Executive Summary

Q3 2025: Net sales $103.9M (-8.5% YoY); adjusted operating income $4.0M (>3x YoY); adjusted EBITDA $12.4M (11.9% margin, +170 bps YoY); adjusted EPS $(0.01); free cash flow $9.1M, reflecting a step change in working capital management .
Versus S&P Global consensus: revenue missed ($103.9M vs $111.8M), EPS missed ($(0.01) vs $0.02); Power Solutions grew (+4.7% YoY) while Mobile Solutions declined (-16.4% YoY) on rationalization and softer auto volumes; margins improved on cost actions and mix shift toward defense/electronics .
Guidance: net sales lowered to $420–$440M (from $430–$460M) while adjusted EBITDA ($53–$63M), free cash flow ($14–$16M, assumes CARES refund), and new business wins ($60–$70M) were reiterated at low ends due to macro uncertainty; 2026 outlook calls for improving auto/commercial vehicle and continued defense/electronics growth .
Catalysts: ongoing M&A program and preferred equity refinancing to enhance flexibility and common equity accretion; final consolidation of a high-cost plant to remove negative EBITDA drag; expanding A&D capabilities supported by ITAR/FFL licensing and new weapons customer win .

What Went Well and What Went Wrong

What Went Well

Margin expansion and profitability: adjusted operating income rose to $4.0M vs $1.3M prior year; adjusted EBITDA margin improved to 11.9% (+170 bps YoY) on cost reductions and favorable mix .
Free cash flow and working capital: FCF improved to $9.1M; management highlighted a structural “step change” in working capital delivering a more predictable cash profile .
Power Solutions strength: segment net sales $44.9M (+4.7% YoY); adjusted income from operations $8.1M (18.0% margin) supported by precious metal pass-through pricing, mix, and cost actions .
Commercial progress/new wins: $11.3M wins in Q3; $44.4M YTD; pipeline expanded to >$850M with foundational wins in defense (weapons components) and medical (robotic surgery consumables) .
Strategic trajectory: management emphasized transformation momentum, M&A pipeline, and preferred equity refinancing underway to unlock shareholder value .

What Went Wrong

Revenue and EPS miss vs consensus: revenue $103.9M vs $111.8M consensus; EPS $(0.01) vs $0.02, driven by auto market softness and rationalization impacts despite mix tailwinds .
Mobile Solutions weakness: net sales $59.1M (-16.4% YoY); adjusted income from operations $0.3M as lower volumes and rationalization weighed on segment profitability .
Macro/market headwinds: data center-driven grid demand exists, but U.S. electrical infrastructure spending faced delays; global auto volumes remain soft; management guided to low end of ranges and reduced FY net sales .

Financial Results

Consolidated Performance (reported)

Metric	Q1 2025	Q2 2025	Q3 2025
Net Sales ($USD Millions)	$105.7	$107.9	$103.9
Adjusted Operating Income ($USD Millions)	$2.0	$4.9	$4.0
Adjusted EBITDA ($USD Millions)	$10.6	$13.2	$12.4
Adjusted EBITDA Margin %	10.0%	12.2%	11.9%
Adjusted EPS ($USD)	$(0.03)	$0.02	$(0.01)

Q3 Margin and Cash Metrics

Metric	Q3 2025
GAAP Gross Profit ($USD Millions)	$17.5
GAAP Gross Margin %	16.8%
Adjusted Gross Profit ($USD Millions)	$19.6
Adjusted Gross Margin %	18.8%
Free Cash Flow ($USD Millions)	$9.1

Segment Breakdown (Q3 2025)

Segment	Net Sales ($USD Millions)	Adjusted Income from Operations ($USD Millions)	Adjusted Operating Margin %
Power Solutions	$44.9	$8.1	18.0%
Mobile Solutions	$59.1	$0.3	3.9%

Estimates vs Actuals (S&P Global)

Metric	Q3 2025 Actual	Q3 2025 Consensus
Revenue ($USD Millions)	103.9*	111.8*
Primary EPS ($USD)	(0.01)*	0.02*
Revenue - # of Estimates	—	4*
Primary EPS - # of Estimates	—	2*

Note: Values retrieved from S&P Global.*

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales ($USD Millions)	FY 2025	$430–$460	$420–$440	Lowered
Adjusted EBITDA ($USD Millions)	FY 2025	$53–$63	$53–$63	Maintained (low end bias)
Free Cash Flow ($USD Millions)	FY 2025	$14–$16 (assumes CARES refund)	$14–$16 (assumes CARES refund)	Maintained
New Business Wins ($USD Millions)	FY 2025	$60–$70	$60–$70	Maintained

Management added a qualitative 2026 outlook: improving North American passenger vehicle production in 2026, commercial vehicle recovery in H2’26, multi-year defense/electronics growth, and >$60M of launches in 2026; some legacy minimal-profit auto business to be completed in rationalization .

Earnings Call Themes & Trends

Topic	Q1 2025 (Prev)	Q2 2025 (Prev)	Q3 2025 (Current)	Trend
Tariffs/Macro	Tariffs largely immaterial; maintaining EBITDA guidance amid uncertainty	Pass-through arrangements; some timing compression; pipeline strong	Lower FY net sales; reiterated EBITDA/FCF at low end; uncertainty in auto/electrical funding	Cautious, operational offsets in place
Automotive (ICE vs EV)	Portfolio diversification remains focus	ICE resurgence supports pipeline; auto market flat/nervous	Softness in North America auto; rationalizing final unprofitable plant; expect inflection in 2026	Near-term soft, medium-term improving
Electrical grid/data center	Targeted growth in stamped/electrical products	Power generation demand (Cummins) strong; residential soft	Data centers drive grid demand, but U.S. infrastructure spending delayed; focused product strategy	Mixed near-term; strategic focus intact
Defense & Medical	Medical pipeline peak $40M+; adding specialized equipment	Building medical capacity (dedicated machines); certifications	Foundational wins in weapons and robotic surgery; ITAR/FFL licenses; new weapons customer	Accelerating
Working capital/FCF	Initiated FCF guidance $14–$16M	Tight capex; improving margin capture	Structural step-change in WC; $9.1M FCF; plan to maintain WC discipline	Improving
Capital structure (M&A, preferred refi)	Term loan refi completed	Focus on lowering term loan cost and preferred refi; active M&A	Preferred refi formally underway; multiple M&A targets; aim to enhance flexibility/accretion	Active

Management Commentary

“We delivered another quarter of strong progress… higher operating income, improved gross and adjusted EBITDA margins, and positive free cash flow performance.”
“We are launching approximately $48 million of new programs in 2025… they will serve to further strengthen our foundation and position NN for solid top-line growth in 2026 and beyond.”
“Our adjusted EBITDA did go up… margin is up 170 basis points year over year… on a lower sales base.”
“Softness in the North American automotive market created an opportunity… to consolidate our last plant that loses money.”
“Our strategic M&A program is underway… evaluating multiple acquisition targets… incorporating the refinancing of our preferred stock.”

Q&A Highlights

Power Solutions/electrical: Data center demand is driving grid needs; NN’s participation centers on hardware for connect/disconnect and circuit breaking, with focused product strategy .
Margin path: Power Solutions percentages pressured by high gold/silver prices (pass-through effect); Mobile to improve via final removal of negative EBITDA business and accretive wins .
Capacity/utilization: Stamping ~60% utilization with significant room; machining varies 60–80% by facility, overall capacity available .
Preferred stock refinancing: Goal to eliminate preferred; considering standalone vs M&A-coupled refi; engaging advisors and current stakeholders (e.g., Morgan Stanley) .
China operations/JV: JV ~$130M sales and >$30M EBITDA; BYD a major customer; wholly-owned China ~$70M sales, profitable and cash generative; repatriation ongoing .
Free cash flow outlook: Absent CARES refund, Q4 FCF could be $2–3M; next year targeted around ~$10M with stronger EBITDA and WC; lower rates could help cash interest .
2026 set-up: Automotive by region—China growing; Europe improving via a large win; North America slightly up; electrical flat base with wins; commercial vehicle improving in H2’26 .

Estimates Context

Q3 2025 results vs S&P Global consensus: revenue $103.9M vs $111.8M (miss); Primary EPS $(0.01) vs $0.02 (miss). Management cited auto softness and rationalization impacts, partially offset by precious metal pass-through pricing and mix gains (defense/electronics) .
Post-quarter estimate implications: Consensus likely to drift lower on revenue/near-term EPS while margin outlook supported by cost actions, mix improvements, and final plant consolidation timing .