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NN INC (NNBR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered pro forma growth and margin expansion: net sales $106.5M (+2% pro forma YoY) and adjusted EBITDA $12.1M with 11.3% margin, up 240 bps YoY; GAAP EPS was $(0.51) while adjusted EPS was $(0.02) .
  • Mobile Solutions posted strong margin improvement (Q4 adjusted EBITDA $10.0M, 14.8% margin), aided by cost-outs and exit of underperforming business; Power Solutions held steady amid Lubbock divestiture impacts .
  • FY2024 finished at revenue $464.3M (slightly below the prior guidance low end of $465M) and adjusted EBITDA $48.3M (above the guidance midpoint), reflecting transformation-driven margin gains despite FX and rationalized volumes .
  • 2025 guidance introduced: revenue $450–$480M, adjusted EBITDA $53–$63M, new business wins $60–$70M; management initially biases toward the low half given FX/tariff uncertainty but expects profitability lift from cost actions and SOP launches of >70 programs .
  • Near-term catalysts: term loan refinancing targeted to conclude in H1 2025; tariff-driven reshoring generating 11 programs into Kentwood; ramp of ~$21M new business in Q1 2025 .

What Went Well and What Went Wrong

What Went Well

  • Transformation year delivered margin expansion: Q4 adjusted EBITDA $12.1M (+21% YoY) with 11.3% margin (+240 bps), and FY adjusted EBITDA $48.3M (+12% YoY), demonstrating cost discipline and operating efficiencies .
  • Record commercial momentum: $73M new wins in 2024 (vs. $63M in 2023) and 70+ programs launching in 2025; ~$21M launches in Q1 2025. “We are launching the highest number of new products in recent history.” – Harold Bevis .
  • Group of 7 turnaround: from $(11.5)M adjusted EBITDA in 2023 to ~$5.1M expected in 2025; “We have fixed four plants and we are closing three.” – Harold Bevis; customers’ scorecards turned “green,” unlocking new business with existing top accounts .

What Went Wrong

  • Top line contracted as-reported: Q4 net sales fell 5.3% YoY due to Lubbock sale, rationalized volumes, and $1.6M FX headwind; GAAP loss from operations widened to $(16.9)M .
  • GAAP net loss remained elevated: Q4 net loss $(21.0)M; FY net loss $(38.3)M, impacted by impairments and debt service, despite JV income and a gain on Lubbock sale .
  • Power Solutions adjusted operating income declined YoY in Q4 ($4.6M vs. $5.8M) on lower revenue and mix; FX and pass-through normalization weighed on reported segment sales .

Financial Results

Sequential performance (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Net Sales ($USD Millions)$123.0 $113.6 $106.5
GAAP Diluted EPS ($)$(0.12) $(0.13) $(0.51)
Adjusted Diluted EPS ($)$(0.02) $(0.05) $(0.02)
Adjusted EBITDA ($USD Millions)$13.4 $11.6 $12.1
Adjusted EBITDA Margin (%)10.9% 10.2% 11.3%
Free Cash Flow ($USD Millions)$(1.32) $0.25 $3.76

Year-over-year (Q4)

MetricQ4 2023Q4 2024
Net Sales ($USD Millions)$112.5 $106.5
GAAP Diluted EPS ($)$(0.50) $(0.51)
Adjusted Diluted EPS ($)$(0.10) $(0.02)
Adjusted EBITDA ($USD Millions)$10.0 $12.1
Adjusted EBITDA Margin (%)8.9% 11.3%

Segment breakdown (Q4 2024)

SegmentNet Sales ($USD Millions)Adjusted Income from Operations ($USD Millions)Adjusted Operating Margin (%)Adjusted EBITDA ($USD Millions)
Power Solutions$39.2 $4.6 11.8% $5.6
Mobile Solutions$67.4 $2.5 8.1% $10.0

KPIs

KPI202320242025 YTD / Q4
New Business Wins ($USD Millions)$63 $73 $13 (YTD 2025)
China Sales Growth (%)—+20.6% (FY) +15.6% (Q4 YoY)
Programs Launching——>70 in 2025; ~$21M launching in Q1 2025
Leverage Ratio—2.97x (Q3) —
Qtr Free Cash Flow ($USD Millions)—Q2: $(1.32) , Q3: $0.25 Q4: $3.76

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2025n/a$450–$480 Introduced
Adjusted EBITDA ($USD Millions)FY 2025n/a$53–$63 Introduced
New Business Wins ($USD Millions)FY 2025n/a$60–$70 Introduced

Management initially expects outcomes in the lower half of ranges given FX/tariff volatility, with margin support from cost-outs and SOP launches .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Transformation & cost-outs4th consecutive YoY EBITDA improvement; focus on profitability and refinancing New cost-outs; Dowagiac closure announced; leverage down to 2.97x ~60% complete; Group of 7 turnaround to $5.1M adj. EBITDA in 2025; 70+ SOPs Strengthening execution
Tariffs & reshoringAuto recalibrating; mix shifts Monitoring macro/FX; optimization actions support margins Minimal direct hits; 11 programs reshored to Kentwood; fluid policy; Big 3 reprieve Modestly positive via select reshoring
Power Solutions demandGrowth in pass-through/pricing; adj. op income up YoY Sequentially softer; mix headwind; still healthy Expect up year; grid-edge demand from data centers/EVs Constructive
Medical & StampingBuilding pipelines and approvals Installing equipment for next-gen products Medical to $50M target; 3-tier pricing floors ≥25%; busbar opportunity Expanding
Balance sheetTerm loan refi priority Strategic refinancing continues ABL done; term loan to conclude H1; China self-funded, remit cash Improving flexibility
Operations & delivery—Backlog reductions underway Past-dues reduced; green scorecards; OTIF metric being implemented Service quality improved
China JV—China sales +19% YoY in Q3 At capacity; exports via BYD/others; adding capacity; strong profitability Growth and capacity additions

Management Commentary

  • “We are launching the highest number of new products in recent history… leveraging our $340 million installed base of machinery and equipment and $56 million of land and buildings.” – Harold Bevis .
  • “Every remaining facility [in the Group of 7] is expected to be adjusted EBITDA positive… approximately $75 million in revenue and generating over $5 million of adjusted EBITDA [in 2025].” – Tim French .
  • “We expect to conclude [term loan refinancing] in the first half of this year… to create additional financial capacity… and continue deleveraging.” – Chris Bohnert .
  • “The electrical grid demand is still strong with data centers… and EVs… the outlook for Power Solutions in ’25 is pretty strong.” – Harold Bevis .
  • “New wins… are being written above [20% gross margin]… three-tiered pricing with floors at 25%.” – Harold Bevis .

Q&A Highlights

  • Group of 7 margin trajectory: Target raising margins toward ≥10%; upside to company-level margins as volume fills open capacity; 11 reshored programs into Kentwood support revenue .
  • Medical/Electrical/Stamping growth: Medical pipeline ~$25M with goal to $50M organic; stamping expansion, busbar for grid; 3-tier pricing and ROI discipline (floors ≥25%) .
  • Tariffs: Direct impacts minimal given safety/PPAP constraints; indirect impacts fluid; Big 3 reprieve; company seeing proactive reshoring from Tier-1s .
  • Power Solutions: Expect an up year; strong grid-edge demand; capacity increased and new wins in the segment .
  • Operations & deliveries: Past-due backlogs reduced; green customer scorecards unlocking wins; OTIF metric to be implemented .
  • China JV: At capacity; exports via BYD and others; adding capacity in JV and wholly-owned entity; cost-competitive and profitable .
  • Plant closures timeline: Juarez ceased production; Dowagiac (owned) listed for sale, ceasing operations early Q2; one more leased facility planned for 2026 closure .
  • Financing roadmap: Term loan refinance in H1; preferred equity modifications possible later; China financing localized to remit cash back .

Estimates Context

  • Wall Street consensus from S&P Global (EPS, revenue, EBITDA) for Q4 2024 and prior two quarters was unavailable due to data access limits at the time of request; therefore, we cannot determine beat/miss versus consensus for this quarter. Values intended from S&P Global could not be retrieved; please note this unavailability.

Key Takeaways for Investors

  • Pro forma growth and sustained margin expansion indicate transformation benefits are flowing through despite reported revenue contraction, positioning NN to lift adjusted EBITDA in 2025 even at low-half outcomes of guidance .
  • Mobile Solutions is driving margin inflection (Q4 adjusted EBITDA $10.0M; 14.8% margin), aided by rationalization and cost structure improvements; watch for continued accretion as new wins ramp .
  • Power Solutions outlook constructive on grid-edge demand from data centers and EV-related upgrades; expect revenue/margins to trend up with capacity additions and wins .
  • Near-term stock catalysts include term loan refinancing (H1 2025 target) and visibility to SOP ramp of >70 programs (with ~$21M in Q1 launches), which can recalibrate sentiment on execution and liquidity .
  • Tariff narrative appears net-manageable near-term; minimal direct cost hits and select reshoring wins provide incremental volume opportunities; monitor policy shifts given fluid headlines .
  • China operations continue to fund themselves, exhibit strong growth, and provide JV income; capacity expansions support volume and profitability, but geopolitical/export dynamics warrant monitoring .
  • FY2024 revenue modestly missed prior guidance low end while adjusted EBITDA exceeded the midpoint, underscoring margin resilience; focus in 2025 shifts to balance sheet optimization, free cash flow, and disciplined pricing (>25% gross margin floors on new wins) .