Bullish indicating open at $55-$60, IPO prices at $37
Introduction & Market Context
NN Inc. (NASDAQ:NNBR) released its second quarter 2025 earnings presentation on August 7, highlighting operational improvements and margin expansion despite ongoing sales challenges. The precision components manufacturer reported modest financial progress as it continues its strategic transformation toward higher-margin businesses, with non-automotive segments now representing 60% of its portfolio.
Trading at $2.14 as of August 6, NN’s stock has recovered somewhat from its post-Q1 earnings dip to $1.83, though it remains significantly below its 52-week high of $4.67. The company faces ongoing challenges in balancing operational improvements with macroeconomic headwinds.
Quarterly Performance Highlights
NN reported Q2 2025 net sales of $107.9 million, representing a decrease from the prior year, while delivering adjusted EBITDA of $13.2 million (12.2% of sales) and adjusted operating income of $4.9 million (4.6% of sales). The company achieved adjusted net income of $0.02 per diluted share.
As shown in the following financial overview chart:
Despite the sales decline, NN demonstrated meaningful margin improvement with adjusted gross margin reaching 19.5%. The company also reported $32.7 million in new business wins year-to-date, positioning it well for future growth. Working capital stood at $86.8 million (20.0% of sales), showing progress toward the company’s long-term goal of 16-17%.
The detailed metrics table provides further context for the quarter’s performance:
Segment Performance Analysis
NN’s Power Solutions segment continued to show strength, with pro forma net sales of $44.6 million, up 2.3% year-over-year. More impressively, adjusted EBITDA for this segment increased 5.8% to $9.1 million, representing a robust 20.4% margin. The segment secured $4.3 million in new business awards and maintains a substantial pipeline of $360 million.
The following chart illustrates the Power Solutions segment’s performance:
Meanwhile, the Mobile Solutions segment faced greater challenges, with pro forma net sales declining 5.4% to $63.4 million. However, operational improvements helped drive a 6.2% increase in adjusted EBITDA to $8.6 million, with margins expanding 150 basis points to 13.6%. This segment secured $29 million in new business awards from a $380 million pipeline.
The Mobile Solutions performance is detailed in this chart:
Strategic Initiatives & Portfolio Transformation
NN continues to demonstrate steady financial improvement, with adjusted gross margin increasing from 16.3% in 2023 to 18.2% in 2025 YTD, targeting a long-term goal exceeding 20%. Similarly, adjusted EBITDA margins have improved from 8.8% in 2023 to 11.1% in 2025 YTD, progressing toward a long-term goal of 13-14%.
The company’s margin improvement trajectory is illustrated in the following chart:
A key component of NN’s strategy involves winning and launching new business. The company has secured $32.7 million in new awards at mid-year with a 24% hit rate and is launching 112 programs in 2025, representing $48 million in revenue at full run-rate.
NN has also strengthened its leadership team by appointing Tim Erro as Chief Commercial Officer and is investing approximately $2 million in new personnel, including a new CTO for electrical and medical markets and two new account managers with electrical backgrounds. These appointments align with the company’s strategic shift toward higher-margin, non-automotive segments.
Forward Guidance & Outlook
Despite operational improvements, NN provided somewhat cautious guidance for the remainder of 2025, citing uncertainty from top customers and the second-half macroeconomic environment. The company expects to deliver toward the lower half of its previously announced ranges for both net sales ($430-460 million) and adjusted EBITDA ($53-63 million).
The company maintained its new business wins target of $60-70 million and projects free cash flow of $14-16 million, including a CARES Act tax refund. NN also announced plans for a Virtual Investor Day in December 2025, suggesting management’s confidence in its long-term strategic direction despite near-term challenges.
NN’s near-term outlook varies by market segment, with its automotive business (40% of revenue) expected to remain flat, while its electric grid segment (20%) shows improvement. The commercial vehicle segment (10%) faces anticipated weakness, while medical equipment (5%) is positioned for continued growth.
As NN continues its transformation journey, investors will be watching closely to see if operational improvements and strategic portfolio shifts can overcome persistent sales challenges and drive sustainable long-term growth.
Full presentation:
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