What changed in this filing

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Item 1. Financial Statements

2024-08-07 compared with 2024-05-07 · 193 added, 91 removed, 375 unchanged (43% of the section changed)

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands, except per share data) 2024 2023 2024 2023

7 unchanged sentences

Other expense (income), net ( 3,461 ) 5,641 692 3,433

Loss before provision for income taxes and share of net income from joint venture ( 14,302 ) ( 9,155 )

Provision for income taxes ( 506 ) ( 1,301 )

Loss before benefit (provision) for income taxes and share of net income from joint venture ( 4,559 ) ( 15,145 ) ( 18,861 ) ( 24,300 )

Benefit (provision) for income taxes 215 ( 325 ) ( 291 ) ( 1,626 )

Share of net income from joint venture 2,141 1,093 4,412 1,374

Net loss $ ( 2,203 ) $ ( 14,377 ) $ ( 14,740 ) $ ( 24,552 )

Other comprehensive income (loss):

Foreign currency translation gain (loss) $ ( 2,346 ) $ 1,840

Other comprehensive loss:

Foreign currency translation loss $ ( 3,387 ) $ ( 2,374 ) $ ( 5,733 ) $ ( 534 )

Interest rate swap:

1 unchanged sentence

Reclassification adjustments included in net loss, net of tax ( 449 ) ( 449 ) ( 898 ) ( 917 )

Other comprehensive income (loss) $ ( 2,795 ) $ 1,142

Other comprehensive loss $ ( 3,836 ) $ ( 2,823 ) $ ( 6,631 ) $ ( 1,681 )

Comprehensive loss $ ( 6,039 ) $ ( 17,200 ) $ ( 21,371 ) $ ( 26,233 )

3 unchanged sentences

Condensed Consolidated Balance Sheets

(in thousands, except per share data) March 31,

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

2024 December 31,

1 unchanged sentence

Cash and cash equivalents $ 13,746 $ 21,903

Accounts receivable, net of allowances of $ 1,626 and $ 1,241 at March 31, 2024 and December 31, 2023

Accounts receivable, net of allowances of $ 1,660 and $ 1,241 at June 30, 2024 and December 31, 2023

68,832 65,545

4 unchanged sentences

Total current assets 185,342 182,554

Property, plant and equipment, net of accumulated depreciation of $ 260,340 and $ 254,013 at March 31, 2024 and December 31, 2023

Property, plant and equipment, net of accumulated depreciation of $ 246,892 and $ 254,013 at June 30, 2024 and December 31, 2023

171,591 185,812

20 unchanged sentences

Commitments and contingencies (Note 10)

Series D perpetual preferred stock - $ 0.01 par value per share, 65 shares authorized, issued and outstanding at March 31, 2024 and December 31, 2023

Series D perpetual preferred stock - $ 0.01 par value per share, 65 shares authorized, issued and outstanding at June 30, 2024 and December 31, 2023

85,312 77,799

Stockholders’ equity:

Common stock - $ 0.01 par value per share, 90,000 shares authorized, 49,520 and 47,269 shares issued and outstanding at March 31, 2024 and December 31, 2023

Common stock - $ 0.01 par value per share, 90,000 shares authorized, 50,032 and 47,269 shares issued and outstanding at June 30, 2024 and December 31, 2023

Additional paid-in capital 462,410 457,632

5 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Three Months Ended

Six Months Ended

(in thousands) 2024 2023

1 unchanged sentence

Net loss $ ( 14,740 ) $ ( 24,552 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization 24,308 23,066

1 unchanged sentence

Paid-in-kind interest 1,436 744

Total derivative loss, net of cash settlements 3,331 386

Share of net income from joint venture, net of cash dividends received ( 2,271 ) ( 281 )

Total derivative loss (gain), net of cash settlements ( 1,068 ) 5,691

Share of net income from joint venture ( 4,412 ) ( 1,374 )

Share-based compensation expense 1,536 851

4 unchanged sentences

Inventories ( 1,185 ) 3,920

Accounts payable 6,130 2,813

Other operating assets ( 2,705 ) ( 6,615 )

Income taxes receivable and payable, net ( 1,326 ) ( 730 )

Other 923 1,276

Net cash provided by operating activities 712 226

Accounts payable 1,726 6,927

Other operating liabilities 4,739 5,524

Net cash provided by (used in) operating activities ( 569 ) 8,643

Cash flows from investing activities

18 unchanged sentences

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Three Months Ended March 31, 2024 and 2023

Three Months Ended June 30, 2024 and 2023

Common Stock Additional

1 unchanged sentence

(in thousands) Number of shares Par

Balance as of December 31, 2023 47,269 $ 473 $ 457,632 $ ( 295,348 ) $ ( 37,755 ) $ 125,002

Balance as of March 31, 2024 49,520 $ 495 $ 464,081 $ ( 307,885 ) $ ( 40,550 ) $ 116,141

Net loss — — — ( 2,203 ) — ( 2,203 )

5 unchanged sentences

Other comprehensive loss — — — — ( 3,836 ) ( 3,836 )

Balance as of June 30, 2024 50,032 $ 500 $ 462,410 $ ( 310,088 ) $ ( 44,386 ) $ 108,436

Common Stock Additional

capital Accumulated deficit Accumulated other comprehensive loss Total

(in thousands) Number of shares Par

Balance as of March 31, 2023 43,772 $ 438 $ 465,377 $ ( 255,373 ) $ ( 35,978 ) $ 174,464

Net loss — — — ( 14,377 ) — ( 14,377 )

Dividends accrued for preferred stock — — ( 3,196 ) — — ( 3,196 )

Shares issued under stock incentive plans, net of forfeitures and tax withholdings 3,306 33 ( 54 ) — — ( 21 )

Share-based compensation expense — — 470 — — 470

Restricted shares surrendered for tax withholdings under stock incentive plans ( 59 ) ( 1 ) ( 72 ) — — ( 73 )

Other comprehensive loss — — — — ( 2,823 ) ( 2,823 )

Balance as of June 30, 2023 47,019 $ 470 $ 462,525 $ ( 269,750 ) $ ( 38,801 ) $ 154,444

See notes to condensed consolidated financial statements (unaudited).

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Six Months Ended June 30, 2024 and 2023

Common Stock Additional

4 unchanged sentences

Dividends accrued for preferred stock — — ( 7,513 ) — — ( 7,513 )

Shares issued for warrants exercised 2,395 24 11,352 11,376

Shares issued under stock incentive plans, net of forfeitures 521 5 ( 5 ) — — —

Share-based compensation expense — — 1,536 — — 1,536

Restricted shares surrendered for tax withholdings under stock incentive plans ( 153 ) ( 2 ) ( 592 ) — — ( 594 )

Other comprehensive income — — — — 1,142 1,142

Balance as of March 31, 2023 43,772 $ 438 $ 465,377 $ ( 255,373 ) $ ( 35,978 ) $ 174,464

Other comprehensive loss — — — — ( 6,631 ) ( 6,631 )

Balance as of June 30, 2024 50,032 $ 500 $ 462,410 $ ( 310,088 ) $ ( 44,386 ) $ 108,436

Common Stock Additional

capital Accumulated deficit Accumulated other comprehensive loss Total

(in thousands) Number of shares Par

Balance as of December 31, 2022 43,856 $ 439 $ 468,143 $ ( 245,198 ) $ ( 37,120 ) $ 186,264

Net loss — — — ( 24,552 ) — ( 24,552 )

Dividends accrued for preferred stock — — ( 6,247 ) — — ( 6,247 )

Shares issued under stock incentive plans, net of forfeitures and tax withholdings 3,306 33 ( 54 ) — — ( 21 )

Share-based compensation expense — — 851 — — 851

Restricted shares surrendered for tax withholdings under stock incentive plans ( 143 ) ( 2 ) ( 168 ) — — ( 170 )

Other comprehensive loss — — — — ( 1,681 ) ( 1,681 )

Balance as of June 30, 2023 47,019 $ 470 $ 462,525 $ ( 269,750 ) $ ( 38,801 ) $ 154,444

See notes to condensed consolidated financial statements (unaudited).

Notes to Condensed Consolidated Financial Statements

March 31, 2024

June 30, 2024

Interim Financial Statements

Nature of Business

NN, Inc., a Delaware corporation, is a diversified industrial company that combines advanced engineering and production capabilities with in-depth materials science expertise to design and manufacture high-precision components and assemblies primarily for a variety of end markets on a global basis.

As of March 31, 2024, we had 27 facilities in North America, Europe, South America, and Asia.

As used in this Quarterly Report on Form 10-Q (this “Quarterly Report”), the terms “NN,” the “Company,” “we,” “our,” or “us” refer to NN, Inc., and its subsidiaries.

As of June 30, 2024, we had 27 facilities in North America, Europe, South America, and Asia.

As used in this Quarterly Report on Form 10-Q (this “Quarterly Report”), the terms “NN,” the “Company,” “we,” “our,” or “us” refer to NN, Inc.

and its subsidiaries.

Basis of Presentation

2 unchanged sentences

Securities and Exchange Commission (the “SEC”) on March 12, 2024.

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 months ended March 31, 2024 and 2023;

financial position as of March 31, 2024 and December 31, 2023;

and cash flows for the three months ended March 31, 2024 and 2023, on a basis consistent with our audited consolidated financial statements.

financial position as of June 30, 2024 and December 31, 2023;

and cash flows for the six months ended June 30, 2024 and 2023, 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.

Certain prior period amounts have been reclassified to conform to the current year’s presentation.

Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S.

1 unchanged sentence

These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes included in the 2023 Annual Report.

The results for the three months ended March 31, 2024, are not necessarily indicative of results for the year ending December 31, 2024, or any other future periods.

The results for the three and six months ended June 30, 2024, are not necessarily indicative of results for the year ending December 31, 2024, or any other future periods.

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

8 unchanged sentences

We participate in programs established by our customers, which allows us to sell certain receivables from that customer on a non-recourse basis to a third-party financial institution.

During the three months ended March 31, 2024 and 2023, we incurred fees of $ 0.3 million and $ 0.2 million, respectively, related to the sale of receivables, which is recorded in the Other expense (income), net line item on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

During the six months ended June 30, 2024 and 2023, we incurred fees of $ 0.6 million and $ 0.5 million, respectively, related to the sale of receivables, which is recorded in the Other expense (income), net line item on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Segment Information

2 unchanged sentences

• Power Solutions, which is focused on growth in the electrical, general industrial, automotive, and medical end markets.

These divisions are considered our two operating segments as each engages in business activities for which it earns revenues and incurs expenses, discrete financial information is available for each, and this is the level at which the chief operating decision maker reviews discrete financial information for purposes of allocating resources and assessing performance.

These components are operating segments as each engages in business activities for which it earns revenues and incurs expenses, discrete financial information is available for each, and this is the level at which the chief operating decision maker reviews discrete financial information for purposes of allocating resources and assessing performance.

The following table presents our financial performance by reportable segment.

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Mobile Solutions $ 72,855 $ 77,153 $ 145,915 $ 155,171

15 unchanged sentences

The other category includes products sold in aerospace, defense, medical, and other industries.

Three Months Ended March 31, 2024 Mobile

Three Months Ended June 30, 2024 Mobile

Solutions Power

6 unchanged sentences

Total net sales $ 72,855 $ 50,151 $ ( 14 ) $ 122,992

Three Months Ended March 31, 2023 Mobile

Three Months Ended June 30, 2023 Mobile

Solutions Power

6 unchanged sentences

Total net sales $ 77,153 $ 48,062 $ ( 9 ) $ 125,206

Six Months Ended June 30, 2024 Mobile

Solutions Power

Solutions Intersegment

Eliminations Total

Automotive $ 99,192 $ 16,322 $ — $ 115,514

General Industrial 36,247 26,807 — 63,054

Residential/Commercial Electrical — 41,718 — 41,718

Other 10,476 13,542 ( 114 ) 23,904

Total net sales $ 145,915 $ 98,389 $ ( 114 ) $ 244,190

Six Months Ended June 30, 2023 Mobile

Solutions Power

Solutions Intersegment

Eliminations Total

Automotive $ 108,765 $ 17,918 $ — $ 126,683

General Industrial 39,441 28,115 — 67,556

Residential/Commercial Electrical — 32,193 — 32,193

Other 6,965 18,908 ( 11 ) 25,862

Total net sales $ 155,171 $ 97,134 $ ( 11 ) $ 252,294

Deferred Revenue

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 $ 0.3 million and $ 0.4 million as of March 31, 2024 and December 31, 2023, respectively.

Revenue recognized for performance obligations satisfied or partially satisfied during the three months ended March 31, 2024 included $ 0.4 million that was included in deferred revenue as of December 31, 2023.

The balance of deferred revenue was $ 0.2 million and $ 0.4 million as of June 30, 2024 and December 31, 2023, respectively.

Revenue recognized for performance obligations satisfied or partially satisfied during the six months ended June 30, 2024 included $ 0.4 million that was included in deferred revenue as of December 31, 2023.

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 March 31, 2024, 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 June 30, 2024, 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.

Inventories are comprised of the following amounts:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Raw materials $ 23,764 $ 25,456

8 unchanged sentences

Amortization ( 1,677 ) ( 5,235 ) ( 6,912 )

Balance as of March 31, 2024 $ 18,165 $ 37,103 $ 55,268

Reclassified to assets held for sale (1)

— ( 591 ) ( 591 )

Balance as of June 30, 2024 $ 17,326 $ 33,895 $ 51,221

_______________________________

(1) Represents customer relationships associated with the Industrial Molding Corporation business, which was classified as held for sale as of June 30, 2024 (see Note 16).

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

There were no impairment charges for the three months ended March 31, 2024 and 2023.

There were no impairment charges for the six months ended June 30, 2024 and 2023.

Investment in Joint Venture

6 unchanged sentences

Foreign currency translation loss ( 783 )

Balance as of March 31, 2024 $ 34,409

Balance as of June 30, 2024 $ 36,330

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

On March 3, 2023, we amended the Term Loan Facility (the “Term Loan Amendment”) and ABL Facility to adjust certain covenants under the agreements, as well as to replace references to LIBOR with Secured Overnight Financing Rate (“SOFR”) for interest rate calculations.

On March 3, 2023, we amended the Term Loan Facility and ABL Facility to adjust certain covenants under the agreements, as well as to replace references to LIBOR with Secured Overnight Financing Rate (“SOFR”) for interest rate calculations.

The following table presents the outstanding debt balances.

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Term Loan Facility $ 129,397 $ 148,114

4 unchanged sentences

_______________________________

(1) In addition to this amount, costs of $ 0.5 million and $ 0.5 million related to the ABL Facility were recorded in other non-current assets as of March 31, 2024 and December 31, 2023, respectively.

We capitalized interest costs of $ 0.5 million and $ 0.3 million in the three months ended March 31, 2024 and 2023, respectively, related to construction in progress.

(1) In addition to this amount, costs of $ 0.4 million and $ 0.5 million related to the ABL Facility were recorded in other non-current assets as of June 30, 2024 and December 31, 2023, respectively.

We capitalized interest costs of $ 0.7 million and $ 0.7 million in the six months ended June 30, 2024 and 2023, respectively, related to construction in progress.

Term Loan Facility

4 unchanged sentences

The PIK interest is payable on the loan maturity date of September 22, 2026.

At March 31, 2024, the Term Loan Facility bore interest, including PIK interest, based on one-month Adjusted SOFR, at 14.305 %.

At June 30, 2024, the Term Loan Facility bore interest, including PIK interest, based on one-month Adjusted SOFR, at 14.319 %.

The Term Loan Facility requires quarterly principal payments of $ 0.4 million with the remaining unpaid principal amount due at the loan maturity date.

2 unchanged sentences

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

We were in compliance with all requirements under the Term Loan Facility as of March 31, 2024.

We were in compliance with all requirements under the Term Loan Facility as of June 30, 2024.

The Term Loan Facility was issued at a $ 3.8 million discount and we have capitalized an additional $ 5.5 million in debt issuance costs.

4 unchanged sentences

The availability of credit under the ABL Facility is limited by a borrowing base calculation derived from accounts receivable and inventory held in the United States.

The maximum commitment amount may be increased or decreased from time to time based on the terms of conditions of the ABL Facility.

The maximum commitment amount may

be increased or decreased from time to time based on the terms of conditions of the ABL Facility.

Outstanding borrowings under the ABL Facility bear interest on a variable rate structure plus an interest rate spread that is based on the average amount of aggregate revolving commitment available.

3 unchanged sentences

We may elect whether to use one-month, three-month, or six-month Adjusted SOFR.

At March 31, 2024, using one-month Adjusted SOFR plus a 2.00 % margin, the interest rate on outstanding borrowings under the ABL Facility would have been 7.418 %.

At June 30, 2024, using one-month Adjusted SOFR plus a 2.00 % margin, the interest rate on outstanding borrowings under the ABL Facility would have been 7.431 %.

We pay a commitment fee of 0.375 % for unused capacity under the ABL Facility and a 2.125 % fee on the amount of letters of credit outstanding.

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

As of March 31, 2024, we had no outstanding borrowings under the ABL Facility, $ 9.9 million of outstanding letters of credit, and $ 26.4 million available for future borrowings under the ABL Facility.

As of June 30, 2024, we had no outstanding borrowings under the ABL Facility, $ 9.9 million of outstanding letters of credit, and $ 27.0 million available for future borrowings under the ABL Facility.

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

We were in compliance with all requirements under the ABL Facility as of March 31, 2024.

We were in compliance with all requirements under the ABL Facility as of June 30, 2024.

Sale-Leaseback Transactions

1 unchanged sentence

Concurrent with the sale, we entered into a 20-year lease agreement for these properties.

Since the lease agreement allows for us to exercise renewal options that extend for substantially all of the remaining economic life, the transaction is accounted for as a failed sale-leaseback.

Since the lease agreement allows for us to exercise renewal options that extend for substantially all of the remaining economic life, we have the ability to maintain the risks and rewards of ownership.

Since the transaction does not transfer control of the assets, it cannot be accounted for as a sale under ASC 606.

As a result, the properties remain on our Condensed Consolidated Balance Sheets and the non-land assets will continue to be depreciated over their remaining useful lives.

4 unchanged sentences

Concurrent with the sale, we entered into a 5-year lease agreement that includes a repurchase option for this equipment.

Since the lease agreement allows for us to exercise an early buyout option, the transaction is accounted for as a failed sale-leaseback.

In May 2024, we sold additional pieces of manufacturing equipment for an aggregate sales price of $ 3.4 million and entered into 5-year and 6-year lease agreements for the equipment.

Since the three lease agreements allow for us to exercise an early buyout option, we have the ability to maintain the risks and rewards of ownership.

Since the transactions do not transfer control of the assets, they cannot be accounted for as sales under ASC 606.

As a result, the assets remain on our Condensed Consolidated Balance Sheets and will continue to be depreciated over their remaining useful lives.

The $ 8.3 million of gross proceeds was recognized as a financing obligation as a component of long-term debt.

The monthly lease payments will be amortized as principal payments and interest expense on an effective interest rate of 10.475 %.

The monthly lease payments will be amortized as principal payments and interest expense on a weighted average effective interest rate of 10.540 %.

Preferred Stock

12 unchanged sentences

Note 15 discusses the accounting for these features.

As of March 31, 2024, the carrying value of the Series D Preferred Stock shares was $ 81.5 million, which included $ 34.8 million of accumulated unpaid and deemed dividends.

The following table presents the change in the Series D Preferred Stock carrying value during the three months ended March 31, 2024.

As of June 30, 2024, the carrying value of the Series D Preferred Stock shares was $ 85.3 million, which included $ 38.6 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, 2024.

Balance as of December 31, 2023 $ 77,799

1 unchanged sentence

Amortization 2,005

Balance as of March 31, 2024 $ 81,469

Balance as of June 30, 2024 $ 85,312

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

Three Months Ended

Six Months Ended

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

3 unchanged sentences

Right-of-use assets obtained in exchange for new operating lease liabilities (1) 692 477

Right-of-use assets obtained in exchange for new finance lease liabilities 645 1,619

_______________________________

(1) Includes new leases, renewals, and modifications.

We recognized sublease income of $ 0.9 million and $ 0.1 million in the three months ended March 31, 2024 and 2023, respectively.

We recognized sublease income of $ 1.9 million and $ 0.5 million in the six months ended June 30, 2024 and 2023, respectively.

Commitments and Contingencies

13 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 March 31, 2024.

Other Legal Matters

All other legal proceedings are of an ordinary and routine nature and are incidental to our operations.

Management believes that such proceedings should not, individually or in the aggregate, have a material adverse effect on our business, financial condition, results of operations, or cash flows.

Management believes that such proceedings should not, individually or in the aggregate, have a material adverse effect on our business, financial

condition, results of operations, or cash flows.

In making that determination, we analyze the facts and circumstances of each case at least quarterly in consultation with our attorneys and determine a range of reasonably possible outcomes.

Our effective tax rate was ( 3.5 )% and ( 14.2 )% for the three months ended March 31, 2024 and 2023, respectively.

The effective tax rates for the three months ended March 31, 2024 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 the U.S.

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

Our effective tax rate was 4.7 % and ( 1.5 )% for the three and six months ended June 30, 2024, respectively, and ( 2.1 )% and ( 6.7 )% for the three and six months ended June 30, 2023, respectively.

The effective tax rates for the three and six months ended June 30, 2024 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, favorable return to provision and amended return adjustments in certain foreign and state jurisdictions and by limitation on the amount of tax benefit recorded for losses in certain jurisdictions where we believe it is more likely than not that a future tax benefit may not be realized.

Net Loss Per Common Share

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Net loss $ ( 2,203 ) $ ( 14,377 ) $ ( 14,740 ) $ ( 24,552 )

11 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Stock Options 207 392 232 454

2 unchanged sentences

Total antidilutive securities 2,527 1,906 2,515 1,961

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 March 31, 2024.

The 2019 Warrants excluded from the calculation of diluted net loss per share had a per share exercise price of $ 11.03 .

Stock options excluded from the calculations of diluted net loss per share have a per share exercise price ranging from $ 7.93 to $ 25.16 for the six months ended June 30, 2024.

Warrants excluded from the calculation of diluted net loss per share have a per share exercise price of $ 11.03 (see Note 15).

Performance share units are potentially dilutive when the related performance criterion has been met.

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Restricted stock $ 532 $ 612 $ 1,119 $ 779

3 unchanged sentences

Restricted Stock

The following table presents the status of unvested restricted stock awards as of March 31, 2024, and activity during the three months then ended.

The following table presents the status of unvested restricted stock awards as of June 30, 2024, and activity during the six months then ended.

Shares Weighted Average Grant-Date

2 unchanged sentences

Vested ( 1,393 ) 1.27

Unvested at March 31, 2024 3,709 $ 1.73

During the three months ended March 31, 2024, we granted 374,000 shares of restricted stock to non-executive directors, officers and certain other employees under the NN, Inc.

2022 Omnibus Incentive Plan (“2022 Omnibus Plan”).

The shares of restricted stock vest pro-rata generally over three years for employees and over one year for non-executive directors.

Total grant date fair value of restricted stock that vested in the three months ended March 31, 2024, was $ 0.3 million.

Forfeited ( 123 ) 2.11

Unvested at June 30, 2024 2,533 $ 2.18

During the six months ended June 30, 2024, we granted 374,000 shares of restricted stock to non-executive directors, officers and certain other employees.

The shares of these restricted stock awards vest pro-rata generally over three years for employees and over one year for non-executive directors.

During the six months ended June 30, 2024, we granted 270,000 shares of restricted stock to new executive officers as inducement awards, which vest pro-rata over five years.

Total grant date fair value of restricted stock that vested in the six months ended June 30, 2024, was $ 1.8 million.

Performance Share Units

Performance Share Units (“PSUs”) are a form of long-term incentive compensation awarded to executive officers and certain other key employees designed to directly align the interests of employees to the interests of our stockholders, and to create long-term stockholder value.

The following table presents the status of unvested PSUs as of March 31, 2024, and activity during the three months then ended.

The following table presents the status of unvested PSUs as of June 30, 2024, and activity during the six months then ended.

Nonvested PSU Awards Weighted Average Grant-Date

1 unchanged sentence

Granted 559 3.73

Nonvested at March 31, 2024 3,932 $ 1.48

During the three months ended March 31, 2024, we granted 143,000 PSUs to certain executive officers.

These units vest, if at all, upon our achieving a specified relative total shareholder return, which will be measured against the total shareholder return of a specified index during the three-year performance period that ends December 31, 2026.

Forfeited ( 379 ) 1.89

Nonvested at June 30, 2024 3,969 $ 1.58

During the six months ended June 30, 2024, we granted 144,000 PSUs to certain executive officers, which vest, if at all, upon our achieving a specified relative total shareholder return, which will be measured against the total shareholder return of a specified index during the three-year performance period that ends December 31, 2026.

During the six months ended June 30, 2024, we granted 415,000 PSUs to new executive officers as inducement awards.

These inducement awards cliff-vest after five years and are contingent on the Company’s stock price meeting specified thresholds.

We estimated the grant date fair value of the PSU awards using the Monte Carlo simulation model, as the total shareholder return metric and changes in stock price are considered market conditions under ASC Topic 718, Compensation – stock compensation .

2 unchanged sentences

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

Balance as of December 31, 2023 $ ( 38,762 ) $ 1,007 $ — $ ( 37,755 )

Balance as of March 31, 2024 $ ( 41,108 ) $ 558 $ — $ ( 40,550 )

Other comprehensive income (loss) before reclassifications ( 3,387 ) — — ( 3,387 )

1 unchanged sentence

Net other comprehensive income (loss) ( 3,387 ) ( 449 ) — ( 3,836 )

Balance as of June 30, 2024 $ ( 44,495 ) $ 109 $ — $ ( 44,386 )

Balance as of March 31, 2023 $ ( 38,332 ) $ 2,354 $ — $ ( 35,978 )

Other comprehensive income (loss) before reclassifications ( 2,374 ) — — ( 2,374 )

Amounts reclassified from AOCI to interest expense (2) — ( 449 ) — ( 449 )

Net other comprehensive income (loss) ( 2,374 ) ( 449 ) — ( 2,823 )

Balance as of June 30, 2023 $ ( 40,706 ) $ 1,905 $ — $ ( 38,801 )

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

Balance as of December 31, 2023 $ ( 38,762 ) $ 1,007 $ — $ ( 37,755 )

2 unchanged sentences

Net other comprehensive income (loss) ( 5,733 ) ( 898 ) — ( 6,631 )

Balance as of March 31, 2023 $ ( 38,332 ) $ 2,354 $ — $ ( 35,978 )

Balance as of June 30, 2024 $ ( 44,495 ) $ 109 $ — $ ( 44,386 )

Balance as of December 31, 2022 $ ( 40,172 ) $ 3,149 $ ( 97 ) $ ( 37,120 )

Other comprehensive income (loss) before reclassifications ( 534 ) ( 327 ) 97 ( 764 )

Amounts reclassified from AOCI to interest expense (2) — ( 917 ) — ( 917 )

Net other comprehensive income (loss) ( 534 ) ( 1,244 ) 97 ( 1,681 )

Balance as of June 30, 2023 $ ( 40,706 ) $ 1,905 $ — $ ( 38,801 )

______________________

6 unchanged sentences

In accordance with ASC 815-15, Derivatives and Hedging - Embedded Derivatives , certain features of our preferred stock and long-term debt were bifurcated and accounted for as derivatives separately.

In conjunction with the Term Loan Amendment, we issued warrants to purchase up to 2.0 million shares of our common stock at an exercise price of $ 0.01 per share (the “2023 Warrants”).

In conjunction with an amendment to our Term Loan in 2023, we issued warrants to purchase up to 2.0 million shares of our common stock at an exercise price of $ 0.01 per share (the “2023 Warrants”).

The 2023 Warrants are exercisable, in full or in part, at any time prior to June 30, 2033.

The 2023 Warrants include anti-dilution adjustments in the event of certain future equity issuances, stock splits, stock dividends, combinations or similar events.

On April 12, 2024, 500,000 of the 2023 Warrants were exercised on a cashless basis, resulting in the issuance of 499,000 shares.

During the six months ended June 30, 2024, 500,000 of the 2023 Warrants were exercised on a cashless basis, resulting in the issuance of 499,000 shares.

In conjunction with our placement of the Series D Preferred Stock, we issued the 2021 Warrants to purchase up to 1.9 million shares of our common stock.

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.

During the three months ended March 31, 2024, all of the 2021 Warrants were exercised on a cashless basis, resulting in the issuance of 1,896,000 shares.

In conjunction with our placement of the Series B Preferred Stock, we issued the 2019 Warrants to purchase up to 1.5 million shares of our common stock.

The 2021 Warrants were exercisable, in full or in part, 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.

During the six months ended June 30, 2024, all of the 2021 Warrants were exercised on a cashless basis, resulting in the issuance of 1,896,000 shares.

In conjunction with our placement of Series B Preferred Stock in 2019, we issued detachable warrants to purchase up to 1.5 million shares of our common stock (the “2019 Warrants”).

The 2019 Warrants, are exercisable, in full or in part, at any time prior to December 11, 2026, at an exercise price of $ 11.03 per share, and are subject to anti-dilution adjustments in the event of future below market issuances, stock splits, stock dividends, combinations or similar events.

The following table presents the change in the liability balance of the embedded derivatives during the three months ended March 31, 2024.

The following table presents the change in the liability balance of the embedded derivatives during the six months ended June 30, 2024.

Balance as of December 31, 2023 $ 16,556

1 unchanged sentence

Settlements ( 11,376 )

Balance as of March 31, 2024 $ 10,950

Balance as of June 30, 2024 $ 5,010

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1 unchanged sentence

The following tables show the fair values of the embedded derivatives within the fair value hierarchy.

March 31, 2024 Quoted Prices in Active Markets for Identical Assets

June 30, 2024 Quoted Prices in Active Markets for Identical Assets

(Level 1) Significant Other Observable Inputs

7 unchanged sentences

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 (Level 3).

The probabilities resulted in a weighted average term of 2.9 years as of March 31, 2024 and December 31, 2023.

The probabilities resulted in a weighted average term of 2.9 years as of June 30, 2024 and December 31, 2023.

Interest Rate Swap

3 unchanged sentences

During the first quarter of 2023, we terminated the 2021 Swap and received cash proceeds of $ 2.5 million, which was the then fair value of the 2021 Swap.

Since the 2021 Swap was an effective cash flow hedge and the forecasted interest payments remaining probable of occurring, the gain will be recognized as a reduction to interest expense through the original maturity date of July 31, 2024.

Since the 2021 Swap was an effective cash flow hedge and the forecasted interest payments remain probable of occurring, the gain will be recognized as a reduction to interest expense through the original maturity date of July 31, 2024.

The following table presents the effects of the interest rate swap on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Interest benefit (1) $ ( 449 ) $ ( 449 ) $ ( 898 ) $ ( 917 )

3 unchanged sentences

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

As of March 31, 2024 and December 31, 2023, the carrying values of these financial instruments, except for debt, approximated fair value.

The fair value of our debt was $ 161.2 million and $ 162.2 million, with a carrying amount of $ 158.5 million and $ 153.3 million, as of March 31, 2024 and December 31, 2023, respectively.

As of June 30, 2024 and December 31, 2023, the carrying values of these financial instruments,

except for debt, approximated fair value.

The fair value of our debt was $ 160.4 million and $ 162.2 million, with a carrying amount of $ 158.7 million and $ 153.3 million, as of June 30, 2024 and December 31, 2023, respectively.

The fair value of debt was calculated by discounting the future cash flows to its present value using prevailing market interest rates for debt with similar creditworthiness, terms and maturities (Level 3).

Subsequent Events

Assets and Liabilities Held for Sale

On July 2, 2024, we completed the sale of our lone plastics injection-molding plant, known as Industrial Molding Corporation (“IMC”), for $ 17.0 million in cash, subject to customary purchase price adjustments.

We received net proceeds of $ 15.4 million after paying certain transaction costs, which was used to repay a portion of the outstanding borrowings under the Term Loan Facility in July 2024.

We determined that the sale of IMC does not represent a strategic shift that will have a major effect on the consolidated results of operations, therefore the results of this business were not classified as discontinued operations and will continue to be reported within our Power Solutions segment.

We determined that the IMC business met the criteria to be classified as held for sale as of June 30, 2024, and therefore have reclassified the related assets and liabilities as held for sale.

The following is a summary of the major categories of assets and liabilities that have been classified as held for sale, and the line item on the Condensed Consolidated Balance Sheet they are reported in:

Financial Statement Line Item June 30, 2024

Accounts receivable, net $ 3,725

Inventories 3,041

Prepaid assets 74

Current assets held for sale Other current assets 6,840

Property, plant and equipment, net 3,248

Intangible assets, net 591

Noncurrent assets held for sale Other non-current assets $ 3,839

Accounts payable $ 1,783

Accrued salaries, wages and benefits 343

Other current liabilities 272

Current liabilities held for sale Other current liabilities $ 2,398

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