NN Q2 Earnings Call Highlights

Key Points

• NN delivered strong second-quarter growth: Sales rose 19% to $128.8 million, while adjusted EBITDA increased 36% to $17.9 million as margins expanded in both Power Solutions and Mobile Solutions.
• The company strengthened its balance sheet: A $124 million preferred-equity refinancing retired most preferred stock, converted about $19 million into common shares, and is expected to reduce annual PIK interest expense by approximately $13 million.
• NN raised its 2026 outlook to $460 million–$480 million in sales and $55 million–$65 million in adjusted EBITDA, supported by growth initiatives in data centers, defense and medical markets and $80 million–$100 million in expected new-business awards.

NN NASDAQ: NNBR reported second-quarter sales growth of 19% and adjusted EBITDA growth of 36%, while raising its full-year outlook and completing a refinancing transaction that retired a substantial portion of its preferred stock.

President and Chief Executive Officer Harold Bevis said the company’s first-half performance exceeded expectations, supported by growth in both reporting segments, new program launches and improved product mix. NN secured $65 million in new business awards during the first half and said awards had reached $80 million through July.

Second-Quarter Results Show Sales and Margin Expansion

NN reported second-quarter net sales of $128.8 million, an increase of $20.8 million, or roughly 19%, from the prior-year period. First-half sales rose 16% to $247.2 million.

Chief Financial Officer Chris Bohnert said quarterly growth was driven by new business launches, volume gains, higher precious-metal pass-through pricing and slightly favorable foreign-exchange translation. Adjusted gross margin dollars increased 24% to $26.1 million, while adjusted gross margin rose 80 basis points year over year to 20.3%.

Second-quarter adjusted EBITDA was $17.9 million, up $4.7 million, or 36%, from a year earlier. Adjusted EBITDA margin expanded 170 basis points to 13.9%. For the first six months of 2026, adjusted EBITDA increased 35% to $32.1 million, with the year-to-date margin reaching 13%, compared with 11.1% in the first half of 2025.

Bohnert said earnings growth reflected higher sales, improved mix, volume leverage from prior cost-reduction actions and ongoing cost-out initiatives, partly offset by higher selling, general and administrative expenses.

• Power Solutions: Quarterly sales rose 40% to $62.3 million, driven by higher precious-metal pass-through pricing and volumes. Adjusted EBITDA increased 40% to $12.7 million, and the segment posted a 20% adjusted EBITDA margin.
• Mobile Solutions: Quarterly sales increased 5% to $66.6 million, supported by new program launches and favorable foreign exchange. Adjusted EBITDA rose 13% to $9.8 million, while adjusted EBITDA margin increased 100 basis points to 14.7%.

Preferred Stock Refinancing Reduces PIK Interest Burden

Following the quarter, NN completed a $124 million refinancing transaction focused on its preferred equity. The company previously raised $75 million through a private investment in public equity, or PIPE, transaction.

Bohnert said NN used $70 million in PIPE proceeds to redeem a large portion of the outstanding preferred stock and converted approximately $19 million of preferred equity into common shares. The remaining preferred balance of roughly $35 million will carry a 10% paid-in-kind interest rate for one year, down from 14.5%. NN can also receive a $5 million discount on the remaining preferred balance if it is repaid or refinanced by Dec. 31, 2026.

The company expects the transaction to reduce annual PIK interest by about $13 million. It does not affect NN’s existing term loan. Bohnert said management is considering options for the term loan and other debt, but did not announce a specific refinancing plan or timeline.

During the question-and-answer session, Bohnert said the preferred conversion added approximately 5.5 million common shares. Bevis said the company had 82.6 million shares outstanding following the swap.

Growth Strategy Centers on Data Centers, Defense and Medical

Bevis said NN’s automotive exposure has fallen to about 40% of the business, with a longer-term goal of approximately one-third as other markets grow faster. The company is concentrating its commercial and capital-allocation efforts on five areas: data centers and electric grid infrastructure, defense electronics, medical products, high-value vehicle parts and high-value stamping applications.

The company’s data-center and electric-grid business generated about $80 million in trailing-12-month sales, according to Bevis, who said NN is targeting $120 million in the near term. The company supplies components including transformer parts, busbar parts, test probes, liquid connectors and cold-plate-related products.

NN has about 50 machines being brought online to support data-center opportunities, including about 25 already in-house, Bevis said. The company is evaluating approximately 100,000 square feet of additional space near its Wuxi, China, facility and said it needs to complete the expansion within 12 months. Bevis said sales from certain data-center program wins are expected to ramp in the second half and into early 2027.

Defense and electronics represented about $60 million of trailing-12-month sales, with a near-term target of $90 million. NN recently secured a multiyear agreement to produce weapon components that Bevis said could generate an additional $12 million to $15 million with one customer. The company also cited a $75 million working pipeline in the market.

NN’s medical business totaled about $15 million in trailing-12-month sales, and management is targeting $40 million. The company has received initial purchase orders for surgical tips and other components used in robotic surgery systems, with production ramping at its Kentwood, Michigan, plant.

Company Raises 2026 Outlook

NN raised its full-year guidance, now expecting 2026 sales of $460 million to $480 million and adjusted EBITDA of $55 million to $65 million. The company also lifted its new-business-award outlook to $80 million to $100 million.

Bevis said the company expects new programs in data centers, defense and medical to contribute more meaningfully in the second half. He noted that the fourth quarter has historically been NN’s lightest period, though new program ramps could offset some of that seasonal pattern.

Looking beyond the current year, Bevis said management sees longer-term adjusted EBITDA margin potential in the range of 14% to 16%, driven primarily by improved sales mix. He added that new business wins have maintained gross-margin floors of 25% and internal-rate-of-return floors of 25% when capital spending is required.

About NN (NASDAQ:NNBR)

NN, Inc NASDAQ: NNBR is a diversified industrial manufacturing company specializing in engineered metal components, powder metal parts and friction materials. Through its subsidiaries, the company develops and produces precision-rolled products for powertrain and chassis applications, engineered friction products for brake and transmission systems, and various metal powders used in automotive, industrial and energy markets. Its offerings span a wide range of component sizes and complexity, from thin‐gauge strips for hybrid and electric vehicle applications to high‐volume sintered parts for commercial and consumer products.

The company's operations are organized into three business segments.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.

Continue following MarketBeat

Add MarketBeat as your preferred source on Google to see our latest stories in your feed.

Add As Preferred Source