Release Date: May 08, 2025

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

Positive Points

• NN Inc (NASDAQ:NNBR) reported a successful new business program, winning 120 programs worth $55 million in annualized sales.

• The company is on track with its $15 million cost reduction plan for 2025, which is expected to bolster profit rates.

• NN Inc (NASDAQ:NNBR) has a significant amount of open capacity globally, allowing for a full blast new business program for existing products.

• The company has won $160 million of new business and is maintaining modest growth cap spending.

• NN Inc (NASDAQ:NNBR) is initiating free cash flow guidance of $14 to $16 million for the year, reflecting improved margin capture and cost out actions.

Negative Points

• Business uncertainty increased during the quarter, leading to lighter sales than planned in Q1.

• The company reported flat sequential sales and flat year-over-year sales on a pro forma basis.

• NN Inc (NASDAQ:NNBR) is facing challenges with its base business softening, requiring a shift in business development focus.

• The company is dealing with a debt structure nearing the end of its life expectancy, requiring refinancing efforts.

• Economic uncertainties and a lack of transparency on volumes, primarily in the North American market, are impacting net sales expectations.

Q & A Highlights

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

Q: Can you provide more details on the tariff-related RFQs and the capacity of your plants to handle new business? A: Harold Beavis, CEO: The tariff-related activities are primarily reshoring to the US and European supply moving to China. In the US, opportunities involve reshoring from Canada and China, with some requiring new equipment. In Europe, there's a shift to China to neutralize US tariffs, involving both new and existing capital. These are mainly automotive-related, and we're selective about US-based automotive investments.

Q: How is the shift in the automotive market, particularly in EV and hybrid vehicles, affecting your new business opportunities? A: Harold Beavis, CEO: The slowdown and balance in EV and hybrid transitions are beneficial for us. Our legacy assets are suited for fuel systems, and the rise in hybrid popularity increases our market opportunities. We've also entered the EV market with shielding and connector stamped products, using existing assets, which expands our available market.

Q: Regarding the $55 million in new business wins and the $740 million pipeline, how are these distributed throughout the year? A: Harold Beavis, CEO: Immediate win programs typically have a 3 to 6-month ramp-up period. Some are set for Q1 2026 due to customer transitions. The profitable immediate growth strategy aims to impact this year, with about half of the new business affecting the second half of 2025.