• Net Sales: $123 million, down 1.8% year-over-year.
• Adjusted EBITDA: $13.4 million, up 28% year-over-year.
• Adjusted EBITDA Margin: 10.9%, up 250 basis points from last year.
• Net Loss Per Share (GAAP): $0.12, improved from $0.38 last year.
• Adjusted Net Loss Per Share: $0.02.
• Power Solutions Sales: $50.2 million, up 4.3% year-over-year.
• Power Solutions Adjusted EBITDA: $9.5 million, up from $6.5 million last year.
• Mobile Solutions Sales: $72.9 million, down 5.6% year-over-year.
• Mobile Solutions Adjusted EBITDA: $8.2 million, up from $7.5 million last year.
• Trailing 12-Month Adjusted EBITDA: $49.2 million.
• Debt Leverage Multiple: Reduced to 2.9 times on a pro-forma basis.
• New Business Wins Year-to-Date: $34.3 million.
• Full Year 2024 Net Sales Guidance: $465 million to $485 million.
• Full Year 2024 Adjusted EBITDA Guidance: $47 million to $51 million.
• Full Year 2024 Free Cash Flow Guidance: $8 million to $12 million.
• Full Year 2024 New Business Wins Guidance: $55 million to $70 million.

• Warning! GuruFocus has detected 4 Warning Signs with NNBR.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• NN Inc (NASDAQ:NNBR) delivered strong second quarter results, driven by the continued execution of their transformation plan, marking the fourth consecutive quarter of year-over-year adjusted EBITDA growth.
• The company has won $34.3 million in new business awards year to date through June and expects their new business pipeline of over $600 million to grow.
• NN Inc (NASDAQ:NNBR) is aggressively pursuing new product development and innovation, particularly in the medical, electrical, and high-end automotive markets.
• The company is on track to deliver bottom-line growth for the full year 2024, supported by exposure to healthy and growing industrial, electrical, and medical end markets.
• NN Inc (NASDAQ:NNBR) has successfully reduced their leverage multiple to 2.9 times on a pro-forma basis after the strategic disposition of a non-core plastics plant, which brought in $15.4 million used to pay down debt.

Negative Points

• Net sales for the second quarter were down slightly by 1.8% compared to last year's second quarter, partly due to unfavorable foreign exchange impacts.
• The company is still working on fixing underperforming plants, with some plants still losing money, which may require further rationalization or closures.
• The global automotive market remains variable, with several factors affecting short-term demand, particularly across domestic EVs.
• NN Inc (NASDAQ:NNBR) has faced challenges with legacy loss contracts, which they are working to reduce, but some unprofitable business remains.
• The company is in the middle of a refinancing process, with current borrowing rates close to 14%, indicating a need to lower their cost of capital.

Q & A Highlights

Q: Can you provide an update on the progress of fixing underperforming plants? A: Tim French, Chief Operating Officer, stated that they are on track to have the group of underperforming plants at break-even or better. As of Q2, nine out of the seven plants are profitable, and all are performing better than the previous year.

Q: How is the Chinese joint venture performing, and do you expect this trend to continue? A: Harold Bevis, CEO, explained that the JV is performing well, driven by a strong hybrid vehicle market in China. The business has benefited from cost reduction programs and is expected to continue performing better year-over-year, although the second half may not be as strong as the first.

Q: What are the expectations for the strategic refinancing, and how will it impact the company? A: Christopher Bohnert, CFO, mentioned that they are in the middle of the refinancing process, expecting to secure lower rates than the current 14% range. The refinance aims to reduce overall cost of capital and potentially pay down some preferred debt, aiding the company's transformation and growth.

Q: How is NN Inc managing pricing actions, and what impact did they have in the quarter? A: Harold Bevis, CEO, noted that pricing impact was minimal, with some contractual price reductions in mobile solutions. The power and medical businesses are largely PO-based, with inflation pricing and precious metals passthroughs contributing to the pricing dynamics.

Q: Can you elaborate on the new $100 million target for the medical business and the timeline to achieve it? A: Harold Bevis, CEO, explained that they are expanding capacity with new machines to support growth in the medical segment. The goal is to reach $100 million in revenue over three years, supported by both organic growth and potential acquisitions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.