Eos Energy stock falls after Fuzzy Panda issues short report
NN Inc (NASDAQ:NNBR) released its third quarter 2025 earnings presentation on October 30, revealing a mixed financial performance that ultimately failed to impress investors. Despite showing improved profitability metrics, the company missed revenue expectations, sending shares tumbling 15% to $1.71, near its 52-week low of $1.57.
Quarterly Performance Highlights
NN Inc reported Q3 2025 net sales of $103.9 million, representing an 8.5% decline from the same period last year. Despite this revenue contraction, the company achieved significant improvements in profitability metrics, with adjusted operating income surging 207.7% to $4.0 million and adjusted EBITDA increasing 6.9% to $12.4 million. The adjusted EBITDA margin expanded by 170 basis points to 11.9%.
As shown in the following financial results summary, NN Inc managed to increase adjusted EBITDA despite lower sales:
The company generated $9.1 million in free cash flow during the quarter, highlighting solid working capital management. According to the presentation, NN Inc has reduced working capital by $20.9 million since Q2 2023, demonstrating the new management team’s focus on operational efficiency.
As illustrated in this working capital reduction chart:
Segment Performance Analysis
NN Inc’s two business segments delivered contrasting results in the quarter. The Power Solutions segment, which focuses on stamped products, reported net sales of $44.9 million, up 4.6% year-over-year. More impressively, the segment’s adjusted EBITDA jumped 39.1% to $8.9 million, with margins expanding to 19.9%.
The Power Solutions segment’s growth was driven by higher precious metal prices and new launches in electrical and defense markets, as shown in the following segment breakdown:
In contrast, the Mobile Solutions segment, which focuses on machined products, experienced a significant decline with net sales dropping 16.4% to $59.1 million. This decline was attributed to the rationalization of underperforming business and lower automotive volumes. Consequently, the segment’s adjusted EBITDA fell to $6.7 million from $8.8 million in the prior year.
The Mobile Solutions segment results highlight the challenges facing the company’s automotive business:
Strategic Initiatives and Market Diversification
NN Inc is actively working to transform its business through a two-phase strategic plan. The company is completing Phase 1, which focuses on creating a scalable core business that generates cash, and preparing to enter Phase 2, which will emphasize scaling up and growing aggressively through M&A activities.
The company reported $11.3 million in new business wins during the quarter, with a focus on defense and medical sectors. Year-to-date, NN Inc has secured $182 million in new business awards, positioning the company for future growth. The presentation highlighted that NN Inc is on track to achieve its 2025 goal of $60-70 million in new business wins.
The company’s improving profitability trends are illustrated in the following chart:
NN Inc is strategically diversifying its revenue streams beyond the automotive sector, which currently represents 40% of revenue. The company is increasing its focus on defense and electronic systems (15% of revenue), which benefit from record-high U.S. defense budgets, and medical equipment (5% of revenue), which offers growth potential. This diversification strategy aims to reduce dependence on the automotive sector, which is experiencing production conservatism and uncertainty.
2025 Outlook and Guidance
NN Inc maintained its guidance for adjusted EBITDA and free cash flow despite lowering its sales outlook. The company now expects 2025 net sales of $420-440 million, down from previous estimates due to automotive production conservatism and program pushouts into 2026. Adjusted EBITDA guidance remains at $53-63 million, with management expecting results toward the lower half of the range. Free cash flow guidance is maintained at $14-16 million, including CARES Act tax refunds.
The company’s full-year guidance is detailed in the following outlook:
CEO Harold Bevis emphasized the company’s proactive approach during the earnings call, stating, "We’re making our own momentum by winning new business." He also highlighted the company’s strategic M&A program and strong free cash flow generation.
Market Reaction and Challenges
Despite operational improvements and profitability gains, investors reacted negatively to NN Inc’s Q3 results. The company reported earnings per share of -$0.01, missing the forecast of $0.01, while revenue fell short of the expected $113.02 million by 8.07%. This significant miss triggered a 15% stock drop to $1.71 in post-earnings trading.
NN Inc faces several challenges, including ongoing softness in North American automotive production, which impacts its largest revenue segment. The company is also managing the consolidation of its final high-cost, unprofitable plant as part of its five-year plan, which creates short-term operational complexities.
While NN Inc’s strategic pivot toward higher-margin, higher-growth markets shows promise, the company must navigate near-term headwinds in its core automotive business while successfully executing its diversification and M&A strategies to restore investor confidence.
Full presentation:
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.