NN 2025 Q1 Earnings Narrowed Losses with 32.4% EPS Improvement

NN(NNBR) reported its fiscal 2025 Q1 earnings on May 07th, 2025. The company's earnings demonstrated a significant improvement in reducing losses, with a narrowed EPS loss of $0.23 compared to a $0.34 loss in the previous year. NN's guidance for the full year remains in line, projecting revenues between $800 million and $865 million, with adjusted EBITDA expected to be between $63.1 million and $68.2 million. The company also anticipates cash flows from operations to range between $35 million and $45 million, reflecting strong operating results in Q1.

Revenue
NN's Q1 2025 revenue experienced a decline of 12.8% year-over-year, totaling $105.69 million, down from $121.20 million in Q1 2024. The Mobile Solutions segment led with $62.24 million, while Power Solutions contributed $43.51 million. The Corporate and Eliminations segment registered a minor negative adjustment of $64,000, aligning the total revenue at $105.69 million.

Earnings/Net Income
NN narrowed its net loss to $6.68 million in Q1 2025, a 46.7% improvement from the $12.54 million loss in Q1 2024. The earnings per share showed a positive trend with a loss of $0.23, an improvement from a $0.34 loss the previous year, indicating a favorable EPS performance.

Price Action
The stock price of NN dropped by 3.68% during the latest trading day, representing a broader decline of 8.96% over the most recent trading week, and a month-to-date decrease of 10.73%.

Post-Earnings Price Action Review
The strategy of acquiring NNBR shares post-revenue increase quarter-over-quarter and holding for 30 days has yielded no returns over the past five years. This strategy consistently underperformed against the benchmark, yielding a return of 0.00% compared to the benchmark's 84.08%. The glaring excess return of -84.08% underscores the significant underperformance. Moreover, the Sharpe ratio and maximum drawdown both stood at 0.00%, indicating neither risk nor return, highlighting the strategy's ineffectiveness in generating returns over the period.

CEO Commentary
Brent Guerisoli, CEO, expressed optimism about the company's performance, reporting a record-breaking quarter with revenue of $209.8 million, a 33.7% increase year-over-year. He attributed success to five key initiatives: leadership development, clinical excellence, employee experience, margin improvement, and growth. Guerisoli emphasized the importance of local leadership, noting that 52 local leaders earned C-level designations since January 2024. He highlighted the successful integration of the Signature Healthcare acquisition, which is ahead of schedule, and pointed to strong performance in both segments. The CEO indicated confidence in reaching the upper end of the 2025 guidance range while remaining cautious about economic uncertainties.

Guidance
The company expects revenue for 2025 to be between $800 million and $865 million, with adjusted EBITDA projected at $63.1 million to $68.2 million and adjusted EPS between $1.03 and $1.11. Lynette Walbom, CFO, mentioned that cash flows from operations are anticipated to range from $35 million to $45 million, supported by strong operating results in Q1 and sufficient funds to execute on upcoming transactions. The guidance reflects the company's strong performance momentum and a commitment to disciplined growth amid market conditions.

Additional News
NN Inc. announced a successful refinancing of its term loan in April 2025, which has bolstered the company's financial flexibility to advance its five-year transformation plan. Additionally, the company plans to host a virtual investor day for analysts and investors in August 2025, showcasing the progress and future strategies in its transformation journey. Furthermore, NN Inc. continues to focus on expanding its portfolio in high-growth areas, having secured $16.4 million in new business wins concentrated in industrial products, electrical and power products, medical, and high-value automotive products.