nnbr-20240930

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 September 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 October 21, 2024, there were 49,946,337 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	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	17
	Note 16. Divestiture	18
	Note 17. Plant Optimization Activities	19

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4.	Controls and Procedures	26

PART II. OTHER INFORMATION		27

Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
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 September 30,				Nine Months Ended September 30,
(in thousands, except per share data)	2024		2023		2024		2023
Net sales	$	113,587	$	124,443	$	357,777	$	376,737
Cost of sales (exclusive of depreciation and amortization shown separately below)	97,131		104,543		299,474		320,648
Selling, general, and administrative expense	10,257		11,693		37,116		35,833
Depreciation and amortization	10,844		11,577		35,152		34,643

Other operating income, net	(895)		(631)		(3,285)		(526)
Loss from operations	(3,750)		(2,739)		(10,680)		(13,861)
Interest expense	5,404		5,739		16,643		15,484



Other expense (income), net	(5,315)		(1,463)		(4,623)		1,970
Loss before benefit (provision) for income taxes and share of net income from joint venture	(3,839)		(7,015)		(22,700)		(31,315)
Benefit (provision) for income taxes	(903)		245		(1,194)		(1,381)
Share of net income from joint venture	2,185		1,713		6,597		3,087


Net loss	$	(2,557)	$	(5,057)	$	(17,297)	$	(29,609)
Other comprehensive income (loss):
Foreign currency translation gain (loss)	$	3,970	$	(3,072)	$	(1,763)	$	(3,606)
Interest rate swap:
Change in fair value, net of tax	—		—		—		(230)
Reclassification adjustments included in net loss, net of tax	(109)		(449)		(1,007)		(1,366)
Other comprehensive income (loss)	$	3,861	$	(3,521)	$	(2,770)	$	(5,202)
Comprehensive income (loss)	$	1,304	$	(8,578)	$	(20,067)	$	(34,811)












Basic and diluted net loss per share	$	(0.13)	$	(0.18)	$	(0.59)	$	(0.84)
Shares used to calculate basic and diluted net loss per share	48,997		47,539		48,522		46,410

See notes to condensed consolidated financial statements (unaudited).

Table of Contents

NN, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


(in thousands, except per share data)	September 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	12,449	$	21,903
Accounts receivable, net of allowances of $1,913 and $1,241 at September 30, 2024 and December 31, 2023	64,447		65,545
Inventories	69,600		71,563
Income tax receivable	12,956		11,885
Prepaid assets	4,095		2,464
Other current assets	10,357		9,194
Total current assets	173,904		182,554
Property, plant and equipment, net of accumulated depreciation of $248,473 and $254,013 at September 30, 2024 and December 31, 2023	172,947		185,812
Operating lease right-of-use assets	40,821		43,357
Intangible assets, net	47,816		58,724
Investment in joint venture	39,843		32,701
Deferred tax assets	1,177		734
Other non-current assets	6,590		7,003
Total assets	$	483,098	$	510,885
Liabilities, Preferred Stock, and Stockholders’ Equity
Current liabilities:
Accounts payable	$	44,983	$	45,480
Accrued salaries, wages and benefits	15,027		15,464
Income tax payable	546		524
Short-term debt and current maturities of long-term debt	8,085		3,910
Current portion of operating lease liabilities	5,805		5,735
Other current liabilities	14,126		10,506
Total current liabilities	88,572		81,619
Deferred tax liabilities	4,960		4,988

Long-term debt, net of current maturities	135,548		149,369
Operating lease liabilities, net of current portion	44,001		47,281
Other non-current liabilities	14,154		24,827
Total liabilities	287,235		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 September 30, 2024 and December 31, 2023	89,289		77,799
Stockholders’ equity:
Common stock - $0.01 par value per share, 90,000 shares authorized, 49,950 and 47,269 shares issued and outstanding at September 30, 2024 and December 31, 2023	499		473
Additional paid-in capital	459,245		457,632
Accumulated deficit	(312,645)		(295,348)
Accumulated other comprehensive loss	(40,525)		(37,755)
Total stockholders’ equity	106,574		125,002
Total liabilities, preferred stock, and stockholders’ equity	$	483,098	$	510,885

See notes to condensed consolidated financial statements (unaudited).

Table of Contents

NN, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended September 30,
(in thousands)	2024		2023
Cash flows from operating activities
Net loss	$	(17,297)	$	(29,609)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	35,152		34,643
Amortization of debt issuance costs and discount	1,718		1,409
Paid-in-kind interest	2,064		1,491


Total derivative loss, net of cash settlements	582		3,139
Share of net income from joint venture, net of cash dividends received	(6,597)		851
Gain on sale of business	(7,154)		—
Share-based compensation expense	2,347		2,058
Deferred income taxes	(477)		(1,531)
Other	(658)		(776)
Changes in operating assets and liabilities:
Accounts receivable	(3,957)		335
Inventories	(1,916)		9,692
Other operating assets	(2,873)		(8,223)
Income taxes receivable and payable, net	(1,078)		(576)
Accounts payable	1,794		5,240
Other operating liabilities	2,739		5,747
Net cash provided by operating activities	4,389		23,890
Cash flows from investing activities
Acquisition of property, plant and equipment	(15,352)		(16,292)
Proceeds from sale of property, plant, and equipment	266		2,876
Proceeds received from sale of business	17,000		—



Net cash provided by (used in) investing activities	1,914		(13,416)
Cash flows from financing activities
Proceeds from long-term debt	38,000		52,000
Repayments of long-term debt	(75,320)		(55,522)

Cash paid for debt issuance costs	(746)		(55)


Proceeds from sale-leaseback of equipment	8,324		—
Proceeds from sale-leaseback of land and buildings	16,863		—
Repayments of financing obligations	(492)		—
Proceeds from short-term debt	—		3,648

SEC Form 10-Q filed by NN Inc.