NN INC 10-Q

Item 1. Financial Statements NN, Inc. Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) Three Months Ended March 31, (in thousands, except per share data) 2025 2024 Net sales $ 105,688 $ 121,198 Cost of sales (exclusive of depreciation and amortization shown separately below) 91,646 101,086 Selling, general, and administrative expense 11,170 13,348 Depreciation and amortization 8,774 12,547 Other operating income, net ( 1,113 ) ( 1,000 ) Loss from operations ( 4,789 ) ( 4,783 ) Interest expense 5,194 5,366 Other expense (income), net ( 2,169 ) 4,153 Loss before provision for income taxes and share of net income from joint venture ( 7,814 ) ( 14,302 ) Provision for income taxes ( 1,310 ) ( 506 ) Share of net income from joint venture 2,439 2,271 Net loss $ ( 6,685 ) $ ( 12,537 ) Other comprehensive income (loss): Foreign currency translation gain (loss) $ 3,125 $ ( 2,346 ) Reclassification adjustments from the interest rate swap included in net loss, net of tax — ( 449 ) Other comprehensive income (loss) $ 3,125 $ ( 2,795 ) Comprehensive loss $ ( 3,560 ) $ ( 15,332 ) Basic and diluted net loss per share $ ( 0.23 ) $ ( 0.34 ) Shares used to calculate basic and diluted net loss per share 49,075 47,724 See notes to condensed consolidated financial statements (unaudited). 3 Table of Contents NN, Inc. Condensed Consolidated Balance Sheets (Unaudited) (in thousands, except per share data) March 31, 2025 December 31, 2024 Assets Current assets: Cash and cash equivalents $ 11,739 $ 18,128 Accounts receivable, net of allowances of $ 1,375 and $ 1,515 at March 31, 2025 and December 31, 2024 67,750 61,549 Inventories 62,927 61,877 Income tax receivable 12,688 12,634 Prepaid assets 5,600 2,855 Other current assets 12,270 10,519 Total current assets 172,974 167,562 Property, plant and equipment, net of accumulated depreciation of $ 247,739 and $ 240,532 at March 31, 2025 and December 31, 2024 162,040 162,034 Operating lease right-of-use assets 38,305 39,317 Intangible assets, net 41,005 44,410 Investment in joint venture 37,622 34,971 Deferred tax assets 1,329 1,329 Other non-current assets 7,449 7,270 Total assets $ 460,724 $ 456,893 Liabilities, Preferred Stock, and Stockholders’ Equity Current liabilities: Accounts payable $ 45,876 $ 38,879 Accrued salaries, wages and benefits 17,698 19,915 Income tax payable 534 659 Short-term debt and current maturities of long-term debt 3,719 5,039 Current portion of operating lease liabilities 5,566 6,038 Other current liabilities 16,711 13,382 Total current liabilities 90,104 83,912 Deferred tax liabilities 5,088 4,969 Long-term debt, net of current maturities 147,604 143,591 Operating lease liabilities, net of current portion 41,007 42,291 Other non-current liabilities 11,673 14,111 Total liabilities 295,476 288,874 Commitments and contingencies (Note 11) Series D perpetual preferred stock - $ 0.01 par value per share, 65 shares authorized, issued and outstanding at March 31, 2025 and December 31, 2024 97,904 93,497 Stockholders’ equity: Common stock - $ 0.01 par value per share, 90,000 shares authorized, 50,526 and 49,908 shares issued and outstanding at March 31, 2025 and December 31, 2024 505 499 Additional paid-in capital 452,187 455,811 Accumulated deficit ( 340,306 ) ( 333,621 ) Accumulated other comprehensive loss ( 45,042 ) ( 48,167 ) Total stockholders’ equity 67,344 74,522 Total liabilities, preferred stock, and stockholders’ equity $ 460,724 $ 456,893 See notes to condensed consolidated financial statements (unaudited). 4 Table of Contents NN, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) Three Months Ended March 31, (in thousands) 2025 2024 Cash flows from operating activities Net loss $ ( 6,685 ) $ ( 12,537 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 8,774 12,547 Amortization of debt issuance costs and discount 716 544 Paid-in-kind interest 316 730 Total derivative loss (gain), net of cash settlements ( 1,762 ) 3,331 Share of net income from joint venture ( 2,439 ) ( 2,271 ) Share-based compensation expense 839 846 Deferred income taxes 174 ( 260 ) Other ( 519 ) ( 666 ) Changes in operating assets and liabilities: Accounts receivable ( 5,403 ) ( 6,888 ) Inventories ( 220 ) ( 1,554 ) Other operating assets ( 3,444 ) ( 4,821 ) Income taxes receivable and payable, net ( 163 ) ( 163 ) Accounts payable 6,468 6,130 Other operating liabilities 3 5,744 Net cash provided by (used in) operating activities ( 3,345 ) 712 Cash flows from investing activities Acquisition of property, plant and equipment ( 3,907 ) ( 5,460 ) Proceeds from sale of property, plant, and equipment 177 98 Net cash used in investing activities ( 3,730 ) ( 5,362 ) Cash flows from financing activities Proceeds from long-term debt 11,000 13,001 Repayments of long-term debt ( 9,026 ) ( 29,808 ) Cash paid for debt issuance costs — ( 646 ) Proceeds from sale-leaseback of equipment — 4,910 Proceeds from sale-leaseback of land and buildings — 16,863 Repayments of financing obligations ( 297 ) ( 99 ) Repayments of short-term debt ( 63 ) — Other ( 1,031 ) ( 651 ) Net cash provided by financing activities 583 3,570 Effect of exchange rate changes on cash flows 103 ( 213 ) Net change in cash and cash equivalents ( 6,389 ) ( 1,293 ) Cash and cash equivalents at beginning of period 18,128 21,903 Cash and cash equivalents at end of period $ 11,739 $ 20,610 See notes to condensed consolidated financial statements (unaudited). 5 Table of Contents NN, Inc. Condensed Consolidated Statements of Changes in Stockholders’ Equity Three Months Ended March 31, 2025 and 2024 (Unaudited) Common Stock Additional paid-in capital Accumulated deficit Accumulated other comprehensive loss Total (in thousands) Number of shares Par value Balance as of December 31, 2024 49,908 $ 499 $ 455,811 $ ( 333,621 ) $ ( 48,167 ) $ 74,522 Net loss — — — ( 6,685 ) — ( 6,685 ) Dividends accrued for preferred stock — — ( 4,407 ) — — ( 4,407 ) Shares issued under stock incentive plans, net of forfeitures and tax withholdings 637 6 ( 7 ) — — ( 1 ) Share-based compensation expense — — 839 — — 839 Restricted shares surrendered for tax withholdings under stock incentive plans ( 19 ) — ( 49 ) — — ( 49 ) Other comprehensive income — — — — 3,125 3,125 Balance as of March 31, 2025 50,526 $ 505 $ 452,187 $ ( 340,306 ) $ ( 45,042 ) $ 67,344 Common Stock Additional paid-in capital Accumulated deficit Accumulated other comprehensive loss Total (in thousands) Number of shares Par value Balance as of December 31, 2023 47,269 $ 473 $ 457,632 $ ( 295,348 ) $ ( 37,755 ) $ 125,002 Net loss — — — ( 12,537 ) — ( 12,537 ) Dividends accrued for preferred stock — — ( 3,670 ) — — ( 3,670 ) Shares issued for warrants exercised 1,896 19 9,367 — — 9,386 Shares issued under stock incentive plans, net of forfeitures 374 4 ( 4 ) — — — Share-based compensation expense — — 846 — — 846 Restricted shares surrendered for tax withholdings under stock incentive plans ( 19 ) ( 1 ) ( 90 ) — — ( 91 ) Other comprehensive loss — — — — ( 2,795 ) ( 2,795 ) Balance as of March 31, 2024 49,520 $ 495 $ 464,081 $ ( 307,885 ) $ ( 40,550 ) $ 116,141 See notes to condensed consolidated financial statements (unaudited). 6 Table of Contents NN, Inc. Notes to Condensed Consolidated Financial Statements March 31, 2025 (Unaudited) Note 1. 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 for a variety of end markets on a global basis. As of March 31, 2025, we had 24 facilities in North America, South America, Europe and China. 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 The accompanying condensed consolidated financial statements have not been audited. The Condensed Consolidated Balance Sheet as of December 31, 2024, was derived from the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Annual Report”), which we filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 6, 2025. 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, 2025 and 2024; financial position as of March 31, 2025 and December 31, 2024; and cash flows for the three months ended March 31, 2025 and 2024, 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 our 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. GAAP”) have been condensed or omitted from the unaudited condensed consolidated financial statements presented in this Quarterly Report. These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes included in the 2024 Annual Report. The results for the three months ended March 31, 2025, are not necessarily indicative of results for the year ending December 31, 2025, or any other future periods. Except for per share data or as otherwise indicated, all U.S. dollar amounts and share counts presented in the tables in these Notes to Condensed Consolidated Financial Statements are in thousands. 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 adopted ASU 2023-07 for the year ended December 31, 2024 and have presented the required interim disclosures on a retrospective basis in this 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. 7 Table of Contents Assets Held for Sale During the quarter ended March 31, 2025, we ceased production activity at our Mobile Solutions plant in Dowagiac, Michigan. The land and building, which we own, have been classified as held for sale as of March 31, 2025 as we are actively marketing the property for sale. The net book value of $ 1.4 million is included in “Other current assets” on the Condensed Consolidated Balance Sheets as of March 31, 2025. Note 2. Segment Information Our business is aggregated into the following two reportable segments: • Mobile Solutions, which is focused on growth in the automotive, general industrial, and medical end markets; and • Power Solutions, which is focused on growth in the electrical, general industrial, automotive, and medical end markets. These components are 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 income (loss) from operations to evaluate the performance of our segments each quarter and for annual forecasting purposes. Income (loss) from operations 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. Three Months Ended March 31, 2025 Mobile Solutions Power Solutions Corporate and Eliminations Total Sales $ 62,244 $ 43,508 ( 64 ) $ 105,688 Cost of sales 56,450 35,268 ( 72 ) 91,646 Selling, general, and administrative expense 3,538 2,682 4,950 11,170 Depreciation expense 4,209 780 380 5,369 Other segment items (1) 734 1,755 ( 197 ) 2,292 Segment income (loss) from operations $ ( 2,687 ) $ 3,023 $ ( 5,125 ) $ ( 4,789 ) Interest expense 5,194 Other income, net ( 2,169 ) Loss before provision for income taxes and share of net income from joint venture $ ( 7,814 ) Three Months Ended March 31, 2024 Mobile Solutions Power Solutions Corporate and Eliminations Total Sales $ 73,060 $ 48,238 ( 100 ) $ 121,198 Cost of sales 63,087 38,110 ( 111 ) 101,086 Selling, general, and administrative expense 3,785 3,260 6,303 13,348 Depreciation expense 7,572 1,049 470 9,091 Other segment items (1) 759 1,840 ( 143 ) 2,456 Segment income (loss) from operations $ ( 2,143 ) $ 3,979 $ ( 6,619 ) $ ( 4,783 ) Interest expense 5,366 Other expense, net 4,153 Loss before provision for income taxes and share of net income from joint venture $ ( 14,302 ) _______________________________ (1) Other segment items includes amortization expense and other operating expenses and income. 8 Table of Contents The following table presents capital expenditures and depreciation and amortization by reportable segment. Three Months Ended March 31, 2025 2024 Capital expenditures: Mobile Solutions $ 2,666 $ 3,828 Power Solutions 874 995 Corporate 367 637 Total $ 3,907 $ 5,460 Depreciation and amortization: Mobile Solutions $ 5,047 $ 8,409 Power Solutions 3,347 3,668 Corporate 380 470 Total $ 8,774 $ 12,547 The following table summarizes total assets by reportable segment. March 31, 2025 December 31, 2024 Mobile Solutions (1) $ 295,563 $ 294,204 Power Solutions 128,474 124,460 Corporate 36,687 38,229 Total $ 460,724 $ 456,893 _______________________________ (1) Total assets in Mobile Solutions includes $ 37.6 million and $ 35.0 million as of March 31, 2025 and December 31, 2024, respectively, related to our investment in a joint venture (see Note 7). Note 3. Revenue from Contracts with Customers Revenue is recognized when control of the good or service is transferred to the customer either at a point in time or, in limited circumstances, as our services are rendered over time. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or services. The following tables summarize revenue by customer industry. Our products in the automotive industry include high-precision components and assemblies for electric power steering systems, electric braking, electric motors, fuel systems, emissions control, transmissions, stampings, sensors, and electrical contacts. Our products in the general industrial industry include high-precision metal components for a variety of industrial applications including diesel industrial motors, heating and cooling systems, fluid power systems, power tools, and more. While many of the industries we serve include electrical components, our products in the residential/commercial electrical industry category in the following tables include components used in smart meters, charging stations, circuit breakers, transformers, electrical contact assemblies, precision stampings, welded contact assemblies, specification plating, and surface finishing. The other category includes products sold in aerospace, defense, medical, and other industries. Three Months Ended March 31, 2025 Mobile Solutions Power Solutions Intersegment Sales Eliminations Total Automotive $ 52,887 $ 7,237 $ — $ 60,124 General Industrial 4,403 9,579 — 13,982 Residential/Commercial Electrical — 20,532 — 20,532 Other 4,954 6,160 ( 64 ) 11,050 Total net sales $ 62,244 $ 43,508 $ ( 64 ) $ 105,688 9 Table of Contents Three Months Ended March 31, 2024 Mobile Solutions Power Solutions Intersegment Sales Eliminations Total Automotive $ 48,975 $ 8,256 $ — $ 57,231 General Industrial 18,713 13,138 — 31,851 Residential/Commercial Electrical — 20,232 — 20,232 Other 5,372 6,612 ( 100 ) 11,884 Total net sales $ 73,060 $ 48,238 $ ( 100 ) $ 121,198 Sales Concentration During the three months ended March 31, 2025, a customer in our Mobile Solutions segment represented 13 % of consolidated revenue, and a customer from our Power Solutions segment represented 11 % of consolidated revenue. 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 $ 0.4 million and $ 0.2 million as of March 31, 2025 and December 31, 2024, respectively. Revenue recognized for performance obligations satisfied or partially satisfied during the three months ended March 31, 2025 included $ 0.1 million that was included in deferred revenue as of December 31, 2024. 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, 2025, 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. Note 4. Accounts Receivable 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, 2025 and 2024, we incurred fees of $ 0.1 million and $ 0.3 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). As of March 31, 2025 and December 31, 2024, one customer represented 11 % of consolidated accounts receivable. Amounts due from this customer are primarily related to Mobile Solutions. Note 5. Inventories Inventories are comprised of the following amounts: March 31, 2025 December 31, 2024 Raw materials $ 21,765 $ 20,664 Work in process 22,275 22,139 Finished goods 18,887 19,074 Total inventories $ 62,927 $ 61,877 Note 6. Intangible Assets The following table shows changes in the carrying amount of intangible assets, net, by reportable segment. Mobile Solutions Power Solutions Total Balance as of December 31, 2024 $ 15,649 $ 28,761 $ 44,410 Amortization ( 838 ) ( 2,567 ) ( 3,405 ) Balance as of March 31, 2025 $ 14,811 $ 26,194 $ 41,005 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, 2025 and 2024. 10 Table of Contents Note 7. Investment in Joint Venture We own a 49 % investment in Wuxi Weifu Autocam Precision Machinery Company, Ltd. (the “JV”), a joint venture located in Wuxi, China. The JV is jointly controlled and managed, and we account for it under the equity method, with the share of net income from the joint venture recorded in the Mobile Solutions segment. The following table shows changes in our investment in the JV. Balance as of December 31, 2024 $ 34,971 Share of earnings 2,439 Foreign currency translation gain 212 Balance as of March 31, 2025 $ 37,622 Note 8. Debt The following table presents amounts outstanding on our debt facilities . March 31, 2025 December 31, 2024 Term Loan Facility $ 114,308 $ 114,397 ABL Facility 8,000 5,400 Financing obligations from sale-leaseback transactions 24,229 24,496 International loans 8,417 8,485 Unamortized debt issuance costs and discount (1) ( 3,631 ) ( 4,148 ) Total debt $ 151,323 $ 148,630 _______________________________ (1) In addition to this amount, costs of $ 1.0 million and $ 1.2 million related to the ABL Facility were recorded in other non-current assets as of March 31, 2025 and December 31, 2024, respectively. We capitalized interest costs of $ 0.2 million and $ 0.5 million in the three months ended March 31, 2025 and 2024, respectively, related to construction in progress. Term Loan Facility On March 22, 2021, we entered into a $ 150.0 million term loan facility (as amended from time to time, the “2021 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 %. 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 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 2021 Term Loan Facility. The PIK interest is payable on the loan maturity date of September 22, 2026. At March 31, 2025, the 2021 Term Loan Facility bore interest, including PIK interest, based on one-month Adjusted Term SOFR, at 12.300 %. The 2021 Term Loan Facility requires quarterly principal payments of $ 0.4 million with the remaining unpaid principal amount due at the loan maturity date. We may be required to make additional principal payments annually that are calculated as a percentage of our excess cash flow, as defined by the lender, based on our net leverage ratio. The 2021 Term Loan Facility is collateralized by all of our assets. The 2021 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 2021 Term Loan Facility as of March 31, 2025. The 2021 Term Loan Facility was issued at a $ 3.8 million discount and we have capitalized an additional $ 5.5 million in debt issuance costs. 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. On April 16, 2025, we repaid all of our outstanding obligations under the 2021 Term Loan Facility with the proceeds from a new term loan arrangement that has an initial principal balance of $ 118.0 million. See Note 18. ABL Facility 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. Outstanding borrowings under the ABL Facility bear interest at either: 1) the one, three or six month SOFR plus 1.50%, plus an 11 Table of Contents 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 March 31, 2025, based on a one-month Term SOFR Rate, the interest rate on outstanding borrowings under the ABL Facility was 5.922 %. 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 2021 Term Loan Facility. We capitalized a total of $1.2 million in new debt issuance costs related to the ABL Facility. As of March 31, 2025, we had $ 8.0 million outstanding borrowings under the ABL Facility, $ 10.4 million of outstanding letters of credit, and $ 18.3 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 March 31, 2025. 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 2021 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 Condensed 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 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 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 2.335 % at March 31, 2025. Note 9. 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. 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. Series D Preferred Stock shares earn cash dividends at a rate of 10.0 % per year, payable quarterly in arrears, accruing whether or not earned or declared. If no cash dividend is paid, then the liquidation preference per share effective on the dividend date increases by 12.0 % per year. On March 22, 2026, the cash dividend rate and in-kind dividend rate increase by 2.5 % per year. Cash dividends are required beginning on September 30, 2027 and are limited based on terms and conditions of the 2021 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. For initial recognition, the Series D Preferred Stock was recognized at a discounted value, net of issuance costs and allocation to warrants and a bifurcated embedded derivative. The aggregate discount is amortized as a deemed dividend through March 22, 2026, which is the date the dividend rate begins to increase by 2.5 % per year. 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 16 discusses the accounting for these features. 12 Table of Contents As of March 31, 2025, the carrying value of the Series D Preferred Stock shares was $ 97.9 million, which included $ 51.2 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, 2025. Balance as of December 31, 2024 $ 93,497 Accrual of in-kind dividends 3,054 Amortization 1,353 Balance as of March 31, 2025 $ 97,904 Note 10. Leases The following table contains supplemental cash flow information related to leases. Three Months Ended March 31, 2025 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used in operating leases $ 2,158 $ 2,739 Operating cash flows used in finance leases 133 81 Financing cash flows used in finance leases 981 559 Right-of-use assets obtained in exchange for new finance lease liabilities 276 — We recognized sublease income of $ 1.0 million and $ 0.9 million in the three months ended March 31, 2025 and 2024, respectively, which is recognized in the “Other operating income, net” line in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The following table presents finance lease-related assets and liabilities recorded on the balance sheet. Financial Statement Line Item March 31, 2025 December 31, 2024 Finance lease assets Property, plant and equipment, net 16,885 16,579 Finance lease current liabilities Other current liabilities 3,641 3,565 Finance lease non-current liabilities Other non-current liabilities 4,873 5,469 Total finance lease liabilities $ 8,514 $ 9,034 Note 11. Commitments and Contingencies Brazil ICMS Tax Matter Prior to the acquisition of Autocam Corporation (“Autocam”) in 2014, Autocam’s Brazilian subsidiary (“Autocam Brazil”) received notification from the Brazilian tax authority regarding ICMS (state value added tax) tax credits claimed on intermediary materials (e.g., tooling and perishable items) used in the manufacturing process. The Brazilian tax authority notification disallowed state ICMS tax credits claimed on intermediary materials based on the argument that these items are not intrinsically related to the manufacturing processes. Autocam Brazil filed an administrative defense with the Brazilian tax authority arguing, among other matters, that it should qualify for an ICMS tax credit, contending that the intermediary materials are directly related to the manufacturing process. We believe that we have substantial legal and factual defenses, and we plan to defend our interests in this matter vigorously. 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. 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. The U.S. dollar amount that would be owed in the event of an unfavorable decision is subject to interest, penalties, and currency impacts and therefore is dependent on the timing of the decision. For the remaining open lawsuits, we currently believe the cumulative potential liability in the event of unfavorable decisions on all matters will be less than $ 2.0 million, inclusive of interest and penalties. 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. Accordingly, we do not expect such losses, if any, to have a material impact on our business, operations or financial results. 13 Table of Contents 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. 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. Note 12. Income Taxes Our effective tax rate was ( 16.8 )% and ( 3.5 )% for the three months ended March 31, 2025 and 2024, respectively. The effective tax rate for the three months ended March 31, 2025 differs 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 of 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. Note 13. Net Loss Per Common Share The following table summarizes the computation of basic and diluted net loss per common share. Three Months Ended March 31, 2025 2024 Numerator: Net loss $ ( 6,685 ) $ ( 12,537 ) Adjustment for preferred stock cumulative dividends and deemed dividends ( 4,407 ) ( 3,670 ) Numerator for basic and diluted net loss per common share $ ( 11,092 ) $ ( 16,207 ) Denominator: Weighted average common shares outstanding 49,987 48,488 Adjustment for participating securities ( 2,372 ) ( 3,454 ) Adjustment for warrants outstanding (1) 1,460 2,690 Shares used to calculate basic and diluted net loss per share 49,075 47,724 Basic and diluted net loss per common share $ ( 0.23 ) $ ( 0.34 ) _______________________________ (1) Outstanding warrants that are exercisable at an exercise price of $ 0.01 per share, are included in shares outstanding for calculation of basic earnings per share (see Note 16). The following table presents securities that could be potentially dilutive in the future that were excluded from the calculation of diluted net loss per common share because they had an anti-dilutive effect. Three Months Ended March 31, 2025 2024 Stock options 168 257 Warrants 1,500 1,500 Performance share units 820 268 Total antidilutive securities 2,488 2,025 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 three months ended March 31, 2025. Warrants excluded from the calculation of diluted net loss per share have a per share exercise price of $ 11.03 (see Note 16). Performance share units are potentially dilutive when the related performance criterion has been met. 14 Table of Contents Note 14. Share-Based Compensation The following table lists the components of share-based compensation expense by type of award, which is recognized in the “Selling, general, and administrative expense” line in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Three Months Ended March 31, 2025 2024 Restricted stock $ 550 $ 587 Performance share units 289 259 Share-based compensation expense $ 839 $ 846 Restricted Stock The following table presents the status of unvested restricted stock awards as of March 31, 2025, and activity during the three months then ended. Nonvested Restricted Shares Weighted Average Grant-Date Fair Value Unvested at January 1, 2025 2,326 $ 2.18 Granted 664 2.55 Vested ( 249 ) 4.77 Forfeited ( 37 ) 2.94 Unvested at March 31, 2025 2,704 $ 2.02 During the three months ended March 31, 2025, we granted 664,000 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. Total grant date fair value of restricted stock that vested in the three months ended March 31, 2025, was $ 1.2 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, 2025, and activity during the three months then ended. Nonvested PSU Awards Weighted Average Grant-Date Fair Value Nonvested at January 1, 2025 3,671 $ 1.45 Granted 231 2.24 Nonvested at March 31, 2025 3,902 $ 1.50 During the three months ended March 31, 2025, we granted 231,000 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, 2027. 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 . 15 Table of Contents Note 15. Accumulated Other Comprehensive Income The following tables present the components of accumulated other comprehensive income (loss) (“AOCI”). Foreign Currency Translation Interest rate swap Total Balance as of December 31, 2024 $ ( 48,167 ) $ — $ ( 48,167 ) Other comprehensive income (loss) before reclassifications 3,125 — 3,125 Net other comprehensive income (loss) 3,125 — 3,125 Balance as of March 31, 2025 $ ( 45,042 ) $ — $ ( 45,042 ) Balance as of December 31, 2023 $ ( 38,762 ) $ 1,007 $ ( 37,755 ) Other comprehensive income (loss) before reclassifications ( 2,346 ) — ( 2,346 ) Amounts reclassified from AOCI to interest expense (1) — ( 449 ) ( 449 ) Net other comprehensive income (loss) ( 2,346 ) ( 449 ) ( 2,795 ) Balance as of March 31, 2024 $ ( 41,108 ) $ 558 $ ( 40,550 ) ______________________ (1) Represents gain recognized in interest expense on effective interest rate swap. Note 16. Fair Value Measurements Fair value is an exit price representing the expected amount that an entity would receive to sell an asset or pay to transfer a liability in an orderly transaction with market participants at the measurement date. We followed consistent methods and assumptions to estimate fair values as more fully described in the 2024 Annual Report. Embedded Derivatives 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 an amendment to our 2021 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. As of March 31, 2025, 1.5 million of the 2023 Warrants remain outstanding. 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 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 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, 2025. Balance as of December 31, 2024 $ 5,192 Change in fair value (1) ( 1,762 ) Balance as of March 31, 2025 $ 3,430 _______________________________ (1) Changes in the fair value are recognized in the “Other expense (income), net” line in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). 16 Table of Contents The following tables show the fair values of the embedded derivatives within the fair value hierarchy. March 31, 2025 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Derivative liability - other non-current liabilities $ 3,297 $ — $ 133 December 31, 2024 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Derivative liability - other non-current liabilities $ 4,776 $ — $ 416 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 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 2.0 years as of March 31, 2025 and December 31, 2024. Interest Rate Swap 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 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 then fair value of the 2021 Swap. 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 three months ended March 31, 2024, we recognized an interest benefit of $ 0.4 million, from gains recognized in interest expense on the effective interest rate swap in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Fair Value Disclosures 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, 2025 and December 31, 2024, the carrying values of these financial instruments, except for debt, approximated fair value. The fair value of our debt was $ 152.4 million and $ 147.8 million, with a carrying amount of $ 151.3 million and $ 148.6 million, as of March 31, 2025 and December 31, 2024, 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). Note 17. 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, and in March 2025 we ended production activity at our Mobile Solutions plant in Dowagiac, Michigan. 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 and once fully implemented, we expect to recognize annual benefits of approximately $ 5.4 million. We have recognized cumulative costs of $ 13.3 million, with $ 5.5 million recognized in the “Cost of sales” line, $ 1.3 million in the “Selling, general, and administrative expense” line, and $ 6.5 million in the “Other expense (income), net” line in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). All costs incurred have been recognized in the Mobile Solutions segment. 17 Table of Contents The following is a summary of costs incurred and amounts accrued during the three months ended March 31, 2025. 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 Restructuring costs 275 — 401 676 Amounts paid ( 1,774 ) — ( 401 ) ( 2,175 ) Balance as of March 31, 2025 $ 1,187 $ — $ — $ 1,187 Voluntary Early Retirement Program During the three months ended March 31, 2025, we recognized $ 0.2 million related to an early retirement incentive program (“ERIP”) that was open to certain U.S. employees that met specified age and service requirements, and who terminated employment in 2025. The estimated total cost of the ERIP, including costs recognized in 2024, is $ 1.6 million with all benefit payments expected to be made in 2025. Note 18. Subsequent Event On April 16, 2025 , we entered into a Term Loan Credit Agreement by and among the Company, the lenders from time to time party thereto (collectively, the “Lenders”) and Alter Domus (US) LLC, as administrative agent for the Lenders (the “2025 Term Loan Credit Agreement”). The 2025 Term Loan Credit Agreement establishes a new senior secured Term Loan Facility (the “2025 Term Loan Facility”) consisting of (i) $ 118.0 million of term loans (the “Closing Date Term Loans”) and (ii) $10.0 million of Delayed Draw Term Loans (together, with the Closing Date Term Loans, the “2025 Term Loans”) for an aggregate amount of $128.0 million maturing on April 16, 2030 . We used the proceeds from the 2025 Term Loan Credit Agreement to repay all of our outstanding obligations under our previous 2021 Term Loan Facility. Under the 2025 Term Loan Credit Agreement, interest rates on the 2025 Term Loans are determined based on the type of Term Loan, certain time periods, our Consolidated Net Leverage Ratio and whether the Delayed Draw Funding Date (as defined in the 2025 Term Loan Credit Agreement) has occurred. Outstanding borrowings under the 2025 Term Loan Facility currently bear interest at either: 1) one-month, three-month, or six-month term secured overnight finance rate (“SOFR”) with a duration adjustment, subject to a 2.00% floor, plus an applicable margin of 9.25% (“Adjusted Term SOFR Rate Loans”); or 2) the greater of various benchmark rates, with certain adjustments, plus an applicable margin of 8.25% (“Base Rate Loans”). For interest payments due before April 16, 2027, we may elect to pay a portion of interest in-kind (“PIK Election”), subject to a minimum cash interest of 5.25% for Adjusted Term SOFR Rate Loans and 4.25% for Base Rate Loans. The applicable margin increases by 0.50% on borrowings to which the PIK Election is made. Through October 16, 2026, we can elect to borrow up to an additional $10.0 million (“Delayed Draw”) under the 2025 Term Loan Facility, subject to satisfying certain conditions. If we borrow under the Delayed Draw, the applicable margin for all outstanding borrowings increases by 0.50%. Through October 16, 2026, we incur a 1.00% commitment fee on undrawn amounts under the Delayed Draw. We may voluntarily prepay outstanding amounts under the 2025 Term Loan Facility, in whole or part without premium or penalty following April 16, 2027. If we voluntarily prepay borrowings prior to April 16, 2026, we are subject to a prepayment premium equal to the present value at the prepayment date of (i) 2.00% of the outstanding principal amount of the 2025 Term Loans to be prepaid, plus (ii) all remaining scheduled interest payments due on such 2025 Term Loans through April 16, 2026 (excluding accrued but unpaid interest to, but not including, the prepayment date), computed using a discount rate equal to the Treasury Rate (determined as of the Business Day prior to such date of prepayment) plus 50 basis points. If we voluntarily prepay borrowings prior to April 16, 2027, we are subject to a prepayment premium equal to 2.00% of the principal amount prepaid. The 2025 Term Loan Facility is collateralized by all of our assets. The 2025 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. In connection with the repayment and termination of the 2021 Term Loan Facility, we expect to recognize a loss on extinguishment of debt of approximately $ 3.0 million in the second quarter of 2025. 18 Table of Contents