Executive Summary

Q2 2025 net sales were $107.9M; adjusted EBITDA $13.2M (12.2% margin) and adjusted EPS $0.02. Pro forma net sales declined 2.4% YoY due to 2024 rationalizations/Lubbock sale and auto volume softness, partly offset by 70 program launches YTD and precious metals pass‑through pricing .
Versus S&P Global consensus, revenue modestly missed (−$2.9M, −2.6%), while EPS was a clear beat; adjusted EBITDA was essentially in line (see Estimates Context) [GetEstimates Q2 2025]*.
Guidance maintained: FY25 net sales $430–$460M, adjusted EBITDA $53–$63M, FCF $14–$16M, new business wins $60–$70M; management continues to guide toward the lower half given tariff/macro uncertainty .
Catalysts: medical certification ramp (Kentwood) and dedicated medical machines (~$40M capacity at two shifts), tariff pass‑through normalization, imminent CARES Act tax refund, active M&A program, and hiring of a Chief Commercial Officer to accelerate electrical/medical growth .

What Went Well and What Went Wrong

What Went Well

Margin expansion and profitability: adjusted gross margin 19.5% (near 20% long‑term goal), adjusted operating income up to $4.9M, adjusted EBITDA margin up 100–130 bps YoY, with strong operational execution and cost‑out actions .
Segment profitability improvement: Mobile Solutions adjusted EBITDA margin rose 150 bps to 13.6% despite weaker top line; Power Solutions adjusted EBITDA margin reached 20.4% on cost actions and mix .
Commercial momentum: $32.7M new awards YTD; 70 program launches YTD and 112 programs planned in 2025 worth ~$48M at peak run‑rate. CEO: “We expect those launches will add over $45 million in future sales at run‑rate” .

What Went Wrong

Auto end‑market softness concentrated at a large Tier‑1 customer; GAAP net sales down 12.3% YoY (as‑reported), with pro forma −2.4% YoY; free cash flow use of $3.2M in Q2 .
Working capital remained elevated due to metal price escalation despite efficiency improvements (WC $86.8M; 20.0% of TTM sales) .
Temporary margin compression from delayed customer agreement on tariff pass‑through; management noted timing pushed benefits to Q3 .

Financial Results

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue (Net Sales, $USD Millions)	$122.992	$105.688	$107.921
GAAP EPS ($)	$(0.12)	$(0.23)	$(0.26)
Adjusted EPS ($)	$(0.02)	$(0.03)	$0.02
Gross Margin % (GAAP)	17.7% (calc from table)	13.3% (calc from table)	16.9%
Adjusted Gross Margin %	18.6%	N/A	19.5%
Adjusted Operating Income ($USD Millions)	$2.072	$2.031	$4.907
Adjusted EBITDA ($USD Millions)	$13.405	$10.578	$13.179
Adjusted EBITDA Margin %	10.9%	10.0%	12.2%
Free Cash Flow ($USD Millions)	$(1.319)	$(7.075)	$(3.199)

Segment breakdown

Segment Metric	Q2 2024	Q1 2025	Q2 2025
Power Solutions Net Sales ($M)	$50.151	$43.508	$44.641
Power Solutions Adjusted Income from Ops ($M)	$8.049	$5.524	$8.426
Power Solutions Adjusted EBITDA (Pro Forma, $M)	$9.5	N/A	$9.1
Power Solutions Adjusted EBITDA Margin % (Pro Forma)	19.0%	N/A	20.4%
Mobile Solutions Net Sales ($M)	$72.855	$62.244	$63.391
Mobile Solutions Adjusted Income from Ops ($M)	$(0.656)	$1.582	$2.268
Mobile Solutions Adjusted EBITDA (Pro Forma, $M)	$8.0	N/A	$8.6
Mobile Solutions Adjusted EBITDA Margin % (Pro Forma)	11.2%	N/A	13.6%

KPIs

KPI	Q4 2024	Q1 2025	Q2 2025
New Business Wins ($M)	$73 FY total	$16.4	$32.7 YTD
2025 Program Launches (#)	~70 scheduled Q1 ramp	120 worth $55M peak	112 worth ~$48M peak
Working Capital ($M)	N/A	N/A	$86.8
Working Capital % of TTM Sales	N/A	N/A	20.0%
Portfolio Mix (Non‑Auto %)	N/A	N/A	60% (Auto 40%)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales ($M)	FY 2025	$430–$460	$430–$460	Maintained
Adjusted EBITDA ($M)	FY 2025	$53–$63	$53–$63	Maintained (management leaning lower half)
Free Cash Flow ($M)	FY 2025	$14–$16 (incl. CARES refund)	$14–$16 (incl. CARES refund; capex $18–$20M)	Maintained
New Business Wins ($M)	FY 2025	$60–$70	$60–$70	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024 and Q1 2025)	Current Period (Q2 2025)	Trend
Tariffs/Macro	Tariffs noted as initial push to low half of FY25 ranges; FX/metals uncertainty	Tariff environment causing timing effects and larger RFQs; pass‑throughs normalizing in Q3	Heightened uncertainty; company mitigating via pass‑throughs
Supply Chain/Operations	Plant rationalizations; cost‑out; “Group of 7” turnaround	OneTeam approach; green scorecards across customers; improved on‑time delivery	Operational KPIs improved
Product/Program Launches	70 programs scheduled in early 2025	70 YTD launches; 112 in 2025 worth ~$48M peak	Launch cadence strong
Segment Mix/Portfolio	Diversification goals; stamped/electrical/medical focus	60% non‑auto; growing Power Solutions	Continued diversification
Medical market	Re‑entry, pipeline >$40M, equipment additions	Kentwood nearing medical certification; ~60 dedicated medical machines	Execution progressing
Electrical/wiring systems	Strategic focus on electrical grid/distribution	Evaluating organic/inorganic entry to electrical harness; new CCO hired	Expansion initiative launched
China operations	Strong growth in Q4/Q1	China up ~6% YoY in Q2; local leasing at low rates supports growth	Healthy growth and cost‑effective capacity
Financing/Balance sheet	Term loan refinancing underway	New term loan in place; focus on preferred stock refinancing	Balance‑sheet optimization

Management Commentary

CEO: “NN delivered a solid quarter for gross margins, operating income, adjusted operating income, and adjusted EBITDA… We expect those launches will add over $45 million in future sales at run-rate” .
CEO on auto softness and mitigation: “Our soft top-line centers around certain automotive customers… partially offset… by new business launches and precious metals pass-through pricing” .
CFO: “We are maintaining our current guidance… continue to direct expectations towards the lower end of our guided ranges” .
COO: “Adjusted gross margins… expanded 190 bps YTD; adjusted EBITDA margins… trending over 11% YTD; we remain on track for our… 13%–14% adjusted EBITDA margins” .
CEO on strategic hiring: “We recently announced the hiring of Tim Erro as NN’s new Chief Commercial Officer… evaluating an organic entry into [electrical wiring systems]” .

Q&A Highlights

Incremental margin on new wins: accretive by ~300–400 bps to EBITDA overall; pricing tiers depend on open capacity vs new equipment ROI hurdles (25% floor) .
Guidance bridge: base business stable; 2H uplift driven by accumulating new program launches; risk of launch timing push‑outs acknowledged .
Capex: $18–$20M FY25, majority to support growth programs; leasing used extensively (China ~3% rates) to fund equipment .
Operations: on‑time delivery and backlog improved; “green scorecards” now across customers enabling new awards .
Tax refund: IRS confirmed returns; ~$6M refund imminent (“check is in the mail”) .
M&A: program “kicked off,” focused on synergistic targets to help refinance preferred stock; active processes underway .

Estimates Context

Q2 2025 Actual vs S&P Global Consensus

Metric	S&P Consensus Estimate	Company Reported Actual	Surprise
Revenue ($USD Millions)	$110.794*	$107.921	Miss (−$2.873M, −2.6%)*
Primary EPS ($)	$(0.00333)*	$0.02	Beat (+$0.0233)*
Adjusted EBITDA ($USD Millions)	$13.158*	$13.179	In line (+$0.021M)*

Values retrieved from S&P Global.*
Note: S&P’s “actual” EBITDA in the dataset may reflect a different methodology than company “adjusted EBITDA”; company‑reported adjusted EBITDA and margins expanded YoY .

Key Takeaways for Investors

Sequential improvement in adjusted profitability (EBITDA/operating income) with YoY margin expansion suggests transformation actions are taking hold; watch for continued cost‑out and mix benefits into 2H .
New business launches are the key 2H revenue driver; monitor launch timing and ramp risks given auto market push‑outs noted by management .
Tariff/macro uncertainty persists, but pass‑through mechanisms and RFQ reshoring/China options provide mitigation paths; expect near‑term volatility but structural margin resilience .
Medical capability buildout (certification, dedicated machines) and electrical harness entry (organic/inorganic) represent higher‑return adjacency expansions under newly hired CCO; potential medium‑term multiple catalyst .
Balance sheet: new term loan in place; preferred stock refinancing targeted alongside M&A to lower leverage—follow progress and terms as catalysts for equity value .
Cash flow: FY25 FCF maintained at $14–$16M including CARES refund; near‑term usage reflects growth capex and working capital tied to metal prices; watch Q3/Q4 cash conversion .
Overall setup: modest revenue miss vs consensus but EPS beat; with guidance intact (lower half bias), the narrative hinges on execution of launches, margin trajectory, and strategic expansions to drive re‑rating [GetEstimates Q2 2025]* .

Citations: Document references in brackets [doc_id:chunk_idx]; S&P Global estimates marked with *.

NN INC (NNBR)·Q2 2025 Earnings Summary