NN Inc.

10/28/2026 | Press release | Distributed by Public on 10/28/2026 15:22

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
Management's Discussion and Analysis of Financial Condition and Results of Operations is intended to help the reader understand the results of operations and financial condition of NN, Inc. and its consolidated subsidiaries for the three and nine months ended September 30, 2026. The financial information as of September 30, 2026, should be read in conjunction with the consolidated financial statements for the year ended December 31, 2025, contained in our Form 10-K for the year ended December 31, 2025 ("2025 Annual Report"), and the Condensed Consolidated Financial Statements included in this Quarterly Report.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by words such as, but not limited to, "anticipates," "believes," "could," "estimates," "expects," "intends," "may," "plans," "predicts," "projects," "will," and similar expressions. These include, among other things, statements relating to the future growth of NN's business and revenues, competitive position, expected new business wins, capital expenditures, and other aspects of the Company's business operations, financial condition, and strategies. Forward-looking statements may appear throughout this report and other documents we file with the Securities and Exchange Commission (SEC), including without limitation, the following sections: Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Quarterly Report on Form 10-Q and Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as updated in our subsequent Quarterly Reports on Form 10-Q. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those reflected in the forward-looking statements. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's filings made with the SEC, which are available on the SEC website at www.sec.gov. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
Overview
NN, Inc., a Delaware corporation, is a diversified industrial company that combines advanced engineering and production capabilities with in-depth materials science expertise to design and manufacture high-precision components and assemblies for a variety of end markets on a global basis. As used in this Quarterly Report, the terms "NN," the "Company," "we," "our," or "us" refer to NN, Inc. and its subsidiaries. Except for per share data, percentages, or as otherwise indicated, all dollar amounts and share counts presented in the tables in this Management's Discussion and Analysis of Financial Condition and Results of Operations are in thousands.
Third Quarter Results
Net sales for the three months ended September 30, 2026 were $131.1 million, an increase of 26.2% compared to the same period in 2025. Loss from operations was $3.3 million, compared to $2.2 million in the prior year period. Net loss was $4.6 million, compared to $6.7 million in the prior year period.
Redemption of Series D Preferred Stock
During the third quarter and through the date of this report, we completed a series of transactions that retired all of our outstanding Series D Preferred Stock and simplified our capital structure:
•On July 2, 2026, we closed a private placement of 24,509,804 shares of common stock at $3.06 per share, resulting in net proceeds of $70.4 million (the "July Private Placement").
•On August 5, 2026, we entered into an Exchange Agreement with the sole holder of our Series D Preferred Stock, under which we (i) redeemed 36,750 shares for $70.0 million in cash, equal to the accreted liquidation preference; (ii) issued 5,500,000 shares of common stock in exchange for 9,850 shares, representing $18.8 million; and (iii) obtained a reduction in the cash dividend and preference accrual rate to 10.0% per annum through August 5, 2027, together with a $5.0 million reduction in the aggregate redemption price if we redeemed the remaining shares for cash on or before December 31, 2026.
•On October 5, 2026, subsequent to quarter-end, we closed a second private placement of 11,275,605 shares of common stock at $3.30 per share and pre-funded warrants to purchase 4,824,395 shares of common stock at $3.29 per warrant, resulting in total gross proceeds of approximately $53.1 million (the "October Private Placement").
•On October 7, 2026, we redeemed the remaining 18,400 shares of Series D Preferred Stock for approximately $30.7 million in cash, reflecting the $5.0 million reduction. No shares of Series D Preferred Stock remain outstanding after October 7, 2026.
As a result of these transactions, we have eliminated the Series D Preferred Stock balance in mezzanine equity. Our common shares outstanding increased to 93,744,244 as of October 5, 2026, excluding shares issuable upon exercise of the pre-funded warrants.
Factors That May Influence Results of Operations
We believe there are several important factors that have influenced, and we expect will continue to influence, our results of operations.
Macroeconomic Conditions
We continue to monitor the ongoing impacts of current macroeconomic and geopolitical events, including changing conditions from global trade negotiations and tariffs, inflationary cost pressures on metal, raw materials, and other manufacturing inputs, elevated interest rates, supply chain disruptions, and ongoing military conflicts.
Global trade negotiations continue to create volatility in the marketplace. New trade restrictions and/or increases in tariffs could have a material impact on our business, financial condition, or results of operations by increasing our input costs and decreasing demand, although the nature of those trade restrictions and tariffs remains unclear. Additionally, tariffs may increase the risk for elevated inflation more generally, which may drive an increase in other input costs and have made it more difficult to procure precious metals and other raw materials. In particular, prices for commodities and certain metals, including, but not limited to, steel, copper, and precious metals, have recently shown increased volatility. Significant price increases for these commodities and precious metals have, and could continue to have, an adverse effect on our liquidity and operating profits if we cannot timely mitigate the price increases by successfully sourcing lower cost commodities or precious metals or by passing the increased costs on to customers.
We cannot predict the future impact on our end markets or input costs, including tariffs and their potential implications and ramifications, nor our ability to recover all cost increases, including the cost of raw materials, through pricing or the timing of such recoveries.
Footprint Optimization
During the second half of 2024, we identified two manufacturing facilities to close due to volume rationalization which have reduced costs and improved operational efficiency. During the first quarter of 2025, we ceased production activities at our Mobile Solutions plants in Juarez, Mexico and Dowagiac, Michigan. In addition, we implemented operational and cost optimization actions to reduce indirect and overhead costs. Based on recent developments, we anticipate reopening of our Juarez facility in 2027. We continue to evaluate our global footprint, which may result in further consolidation actions to further improve our overall cost structure.
Results of Operations
Three Months Ended September 30, 2026 compared to the Three Months Ended September 30, 2025
Consolidated Results
Three Months Ended September 30,
2026 2025 $ Change
Net sales $ 131,100 $ 103,882 $ 27,218
Cost of sales (exclusive of depreciation and amortization shown separately below) 112,830 86,410 26,420
Selling, general, and administrative expense 13,287 11,059 2,228
Depreciation and amortization 9,260 9,064 196
Other operating income, net (957) (404) (553)
Loss from operations (3,320) (2,247) (1,073)
Interest expense 5,467 5,666 (199)
Other income, net (2,919) (70) (2,849)
Loss before provision for income taxes and share of net income from joint venture (5,868) (7,843) 1,975
Provision for income taxes (1,872) (815) (1,057)
Share of net income from joint venture 3,153 1,979 1,174
Net loss $ (4,587) $ (6,679) $ 2,092
Net Sales. Net sales increased by $27.2 million, or 26.2%, during the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to higher selling prices, reflecting the pass-through of increased raw material costs to customers, higher volumes, and favorable foreign exchange effects.
Cost of Sales. Cost of sales increased by $26.4 million, or 30.6%, during the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to higher volumes and higher labor costs associated with increasing headcount to support new business.
Selling, General, and Administrative Expense. Selling, general, and administrative expense increased by $2.2 million during the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to higher professional fees driven by the various strategic initiatives during the quarter.
Depreciation and amortization. Depreciation and amortization increased by $0.2 million during the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to the impact of capital expenditures placed in service in the current and prior year.
Interest Expense. Interest expense decreased by $0.2 million during the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to higher capitalized interest and lower interest on our ABL facility.
Three Months Ended September 30,
2026 2025
Interest on debt $ 5,419 $ 5,724
Amortization of debt issuance costs and discount 251 191
Capitalized interest (465) (207)
Other 262 (42)
Total interest expense $ 5,467 $ 5,666
Other Income, Net. Other income, net increased by $2.8 million during the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to a gain from a favorable value added tax ("VAT") ruling in Brazil.
Provision for Income Taxes. Our effective tax rate was (31.9)% for the three months ended September 30, 2026, compared to (10.4)% for the three months ended September 30, 2025. The rate for the three months ended September 30, 2026 was unfavorably impacted due to the accrual of tax on non-permanently reinvested unremitted earnings of foreign subsidiaries and by the limitation of the amount of tax benefit recorded for losses in certain jurisdictions where we believe it is more likely than not that a future tax benefit may not be realized.
Share of Net Income from Joint Venture. Share of net income from the Wuxi Weifu Autocam Precision Machinery Company, Ltd. joint venture (the "JV") increased by $1.2 million during the three months ended September 30, 2026, compared to the three months ended September 30, 2025. The JV, in which we own a 49% investment, recognized net sales of $37.8 million and $33.3 million for the three months ended September 30, 2026 and 2025, respectively.
Results by Segment
MOBILE SOLUTIONS
Three Months Ended September 30,
2026 2025 $ Change
Net sales $ 68,177 $ 59,117 $ 9,060
Loss from operations $ (6,288) $ (2,854) $ (3,434)
Net sales increased by $9.1 million, or 15.3%, during the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to higher volumes and favorable foreign exchange effects.
Loss from operations increased by $3.4 million or 120.3% during the three months ended September 30, 2026, compared to the same period in the prior year. The increase was primarily due to higher costs from volume increases, increased labor costs due to the start-up of new programs, material cost increases, depreciation expense, and repairs and maintenance increases.
POWER SOLUTIONS
Three Months Ended September 30,
2026 2025 $ Change
Net sales $ 63,178 $ 44,948 $ 18,230
Income from operations $ 9,200 $ 5,432 $ 3,768
Net sales increased by $18.2 million, or 40.6%, during the three months ended September 30, 2026 compared to the three months ended September 30, 2025, primarily due to higher selling prices, reflecting the pass-through of increased raw material costs to customers, increased volumes, and favorable foreign exchange impacts.
Income from operations increased by $3.8 million during the three months ended September 30, 2026 compared to the same period in the prior year, primarily due to higher selling prices and increased volumes. This increase was partially offset by higher material costs and labor costs.
Nine Months Ended September 30, 2026 compared to the Nine Months Ended September 30, 2025
Consolidated Results
Nine Months Ended September 30,
2026 2025 $ Change
Net sales $ 378,293 $ 317,492 $ 60,801
Cost of sales (exclusive of depreciation and amortization shown separately below) 318,724 267,755 50,969
Selling, general, and administrative expense 39,151 34,325 4,826
Depreciation and amortization 27,844 26,756 1,088
Other operating income, net (3,053) (2,843) (210)
Loss from operations (4,373) (8,501) 4,128
Interest expense 16,956 16,517 439
Loss on extinguishment of debt - 3,007 (3,007)
Other income, net (2,634) (2,858) 224
Loss before provision for income taxes and share of net income from joint venture (18,695) (25,167) 6,472
Provision for income taxes (2,778) (2,898) 120
Share of net income from joint venture 7,791 6,599 1,192
Net loss $ (13,682) $ (21,466) $ 7,784
Net Sales. Net sales increased by $60.8 million, or 19.2%, during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to higher selling prices, reflecting the pass-through of increased raw material costs to customers, higher volumes, and favorable foreign exchange effects.
Cost of Sales. Cost of sales increased by $51.0 million, or 19.0%, during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to raw material price increases, higher volumes, and higher labor costs due to headcount.
Selling, General, and Administrative Expense. Selling, general, and administrative expense increased by $4.8 million during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to higher compensation costs and professional fees.
Depreciation and amortization. Depreciation and amortization increased by $1.1 million during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to the impact of capital expenditures placed in service in the current and prior year.
Interest Expense. Interest expense increased by $0.4 million during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to higher average debt balances offset by lower amortization of debt issuance costs and higher capitalized interest.
Nine Months Ended September 30,
2026 2025
Interest on debt $ 16,483 $ 15,506
Amortization of debt issuance costs and discount 750 1,215
Capitalized interest (1,018) (614)
Other 741 410
Total interest expense $ 16,956 $ 16,517
Loss on Extinguishment of Debt. Loss on extinguishment of debt was $3.0 million during the nine months ended September 30, 2025 due to the termination of the 2021 Term Loan Facility. No debt extinguishment has occurred during the nine months ended September 30, 2026.
Other Income, Net. Other income, net changed unfavorably by $0.2 million during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to noncash derivative mark-to-market loss recognized during the first nine months of 2026 compared to noncash derivative mark-to-market gain in the first nine months of 2025. The derivative mark-to-market loss is offset by a gain from a favorable VAT tax ruling in Brazil.
Provision for Income Taxes. Our effective tax rate was (14.9)% for the nine months ended September 30, 2026, compared to (11.5)% for the nine months ended September 30, 2025. The rate for the nine months ended September 30, 2026 was unfavorably impacted due to the accrual of tax on non-permanently reinvested unremitted earnings of foreign subsidiaries and by the limitation of the amount of tax benefit recorded for losses in certain jurisdictions where we believe it is more likely than not that a future tax benefit may not be realized.
Share of Net Income from Joint Venture. Share of net income from the JV increased by $1.2 million during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. The JV, in which we own a 49% investment, recognized net sales of $108.8 million and $97.7 million for the nine months ended September 30, 2026 and 2025, respectively.
Results by Segment
MOBILE SOLUTIONS
Nine Months Ended September 30,
2026 2025 $ Change
Net sales $ 197,880 $ 184,752 $ 13,128
Loss from operations $ (10,310) $ (6,651) $ (3,659)
Net sales increased by $13.1 million, or 7.1%, during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to higher sales volume, favorable foreign currency effects, which was partially offset by the impact of rationalization actions taken in 2025 to improve profitability.
Loss from operations increased by $3.7 million or 55.0% during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily related to raw material cost increases and higher labor costs associated with
increased headcount. These were partially offset by lower costs due to plant rationalization benefits and favorable foreign exchange effects.
POWER SOLUTIONS
Nine Months Ended September 30,
2026 2025 $ Change
Net sales $ 180,871 $ 133,096 $ 47,775
Income from operations $ 24,546 $ 14,237 $ 10,309
Net sales increased by $47.8 million, or 35.9%, during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to higher selling prices, reflecting the pass-through of increased raw material costs to customers, higher volumes, and favorable foreign exchange impacts.
Income from operations increased by $10.3 million during the nine months ended September 30, 2026 compared to the same period in the prior year, primarily due to higher selling prices and higher volumes. These were partially offset by increased employee-related costs.
Sources and Uses of Cash December 31, 2025 to September 30, 2026
Cash Flows
Cash provided by operations was $16.9 million for the nine months ended September 30, 2026, compared to cash provided by operations of $7.1 million for the nine months ended September 30, 2025. The favorable change is primarily due to a $12.7 million collection of a tax refund claim and other favorable operating impacts.
Cash used in investing activities was $14.8 million for the nine months ended September 30, 2026, compared with $9.2 million for the nine months ended September 30, 2025. The higher use of cash is primarily due to additional purchases of equipment.
Cash used in financing activities decreased by $3.0 million during the nine months ended September 30, 2026, compared with the same period in 2025. During the nine months ended September 30, 2026, we received $69.4 million of net proceeds from the issuance of common stock in the July Private Placement, which funded the $70.0 million redemption of Series D Preferred Stock in August 2026. The improvement in cash used is primarily due to $10.0 million of proceeds from the Delayed Draw Term Loan, partially offset by net repayments under our ABL Facility
Liquidity and Capital Resources
Overview
As of September 30, 2026, our primary sources of liquidity were cash and cash equivalents, availability under our ABL Facility, and cash flows from operating activities. On October 5, 2026, we received net proceeds of approximately $49.8 million from the closing of the October Private Placement. On October 7, 2026, we redeemed the remaining 18,400 shares of Series D Preferred Stock for an aggregate cash consideration of approximately $30.7 million. We believe that the execution of these transactions will help support our long-term liquidity.
Based on our current cash position, anticipated cash flows from operating activities, and anticipated borrowing capacity under the ABL Facility, we believe we will have sufficient liquidity to fund our operations, capital expenditures, and debt service requirements for the next 12 months. Our ability to meet these requirements is subject to the factors described in Item 1A, "Risk Factors," in our 2025 Annual Report, including the level and timing of future cash flows, prevailing economic conditions, and restrictions under our credit agreements.
As of September 30, 2026, we had total available liquidity of:
September 30, 2026
Cash & Cash Equivalents $ 12,290
Undrawn Commitments 34,689
Total Availability $ 46,979
Credit Facilities
The debt and credit facilities descriptions in Note 8 are incorporated in this section by reference.
We were in compliance with all covenants as of September 30, 2026.
Working Capital Management
We manage our liquidity and working capital to fund our operations, meet debt service obligations, finance capital expenditures and fund other business initiatives. The cost of raw materials, primarily for steel, copper and precious metals is subject to price volatility due to tariffs, supply chain constraints and market supply and demand. A significant increase in the prices we pay for raw materials may cause our working capital needs to increase, which could reduce our liquidity and borrowing availability.
Accounts Receivable Sales Programs
We participate in programs established by our customers and financial institutions which allow us to sell certain receivables from customers on a non-recourse basis to a third-party financial institution. In exchange, we receive payment on the receivables, less a discount, sooner than under the customary credit terms we have extended to customers. These programs allow us to improve working capital and cash flows at the same or lower interest rates as available on our ABL Facility. Our participation in these programs is based on our specific cash needs throughout the year, the discount charged to receive payment earlier, the length of the payment terms with our customers, as well being subject to limits in our ABL Facility and Term Loan Facility agreements.
Other Receivables
In 2021, we filed a refund claim with the IRS as a result of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). In May 2026, we received a refund check of $12.7 million in full payment of our claim, including interest.
Seasonality and Fluctuation in Quarterly Results
General economic conditions impact our business and financial results, and certain businesses experience seasonal and other trends related to the industries and end markets that they serve. For example, European sales are often weaker in the summer months as customers slow production, and sales to original equipment manufacturers are often stronger immediately preceding and following the launch of new products. In addition, our consolidated net sales in the fourth quarter are typically lower than in other quarters. As such, our results for any particular quarter are not necessarily indicative of results to be expected for the full year.
Critical Accounting Estimates
Our significant accounting policies, including the assumptions and judgments underlying them, are disclosed in Note 1 of the Notes to Consolidated Financial Statements included in the 2025 Annual Report. Our most critical accounting estimates are discussed in the Management's Discussion and Analysis of Financial Condition and Results of Operations included in the 2025 Annual Report. There have been no material changes to our significant accounting policies or critical accounting estimates during the nine months ended September 30, 2026.
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