NN, Inc. Q4 FY2025 earnings call

• 2025 was third consecutive year of improved results, adjusted EBITDA toward recent highs, adjusted operating income grew meaningfully, funded growth programs with free cash flow, completed majority of transformation plan with plant closings and headcount reduction.
• Strategically evolving business portfolio, shifting sales profile to higher value markets and capabilities, exiting unprofitable plants, new business winds program performing well with over $200 million in new business since mid-2023, pipeline over $800 million.
• 2026 forecast for revenue growth, Q1 already showing growth, global automotive and commercial vehicle markets have specific growth outlooks, U.S. defense business likely to get stronger, $10 million cost out program this year, record new business launches underway.
• Adjusted gross margin performance trending toward 20% goal, cost and operational leadership with STNA as percentage of sales dropping to 10.9%, achieved $15 million cost out in 2025, plans for another $10 million this year.

Power Solutions segment: Q4 net sales 45.5 million, up 14.9% y-o-y; full-year pro forma net sales 178.6 million, up 5.3% y-o-y. Adjusted EBITDA Q4 $6.4 million, up $0.8 million y-o-y; full-year 30.7 million, up 10.8% y-o-y. Mobile Solutions segment: Q4 net sales 59.3 million vs 63.8 million prior year; full-year pro forma net sales 244 million, down 9.3% y-o-y. Q4 adjusted EBITDA $10 million, up slightly y-o-y; full-year 33.5 million, down 4% y-o-y. New business: Power Solutions won $3.1 million in Q4, full-year $13.2 million; Mobile Solutions won $26.2 million in Q4, $58.6 million full-year.

• 2026 forecast for net sales growth, guiding to 445 to 465 million in sales.
• Adjusted EBITDA guidance with wider range at start of year narrowing as year unfolds.
• Intend to reduce costs another $10 million this year.
• Increase new business wins target to $70 to $80 million.
• Expect to grow at 10% compounded annual growth rate reaching $80 million in adjusted EBITDA by 2030, with 5% market growth and 2% share gain.

• Volatility remains high in markets, influenced by tariffs, precious metals pricing, geopolitical unrest, Middle East happenings, etc.
• U.S. auto parts market expected to remain volatile with supply chain issues from global tariffs, trade wars, reset between EVs and internal combustion engines, affordability, EPA resets, and wars.
• Capital stack problematic with too much debt plus preferred equity, board launching committee to look at financial and strategic options.

Q: Can you expand on the data center and market opportunity, including any additional color on the size, expected ramp timeline, and margin profile of your first direct data center wind?

A: We have product angles into data center market, focused on cooling and cable assemblies, immediate ramp up business, team underway, will report on size in next public call.

Q: What is the roadmap for sustaining sales growth in 2026 look like?

A: Roughly doubling capital spending, growth primarily from new wins that preceded the year, 2026 growth from ramping up existing wins and new wins, capex primarily for growth programs.

Q: On the ramp of new business in 26, what's the cadence of ramp in terms of the revenue that hits this year versus future years?

A: Launching over a hundred programs in 2026, expect between 20 and 25 million of revenue from 2026 launches, with programs launched in 2025 continuing to escalate.

Q: Where do you plan CapEx activity and what program areas do you need CapEx for?

A: Bulk of CapEx goes towards growth programs, well over 15 million in growth programs, 75% focused on capital required for launching businesses.

Q: How much visibility do you have beyond Q1? Is Q2 looking strong?

A: Have released orders into Q2, healthy backlog, can see Q2 is strong, Q3 and Q4 have expectations from customers consistent with sales guidance.