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    NNBR
    Earnings call· Jun 2026(Q2 FY26)

    NN Q2 FY26 earnings call NNBR

    Aug 6, 2026 Source

    Executive summary

    NN, Inc. Q2 FY26 — Strong Growth, Strategic Refinancing, and Expanding High-Value Markets

    NN, Inc. delivered a strong second quarter, marked by significant growth across both segments and a pivotal refinancing that optimized its capital structure. The company is actively expanding into high-value markets like data center, defense, and medical, with substantial new business wins and pipeline development driving future growth, despite typical Q4 seasonality and inflationary pressures on raw materials.

    Highlights

    5

    • Q2 sales increased 19% year over year.

    • Q2 adjusted EBITDA increased 36% year over year.

    • Secured $65 million of new business awards in H1 FY26.

    • Successfully completed $124 million refinancing transaction, retiring $89 million of preferred stock.

    • Adjusted EBITDA margins expanded 170 basis points in Q2 to 13.9%.

    Concerns

    3

    • Q4 is typically the lightest quarter due to customer balance sheet management.

    • New business wins require increased working capital and CapEx.

    • Metal inflation impacts working capital and negatively affects EBITDA percentages.

    Guidance & targets

    4
    CategoryTargetConfidence
    Full-year Sales
    $460M-$480M
    high materiality
    High
    Full-year Adjusted EBITDA
    $55M-$65M
    high materiality
    High
    Full-year New Business Wins
    $80M-$100M
    medium materiality
    High
    Longer-term Adjusted EBITDA Margin
    14%-16%
    high materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Power Solutions
    Increase driven by higher precious metals pass-through pricing and higher volumes. Adjusted EBITDA growth was due to sales growth, improved mix from high-value end markets, and cost initiatives.
    Net sales (Q2 FY25): $44.6MAdjusted EBITDA (Q2 FY26): $12.7MAdjusted EBITDA growth (Q2 YoY): 40%Adjusted EBITDA (Q2 FY25): $9.1MAdjusted EBITDA margin (H1 FY26): 20%Net sales (H1 FY26): $117.7MNet sales growth (H1 YoY): 34%
    		$62.3M40%—20%
    Mobile Solutions
    Sales growth reflected solid volumes from new program launches and favorable foreign exchange impacts. The segment has delivered two consecutive quarters of net sales growth year over year.
    Net sales (Q2 FY25): $63.4MAdjusted EBITDA (Q2 FY26): $9.8MAdjusted EBITDA growth (Q2 YoY): 13%Adjusted EBITDA (Q2 FY25): $8.7MAdjusted EBITDA margin (Q2 YoY expansion): 100 bpsNet sales (H1 FY26): $129.7MNet sales growth (H1 YoY): 3%Net sales (H1 FY25): $125.6MAdjusted EBITDA (H1 FY26): $18MAdjusted EBITDA (H1 FY25): $16.8MAdjusted EBITDA margin (H1 FY26): nearly 14%Adjusted EBITDA margin (H1 FY25): just over 13%
    		$66.6M5%—14.7%

    Operational metrics

    36
    Net Sales
    $128.79Mup $20.8M or 19% YoY
    Q2 FY26

    Supported by growth across both segments, new business launches, higher precious metals pass-through pricing, volume growth, and slightly favorable FX translation.

    Net Sales
    $247.2Mup $33.6M or 16% YoY
    H1 FY26

    Demonstrating a very strong start to the year and a continuation of momentum from Q1.

    Adjusted Gross Margin Dollars
    $26.1Mup $5M or 24% YoY
    Q2 FY26

    Supported by a stronger mix of sales as a function of new business launches.

    Adjusted Gross Margin Dollars
    $49.2Mup $10.3M or 26% YoY
    H1 FY26

    Reflects a very solid adjusted gross margin.

    Adjusted Gross Margin
    20.3%expanded 80 bps YoY
    Q2 FY26

    Meaningful expansion compared to the prior year period.

    Adjusted Gross Margin
    19.9%expanded 170 bps YoY
    H1 FY26

    Meaningful expansion compared to the prior year period.

    Adjusted EBITDA
    $17.9Mup $4.7M or 36% YoY
    Q2 FY26

    Increase led by higher sales, improved mix, and volume leverage from past cost improvement actions, partially offset by higher SG&A.

    Adjusted EBITDA
    $32.1Mup $8.3M or 35% YoY vs $23.1M in H1 2025
    H1 FY26

    Driven by similar factors as quarterly results.

    Adjusted EBITDA Margin
    13.9%expanded 170 bps YoY
    Q2 FY26

    Improvement in margins alongside EBITDA growth.

    Adjusted EBITDA Margin
    13%up 190 bps YoY vs 11.1% in H1 2025
    H1 FY26

    Improvement in margins alongside EBITDA growth.

    New Business Awards
    $65M
    H1 FY26

    Secured in the first half of the year.

    New Business Wins
    $80M
    YTD through July

    The majority are immediate ramp-ups, benefiting the second half.

    Automotive Revenue Share
    40%declined
    Current

    Ultimate goal is to have it be about a third, not by shrinking but by other areas growing more quickly.

    Top 3 Growth Markets Sales
    $150M
    Current

    Includes data center, electric grid, defense electronics, and medical products.

    Data Center/Electric Grid Sales
    $80M
    TTM

    Second largest market, closing the gap to become the largest segment.

    Defense and Electronics Sales
    $60M
    TTM

    Opportunity rich segment, right behind data center in demand.

    Medical Products Sales
    $15M
    TTM

    Smaller than others, but gaining momentum with high aspirations.

    Preferred Stock Retirement
    $89M
    Q2 FY26

    Completed as part of a multi-leg refinancing.

    PIPE Transaction Capital Raised
    $75M
    Q2 FY26

    Successfully raised, bringing multiple new investors.

    Refinancing Transaction Total
    $124M
    Q2 FY26

    Completed to address the preferred stock.

    Cash Used for Preferred Equity Redemption
    $70M
    Q2 FY26

    Utilized from the recent PIPE transaction to materially de-lever.

    Preferred Equity Equitized into Common Stock
    $19M
    Q2 FY26

    Roughly $19 million of preferred was equitized.

    Remaining Preferred Equity
    $35M
    Q2 FY26

    The remaining stub of preferred equity.

    PICK Interest Rate on Remaining Preferred
    10%reduced from 14.5%
    Current

    Significantly below the previous rate.

    Annual PICK Interest Reduction
    $13M
    Annual

    Materially delivered and annual PICK interest will be reduced.

    Discount on Remaining Preferred
    $5M
    Current

    If paid off or refinanced by the specified date.

    Shares Swapped for Preferred Equity
    5.5M
    Q2 FY26

    For roughly $19 million of reduction in the PREF.

    Total Shares Outstanding
    82.6M
    Q2 FY26

    The gap is reserved for comp plans and previously issued warrants.

    Data Center Machines Coming Online
    50
    Q3/Q4 FY26

    For making data center parts, all installed by November.

    Data Center Sales Outlook from New Machines
    >$1M
    Starting November

    Expected sales outlook once all 50 machines are installed and operational.

    Defense and Electronics Working Pipeline
    $75Mexpanding
    Current

    Achieved a lot of credentials with the Department of Defense and ITAR.

    Medical Pipeline
    $75M
    Current

    Evaluating the market in China, the second largest market for robotic assisted surgery.

    Hit Rate on Closed Opportunities
    27%above industry average
    YTD

    The reason for losing over 70% is being disciplined about the financials.

    Gross Margin Floor for New Business
    25%
    Current

    The floor on gross margin for new programs.

    IRR Floor for Capital Spending
    25%
    Current

    The floor on IRR if spending is needed for new programs.

    New Business Gross Margins vs Existing
    5 points higher
    Current

    The company is still maintaining about five points higher on gross margins on new wins versus existing business.

    Industry KPIs

    4
    MetricValueDetails
    Capacity expansion50 machinesunits
    Tariff cost impactNot quantified
    Data center prime power demand$80MUSD
    Order backlog order intake by segment$75MUSD

    Deals & partnerships

    1
    Undisclosed customerMulti-year agreement to produce parts for weapons systems.$12M-$15Mmulti-year

    Involves advancements in surface coatings and mastering high-volume titanium machining. This is an expanding area for the company.

    Capital programs

    1
    China Manufacturing Expansionunderway

    Benefit: 100,000 sq ft, 200 machines

    Looking for new space in the area of the Wuxi plant to accommodate equipment for data center production. Currently, 80 machines can fit in the existing facility, with a need for space for at least another 200 machines.

    Risks & headwinds

    3
    Q4 SeasonalityQ4 FY26

    Q4 is usually the lightest quarter

    Mitigation: Offsetting new business wins ramping up in H2.

    Working Capital and Capital Expenditure DemandOngoing

    More working capital, more CapEx than thought

    Mitigation: Staying disciplined about the process and selective with programs.

    Metal Inflation and TariffsOngoing

    Year over year inflation in all metals (gold, silver, steel, copper); tariffs on steel

    Mitigation: Right to pass through basis cost changes; seeking full recovery; procurement team tracks tariffs and surcharges.

    What to watch in Q3 FY26

    5

    China Manufacturing Expansion

    Next quarter
    CurrentNeed for 100,000 sq ft and 200 machines identified
    TargetProgress on securing new space and ordering machines within 12-month timeline

    Why it matters

    This expansion is crucial for accommodating the significant ramp-up in data center production and supporting future growth.

    We need about another 100,000 square feet to accommodate the equipment that we're going to need. And this business is on track with expanding opportunities.

    Q&A highlights

    9

    Characterize the data center pipeline, areas of interest, and scale.

    Harold Bevis detailed the diverse products NN makes for data centers (transformer parts, bus bars, liquid connectors, cold plate plating, couplings for heat pumps, stampings for racks, whips/cabling). He mentioned a multi-product approach, expanding into welding/brazing, and a large expanding prospecting pipeline approaching $100 million, with potential for $100 million in connectors alone over time. The focus is on strategic partnerships and asset placement.

    “We have a multi product, look at the data center ecosystem, but basically we're focused in on our core markets. We're getting pulled into a few new areas of welding and brazing, and that's fine because we know how to do that.”

    asked by Rob Brown · answered by Harold Bevis

    2 min read6 chapters

    Detailed Narrative

    01

    Capital Structure Optimization

    NN Inc. completed a multi-leg refinancing transaction, retiring $89 million of preferred stock. This involved using $70 million cash from a PIPE transaction to redeem preferred equity, equitizing $19 million of preferred into common stock, and reducing the interest rate on the remaining $35 million preferred stub to 10% from 14.5%. This move is expected to reduce annual PICK interest by approximately $13 million and provides greater optionality for future debt refinancing.

    02

    Five-Pillar Growth Strategy

    The company is executing a five-pillar growth strategy focusing on data center/electric grid, defense electronics, medical products, high-value vehicle parts, and high-value stamping. Automotive's share of revenue has declined to 40%, with a goal of reaching one-third as other segments grow faster. The top three growth markets now represent over $150 million in sales, about one-third of the company.

    03

    Data Center & Electric Grid Expansion

    This segment is already an $80 million business on a trailing 12-month basis, with a near-term goal of $120 million. NN is evaluating multiple large opportunities, leveraging its precision metal part making for liquid management (cold plates, pumps) and electrical components. The company has secured significant new awards, with 50 machines coming online and a need for an additional 100,000 square feet and 200 machines in China to support ramp-ups into early 2027.

    04

    Defense & Electronics Growth

    This segment is a $60 million TTM business, targeting $90 million. NN supplies critical components for weapons and guidance systems, including anti-drone munitions. A multi-year agreement for defense parts, valued at $12 million to $15 million, is ramping up. The company has mastered high-volume titanium machining and has a $75 million working pipeline in this area.

    05

    Medical Products Momentum

    Currently a $15 million TTM business, with a near-term goal of $40 million. NN has achieved certifications for clean manufacturing and is approved to make surgical robotic machine tips. Initial purchase orders have been received, with ramp-ups underway in Kentwood, Michigan. The new business is expected to double the medical segment, and a $75 million pipeline is being evaluated, including expansion into the Chinese market.

    06

    New Business Wins & Operational Efficiency

    The company secured $65 million in new business awards in H1 FY26 and $80 million through July, with a full-year target of $80 million to $100 million. A 27% hit rate on closed opportunities, above industry average, is attributed to a disciplined approach to financials and a differentiated value proposition. Gross margins on new wins are approximately five points higher than existing business.

    AI-generated summary of the company’s earnings call. Not investment advice.