as the charges are not indicative of our ongoing operating cost. We believe the presentation of adjusted income (loss) from operations, adjusted EBITDA, adjusted net income (loss), adjusted net income (loss) per diluted share, free cash flow and net debt provides useful information in assessing our underlying business trends and facilitates comparison of our long-term performance over given periods. The non-GAAP financial measures provided herein may not provide information that is directly comparable to that provided by other companies in the Company's industry, as other companies may calculate such financial results differently. The Company's non-GAAP financial measures are not measurements of financial performance under GAAP and should not be considered as alternatives to actual income growth derived from income amounts presented in accordance with GAAP. The Company does not consider these non-GAAP financial measures to be a substitute for, or superior to, the information provided by GAAP financial results. (a) Non-GAAP adjusted EBITDA represents GAAP income (loss) from operations, adjusted to include income taxes, interest expense, write-off of unamortized debt issuance costs, interest rate swap payments and change in fair value, change in fair value of preferred stock derivatives and warrants, depreciation and amortization, charges related to acquisition and transition costs, non-cash stock compensation expense, foreign exchange gain (loss) on inter-company loans, restructuring and integration expense, costs related to divested businesses and litigation settlements, income from discontinued operations, and non-cash impairment charges, to the extent applicable. We believe this presentation is commonly used by investors and professional research analysts in the valuation, comparison, rating, and investment recommendations of companies in the industrial industry. We use this information for comparative purposes within the industry. Non-GAAP adjusted EBITDA is not a measure of financial performance under GAAP and should not be considered as a measure of liquidity or as an alternative to GAAP income (loss) from continuing operations. Non-GAAP Financial Measures Footnotes

 
15 Reconciliation of GAAP Income (Loss) from Operations to Non-GAAP Adjusted Income (Loss) from Operations and Non-GAAP Adjusted EBITDA

 
16 Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted Net Income (Loss) and GAAP Net Income (Loss) per Diluted Common Share to Non-GAAP Adjusted Net Income (Loss) per Diluted Common Share

 
17 Reconciliation of Operating Cash Flow to Free Cash Flow

 
Thank You 18 Joe Caminiti or Stephen Poe, Investors Tim Peters, Media NNBR@alpha-ir.com 312-445-2870 Investor & Media Contacts

 
v3.24.1.u1
Cover Page
May 06, 2024
Cover [Abstract]  
Entity Registrant Name NN, Inc.
Document Type 8-K
Document Period End Date May 06, 2024
Amendment Flag false
Entity Central Index Key 0000918541
Entity Incorporation, State or Country Code DE
Entity File Number 001-39268
Entity Tax Identification Number 62-1096725
Entity Address, Address Line One 6210 Ardrey Kell Road, Suite 120
Entity Address, City or Town Charlotte
Entity Address, State or Province NC
Entity Address, Postal Zip Code 28277
City Area Code 980
Local Phone Number 264-4300
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, par value $0.01
Trading Symbol NNBR
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
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