What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-06 compared with 2024-03-12 · 257 added, 209 removed, 841 unchanged (36% of the section changed)

8 unchanged sentences

Significant Accounting Policies

Discontinued Operations

Segment Information

10 unchanged sentences

Fair Value Measurements

Plant Optimization Activities

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the financial statements of the Company as of and for the year ended December 31, 2023, and our report dated March 12, 2024 expressed an unqualified opinion on those consolidated financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2024, and our report dated March 5, 2025 expressed an unqualified opinion on those financial statements.

Basis for opinion

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We have audited the accompanying consolidated balance sheets of NN, Inc.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 12, 2024 expressed unqualified opinion.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 5, 2025 expressed an unqualified opinion.

Basis for opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

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Interest expense 22,095 21,137 15,041

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

Derivative payments on interest rate swap — — 1,717

Loss on interest rate swap — — 2,033

Loss on extinguishment of debt 349 — —

Other expense (income), net ( 4,558 ) 10,730 ( 5,064 )

Loss from continuing operations before benefit (provision) for income taxes and share of net income from joint venture ( 53,671 ) ( 31,069 ) ( 22,442 )

Benefit (provision) for income taxes ( 2,285 ) ( 1,621 ) 1,756

Loss before provision for income taxes and share of net income from joint venture ( 45,434 ) ( 53,671 ) ( 31,069 )

Provision for income taxes ( 2,410 ) ( 2,285 ) ( 1,621 )

Share of net income from joint venture 9,571 5,806 6,592

Loss from continuing operations ( 50,150 ) ( 26,098 ) ( 14,425 )

Income from discontinued operations, net of tax (Note 2) — — 1,200

Net loss $ ( 38,273 ) $ ( 50,150 ) $ ( 26,098 )

Other comprehensive income (loss):

Other comprehensive loss:

Foreign currency translation gain (loss) $ ( 9,405 ) $ 1,410 $ ( 8,156 )

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Reclassification adjustments included in net loss, net of tax ( 1,007 ) ( 1,815 ) ( 420 )

Other comprehensive income (loss) $ ( 635 ) $ ( 5,218 ) $ 1,830

Other comprehensive loss $ ( 10,412 ) $ ( 635 ) $ ( 5,218 )

Comprehensive loss $ ( 48,685 ) $ ( 50,785 ) $ ( 31,316 )

Basic and diluted net loss per common share $ ( 1.11 ) $ ( 1.35 ) $ ( 0.83 )

Loss from continuing operations per common share $ ( 1.35 ) $ ( 0.83 ) $ ( 0.82 )

Income from discontinued operations per common share $ — $ — $ 0.03

Basic and diluted net loss per common share $ ( 1.35 ) $ ( 0.83 ) $ ( 0.79 )

Shares used to calculate basic and diluted net loss per share 48,653 46,738 44,680

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Paid-in-kind interest 2,677 2,239 —

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

Impairments of property, plant and equipment 6,546 — —

Loss on extinguishment of debt 349 — —

Total derivative loss (gain), net of cash settlements ( 1,036 ) 11,933 ( 5,265 )

Share of net income from joint venture, net of cash dividends received ( 3,311 ) ( 1,868 ) ( 347 )

Gain on disposal of discontinued operations, net of tax — — ( 1,200 )

Gain on sale of business ( 7,154 ) — —

Share-based compensation expense 3,140 2,821 4,377

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Inventories 4,210 9,997 ( 6,672 )

Accounts payable 1,142 8,619 343

Other operating assets ( 1,558 ) ( 5,041 ) ( 1,825 )

Income taxes receivable and payable, net ( 662 ) ( 89 ) ( 1,457 )

Other ( 1,771 ) ( 4,091 ) ( 2,761 )

Accounts payable ( 3,894 ) 1,142 8,619

Other operating liabilities 7,049 3,270 ( 2,266 )

Net cash provided by operating activities 11,070 29,344 7,717

2 unchanged sentences

Proceeds from sale of property, plant, and equipment 306 2,898 460

Cash paid for post-closing adjustments on sale of business — — ( 3,880 )

Cash settlements of interest rate swap — — ( 15,420 )

Proceeds received from sale of business 17,000 — —

Net cash used in investing activities ( 1,008 ) ( 17,598 ) ( 17,492 )

3 unchanged sentences

Cash paid for debt issuance costs ( 2,011 ) ( 169 ) ( 136 )

Proceeds from issuance of preferred stock — — 61,793

Redemption of preferred stock — — ( 122,434 )

Proceeds from (repayments of) short-term debt 3,648 — ( 1,563 )

Proceeds from sale-leaseback of equipment 8,324 — —

Proceeds from sale-leaseback of land and buildings 16,863 — —

Repayments of financing obligations ( 781 ) — —

Proceeds from short-term debt — 3,648 —

Other ( 3,009 ) ( 1,967 ) ( 3,092 )

Net cash provided by (used in) financing activities ( 2,883 ) ( 5,186 ) 2,557

Net cash used in financing activities ( 13,245 ) ( 2,883 ) ( 5,186 )

Effect of exchange rate changes on cash flows ( 592 ) 232 ( 887 )

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Common Stock Additional

capital Accumulated deficit Accumulated other comprehensive income (loss)

capital Accumulated deficit Accumulated other comprehensive loss

(in thousands) Number of shares Par

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Restricted shares surrendered for tax withholdings under stock incentive plans ( 31 ) — ( 88 ) — — ( 88 )

Shares issued for option exercises 6 — 48 — — 48

Other comprehensive income — — — — 1,830 1,830

Other comprehensive loss — — — — ( 5,218 ) ( 5,218 )

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

1 unchanged sentence

Dividends accrued for preferred stock — — ( 13,098 ) — — ( 13,098 )

Shares issued under stock incentive plans, net of forfeitures 860 9 ( 9 ) — — —

Shares issued under stock incentive plans, net of forfeitures and tax withholdings 3,561 36 ( 57 ) — — ( 21 )

Share-based compensation expense — — 2,821 — — 2,821

4 unchanged sentences

Dividends accrued for preferred stock — — ( 15,698 ) — — ( 15,698 )

Shares issued under stock incentive plans, net of forfeitures and tax withholdings 3,561 36 ( 57 ) — — ( 21 )

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

Shares issued under stock incentive plans, net of forfeitures 401 4 ( 4 ) — — —

Share-based compensation expense — — 3,140 — — 3,140

6 unchanged sentences

Nature of Business

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 for a variety of end markets on a global basis.

As used in the Notes to Consolidated Financial Statements, the terms the “Company,” “we,” “our,” or “us” refer to NN, Inc., and its subsidiaries.

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 for a variety of end markets on a global basis.

As of December 31, 2024, we had 26 facilities in North America, South America, Europe, and China.

As used in the Notes to Consolidated Financial Statements, the terms the “Company,” “we,” “our,” or “us” refer to NN, Inc.

and its subsidiaries.

Basis of Presentation

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

dollar amounts presented in the tables in these Notes to Consolidated Financial Statements are in thousands.

dollar amounts and share counts presented in the tables in these Notes to Consolidated Financial Statements are in thousands.

Principles of Consolidation

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Actual results may differ from those estimates.

Accounting Standards Recently Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2023-07, Segment Reporting (Topic 832):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires additional disclosures related to reportable segments, including significant segment expenses and other segment items.

ASU 2023-07 also permits entities to disclose more than one measure of a segment’s profit or loss and requires quarterly disclosure of certain information that is now only required annually.

We have adopted ASU 2023-07 for the year ended December 31, 2024 on a retrospective basis, and will present the required interim disclosures beginning with our March 31, 2025 Form 10-Q.

Accounting Standards Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, “ Income Taxes (Topic 740):

Improvements to Income Tax Disclosures ” (“ASU 2023-09”), which requires additional annual income tax disclosures.

These include a tabular rate reconciliation comprised of eight specific categories, the disaggregation of income taxes paid between federal, state, and foreign jurisdictions, and to disaggregate income from continuing operations before income tax expense and income tax expense from continuing operations between domestic and foreign.

ASU 2023-09 eliminates the disclosure of the nature and estimate of reasonably possible changes to unrecognized tax benefits in the next 12 months or that an estimated range cannot be made.

ASU 2023-09 is effective for fiscal years beginning on or after December 15, 2024, with early adoption permitted, and can be applied on a prospective or retrospective basis.

We plan to adopt ASU 2023-09 in our Form 10-K for the year ended December 31, 2025 and are in the process of assessing the impact on our disclosures.

In November 2024, the FASB issued ASU 2024-03, “ Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses ” (“ASU 2024-03”), which requires disaggregated disclosures of certain categories of expenses that are included in income statement line items.

ASU 2024-03 is effective for fiscal years beginning on or after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Companies may early adopt and can apply the guidance prospectively or retrospectively.

The Company has not yet determined the potential impact of adopting this standard.

Cash and Cash Equivalents

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When a property item is retired, its cost and related accumulated depreciation are removed from the property accounts and any gain or loss is recorded in the Consolidated Statements of Operations and Comprehensive Income (Loss).

We review the carrying values of long-lived assets for

impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

We review the carrying values of long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

Property, plant and equipment also includes tools, molds, and dies used in manufacturing.

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Estimated useful lives for machinery and equipment generally range from 3 years to 12 years.

Estimated useful lives for leasehold improvements are based on the life of the lease.

We determine whether an arrangement is a lease at inception.

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We recognize short-term leases, which have a term of twelve months or less, on a straight-line basis and do not record a related lease asset or liability for such leases.

Finance lease ROU assets consist primarily of equipment used in the manufacturing process with terms of four years to eight years .

Finance lease ROU assets consist primarily of equipment used in the manufacturing process with terms of two years to eight years .

Operating lease ROU assets consist of the following:

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Since we retain the obligation to the lessor, the underlying leases continue to be accounted for as operating leases.

Sublease income is recognized on a straight-line basis over the lease term.

Sublease income is recognized on a straight-line basis over the lease term and is recognized in the “Other operating expense (income), net” line in the Consolidated Statements of Operations and Comprehensive Income (Loss).

Impairment of Long-Lived Assets

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A test for recoverability is also performed when management has committed to a plan to dispose of a reporting unit or asset group.

Assets to be held and used are tested for recoverability when indications of impairment are evident.

Recoverability of a long-lived tangible or intangible asset, or asset group, is evaluated by comparing its carrying value to the future estimated undiscounted cash flows expected to be generated by the asset or asset group.

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Revenue Recognition

We generally transfer control and recognize revenue when we ship the product from our manufacturing facility to our customer at a point in time, as this is when our customer obtains the ability to direct use of, and obtain substantially all of the remaining benefits from, the product.

We generally transfer control and recognize revenue when we ship the product from our manufacturing facilities to our customer at a point in time, as this is when our customer obtains the ability to direct use of, and obtain substantially all of the remaining benefits from, the product.

In limited circumstances, we recognize revenue over time as services are rendered.

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In accordance with ASC 260, Earnings Per Share, we allocate earnings or losses to common stockholders and participating securities using the two-class method to compute earnings per share (“EPS”) unless the treasury stock method results in a lower EPS.

The two-class method is an earnings allocation formula that treats participating securities as having rights to earnings that otherwise would have been available to common stockholders.

The two-class method is an earnings allocation formula that treats participating securities as having rights to earnings that

otherwise would have been available to common stockholders.

Participating securities may participate in undistributed earnings with common stock whether or not that participation is conditioned upon the occurrence of a specified event.

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Government Assistance

For the years ended December 31, 2023 and 2022, we received $ 0.7 million and $ 1.4 million, respectively, in grants and other programs from various governments outside of the U.S.

These amounts were received as employment programs, rent abatements, and incentives for capital expenditures in specific locations.

For the year ended December 31, 2024, we received $ 1.0 million in grants and other programs from various governments outside of the U.S.

These amounts were received as rent abatements and incentives for capital expenditures in specific locations.

Amounts received were recognized as reductions to the underlying expense or capital assets.

Discontinued Operations

In October 2020, we sold our Life Sciences business under the terms of a Stock Purchase Agreement (the “SPA”) with affiliates of American Securities LLC for $ 753.3 million cash.

In accordance with the terms of the SPA, we agreed to indemnify the buyer for certain tax liabilities on its consolidated federal income tax return related to the Life Sciences business during the portion of the year ended December 31, 2020, prior to the change in ownership on October 6, 2020.

We recognized a tax indemnification of $ 1.2 million during the year ended December 31, 2020 which was reversed during the year ended December 31, 2021, as the actual tax liability was determined to be $ 0 .

Segment Information

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Our medical business includes the production of a variety of tools and instruments for the orthopaedics and medical/surgical end markets.

These divisions are considered our two operating segments as each has engaged 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.

These divisions are considered our two operating segments as each has engaged 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 (“CODM”) reviews discrete financial information for purposes of allocating resources and assessing performance.

The CODM, who is our President and Chief Executive Officer, uses segment operating income (loss) to evaluate the performance of our segments each quarter and for annual forecasting purposes.

Operating income (loss) is used to make key operating decisions, such as the amount and timing of capital expenditures, plant optimization actions, and allocation of management resources.

In addition to our two reportable segments, we report a Corporate category which includes corporate costs and unallocated expenses.

The following tables reconcile segment revenues to consolidated loss before provision for income taxes and share of net income from joint venture.

Year Ended December 31, 2024 Mobile

Solutions Power

Solutions Corporate and Eliminations Total

Sales $ 283,944 $ 180,545 ( 199 ) $ 464,290

Cost of sales 251,847 143,197 ( 232 ) 394,812

Selling, general, and administrative expense 14,672 12,987 21,822 49,481

Depreciation expense 26,027 3,994 1,558 31,579

Other segment items (1) 9,476 7,256 ( 766 ) 15,966

Segment operating income (loss) $ ( 18,078 ) $ 13,111 $ ( 22,581 ) $ ( 27,548 )

Interest expense 22,095

Loss on extinguishment of debt 349

Other income, net ( 4,558 )

Loss before provision for income taxes and share of net income from joint venture $ ( 45,434 )

Year Ended December 31, 2023 Mobile

Solutions Power

Solutions Corporate and Eliminations Total

Sales $ 303,335 $ 185,948 ( 13 ) $ 489,270

Cost of sales 271,110 148,096 ( 31 ) 419,175

Selling, general, and administrative expense 14,471 13,104 19,861 47,436

Depreciation expense 25,803 4,504 1,646 31,953

Other segment items (1) 3,700 9,148 ( 338 ) 12,510

Segment operating income (loss) $ ( 11,749 ) $ 11,096 $ ( 21,151 ) $ ( 21,804 )

Interest expense 21,137

Other expense, net 10,730

Loss before provision for income taxes and share of net income from joint venture $ ( 53,671 )

Year Ended December 31, 2022 Mobile

Solutions Power

Solutions Corporate and Eliminations Total

Sales $ 293,536 $ 205,204 ( 2 ) $ 498,738

Cost of sales 253,906 167,206 ( 7 ) 421,105

Selling, general, and administrative expense 13,559 15,147 20,929 49,635

Depreciation expense 24,839 5,009 1,556 31,404

Other segment items (1) 3,397 14,306 ( 17 ) 17,686

Income (loss) from operations $ ( 2,165 ) $ 3,536 $ ( 22,463 ) $ ( 21,092 )

Interest expense 15,041

Other income, net ( 5,064 )

Loss before provision for income taxes and share of net income from joint venture $ ( 31,069 )

_______________________________

(1) Other segment items includes amortization expense and other operating expenses and income.

The following table presents capital expenditures and depreciation and amortization by reportable segment.

Year Ended December 31,

2024 2023 2022

Mobile Solutions $ 303,335 $ 293,536 $ 285,863

Power Solutions 185,948 205,204 191,800

Intersegment sales eliminations ( 13 ) ( 2 ) ( 79 )

Total $ 489,270 $ 498,738 $ 477,584

Income (loss) from operations:

Capital expenditures:

Mobile Solutions $ 13,438 $ 15,387 $ 14,590

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Total $ 45,302 $ 46,120 $ 47,231

Expenditures for long-lived assets:

Mobile Solutions $ 15,387 $ 14,590 $ 15,411

Power Solutions 3,643 2,401 2,200

Corporate 1,466 961 610

Total $ 20,496 $ 17,952 $ 18,221

The following table summarizes total assets by reportable segment.

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France 20,713 24,298

Mexico 14,038 15,235

Brazil 12,585 17,088

Poland 9,131 10,371

Mexico 5,167 14,038

All foreign countries $ 87,505 $ 101,983

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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, specification plating, and surface finishing.

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

Year Ended December 31, 2024 Mobile

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Changes in the contract liability balances during the year ended December 31, 2024, were not materially impacted by any other factors.

The balance of deferred revenue was $ 0.4 million and $ 0.7 million as of December 31, 2023 and December 31, 2022, respectively.

Revenue recognized for performance obligations satisfied or partially satisfied during the year ended December 31, 2023 included $ 0.7 million that was included in deferred revenue as of December 31, 2022.

The balance of deferred revenue was $ 0.2 million, $ 0.4 million and $ 0.7

million as of December 31, 2024, 2023 and 2022, respectively.

Revenue recognized for performance obligations satisfied or partially satisfied during the years ended December 31, 2024, 2023 and 2022, included $ 0.4 million, $ 0.7 million and $ 0.5 million, respectively, that was included in deferred revenue as of the prior year-end.

Transaction Price Allocated to Future Performance Obligations

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Balance at end of year $ 1,515 $ 1,241 $ 1,469

As of December 31, 2023, one customer represented greater than 10 % of our consolidated accounts receivable balance.

As of December 31, 2024 and 2023, one customer represented 11 % and 13 %, respectively, of our consolidated accounts receivable balance.

Amounts due from this customer are primarily related to Mobile Solutions.

Accounts Receivable Sales Programs

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 years ended December 31, 2023 and 2022, we incurred fees of $ 1.1 million and $ 0.6 million, respectively, related to the sale of receivables which is recorded in the Other expense (income), net line item on the Consolidated Statements of Operations and Comprehensive Income (Loss).

During the years ended December 31, 2024, 2023 and 2022, we incurred fees of $ 1.1 million, $ 1.1 million and $ 0.6 million, respectively, related to the sale of receivables which is recorded in the Other expense (income), net line item on the Consolidated Statements of Operations and Comprehensive Income (Loss).

Inventories are comprised of the following amounts:

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For the years ended December 31, 2024, 2023, and 2022, we recorded depreciation expense of $ 31.6 million, $ 32.0 million, and $ 31.4 million, respectively.

During the year ended 2024, we recognized $ 0.9 million of accelerated depreciation expense due to changes in the estimated remaining useful life of certain machinery and equipment.

We monitor property, plant and equipment for any indicators of potential impairment.

We recognized an impairment of $ 6.5 million for the year ended December 31, 2024, related to machinery and equipment located at a plant that will close in 2025.

The machinery and equipment were adjusted down to their fair value, which was determined based on quoted market prices for similar assets.

The impairment loss, which was reported within our Mobile Solutions group, is recognized in the “Other expense (income), net” line in the Consolidated Statements of Operations and Comprehensive Income (Loss).

There were no impairment charges for the years ended December 31, 2023, and 2022.

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Amortization ( 3,354 ) ( 10,369 ) ( 13,723 )

Intangible assets sold (1) — ( 591 ) ( 591 )

Balance as of December 31, 2024 $ 15,649 $ 28,761 $ 44,410

_______________________________

(1) Represents customer relationships associated with the Industrial Molding Corporation business, which was sold during the year ended December 31, 2024 (see Note 18).

The following table shows the cost and accumulated amortization of our intangible assets as of December 31, 2024 and 2023.

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Noncurrent liabilities 7,639 8,662

We recognized sales to the JV of $ 0 , $ 0.1 million, and $ 0.4 million during the years ended December 31, 2023, 2022, and 2021, respectively.

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 new $ 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 finance rate (“SOFR”) for interest rate calculations.

The following table presents the outstanding debt balances.

We recognized sales to the JV of $ 0 , $ 0 , and $ 0.1 million during the years ended December 31, 2024, 2023, and 2022, respectively.

The following table presents amounts outstanding on our debt facilities.

As of December 31,

1 unchanged sentence

ABL Facility 5,400 —

Financing obligations from sale-leaseback transactions 24,496 —

International loans 8,485 10,655

2 unchanged sentences

_______________________________

(1) In addition to this amount, costs of $ 0.5 million and $ 0.6 million related to the ABL Facility were recorded in other non-current assets as of December 31, 2023 and 2022, respectively.

(1) In addition to this amount, costs of $ 1.2 million and $ 0.5 million related to asset backed credit facilities were recorded in other non-current assets as of December 31, 2024 and 2023, respectively.

We capitalized interest costs of $ 1.2 million, $ 1.3 million, and $ 0.6 million in the years ended December 31, 2024, 2023, and 2022, respectively, related to construction in progress.

Term Loan Facility

Effective March 31, 2023, outstanding borrowings under the Term Loan Facility bear interest at either 1) one-month, three-month, or six-month SOFR with a duration adjustment (“Adjusted SOFR”), 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 %.

Beginning in the second quarter of 2023, interest was increased on a paid-in-kind basis at a rate between 1.00 % and 2.00 % (“PIK interest”), dependent on the Company’s leverage ratio.

On March 22, 2021, we entered into a $ 150.0 million term loan facility (as amended from time to time, the “Term Loan Facility”), on which outstanding borrowings bear interest at either:

1) one-month, three-month, or six-month term secured overnight finance rate (“SOFR”) with a duration adjustment (“Adjusted Term SOFR”), 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 %.

the second quarter of 2023, interest was increased on a paid-in-kind basis at a rate between 1.00 % and 2.00 % (“PIK interest”), dependent on our net leverage ratio for the most recently reported fiscal quarter and subject to reduction upon the occurrence of certain conditions as set forth in the credit agreement governing the Term Loan Facility.

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

At December 31, 2023, the Term Loan Facility bore interest, including PIK interest, based on one-month Adjusted SOFR, at 14.331 %.

At December 31, 2024, the Term Loan Facility bore interest, including PIK interest, based on one-month Adjusted Term SOFR, at 12.332 %.

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

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These costs are recorded as a direct reduction to the carrying amount of the associated long-term debt and amortized over the term of the debt.

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

We had an interest rate swap that changed the applicable variable base rate to a fixed rate of 1.291 % on $ 60.0 million of the outstanding balance of the Term Loan Facility.

During the first quarter of 2023, we terminated the interest rate swap and received cash proceeds of $ 2.5 million which was equal to its fair value.

The ABL Facility provides for a senior secured revolving credit facility, with an original commitment amount of $ 50.0 million, of which a maximum of $ 30.0 million is available in the form of letters of credit and a maximum of $ 5.0 million is available for the issuance of short-term swingline loans.

On December 30, 2024, we entered into a new asset backed credit facility (the “ABL Facility”) which provides for a senior secured revolving credit facility in the amount of $ 50.0 million, of which $ 15.0 million is available in the form of letters of credit and $ 5.0 million is available for the issuance of short-term swingline loans.

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.

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.

Effective March 3, 2023, the variable borrowing rate is either 1) Adjusted SOFR plus an applicable margin of 1.75 % or 2.00 %, depending on availability, or 2) the greater of the federal funds rate or prime, plus an applicable margin of 0.75 % or 1.00 %, depending on availability.

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

At December 31, 2023, using one-month Adjusted SOFR plus a 2.00 % margin, the interest rate on outstanding borrowings under the ABL Facility would have been 7.445 %.

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 December 31, 2023, we had no outstanding borrowings under the ABL Facility, $ 10.9 million of outstanding letters of credit, and $ 26.4 million available for future borrowings under the ABL Facility.

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

Outstanding borrowings under the ABL Facility bear interest at either:

1) the one, three or six month SOFR plus 1.50 %, plus an adjustment of 0.10 % (“Term SOFR Rate”);

or 2) the highest of the base commercial lending rate of the lender or various benchmark rates plus an applicable margin of 0.50 % or 1.00 %, depending on the benchmark (“Alternative Base Rate”).

At December 31, 2024, based on a one-month Term SOFR Rate, the interest rate on outstanding borrowings under the ABL Facility was 5.94 %.

We incur a commitment fee of 0.25 % for unused capacity under the ABL Facility and a 1.85 % fee on the amount of letters of credit outstanding.

The final maturity date of the ABL Facility is the earlier of:

1) December 30, 2029;

or 2) 91 days prior to the loan maturity date of the Term Loan Facility.

We capitalized a total of $ 1.2 million in new debt issuance costs related to the ABL Facility.

As of December 31, 2024, we had $ 5.4 million outstanding borrowings under the ABL Facility, $ 10.4 million of outstanding letters of credit, and $ 15.0 million available for future borrowings under the ABL Facility.

The ABL Facility is secured by a perfected lien over substantially all of the Company’s assets.

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

2021 ABL Facility

On March 22, 2021, we entered into an asset backed credit facility (as amended from time to time, the “2021 ABL Facility”) which provided for a $ 50.0 million senior secured revolving credit facility, of which a maximum of $30.0 million was available in the form of letters of credit and a maximum of $ 5.0 million was available for the issuance of short-term swingline loans.

On December 30, 2024, we terminated the 2021 ABL Facility and paid down the $ 12.0 million of outstanding borrowings.

The availability of credit under the 2021 ABL Facility was limited by a borrowing base calculation derived from accounts receivable and inventory held in the United States.

Outstanding borrowings under the 2021 ABL Facility bore interest on a variable rate structure plus an interest rate spread that was based on the average amount of aggregate revolving commitment available.

The variable borrowing rate was either:

1) Adjusted Term SOFR plus an applicable margin of 1.75 % or 2.00 %, depending on availability;

or 2) the greater of the federal funds rate or prime, plus an applicable margin of 0.75 % or 1.00 %, depending on availability.

At December 30, 2024, using one-month Adjusted Term SOFR plus a 2.00 % margin, the interest rate on outstanding borrowings under the 2021 ABL Facility was 6.568 %.

We incurred a commitment fee of 0.375 % for unused capacity under the 2021 ABL Facility and a 2.125% fee on the amount of letters of credit outstanding.

During the year ended December 31, 2024, we recognized a $ 0.3 million loss on extinguishment in connection with the termination of the 2021 ABL Facility.

Sale-Leaseback Transactions

In March 2024, we sold three of our properties for an aggregate sales price of $ 16.9 million, with the net proceeds used to repay a portion of the outstanding borrowings under the Term Loan Facility.

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, we have the ability to maintain the risks and rewards of ownership.

Since the transaction did 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 Consolidated Balance Sheets and the non-land assets will continue to be depreciated over their remaining useful lives.

The $ 16.9 million of gross proceeds was recognized as a financing obligation as a component of long-term debt.

The monthly lease payments, which increase 3.0% each year, are being amortized as principal payments and interest expense based on an effective interest rate of 9.715 %.

We incurred $ 0.6 million in debt issuance costs related to this transaction, which are being amortized over the term of the debt.

In March 2024, we sold multiple pieces of manufacturing equipment for an aggregate sales price of $ 4.9 million.

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

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

As a result, the assets remain on our 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 are being amortized as principal payments and interest expense on a weighted average effective interest rate of 10.540 %.

International Loans

We have fixed rate debt with various financial institutions in France, Poland and China, with maturity dates between 2025 and 2033.

These loans, which were obtained to fund working capital and equipment purchases, had a weighted average interest rate of 2.320% at December 31, 2024.

Future Maturities

The following table lists aggregate maturities of debt for each of the next five years.

Debt Issuance Costs

We recognized a $ 2.4 million loss on extinguishment for unamortized debt issuance costs that were written off in the year ended December 31, 2021, in connection with the termination of our previous credit facility.

Preferred Stock

Series D Perpetual Preferred Stock

On March 22, 2021, we completed a private placement of 65,000 shares of newly designated Series D Perpetual Preferred Stock, with a par value of $ 0.01 per share (the “Series D Preferred Stock”), at a price of $ 1,000 per share, together with detachable warrants (the “2021 Warrants”) to purchase up to 1.9 million shares of our common stock at an exercise price of $ 0.01 per share.

The Series D Preferred Stock has an initial liquidation preference of $ 1,000 per share and is redeemable at our option in cash at a redemption price equal to the liquidation preference then in effect.

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On 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.

Cash dividends are required beginning on September 30, 2027 and are limited based on terms and conditions of the Term Loan Agreement.

The Series D Preferred Stock is classified as mezzanine equity, between liabilities and stockholders’ equity, because certain features of the Series D Preferred Stock could require redemption of the Series D Preferred Stock upon a change of control event that is considered not solely within our control.

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Deemed dividends adjust additional paid-in capital due to the absence of retained earnings.

In accordance with ASC 815-15, Derivatives and Hedging - Embedded Derivatives, certain features of the Series D Preferred Stock were bifurcated and accounted for as derivatives separately.

Note 18 discusses the accounting for these features.

As of December 31, 2024, the carrying value of the Series D Preferred Stock shares was $ 93.5 million, which included $ 46.8 million of accumulated unpaid and deemed dividends.

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Balance at beginning of year $ 77,799 $ 64,701 $ 53,807

Proceeds from issuance of shares, net of issuance costs — — 61,793

Fair value of 2021 Warrants issued — — ( 14,839 )

Recognition of bifurcated embedded derivative — — ( 282 )

Accrual of in-kind dividends 11,351 10,085 8,961

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Balance at end of year $ 93,497 $ 77,799 $ 64,701

Series B Convertible Preferred Stock

On December 11, 2019, we issued 100,000 shares of contingently redeemable Series B convertible preferred stock (the “Series B Preferred Stock”), together with detachable warrants (the “2019 Warrants”) to purchase up to 1.5 million shares of our common stock at an original exercise price of $ 12.00 per share.

The Series B Preferred Stock had a liquidation preference of $ 1,000 per share and earned cumulative dividends at a rate of 10.625 % per year, and accrued whether or not earned or declared.

On March 22, 2021, we used the net cash proceeds of $ 61.8 million from the issuance of the Series D Preferred Stock, along with part of the proceeds from the Term Loan Facility, to redeem all of the outstanding shares of the Series B Preferred Stock.

The following table presents the change in the Series B Preferred Stock carrying value for the year ended December 31, 2021.

Balance as of December 31, 2020 $ 105,086

Accrual of in-kind dividends 14,008

Amortization 335

Redemption ( 119,429 )

Balance as of December 31, 2021 $ —

The following table presents components of lease expense:

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In June 2023, we began subleasing our Taunton and Irvine sites, under subleases that extend through the lease termination dates of the respective head leases.

In August 2022, we began subleasing a portion of our leased corporate headquarters office space.

We are subleasing a portion of our leased corporate headquarters office space under two separate subleases that expire in 2027 and 2029, respectively.

The undiscounted cash flows to be received under operating subleases subsequent to December 31, 2024, is as follows:

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The matter encompasses several lawsuits filed with the Brazilian courts requesting declaratory actions that no tax is due or seeking a stay of execution on the collection of the tax.

In 2018, we obtained a favorable decision in one of the declaratory actions for which the period for appeal has expired.

We have filed actions in each court requesting dismissal of the matter based on the earlier court action.

In May 2020, we received an unfavorable decision in one of the lawsuits, and as a result have recorded a liability to the Brazilian tax authorities and a receivable from the former shareholders of Autocam for the same amount.

We have obtained multiple favorable decisions and one unfavorable decision.

Although we anticipate a favorable resolution to the remaining matters, we can provide no assurances that we will be successful in achieving dismissal of all pending cases.

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We are entitled to indemnification from the former shareholders of Autocam, subject to the limitations and procedures set forth in the agreement and plan of merger relating to the Autocam acquisition.

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 December 31, 2023.

Accordingly, we do not expect such losses, if any, to have a material impact on our business, operations or financial results.

Other Legal Matters

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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.

The following table summarizes the income (loss) from continuing operations before benefit (provision) for income taxes and share of net income from joint venture.

The following table summarizes income (loss) before benefit (provision) for income taxes and share of net income from joint venture.

Years Ended December 31,

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Foreign 9,269 10,723 9,474

Loss from continuing operations before benefit (provision) for income taxes and share of net income from joint venture $ ( 53,671 ) $ ( 31,069 ) $ ( 22,442 )

Loss before provision for income taxes and share of net income from joint venture $ ( 45,434 ) $ ( 53,671 ) $ ( 31,069 )

The following table summarizes total income tax expense (benefit) recognized in each year.

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Total deferred tax benefit ( 921 ) ( 1,162 ) ( 1,785 )

Total income tax expense (benefit) $ 2,285 $ 1,621 $ ( 1,756 )

Total income tax expense $ 2,410 $ 2,285 $ 1,621

The following table presents a reconciliation of income taxes based on the U.S.

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Research and development tax credit — % 0.2 % 0.3 %

Change in uncertain tax positions — % — % 0.7 %

Interest on CARES Act refund 1.6 % 1.1 % 1.8 %

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Effective tax rate ( 5.3 ) % ( 4.3 ) % ( 5.2 ) %

Our effective tax rate was ( 4.3 )% and ( 5.2 )% for the years ended December 31, 2023 and 2022, respectively.

The effective tax rates differed from the U.S.

federal statutory tax rate of 21 % primarily due to the impact of our valuation allowance change during the year.

Our effective tax rate for continuing operations was 7.8 % for the year ended December 31, 2021, which differed from the U.S.

federal statutory tax rate of 21 % primarily due to the impact of our valuation allowance change during the year.

Our effective tax rate was ( 5.3 )% for the year ended December 31, 2024.

The effective tax rate differed 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, foreign tax rate differences and the 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.

Our effective tax rate was ( 4.3 )% and ( 5.2 )% for the years ended December 31, 2023 and 2022, respectively, which differed from the U.S.

federal statutory tax rate of 21 % primarily due to the impact of our valuation allowance changes during each year.

In 2021, we filed a refund claim with the IRS as a result of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

During the years ended December 31, 2024 and 2023, we accrued $ 0.7 million and $ 0.6 million, respectively, of interest on the CARES Act refund.

Including interest accrued on the initial refund amount, we have a $ 11.6 million tax refund receivable at December 31, 2023, which is in the process of IRS review and approval.

The timing of the receipt of the refund remains uncertain at December 31, 2023.

Including interest accrued on the initial refund amount, we have a $ 12.3 million tax refund receivable at December 31, 2024, which is in the process of IRS review.

The timing of the receipt of the refund is expected in the first half of 2025.

The following table summarizes the principal components of the deferred tax assets and liabilities.

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Operating leases 9,005 9,970

Interest rate swap — 754

Taxes on unremitted foreign earnings 4,488 4,658

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Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future earnings growth.

On the basis of this evaluation, as of December 31, 2023, a valuation allowance of $ 47.5 million has been recorded to recognize only the portion of the deferred tax asset that is more likely than not to be realized without consideration of future earnings growth.

On the basis of this

evaluation, as of December 31, 2024, a valuation allowance of $ 59.3 million has been recorded to recognize only the portion of the deferred tax asset that is more likely than not to be realized without consideration of future earnings growth.

Management believes all remaining tax assets will more likely than not be realized.

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During 2024, the valuation allowance increased by $ 11.8 million, primarily due to allowances recorded against U.S.

federal net operating loss carryforwards, foreign net operating loss carryforwards, and carryforwards of disallowed interest expense which are subject to certain annual deduction limitations.

The increase was partially offset by the release of valuation allowance in Brazil.

As of December 31, 2023, Brazil had emerged from a recent history of cumulative losses and management has confidence in the operations ability to sustain profits in the future.

federal net operating loss carryforwards, and carryforwards of disallowed interest expense which are subject to certain annual deduction limitations.

As a result of the deemed mandatory repatriation provisions in the U.S.

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As of December 31, 2024, we have recorded a liability of $ 4.5 million for the anticipated withholding taxes that would be due upon repatriation of the unremitted earnings of those subsidiaries for which management does not intend to permanently reinvest.

In 2021, the Company asserted that it was permanently reinvested in certain jurisdictions for which it previously was unable to assert permanent reinvestment.

Prior to the Company’s debt refinancing in 2021, the Company had recorded a liability on all unremitted earnings.

However, upon completion of the debt refinancing, the Company reevaluated repatriation plans, changed its assertion for certain jurisdictions and recorded the resulting tax benefit of $ 2.4 million.

We are subject to U.S.

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federal examination for periods before 2021.

We are currently under federal examination for tax years 2017, 2018 and 2019.

We regularly assess the outcomes of both ongoing and future examinations for the current or prior years to ensure our provision for income taxes is sufficient.

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Balance at end of year $ 117 $ 121 $ 118

The increase to unrecognized tax benefits in 2023 is related to the foreign currency remeasurement of previously unrecognized tax benefits.

The decrease to unrecognized tax benefits in 2024 is related to the foreign currency remeasurement of previously unrecognized tax benefits.

As of December 31, 2024, the unrecognized tax benefits would, if recognized, impact our effective tax rate by $ 0.7 million, inclusive of the impact of interest and penalties.

Management believes that it is reasonably possible that the amount of unrecognized income tax benefits, including interest and penalties, may not decrease during the next twelve months as no statutes are expected to lapse within the period.

We operate under tax holidays in other countries, which are effective through December 31, 2026, and may be extended if certain additional requirements are satisfied.

The tax holidays are conditional upon our meeting certain employment and investment thresholds.

The tax holidays did not impact our 2023 or 2022 foreign taxes and decreased foreign taxes by $ 0.2 million for the year ended December 31, 2021.

Net Income (Loss) Per Common Share

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2024 2023 2022

Loss from continuing operations $ ( 50,150 ) $ ( 26,098 ) $ ( 14,425 )

Net loss $ ( 38,273 ) $ ( 50,150 ) $ ( 26,098 )

Adjustment for preferred stock cumulative dividends and deemed dividends ( 15,698 ) ( 13,098 ) ( 10,894 )

Numerator for basic and diluted net loss from continuing operations per common share ( 63,248 ) ( 36,992 ) ( 35,903 )

Income from discontinued operations, net of tax — — 1,200

Numerator for basic and diluted net loss per common share $ ( 53,971 ) $ ( 63,248 ) $ ( 36,992 )

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Shares used to calculate basic and diluted net loss per share 48,653 46,738 44,680

Basic and diluted net loss from continuing operations per common share $ ( 1.35 ) $ ( 0.83 ) $ ( 0.82 )

Basic and diluted net income from discontinued operations per common share — — 0.03

Basic and diluted net loss per common share $ ( 1.11 ) $ ( 1.35 ) $ ( 0.83 )

Cash dividends declared per common share $ — $ — $ —

_______________________________

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2024 2023 2022

Options 381 557 766

Stock options 212 381 557

Warrants 1,500 1,500 1,500

1,881 2,057 2,266

Performance share units 802 133 —

Total antidilutive securities 2,514 2,014 2,057

Stock options excluded from the EPS calculations had a per share exercise price ranging from $ 7.93 to $ 25.16 for the year ended December 31, 2024.

The 2019 Warrants excluded from the EPS calculations for the year ended December 31, 2023 had a per share exercise price of $ 11.03 .

The 2019 Warrants excluded from the EPS calculations for the year ended December 31, 2024 had a per share exercise price of $ 11.03 (see Note 17).

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

Share-Based Compensation

As of December 31, 2024, we have 3.4 million shares available that can be issued to employees and non-executive directors under the NN, Inc.

2022 Omnibus Incentive Plan and prior plans (collectively, the “Incentive Plans”), as options, stock appreciation rights, and other share-based awards.

2022 Amended and Restated Omnibus Incentive Plan and prior plans (collectively, the “Incentive Plans”), as options, stock appreciation rights, and other share-based awards.

Shares of our common stock delivered upon exercise or vesting may consist of newly issued shares of our common stock or shares acquired in the open market.

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Unvested at December 31, 2024 2,326 $ 2.18

During the year ended December 31, 2023, we granted 1,952,000 shares of restricted stock to non-executive directors, officers and certain other employees under the Incentive Plans.

These shares vest pro-rata generally over three years for employees and over one year for non-executive directors.

During the year ended December 31, 2023, we granted 1,830,000 shares of restricted stock, outside of the Incentive Plans, to new executive officers as inducement awards, which vest pro-rata over five years .

During the year ended December 31, 2024, we granted 390,000 shares of restricted stock to non-executive directors, officers and certain other employees which vest pro-rata over three years for employees and over one year for non-executive directors.

In addition, we granted 270,000 shares of restricted stock to new executive officers as inducement grants, during the year ended December 31, 2024, which vest pro-rata over five years .

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.

PSUs vest upon achieving specified performance targets over a performance period, which are based on total shareholder return (“TSR Awards”), return on invested capital (“ROIC Awards”), or on the Company’s stock price meeting specified thresholds.

If the performance metric thresholds are not met at the end of performance period, the PSUs expire automatically.

PSUs cliff-vest at the end of the performance period and expire automatically if the performance metric thresholds are not met during the performance period.

The TSR Awards 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, as defined by the Incentive Plans, during the performance periods.

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The performance periods for TSR Awards and ROIC Awards begins on January 1st of the year of grant and ends three years later on December 31st.

The Inducement Awards are earned upon our stock price meeting specified thresholds for any 20 consecutive trading days during the five-year performance period.

PSUs that vest will be settled by the issuance of shares of our common stock with the actual number of shares interpolated between a threshold and maximum payout amount based on actual performance results.

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Nonvested at December 31, 2024 3,671 $ 1.45

During the year ended December 31, 2023, we granted 561,000 TSR Awards to executive officers under the Incentive Plans for the 2023 to 2025 performance period.

During the year ended December 31, 2023, we granted 3,060,000 PSUs, outside of the Incentive Plans, to new executive officers as inducement awards.

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

During the year ended December 31, 2024, we granted 175,000 TSR Awards to executive officers under the Incentive Plans for the 2023 to 2025 performance period, and 415,000 Inducement Awards to new executive officers.

During the years ended December 31, 2023 and 2022, we granted 3,621,000 and 790,000 PSUs with weighted average grant-date fair values of $ 1.14 and $ 2.58 per share, respectively.

During the year ended December 31, 2023, 67,000 PSUs were subject to accelerated vesting upon a participant’s termination that was a qualifying event under the terms of the Incentive Plans.

The total grant date fair value of PSUs that vested in the year ended December 31, 2023, was $0.3 million.

No other PSUs were vested during the years ended December 31, 2023, 2022 and 2021.

The total grant-date fair value of PSU’s that vested in the years ended December 31, 2024, 2023, and 2022, was $ 0.1 million, $ 0.3 million, and $ 0 , respectively.

Stock Options

Stock options, which were last granted in 2020, have an exercise price equal to the closing price of our stock on the date of grant, an exercise term of ten years with a vesting period of three years .

Stock options, which were last granted in 2020, have an exercise price equal to the closing price of our stock on the date of grant, an exercise term of ten years , and a vesting period of three years .

The following table presents stock option activity for the year ended December 31, 2024.

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Amounts reclassified from AOCI to interest expense (2) — ( 428 ) 8 ( 420 )

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

Net other comprehensive income (loss) ( 8,156 ) 2,998 ( 60 ) ( 5,218 )

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(1) Income tax effect of changes in interest rate swap.

(2) Represents (gain) loss recognized in interest expense on effective interest rate swap.

(3) Represents reclassification of derivative loss and settlements after discontinuation of hedge accounting.

(2) Represents gain recognized in interest expense on effective interest rate swap.

Fair Value Measurements

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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.

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.

On February 5, 2024, all of the 2021 Warrants were exercised on a cashless basis, resulting in the issuance of 1,896,000 shares.

The Series D Preferred Stock includes a put feature that allows the holder to redeem the Series D Preferred Stock upon a change in control at the greater of 1) the liquidation preference plus accrued dividends or 2) 140 % of the liquidation preference.

The put feature was considered a redemption right at a premium and is not clearly and closely related to the debt host.

Since the liquidation preference plus accrued dividends was greater than 140% of the liquidation preference at December 31, 2023, the put feature is no longer applicable.

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.

During the year ended December 31, 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 in 2021, we issued warrants to purchase up to 1.9 million shares of our common stock (the “2021 Warrants”).

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 year ended December 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 in 2019, we issued 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.

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Change in fair value (1) 12 10,885

Settlements ( 11,376 ) —

Balance at end of year $ 5,192 $ 16,556

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Derivative liability - other non-current liabilities 15,421 — 1,135

The fair value of the 2023 Warrants and 2021 Warrants is determined using the observable market price of a share of our common stock, less the $ 0.01 per share exercise price.

The fair value of the change-in-control put feature utilized 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 was 3 % to 10 % as of December 31, 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 December 31, 2023 and 2022.

Interest Rate Swaps

On July 22, 2021, we entered into a fixed-rate interest rate swap agreement to change the LIBOR-based component of the interest rate on a portion of our variable rate debt to a fixed rate of 1.291 % (the “2021 Swap”).

The 2021 Swap has a notional amount of $ 60.0 million and a maturity date of July 31, 2024.

The fair value of the 2023 Warrants and 2021 Warrants is determined using the observable market price of a share of our common stock, less the $ 0.01 per share exercise price (Level 1).

The probabilities resulted in a weighted average term of 2.0 years as of December 31, 2024 and 2.9 years as of December 31, 2023.

Interest Rate Swap

On July 22, 2021, we entered into a fixed-rate interest rate swap agreement to change the applicable variable base rate component of the interest rate on a portion of our variable rate debt to a fixed rate of 1.291 % (the “2021 Swap”).

The 2021 Swap had a notional amount of $ 60.0 million and a maturity date of July 31, 2024.

We designated the 2021 Swap as a cash flow hedge at inception with cash settlements recognized in interest expense.

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

On February 8, 2019, we entered into a $ 700.0 million fixed-rate interest rate swap agreement that changed the LIBOR-based portion of the interest rate on a portion of our variable rate debt to a fixed rate of 2.4575 % (the “2019 Swap”).

On March 22, 2021, we terminated the 2019 Swap with a $ 13.7 million cash payment in connection with the extinguishment of our previously outstanding long-term variable-rate debt.

The 2019 Swap was designated as a cash flow hedge at inception.

However, in the fourth quarter of 2020, the 2019 Swap no longer qualified as an effective hedge, and subsequent changes in fair value of the 2019 Swap were recognized in earnings.

Cash settlements during 2021 are presented in investing activities on the Consolidated Statements of Cash Flows.

The following table presents the effect of the interest rate swaps on the Consolidated Statements of Operations and Comprehensive Income (Loss).

Years Ended December 31,

2023 2022 2021

Interest expense (benefit) (1) $ ( 1,815 ) $ ( 428 ) $ 73

Derivative payments on interest rate swap (2) — — 1,717

Loss on interest rate swap (2) — — 2,033

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(1) Represents (gain) loss recognized in interest expense on effective interest rate swap.

(2) Represents settlements and changes in fair value on the 2019 Swap while the hedge was ineffective.

As of December 31, 2023 and 2022, we reported $ 1.0 million and $ 3.1 million gains, respectively, net of tax, in accumulated other comprehensive income related to the interest rate swap.

The following table shows the fair values of the interest rate swaps within the fair value hierarchy.

December 31, 2022 Quoted Prices in Active Markets for Identical Assets

(Level 1) Significant Other Observable Inputs

(Level 2) Significant Unobservable Inputs

Derivative asset - other current assets $ — $ 2,130 $ —

Derivative asset - other non-current assets $ — $ 1,023 $ —

Total $ — $ 3,153 $ —

The fair value of the interest rate swap was calculated through standard pricing models which used inputs derived from or corroborated by observable market data such as interest rate yield curves, index forward curves, discount curves, and volatility surfaces.

The counterparty to the derivative contract is a highly rated financial institution which we believe carried only a minimal risk of nonperformance.

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

During the years ended December 31, 2024, 2023, and 2022, we recognized an interest benefit of $ 1.0 million, $ 1.8 million, and $ 0.4 million, respectively, from gains recognized in interest expense on the effective interest rate swap in the Consolidated Statements of Operations and Comprehensive Income (Loss).

As of December 31, 2024 and 2023, we reported $ 0 and $ 1.0 million gains, respectively, net of tax, in accumulated other comprehensive loss related to the interest rate swap.

Fair Value Disclosures

2 unchanged sentences

The fair value of our debt was $ 147.8 million and $ 162.2 million, with a carrying amount of $ 148.6 million and $ 153.3 million, as of December 31, 2024 and 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 and is considered a Level 3 fair value measurement.

Subsequent Event

On March 5, 2024, we entered into a Purchase and Sale and Escrow Agreement to sell and leaseback three of our properties (the “Properties”).

The sale is expected to close on or around March 15, 2024, with the buyer’s obligation to close subject to inspection, due diligence and other customary closing conditions.

The aggregate purchase price for the Properties is $ 16.8 million, the net proceeds from which will be used to repay a portion of the outstanding borrowings under the Term Loan Facility.

We plan to continue operations at the Properties uninterrupted by entering into a 20 year lease upon the closing of the sale.

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).

On July 2, 2024, we completed the sale of our Lubbock operations, 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.

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

The gain on sale of business is recognized in the “ Other expense (income), net ” line in the Consolidated Statements of Operations and Comprehensive Income (Loss).

The following is a summary of the net gain recognized in connection with the divestiture:

Net proceeds $ 17,000

Net assets disposed 8,281

Direct costs to sell 1,565

Gain on sale of business $ 7,154

Plant Optimization Activities

During the second half of 2024, we took specific steps to consolidate our footprint by identifying two manufacturing facilities to close due to volume rationalization which will reduce costs and improve operational efficiency.

In January 2025, we ceased production activities at our Mobile Solutions plant in Juarez, Mexico.

We plan to stop production activity at our Mobile Solutions plant in Dowagiac, Michigan by the end of the first quarter of 2025.

In addition, we implemented operational and cost optimization actions to reduce indirect and overhead costs.

We expect the facility closures and organizational changes to be completed in the first half of 2025.

We estimate incurring $ 13.6 million in charges which will be recognized in 2024 and 2025.

Once fully implemented, we expect to recognize annual benefits of approximately $ 5.4 million.

All costs incurred have been recognized in the Mobile Solutions segment.

The following is a summary of costs incurred and amounts accrued during the year ended December 31, 2024.

Severance and employee related Impairment of property and equipment Costs associated with exit or disposal activities Total

Balance as of December 31, 2023 $ — $ — $ — $ —

Restructuring costs 3,267 6,546 2,787 12,600

Amounts paid ( 581 ) — ( 257 ) ( 838 )

Charges against assets — ( 6,546 ) ( 2,530 ) ( 9,076 )

Balance as of December 31, 2024 $ 2,686 $ — $ — $ 2,686

Of the $ 12.6 million incurred during the year ended December 31, 2024, $ 5.0 million are recognized in the “Cost of sales” line, $ 1.1 million in the “Selling, general, and administrative expense” line, and $ 6.5 million in the “ Other expense (income), net ” line in the Consolidated Statements of Operations and Comprehensive Income (Loss).

Voluntary Early Retirement Program

During the year ended December 31, 2024, we recognized $ 1.2 million related to an early retirement incentive program (“ERIP”) that was open to to certain U.S.

employees that met specified age and service requirements, and who terminated employment in 2024.

We plan to recognize an additional $ 0.5 million under the ERIP for employees that will terminate during the first quarter of 2025.

The estimated total cost of the ERIP is $ 1.7 million with all benefit payments expected to be made in 2025.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data