What changed in this filing

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Item 1. Financial Statements

2022-11-02 compared with 2022-08-05 · 142 added, 133 removed, 577 unchanged (32% of the section changed)

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands, except per share data) 2022 2021 2022 2021

9 unchanged sentences

Loss on interest rate swap — — — 2,033

Other expense (income), net ( 67 ) 1,680 ( 3,063 ) 1,558

Other income, net ( 1,156 ) ( 4,346 ) ( 4,219 ) ( 2,788 )

Loss before benefit (provision) for income taxes and share of net income from joint venture ( 4,707 ) ( 3,844 ) ( 16,505 ) ( 17,749 )

3 unchanged sentences

Other comprehensive income (loss):

Foreign currency translation gain (loss) $ ( 8,490 ) $ 4,409 $ ( 5,890 ) $ 1,062

Foreign currency translation loss $ ( 7,653 ) $ ( 2,612 ) $ ( 13,543 ) $ ( 1,550 )

Interest rate swap:

Change in fair value, net of tax 904 ( 176 ) 2,464 ( 176 )

Reclassification adjustment for losses included in net loss, net of tax 31 — 65 2,851

Reclassification adjustment for losses (gains) included in net loss, net of tax ( 116 ) 22 ( 51 ) 2,873

Other comprehensive income (loss) $ ( 6,865 ) $ ( 2,766 ) $ ( 11,130 ) $ 1,147

8 unchanged sentences

Condensed Consolidated Balance Sheets

(in thousands, except per share data) June 30,

(in thousands, except per share data) September 30,

2022 December 31,

1 unchanged sentence

Cash and cash equivalents $ 12,551 $ 28,656

Accounts receivable, net of allowances of $ 1,762 and $ 1,352 at June 30, 2022 and December 31, 2021, respectively

Accounts receivable, net of allowances of $ 1,476 and $ 1,352 at September 30, 2022 and December 31, 2021, respectively

83,496 71,419

3 unchanged sentences

Total current assets 204,091 196,282

Property, plant and equipment, net of accumulated depreciation of $ 210,618 and $ 197,936 at June 30, 2022 and December 31, 2021, respectively

Property, plant and equipment, net of accumulated depreciation of $ 214,254 and $ 197,936 at September 30, 2022 and December 31, 2021, respectively

195,084 209,105

20 unchanged sentences

Commitments and contingencies (Note 9)

Series D perpetual preferred stock - $ 0.01 par value per share, 65 shares authorized, issued and outstanding at June 30, 2022 and December 31, 2021, respectively

Series D perpetual preferred stock - $ 0.01 par value per share, 65 shares authorized, issued and outstanding at September 30, 2022 and December 31, 2021, respectively

61,786 53,807

Stockholders' equity:

Common stock - $ 0.01 par value per share, 90,000 shares authorized, 43,884 and 43,027 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

Common stock - $ 0.01 par value per share, 90,000 shares authorized, 43,882 and 43,027 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 470,543 474,757

5 unchanged sentences

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Three Months Ended June 30, 2022 and 2021

Three Months Ended September 30, 2022 and 2021

Common Stock Accumulated deficit Accumulated other comprehensive income (loss)

2 unchanged sentences

capital Total

Balance at March 31, 2022 43,890 $ 439 $ 473,072 $ ( 222,402 ) $ ( 28,081 ) $ 223,028

Balance as of June 30, 2022 43,884 $ 439 $ 473,019 $ ( 230,969 ) $ ( 36,167 ) $ 206,322

Net loss — — — ( 2,215 ) — ( 2,215 )

1 unchanged sentence

Share-based compensation expense ( 2 ) — 991 — — 991

Restricted shares forgiven for taxes ( 1 ) — ( 1 ) — — ( 1 )

Change in estimate of share-based award vesting — — ( 684 ) — — ( 684 )

Change in fair value of interest rate swap, net of tax of $ 241

3 unchanged sentences

Foreign currency translation loss — — — — ( 7,653 ) ( 7,653 )

Balance at June 30, 2022 43,884 $ 439 $ 473,019 $ ( 230,969 ) $ ( 36,167 ) $ 206,322

Balance as of September 30, 2022 43,882 $ 439 $ 470,543 $ ( 233,184 ) $ ( 43,032 ) $ 194,766

Common Stock Accumulated deficit Accumulated other comprehensive income (loss)

2 unchanged sentences

capital Total

Balance at March 31, 2021 43,049 $ 430 $ 479,341 $ ( 210,788 ) $ ( 34,228 ) $ 234,755

Balance as of June 30, 2021 43,034 $ 430 $ 477,923 $ ( 216,179 ) $ ( 29,819 ) $ 232,355

Net loss — — — ( 3,377 ) — ( 3,377 )

Dividends accrued for preferred stock — — ( 2,314 ) — — ( 2,314 )

Shares issued for option exercises 6 — 48 — — 48

Share-based compensation expense — — 931 — — 931

Restricted shares forgiven for taxes ( 2 ) — ( 18 ) — — ( 18 )

Change in estimate of share-based award vesting — — ( 337 ) — — ( 337 )

Foreign currency translation gain — — — — 4,409 4,409

Balance at June 30, 2021 43,034 $ 430 $ 477,923 $ ( 216,179 ) $ ( 29,819 ) $ 232,355

Change in fair value of interest rate swap, net of tax of $ 53

— — — — ( 176 ) ( 176 )

Reclassification of interest rate swap settlement to net loss, net of tax of $ 7

— — — — 22 22

Foreign currency translation loss — — — — ( 2,612 ) ( 2,612 )

Balance as of September 30, 2021 43,034 $ 430 $ 476,540 $ ( 219,556 ) $ ( 32,585 ) $ 224,829

See notes to condensed consolidated financial statements (unaudited).

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Six Months Ended June 30, 2022 and 2021

Nine Months Ended September 30, 2022 and 2021

Common Stock Accumulated deficit Accumulated other comprehensive income (loss)

2 unchanged sentences

capital Total

Balance at December 31, 2021 43,027 $ 430 $ 474,757 $ ( 219,100 ) $ ( 31,902 ) $ 224,185

Balance as of December 31, 2021 43,027 $ 430 $ 474,757 $ ( 219,100 ) $ ( 31,902 ) $ 224,185

Net loss — — ( 14,084 ) — ( 14,084 )

2 unchanged sentences

Restricted shares forgiven for taxes ( 31 ) — ( 88 ) — — ( 88 )

Change in estimate of share-based award vesting — — ( 684 ) — — ( 684 )

Change in fair value of interest rate swap, net of tax of $ 655

3 unchanged sentences

Foreign currency translation loss — — — — ( 13,543 ) ( 13,543 )

Balance at June 30, 2022 43,884 $ 439 $ 473,019 $ ( 230,969 ) $ ( 36,167 ) $ 206,322

Balance as of September 30, 2022 43,882 $ 439 $ 470,543 $ ( 233,184 ) $ ( 43,032 ) $ 194,766

Common Stock Accumulated deficit Accumulated other comprehensive income (loss)

2 unchanged sentences

capital Total

Balance at December 31, 2020 42,686 $ 427 $ 493,332 $ ( 205,875 ) $ ( 33,732 ) $ 254,152

Balance as of December 31, 2020 42,686 $ 427 $ 493,332 $ ( 205,875 ) $ ( 33,732 ) $ 254,152

Net loss — — — ( 13,681 ) — ( 13,681 )

4 unchanged sentences

Change in estimate of share-based award vesting — — ( 337 ) — — ( 337 )

Change in fair value of interest rate swap, net of tax of $ 53

— — — — ( 176 ) ( 176 )

Reclassification of interest rate swap settlement to net loss, net of tax of $ 868

— — — — 2,873 2,873

Foreign currency translation gain — — — — 1,062 1,062

Balance at June 30, 2021 43,034 $ 430 $ 477,923 $ ( 216,179 ) $ ( 29,819 ) $ 232,355

Foreign currency translation loss — — — — ( 1,550 ) ( 1,550 )

Balance as of September 30, 2021 43,034 $ 430 $ 476,540 $ ( 219,556 ) $ ( 32,585 ) $ 224,829

See notes to condensed consolidated financial statements (unaudited).

Condensed Consolidated Statements of Cash Flows

Six Months Ended

Nine Months Ended

September 30,

(in thousands) 2022 2021

5 unchanged sentences

Loss on extinguishment of debt and write-off of debt issuance costs — 2,390

Total derivative loss (gain), net of cash settlements ( 3,237 ) 3,973

Total derivative gain, net of cash settlements ( 4,858 ) ( 856 )

Share of net income from joint venture, net of cash dividends received 2,310 ( 3,456 )

17 unchanged sentences

Cash paid for debt issuance costs ( 136 ) ( 7,360 )

Dividends paid — —

Proceeds from issuance of preferred stock — 61,793

4 unchanged sentences

Other ( 2,265 ) ( 3,859 )

Net cash provided by (used in) financing activities ( 1,010 ) 6,930

Net cash provided by financing activities 1,441 4,519

Effect of exchange rate changes on cash flows ( 1,324 ) ( 1,058 )

4 unchanged sentences

Notes to Condensed Consolidated Financial Statements

June 30, 2022

September 30, 2022

Interim Financial Statements

6 unchanged sentences

Securities and Exchange Commission (the “SEC”) on March 11, 2022.

In management’s opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary to fairly state our results of operations for the three and six months ended June 30, 2022 and 2021;

financial position as of June 30, 2022 and December 31, 2021;

and cash flows for the six months ended June 30, 2022 and 2021, on a basis consistent with our audited consolidated financial statements.

financial position as of September 30, 2022 and December 31, 2021;

and cash flows for the nine months ended September 30, 2022 and 2021, on a basis consistent with our audited consolidated financial statements.

These adjustments are of a normal recurring nature and are, in the opinion of management, necessary to state fairly the Company’s financial position and operating results for the interim periods.

3 unchanged sentences

These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes included in the 2021 Annual Report.

The results for the three and six months ended June 30, 2022, are not necessarily indicative of results for the year ending December 31, 2022, or any other future periods.

The results for the three and nine months ended September 30, 2022, are not necessarily indicative of results for the year ending December 31, 2022, or any other future periods.

Except for per share data or as otherwise indicated, all U.S.

9 unchanged sentences

The difference between the fair value of the modified warrant and the fair value of the warrant immediately before modification is then recognized as an issuance cost or discount of the related transaction.

Since we do not have any equity-classified written call options that would be subject to this guidance, the adoption of ASU 2021-04 did not have any impact on our consolidated financial statements and related disclosures during the six months ended June 30, 2022.

Accounting Standards Not Yet Adopted

14 unchanged sentences

Consolidations Total

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Net sales $ 76,122 $ 51,124 $ 51 (a) $ 127,297

2 unchanged sentences

Loss from operations before income taxes and share of net income from joint venture $ ( 4,707 )

Three Months Ended June 30, 2021

Net sales $ 73,886 $ 49,271 $ — $ 123,157

Three Months Ended September 30, 2021

Net sales $ 68,586 $ 48,680 $ ( 22 ) (a) $ 117,244

Income (loss) from operations ( 257 ) 1,252 ( 5,607 ) ( 4,612 )

Interest expense ( 3,578 )

Other ( 1,680 )

Loss from operations before income taxes and share of net income from joint venture $ ( 3,844 )

2 unchanged sentences

Consolidations Total

Six Months Ended June 30, 2022

Net sales $ 149,420 $ 104,060 $ ( 51 ) (a) $ 253,429

Nine Months Ended September 30, 2022

Net sales $ 225,542 $ 155,184 $ — $ 380,726

Income (loss) from operations 3,224 4,376 ( 17,651 ) ( 10,051 )

1 unchanged sentence

Loss from operations before income taxes and share of net income from joint venture $ ( 16,505 )

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Net sales $ 220,248 $ 147,026 $ ( 69 ) (a) $ 367,205

6 unchanged sentences

Inventories are comprised of the following amounts:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Raw materials $ 32,821 $ 27,221

8 unchanged sentences

Amortization ( 2,515 ) ( 8,245 ) ( 10,760 )

Balance as of June 30, 2022 $ 24,032 $ 57,513 $ 81,545

Balance as of September 30, 2022 $ 23,194 $ 54,764 $ 77,958

Intangible assets are reviewed for impairment when changes in circumstances indicate the carrying value of those assets may not be recoverable.

At June 30, 2022, our market capitalization declined to a level that was less than the net book value of our stockholders’ equity.

The decline in market capitalization was a triggering event that caused us to perform an impairment analysis on our long-lived assets as of June 30, 2022.

Based on our analysis, the carrying values of the long-lived assets were recoverable and no impairment charge was recorded during the six months ended June 30, 2022.

As of September 30, 2022, our market capitalization remained at a level that was less than the net book value of our stockholders’ equity.

The decline in our market capitalization during the nine months ended September 30, 2022 was a triggering event that caused us to perform impairment analyses on our long-lived assets.

Based on our analyses, the carrying values of the long-lived assets were recoverable and no impairment charge was recorded during the nine months ended September 30, 2022.

Investment in Joint Venture

7 unchanged sentences

Foreign currency translation loss ( 3,542 )

Balance as of June 30, 2022 $ 30,875

Our effective tax rate was ( 13.2 )% and ( 21.9 )% for the three and six months ended June 30, 2022, respectively, and 3.4 % and 7.1 % for the three and six months ended June 30, 2021, respectively.

The effective tax rate for the three and six months ended June 30, 2022 differs from the U.S.

Balance as of September 30, 2022 $ 28,193

Our effective tax rate was 22.7 % and ( 9.2 )% for the three and nine months ended September 30, 2022, respectively, and ( 9.8 )% and 3.5 % for the three and nine months ended September 30, 2021, respectively.

The effective tax rates for the three and nine months ended September 30, 2022 differ from the U.S.

federal statutory tax rate of 21 % primarily due to the accrual of tax on non-permanently reinvested unremitted earnings of foreign subsidiaries and by limitation on the amount of tax benefit recorded for loss carryforwards in certain jurisdictions where we believe it is more likely than not that a portion of the future tax benefit may not be realized.

In addition, the effective tax rate was unfavorably impacted by U.S.

tax on the earnings of foreign subsidiaries under the global intangible low-taxed income regime.

In addition, the effective tax rate was favorably impacted by the recording of interest income on the Company’s federal income tax refund requested as a result of the CARES act.

On March 22, 2021, we entered into a new $ 150.0 million term loan facility (the “Term Loan Facility”) and a new $ 50.0 million asset backed credit facility (the “ABL Facility”).

The following table presents debt balances as of June 30, 2022 and December 31, 2021.

June 30, 2022 December 31, 2021

The following table presents debt balances as of September 30, 2022 and December 31, 2021.

September 30, 2022 December 31, 2021

Term Loan Facility $ 147,750 $ 148,875

7 unchanged sentences

_______________________________

(1) In addition to this amount, costs of $ 0.6 million and $ 0.7 million related to the ABL Facility were recorded in other non-current assets as of June 30, 2022 and December 31, 2021, respectively.

(1) In addition to this amount, costs of $ 0.7 million and $ 0.7 million related to the ABL Facility were recorded in other non-current assets as of September 30, 2022 and December 31, 2021, respectively.

Term Loan Facility

Outstanding borrowings under the Term Loan Facility bear interest at either 1) one-month LIBOR (subject to a 1.000 % floor) plus an applicable margin of 6.875 % or 2) the greater of various benchmark rates plus an applicable margin of 5.875 %.

At June 30, 2022, the Term Loan Facility bore interest, based on one-month LIBOR, at 8.541 %.

We have an interest rate swap that changes the one-month LIBOR to a fixed rate of 1.291 % on $ 60.0 million of the outstanding balance of the Term Loan Facility.

At September 30, 2022, the Term Loan Facility bore interest, based on one-month LIBOR, at 9.990 %.

We have an interest rate swap, which expires in July 2024, that changes the one-month LIBOR to a fixed rate of 1.291 % on $ 60.0 million of the outstanding balance of the Term Loan Facility.

The Term Loan Facility requires quarterly principal payments of $ 0.4 million with the remaining unpaid principal amount due on the final maturity date of September 22, 2026.

1 unchanged sentence

The Term Loan Facility has a first lien on all assets other than accounts receivable and inventory and has a second lien on accounts receivable and inventory.

On March 3, 2022, we amended our Term Loan Facility, which increases the quarterly maximum consolidated net leverage ratio.

We were in compliance with all requirements under the Term Loan Facility as of June 30, 2022.

On March 3, 2022, we amended our Term Loan Facility, which increased the quarterly maximum consolidated net leverage ratio.

We were in compliance with all requirements under the Term Loan Facility as of September 30, 2022.

The Term Loan Facility was issued at a $ 3.8 million discount and we capitalized an additional $ 2.8 million in new debt issuance costs.

6 unchanged sentences

Interest payments are due monthly on borrowings that utilize one-month LIBOR and quarterly on borrowings that utilize three-month or six-month LIBOR.

At June 30, 2022, using one-month LIBOR plus a 1.75 % spread, the weighted average interest rate on outstanding borrowings under the ABL Facility was 3.00 %.

At September 30, 2022, using one-month LIBOR plus a 1.75 % spread, the weighted average interest rate on outstanding borrowings under the ABL Facility was 4.56 %.

We pay a commitment fee of 0.375 % for unused capacity under the ABL Facility and a 1.875 % fee on the amount of letters of credit outstanding.

The final maturity date of the ABL Facility is March 22, 2026.

As of June 30, 2022, we had $ 2.0 million of outstanding borrowings under the ABL Facility, $ 11.1 million of outstanding letters of credit, and $ 36.9 million available for future borrowings under the ABL Facility.

As of September 30, 2022, we had $ 6.0 million of outstanding borrowings under the ABL Facility, $ 11.1 million of outstanding letters of credit, and $ 32.1 million available for future borrowings under the ABL Facility.

The ABL Facility has a first lien on accounts receivable and inventory.

We were in compliance with all requirements under the ABL Facility as of June 30, 2022.

We were in compliance with all requirements under the ABL Facility as of September 30, 2022.

The following table contains supplemental cash flow information related to leases.

Six Months Ended

Nine Months Ended

September 30,

Cash paid for amounts included in the measurement of lease liabilities:

21 unchanged sentences

Management believes the indemnification would include amounts owed for the tax, interest, and penalties related to this matter.

Accordingly, we do not expect to incur a loss related to this matter even in the event of an unfavorable decision and, therefore, have not accrued an amount for the remaining matters as of June 30, 2022.

Securities Offering Matter

As previously disclosed, Erie County Employees’ Retirement System, on behalf of a purported class of plaintiffs, filed a complaint in the Supreme Court of the State of New York, County of New York against us, certain of our current and former officers and directors, and each of the underwriters involved in our public offering and sale of 14.4 million shares of our common stock pursuant to a preliminary prospectus supplement, dated September 10, 2018, a final prospectus supplement, dated September 13, 2018, and a base prospectus, dated April 19, 2017, relating to our effective shelf registration statement on Form S-3 (File No.

On November 1, 2019, Erie County Employees’ Retirement System, on behalf of a purported class of plaintiffs, filed a complaint in the Supreme Court of the State of New York, County of New York against us, certain of our current and former officers and directors, and each of the underwriters involved in our public offering and sale of 14.4 million shares of our common stock pursuant to a preliminary prospectus supplement, dated September 10, 2018, a final prospectus supplement, dated September 13, 2018, and a base prospectus, dated April 19, 2017, relating to our effective shelf registration statement on Form S-3 (File No.

333-216737) (the “Offering”).

1 unchanged sentence

On July 25, 2022, the parties filed a Stipulation of Settlement, which is subject to court approval, to settle the securities offering action.

Under the terms of the Stipulation of Settlement, the Company and/or its insurance carrier will make a cash payment to the plaintiff in the amount $ 9.5 million (the “Settlement Amount”), in exchange for which the Company and the other named defendants will be released from all claims related to the securities offering action.

As of June 30, 2022, we have previously

paid covered expenses totaling $ 1.0 million meeting our directors' and officers' retention requirement and therefore the Settlement Amount will be covered and paid by our directors' and officers' insurance carrier.

Under the terms of the Stipulation of Settlement, the Company and/or its insurance carrier will make a cash payment to the plaintiff in the amount of $ 9.5 million (the “Settlement Amount”), in exchange for which the Company and the other named defendants will be released from all claims related to the securities offering action.

As of September 30, 2022, we have

previously paid covered expenses totaling $ 1.0 million meeting our directors' and officers' retention requirement and therefore the Settlement Amount will be covered and paid by our directors' and officers' insurance carrier.

Other Legal Matters

On April 25, 2022, we reached an agreement to settle breach of contract claims brought by a former customer regarding the sale of products by us in 2016.

Under the agreement, we will pay $ 1.8 million to the customer in specified installments through July 2023.

Under the agreement, we are paying $ 1.8 million to the customer in specified installments through July 2023.

The $ 1.8 million settlement is included in the Other operating expense (income), net line in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

8 unchanged sentences

If no cash dividend is paid, then the liquidation preference per share effective on the dividend date increases by 12.0 % per year.

On March 22, 2026, the cash dividend rate and in-kind dividend rate increase by 2.5 % per year.

Beginning March 22, 2026, the cash dividend rate and in-kind dividend rate increase by 2.5 % per year.

Cash dividends are required beginning on September 30, 2027.

5 unchanged sentences

Note 15 discusses the accounting for these features.

As of June 30, 2022, the carrying value of the Series D Preferred Stock shares was $ 59.0 million, which included $ 12.3 million of accumulated unpaid and deemed dividends.

The following table presents the change in the Series D Preferred Stock carrying value during the six months ended June 30, 2022.

Six Months Ended

June 30, 2022

Beginning balance $ 53,807

As of September 30, 2022, the carrying value of the Series D Preferred Stock shares was $ 61.8 million, which included $ 15.1 million of accumulated unpaid and deemed dividends.

The following table presents the change in the Series D Preferred Stock carrying value during the nine months ended September 30, 2022.

Balance as of December 31, 2021 $ 53,807

Accrual of in-kind dividends 6,620

Amortization 1,359

Ending balance $ 59,003

Balance as of September 30, 2022 $ 61,786

Revenue from Contracts with Customers

1 unchanged sentence

Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or services.

During the six months ended June 30, 2022, we received equipment from a customer as part of the selling price of goods transferred.

During the nine months ended September 30, 2022, we received equipment from a customer as part of the selling price of goods transferred.

This noncash consideration was recognized as revenue equal to the fair value of the equipment received.

The following tables summarize revenue by customer geographical region.

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022 Mobile

Solutions Power

9 unchanged sentences

Total net sales $ 76,122 $ 51,124 $ 51 $ 127,297

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021 Mobile

Solutions Power

9 unchanged sentences

Total net sales $ 68,586 $ 48,680 $ ( 22 ) $ 117,244

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022 Mobile

Solutions Power

9 unchanged sentences

Total net sales $ 225,542 $ 155,184 $ — $ 380,726

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021 Mobile

Solutions Power

11 unchanged sentences

Our products in the automotive industry include high-precision components and assemblies for electric power steering systems, electric braking, electric motors, fuel systems, emissions control, transmissions, moldings, stampings, sensors, and electrical contacts.

Our products in the general industrial industry include high-precision metal and plastic components for a variety of industrial applications including diesel industrial motors, heating and cooling systems, fluid power systems, power tools, and more.

Our products in the general industrial industry

include high-precision metal and plastic components for a variety of industrial applications including diesel industrial motors, heating and cooling systems, fluid power systems, power tools, and more.

While many of the industries we serve include electrical components, our products in the residential/commercial electrical industry category in the following tables include components used in smart meters, charging stations, circuit breakers, transformers, electrical contact assemblies, precision stampings, welded contact assemblies, and specification plating and surface finishing.

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022 Mobile

Solutions Power

6 unchanged sentences

Total net sales $ 76,122 $ 51,124 $ 51 $ 127,297

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021 Mobile

Solutions Power

6 unchanged sentences

Total net sales $ 68,586 $ 48,680 $ ( 22 ) $ 117,244

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022 Mobile

Solutions Power

6 unchanged sentences

Total net sales $ 225,542 $ 155,184 $ — $ 380,726

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021 Mobile

Solutions Power

8 unchanged sentences

Deferred revenue relates to payments received in advance of performance under the contract and recognized as revenue as (or when) we perform under the contract.

The balance of deferred revenue was $ 0.6 million and $ 0.5 million as of June 30, 2022 and December 31, 2021, respectively.

Revenue recognized for performance obligations satisfied or partially satisfied during the six months ended June 30, 2022 included $ 0.5 million that was included in deferred revenue as of December 31, 2021.

The balance of deferred revenue was $ 0.6 million and $ 0.5 million as of September 30, 2022 and December 31, 2021, respectively.

Revenue recognized for performance obligations satisfied or partially satisfied during the nine months ended September 30, 2022 included $ 0.5 million that was included in deferred revenue as of December 31, 2021.

Transaction Price Allocated to Future Performance Obligations

We are required to disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied as of June 30, 2022, unless our contracts meet one of the practical expedients.

We are required to disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied as of September 30, 2022, unless our contracts meet one of the practical expedients.

Our contracts met the practical expedient for a performance obligation that is part of a contract that has an original expected duration of one year or less.

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

8 unchanged sentences

S tock Options

The following table presents stock option activity for the six months ended June 30, 2022.

The following table presents stock option activity for the nine months ended September 30, 2022.

Number of Options

4 unchanged sentences

Expired ( 79 ) 9.71

Outstanding at June 30, 2022 542 $ 12.61 4.1 years $ — (1)

Exercisable at June 30, 2022 515 $ 12.77 3.9 years $ — (1)

Outstanding at September 30, 2022 542 $ 12.61 3.6 years $ — (1)

Exercisable at September 30, 2022 515 $ 12.77 3.4 years $ — (1)

_______________________________

(1) The aggregate intrinsic value is the sum of intrinsic values for each exercisable individual option grant.

The intrinsic value is the amount by which the closing market price of our stock at June 30, 2022, was greater than the exercise price of any individual option grant.

The intrinsic value is the amount by which the closing market price of our stock at September 30, 2022 was greater than the exercise price of any individual option grant.

Restricted Stock

During the six months ended June 30, 2022, we granted 897,000 shares of restricted stock to non-executive directors, officers and certain other key employees under the NN, Inc.

During the nine months ended September 30, 2022, we granted 897 thousand shares of restricted stock to non-executive directors, officers and certain other key employees under the NN, Inc.

2019 Omnibus Incentive Plan (“2019 Omnibus Plan”).

The shares of restricted stock granted during the six months ended June 30, 2022, vest pro-rata generally over three years for employees and over one year for non-executive directors.

The shares of restricted stock granted during the nine months ended September 30, 2022, vest pro-rata generally over three years for employees and over one year for non-executive directors.

We determined the fair value of the shares awarded by using the closing price of our common stock as of the date of grant.

The weighted average grant date fair value of restricted stock granted in the six months ended June 30, 2022, was $ 3.31 per share.

Total grant date fair value of restricted stock that vested in the six months ended June 30, 2022, was $ 2.1 million.

The following table presents the status of unvested restricted stock awards as of June 30, 2022 and changes during the six months then ended.

The weighted average grant date fair value of restricted stock granted in the nine months ended September 30, 2022, was $ 3.31 per share.

Total grant date fair value of restricted stock that vested in the nine months ended September 30, 2022, was $ 2.1 million.

The following table presents the status of unvested restricted stock awards as of September 30, 2022 and changes during the nine months then ended.

(in thousands) Weighted

3 unchanged sentences

Forfeited ( 11 ) 4.37

Unvested at June 30, 2022 1,066 $ 4.02

Unvested at September 30, 2022 1,064 $ 4.02

Performance Share Units

24 unchanged sentences

The grant date fair value of ROIC Awards is based on the closing price of a share of our common stock on the date of grant.

The following table presents the status of unvested PSUs as of June 30, 2022 and changes during the six months then ended.

The following table presents the status of unvested PSUs as of September 30, 2022 and changes during the nine months then ended.

Nonvested TSR Awards Nonvested ROIC Awards

4 unchanged sentences

Granted 382 2.53 408 2.62

Nonvested at June 30, 2022 576 $ 4.90 636 $ 4.60

Nonvested at September 30, 2022 576 $ 4.90 636 $ 4.60

Accumulated Other Comprehensive Income

1 unchanged sentence

Foreign Currency Translation Interest rate swap Income taxes (1) Total

Balance at March 31, 2022 $ ( 29,416 ) $ 1,698 $ ( 363 ) $ ( 28,081 )

Balance as of June 30, 2022 $ ( 37,906 ) $ 2,207 $ ( 468 ) $ ( 36,167 )

Other comprehensive income (loss) before reclassifications ( 7,653 ) 1,145 ( 241 ) ( 6,749 )

1 unchanged sentence

Net other comprehensive income (loss) ( 7,653 ) 999 ( 211 ) ( 6,865 )

Balance at June 30, 2022 $ ( 37,906 ) $ 2,207 $ ( 468 ) $ ( 36,167 )

Balance at March 31, 2021 $ ( 34,228 ) $ — $ — $ ( 34,228 )

Balance as of September 30, 2022 $ ( 45,559 ) $ 3,206 $ ( 679 ) $ ( 43,032 )

Balance as of June 30, 2021 $ ( 29,819 ) $ — $ — $ ( 29,819 )

Other comprehensive income (loss) before reclassifications ( 2,612 ) ( 229 ) 53 ( 2,788 )

Amounts reclassified from AOCI to interest expense (2) — 29 ( 7 ) 22

Net other comprehensive income (loss) ( 2,612 ) ( 200 ) 46 ( 2,766 )

Balance at June 30, 2021 $ ( 29,819 ) $ — $ — $ ( 29,819 )

Balance as of September 30, 2021 $ ( 32,431 ) $ ( 200 ) $ 46 $ ( 32,585 )

Foreign Currency Translation Interest rate swap Income taxes (1) Total

Balance at December 31, 2021 $ ( 32,016 ) $ 151 $ ( 37 ) $ ( 31,902 )

Balance as of December 31, 2021 $ ( 32,016 ) $ 151 $ ( 37 ) $ ( 31,902 )

Other comprehensive income (loss) before reclassifications ( 13,543 ) 3,119 ( 655 ) ( 11,079 )

1 unchanged sentence

Net other comprehensive income (loss) ( 13,543 ) 3,055 ( 642 ) ( 11,130 )

Balance at June 30, 2022 $ ( 37,906 ) $ 2,207 $ ( 468 ) $ ( 36,167 )

Balance at December 31, 2020 $ ( 30,881 ) $ ( 3,712 ) $ 861 $ ( 33,732 )

Balance as of September 30, 2022 $ ( 45,559 ) $ 3,206 $ ( 679 ) $ ( 43,032 )

Balance as of December 31, 2020 $ ( 30,881 ) $ ( 3,712 ) $ 861 $ ( 33,732 )

Other comprehensive income (loss) before reclassifications ( 1,550 ) ( 229 ) 53 ( 1,726 )

Amounts reclassified from AOCI to interest expense (2) — 29 ( 7 ) 22

Amounts reclassified from AOCI to loss on interest rate swap (3) — 3,712 ( 861 ) 2,851

Net other comprehensive income (loss) ( 1,550 ) 3,512 ( 815 ) 1,147

Balance at June 30, 2021 $ ( 29,819 ) $ — $ — $ ( 29,819 )

Balance as of September 30, 2021 $ ( 32,431 ) $ ( 200 ) $ 46 $ ( 32,585 )

______________________

3 unchanged sentences

Net Income (Loss) Per Common Share

In accordance with ASC 260, Earnings Per Share, a company that has participating securities is required to utilize the two-class

method for calculating earnings per share (“EPS”) unless the treasury stock method results in lower EPS.

In accordance with ASC 260, Earnings Per Share, a company that has participating securities is required to utilize the two-class method for calculating earnings per share (“EPS”) unless the treasury stock method results in lower EPS.

The two-class method is an allocation of earnings between the holders of common stock and a company’s participating securities.

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

14 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

3 unchanged sentences

We have elected to allocate undistributed income to participating securities based on year-to-date results.

As there was no undistributed income for the six months ended June 30, 2022, no such allocation was necessary.

In addition, given the undistributed loss in the three and six months ended June 30, 2022 and 2021, options and the 2019 Warrants are considered anti-dilutive and were excluded from the calculation of diluted net loss per share.

Stock options excluded from the calculations of diluted net loss per share had a per share exercise price ranging from $ 7.93 to $ 25.16 for the three months ended June 30, 2022, and $ 7.93 to $ 25.16 for three months ended June 30, 2021.

Stock options excluded from the calculations of diluted net loss per share had a per share exercise price ranging from $ 7.93 to $ 25.16 for the six months ended June 30, 2022, and $ 7.93 to $ 25.16 for six months ended June 30, 2021.

The 2019 Warrants excluded from the calculation of diluted net loss per share for the three and six months ended June 30, 2022 and 2021, had a per share exercise price of $ 11.49 .

As there was no undistributed income for the nine months ended September 30, 2022, no such allocation was necessary.

In addition, given the undistributed loss in the three and nine months ended September 30, 2022 and 2021, options and the 2019 Warrants are considered anti-dilutive and were excluded from the calculation of diluted net loss per share.

Stock options excluded from the calculations of diluted net loss per share had a per share exercise price ranging from $ 7.93 to $ 25.16 for the three months ended

September 30, 2022, and $ 7.93 to $ 25.16 for the three months ended September 30, 2021.

Stock options excluded from the calculations of diluted net loss per share had a per share exercise price ranging from $ 7.93 to $ 25.16 for the nine months ended September 30, 2022, and $ 7.93 to $ 25.16 for nine months ended September 30, 2021.

The 2019 Warrants excluded from the calculation of diluted net loss per share for the three and nine months ended September 30, 2022 and 2021, had a per share exercise price of $ 11.49 .

Fair Value Measurements

7 unchanged sentences

Our financial instruments that are subject to fair value disclosure consist of cash and cash equivalents, accounts receivable, accounts payable, derivatives, and long-term debt.

As of June 30, 2022, the carrying values of these financial instruments approximated fair value.

As of September 30, 2022, the carrying values of these financial instruments approximated fair value.

Derivative Financial Instruments

9 unchanged sentences

The 2021 Warrants are exercisable, in full or in part, at any time prior to March 22, 2027, at an exercise price of $ 0.01 per share, subject to anti-dilution adjustments in the event of certain future equity issuances, stock splits, stock dividends, combinations or similar events.

The following tables show the liabilities measured at fair value for the Preferred Stock derivatives as of June 30, 2022 and December 31, 2021.

Fair Value Measurements as of June 30, 2022

The following tables show the liabilities measured at fair value for the Preferred Stock derivatives as of September 30, 2022 and December 31, 2021.

Fair Value Measurements as of September 30, 2022

Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs

3 unchanged sentences

Derivative liability - other non-current liabilities 7,771 — 453

The following table presents the change in the Preferred Stock derivatives during the six months ended June 30, 2022.

Six Months Ended June 30, 2022

Beginning balance $ 8,224

The following table presents the change in the Preferred Stock derivatives during the nine months ended September 30, 2022.

Balance as of December 31, 2021 $ 8,224

Change in fair value (1) ( 4,858 )

Ending balance $ 4,987

Balance as of September 30, 2022 $ 3,366

_______________________________

1 unchanged sentence

The fair value of the change-in-control put feature utilizes unobservable inputs based on the Company’s assessment of the probability of a change-in-control event occurring in a future period.

The probability of a change-in-control event ranged from 3 % to 10 % as of June 30, 2022.

The probability of a change-in-control event ranged from 3 % to 10 % as of September 30, 2022.

The fair value of the 2019 Warrants is determined using a valuation model that utilizes unobservable inputs to determine the probability that the 2019 Warrants will remain outstanding for future periods.

The probabilities resulted in a weighted average term of 2.9 years as of June 30, 2022, and 3.6 years as of December 31, 2021.

The probabilities resulted in a weighted average term of 2.9 years as of September 30, 2022, and 3.6 years as of December 31, 2021.

The fair value of the 2021 Warrants is determined using the observable market price of a share of our common stock, less the $ 0.01 per share exercise price.

16 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

5 unchanged sentences

(2) Represents settlements and changes in fair value on the 2019 Swap.

The following tables present the assets and liabilities measured at fair value on a recurring basis for the interest rate swaps as of June 30, 2022 and December 31, 2021.

Fair Value Measurements as of June 30, 2022

The following tables present the assets and liabilities measured at fair value on a recurring basis for the interest rate swaps as of September 30, 2022 and December 31, 2021.

Fair Value Measurements as of September 30, 2022

Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs

12 unchanged sentences

Fixed Rate Debt

The fair value of our outstanding fixed-rate debt included in the “International lines of credit and other loans” line item within Note 7 to these Notes to Condensed Consolidated Financial Statements approximated carrying value as of June 30, 2022 and December 31, 2021, respectively.

These fair values represent Level 2 under the three-tier hierarchy described above.

The carrying value of this fixed-rate debt was $ 9.3 million and $ 10.9 million as of June 30, 2022 and December 31, 2021, respectively.

The carrying value of this fixed-rate debt was $ 8.4 million and $ 10.9 million as of September 30, 2022 and December 31, 2021, respectively.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements