nnbr-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-39268

NN, Inc.

(Exact name of registrant as specified in its charter)


Delaware						62-1096725
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

6210 Ardrey Kell Road, Suite 120

Charlotte, North Carolina 28277

(Address of principal executive offices, including zip code)

(980) 264-4300

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of each exchange on which registered

Common Stock, par value $0.01

NNBR

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 26, 2024, there were 50,048,063 shares of the registrant’s common stock, par value $0.01 per share, outstanding.

Table of Contents

NN, Inc.

INDEX


		Page
PART I. FINANCIAL INFORMATION		3

Item 1.	Financial Statements	3

	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)	3
	Condensed Consolidated Balance Sheets (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows (Unaudited)	5
	Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	8
	Note 1. Interim Financial Statements	8
	Note 2. Segment Information	8
	Note 3. Revenue from Contracts with Customers	9
	Note 4. Inventories	10
	Note 5. Intangible Assets, Net	10
	Note 6. Investment in Joint Venture	11
	Note 7. Debt	11
	Note 8. Preferred Stock	12
	Note 9. Leases	13
	Note 10. Commitments and Contingencies	13
	Note 11. Income Taxes	14
	Note 12. Net Loss Per Common Share	14
	Note 13. Share-Based Compensation	15
	Note 14. Accumulated Other Comprehensive Income	16
	Note 15. Fair Value Measurements	16
	Note 16. Subsequent Events	18

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24

Item 4.	Controls and Procedures	25

PART II. OTHER INFORMATION		26

Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosures	26
Item 5.	Other Information	26
Item 6.	Exhibits	27
SIGNATURES		28

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

NN, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share data)	2024		2023		2024		2023
Net sales	$	122,992	$	125,206	$	244,190	$	252,294
Cost of sales (exclusive of depreciation and amortization shown separately below)	101,257		107,684		202,343		216,105
Selling, general, and administrative expense	13,511		10,975		26,859		24,140
Depreciation and amortization	11,761		11,550		24,308		23,066

Other operating expense (income), net	(1,390)		(956)		(2,390)		105
Loss from operations	(2,147)		(4,047)		(6,930)		(11,122)
Interest expense	5,873		5,457		11,239		9,745



Other expense (income), net	(3,461)		5,641		692		3,433
Loss before benefit (provision) for income taxes and share of net income from joint venture	(4,559)		(15,145)		(18,861)		(24,300)
Benefit (provision) for income taxes	215		(325)		(291)		(1,626)
Share of net income from joint venture	2,141		1,093		4,412		1,374


Net loss	$	(2,203)	$	(14,377)	$	(14,740)	$	(24,552)
Other comprehensive loss:
Foreign currency translation loss	$	(3,387)	$	(2,374)	$	(5,733)	$	(534)
Interest rate swap:
Change in fair value, net of tax	—		—		—		(230)
Reclassification adjustments included in net loss, net of tax	(449)		(449)		(898)		(917)
Other comprehensive loss	$	(3,836)	$	(2,823)	$	(6,631)	$	(1,681)
Comprehensive loss	$	(6,039)	$	(17,200)	$	(21,371)	$	(26,233)












Basic and diluted net loss per share	$	(0.12)	$	(0.38)	$	(0.46)	$	(0.67)
Shares used to calculate basic and diluted net loss per share	48,839		46,357		48,281		45,836

See notes to condensed consolidated financial statements (unaudited).

Table of Contents

NN, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


(in thousands, except per share data)	June 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	13,746	$	21,903
Accounts receivable, net of allowances of $1,660 and $1,241 at June 30, 2024 and December 31, 2023	68,832		65,545
Inventories	68,291		71,563
Income tax receivable	13,045		11,885
Prepaid assets	4,545		2,464
Other current assets	16,883		9,194
Total current assets	185,342		182,554
Property, plant and equipment, net of accumulated depreciation of $246,892 and $254,013 at June 30, 2024 and December 31, 2023	171,591		185,812
Operating lease right-of-use assets	41,593		43,357
Intangible assets, net	51,221		58,724
Investment in joint venture	36,330		32,701
Deferred tax assets	771		734
Other non-current assets	10,386		7,003
Total assets	$	497,234	$	510,885
Liabilities, Preferred Stock, and Stockholders’ Equity
Current liabilities:
Accounts payable	$	45,470	$	45,480
Accrued salaries, wages and benefits	14,848		15,464
Income tax payable	380		524
Short-term debt and current maturities of long-term debt	8,041		3,910
Current portion of operating lease liabilities	5,417		5,735
Other current liabilities	16,739		10,506
Total current liabilities	90,895		81,619
Deferred tax liabilities	4,605		4,988

Long-term debt, net of current maturities	150,694		149,369
Operating lease liabilities, net of current portion	45,078		47,281
Other non-current liabilities	12,214		24,827
Total liabilities	303,486		308,084
Commitments and contingencies (Note 10)
Series D perpetual preferred stock - $0.01 par value per share, 65 shares authorized, issued and outstanding at June 30, 2024 and December 31, 2023	85,312		77,799
Stockholders’ equity:
Common stock - $0.01 par value per share, 90,000 shares authorized, 50,032 and 47,269 shares issued and outstanding at June 30, 2024 and December 31, 2023	500		473
Additional paid-in capital	462,410		457,632
Accumulated deficit	(310,088)		(295,348)
Accumulated other comprehensive loss	(44,386)		(37,755)
Total stockholders’ equity	108,436		125,002
Total liabilities, preferred stock, and stockholders’ equity	$	497,234	$	510,885

See notes to condensed consolidated financial statements (unaudited).

Table of Contents

NN, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Six Months Ended June 30,
(in thousands)	2024		2023
Cash flows from operating activities
Net loss	$	(14,740)	$	(24,552)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	24,308		23,066
Amortization of debt issuance costs and discount	1,106		880
Paid-in-kind interest	1,436		744


Total derivative loss (gain), net of cash settlements	(1,068)		5,691
Share of net income from joint venture	(4,412)		(1,374)
Share-based compensation expense	1,536		851
Deferred income taxes	(479)		110
Other	(758)		(721)
Changes in operating assets and liabilities:
Accounts receivable	(8,747)		(5,078)
Inventories	(1,185)		3,920
Other operating assets	(2,705)		(6,615)
Income taxes receivable and payable, net	(1,326)		(730)
Accounts payable	1,726		6,927
Other operating liabilities	4,739		5,524
Net cash provided by (used in) operating activities	(569)		8,643
Cash flows from investing activities
Acquisition of property, plant and equipment	(9,052)		(12,196)
Proceeds from sale of property, plant, and equipment	237		2,777



Net cash used in investing activities	(8,815)		(9,419)
Cash flows from financing activities
Proceeds from long-term debt	25,000		35,000
Repayments of long-term debt	(46,061)		(34,725)

Cash paid for debt issuance costs	(646)		(55)


Proceeds from sale-leaseback of equipment	8,324		—
Proceeds from sale-leaseback of land and buildings	16,863		—
Repayments of financing obligations	(211)		—
Proceeds from short-term debt	—		3,648
Other	(1,700)		(1,610)
Net cash provided by financing activities	1,569		2,258
Effect of exchange rate changes on cash flows	(342)		47
Net change in cash and cash equivalents	(8,157)		1,529
Cash and cash equivalents at beginning of period	21,903

SEC Form 10-Q filed by NN Inc.