NN (NNBR +3.10%), a specialized manufacturer of high-precision industrial components for automotive, electrical, and medical sectors, reported its earnings for the quarter ended June 30, 2025, on August 6, 2025. The company’s results showed a positive turn in non-GAAP earnings, with EPS of $0.02, beating the consensus expectation of -$0.00 (non-GAAP). However, GAAP revenue was $107.9 million, below the analyst estimate of $110.8 million (GAAP) and declining 12.3% from the prior-year period. Despite weaker sales, NN outperformed on key adjusted profitability metrics, with adjusted operating income of $4.9 million and Adjusted EBITDA margin improved from 10.0% in Q1 2025 to 12.2% in Q2 2025. Overall, the period highlighted ongoing margin improvement and cost control, but also underscored persistent market weakness and cash flow challenges.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.02 | $(0.00) | $(0.02) | $0.04 |
| Revenue | $107.9 million | $110.8 million | $123.0 million | (12.3%) |
| Adjusted EBITDA | $13.2 million | $13.4 million | (1.5%) | |
| Adjusted Operating Income | $4.9 million | $2.1 million | 133.3% | |
| Free Cash Flow | $(3.2 million) | $(1.3 million) | (146.2%) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About NN: Business focus and key drivers
NN operates as a supplier of high-precision components, serving the automotive, electrical, and medical markets with products manufactured using advanced techniques like precision machining, progressive stamping, and laser welding. Its global operations span 26 facilities across North America, South America, Europe, and Asia, enabling it to provide customers with cost-effective and localized manufacturing solutions.
The company’s strategy hinges on five core areas: high-precision manufacturing, an international footprint, long-standing blue-chip customer relationships, fostering innovation across its business segments, and supporting customers throughout the full product lifecycle. Recent efforts have focused on expanding into new product categories such as medical components and evaluating entry into electrical harnesses, aiming to reduce reliance on cyclical automotive demand and fuel future growth. Success for NN centers on ramping new business programs, continuing cost-control measures, and leveraging its engineering and manufacturing expertise for demanding markets.
Quarter in review: Financial and operational highlights
NN’s GAAP revenue fell short of expectations in Q2 2025 as softness in core end markets, mainly automotive, continued to weigh on sales. Power Solutions segment GAAP net sales declined to $44.6 million from $50.2 million in Q2 2024, largely due to the sale of the Lubbock facility and lower automotive volume. Mobile Solutions sales also fell, down 13% to $63.4 million compared to Q2 2024, reflecting ongoing weaker automotive demand. Despite these headwinds, the company delivered a marked improvement in profitability, as reflected by an increase in adjusted income from operations and adjusted EBITDA margin, more than doubling adjusted operating income to $4.9 million and increasing adjusted gross margin from 18.6% to 19.5% (non-GAAP).
Segment margin performance was a highlight. In Power Solutions, adjusted operating margin (non-GAAP) increased to 18.9% from 16.0% in Q2 2024, supported by a more favorable product mix and cost reductions. Mobile Solutions swung to positive adjusted income from operations of $2.3 million, compared to a loss of $0.7 million in Q2 2024. The improvement was primarily due to a better sales margin mix and lower operating costs. GAAP gross margin for Q2 2025 was 16.9%.
Cost controls and transformation initiatives remained central. Management continued rationalizing its global footprint and cutting staff, with headcount down 16.1% from Q2 2023 to Q1 2025. Profit per salaried employee (adjusted EBITDA per salaried headcount) rose 25% over the last twelve months through Q1 2025. This increase was a direct result of reorganization and efficiency improvements. Working capital as a percentage of revenue declined to 19.1% in Q1 2025, and the company is targeting further reductions.
Program pipeline activity accelerated. Over 100 new programs are being launched in 2025, anticipated to add more than $45 million in future annualized sales once fully ramped. In the first half of 2025, NN secured $32.7 million in new business wins, with a broader pipeline now exceeding $750 million as of Q1 2025. New product development and targeted additions to the business development team, including recent hires for medical and stampings, are expanding commercial reach. Notably, about half of the company’s business development pipeline is now outside traditional end markets, helping to diversify its future revenue base.
Business segments and notable activity
Power Solutions, which delivers progressive stamper products—metal parts used in electrical systems—reported a revenue decline, impacted by both strategic asset sales and lower automotive orders. However, the ability to pass through precious metals pricing eased some pressure. Management noted ongoing new business wins, especially in industrial stampings, have begun to offset legacy volume declines. Margin expansion in the segment signals that cost and mix actions are gaining traction.
The Mobile Solutions segment, responsible for precision machined products such as metal shafts and assemblies primarily for vehicles, experienced continued softening from the auto sector. Rationalized volume, meaning deliberate exit from unprofitable business, helped trim excess and improved margins. Adjusted income from operations for the segment moved from a loss of $0.7 million in Q2 2024 to a positive $2.3 million. Ramped-up launches for industrial and medical applications now use capacity freed from automotive rationalization, and new machining equipment installed this year is dedicated to medical business expansion.
Innovation and cross-segment synergies featured throughout the quarter. NN continues to leverage its expertise in precision manufacturing and its global platform to win new contracts that require a high level of engineering rigor. For example, its entry into medical instrument parts, such as ratcheting handles for surgical kits, builds on its ability to produce tight-tolerance, high-reliability parts. The pursuit of synergies and product adjacencies, like electrical harnesses, supports the aim to reduce reliance on any single sector and maximize use of capacity.
No one-time items like plant closures were reported this quarter, but the company continues to review underperforming facilities for possible consolidation in the year ahead. NN does not currently pay a dividend.
Looking ahead: Guidance and areas to watch
Management reaffirmed its full-year 2025 guidance, targeting net sales of $430–$460 million, adjusted EBITDA of $53–$63 million, and free cash flow (non-GAAP) of $14–$16 million, which includes expected tax refunds under the CARES Act. However, leadership suggested that results are trending toward the lower end of those ranges due to ongoing tariff uncertainty, continuing softness in automotive, and macroeconomic factors. There was no change in the guidance for new business wins, holding at $60–$70 million.
The company’s liquidity position tightened, with cash and cash equivalents of $9.5 million as of June 30, 2025, down from $18.1 million as of December 31, 2024. Net debt increased as capital investments continued. Investors should monitor the conversion of the business pipeline into realized sales, trends in segment margins as cost actions mature, and any impacts from potential changes in trade policy or tariff regimes on core markets. No new clear guidance was offered beyond these figures, and future performance will depend on how newly launched programs ramp and stabilize revenues across business lines.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
