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What changed in NN INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of NN INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+182 added−162 removedSource: 10-K (2025-03-06) vs 10-K (2024-03-12)

Top changes in NN INC's 2024 10-K

182 paragraphs added · 162 removed · 142 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeDifferentiated, system-critical products The tight-tolerance and high-quality nature of our precision products is specifically suited for use in the most demanding applications that require superior reliability. Our products are critical components to the operation and reliability of larger mechanical systems. Precision parts are difficult to manufacture and the high cost of failure motivates our customers to focus on quality.
Biggest changeOur products are critical components to the operation and reliability of larger mechanical and electrical systems. Precision parts are difficult to manufacture and the high cost of failure motivates our customers to focus on quality. Our products are developed for specific uses within critical systems and are typically designed in conjunction with the system designer.
Long-term blue-chip customer base We maintain relationships with hundreds of customers around the world. Our customers are typically sophisticated, engineering-driven, mechanical systems manufacturers with long histories of product development and reputations for quality. We have no significant retail exposure, which limits volatility and provides enhanced sales visibility.
Long-term blue-chip customer base We maintain relationships with hundreds of customers around the world. Our customers are typically sophisticated, engineering-driven, mechanical and electrical systems manufacturers with long histories of product development and reputations for quality. We have no significant retail exposure, which limits volatility and provides enhanced sales visibility.
Within this group we combine materials science expertise with advanced engineering and production capabilities to design and manufacture a broad range of high-precision metal and plastic components, assemblies, and finished devices used in applications ranging from power control to transportation electrification.
Within this group we combine materials science expertise with advanced engineering and production capabilities to design and manufacture a broad range of high-precision metal components, assemblies, and finished devices used in applications ranging from power control to transportation electrification.
Our employees in the France, Brazil, and Mexico City plants are subject to labor council relationships that vary due to the diverse countries in which we operate. We believe we have a good working relationship with our employees and the unions that represent them.
Our employees in the France, Brazil, and Mexico City plants are subject to labor council relationships that vary due to the diverse countries in which we operate. We believe we have a good working relationship with our employees and the labor council that represent them.
Raw Materials Mobile Solutions Mobile Solutions produces products from a wide variety of metals in various forms from various sources located in the North America, Europe, South America, and Asia.
Raw Materials Mobile Solutions Mobile Solutions produces products from a wide variety of metals in various forms from various sources located in North America, Europe, South America, and Asia.
Our global footprint provides flexibility to locally supply identical products for global customers, reducing shipping time and expense, allowing us to match costs to revenue and to capitalize on industry localization trends. In total, we operate more than 1.8 million square feet of manufacturing space.
Our global footprint provides flexibility to locally supply identical products for global customers, reducing shipping time and expense, allowing us to match costs to revenue and to capitalize on industry localization trends. In total, we operate more than 1.7 million square feet of manufacturing space.
However, we carefully manage raw material price volatility, particularly with respect to precious metals, through the use of consignment agreements, which allow us to buy the precious metals on the same day customer shipments are priced, thereby eliminating risk of price changes from procurement to product shipment.
However, we carefully manage raw material price volatility, particularly with respect to precious metals, through the use of consignment agreements, which allow us to buy the precious metals on the same day customer shipments are priced, thereby minimizing risk of price changes from procurement to product shipment.
The diverse nature, size, and reach of our customer base provides resistance to localized market and geographic fluctuations and helps stabilize overall product demand. Strategic global footprint Our 27 facilities, on four continents, are strategically located to serve our customer base and provide local service and expertise.
The diverse nature, size, and reach of our customer base provides resistance to localized market and geographic fluctuations and helps stabilize overall product demand. Strategic global footprint Our 26 facilities, on four continents, are strategically located to serve our customer base and provide local service and expertise.
Further, annual goal-setting and development opportunities for employees and leaders helps our people align their professional experience with the Company’s business objectives and encourages them to take ownership of their development and career paths. 7 Table of Contents We use regular talent management and performance evaluation processes to inform the Company’s internal development processes and to calibrate assessment of individual performance organizationally.
Further, annual goal-setting and development opportunities for employees and leaders helps our people align their professional experience with the Company’s business objectives and encourages them to take ownership of their development and career paths. We use regular talent management and performance evaluation processes to inform the Company’s internal development processes and to calibrate assessment of individual performance organizationally.
We are included in customer designs and deployed in critical systems that involve high cost of failure applications and significant regulatory certification processes, including those for the Underwriters Laboratories. Complete product lifecycle focus Our engineering expertise and deep knowledge of precision manufacturing processes adds proprietary value throughout the complete lifecycle of our products.
We are included in customer designs and deployed in 5 Table of Contents critical systems that involve high cost of failure applications and significant regulatory certification processes, including those for the Underwriters Laboratories. Complete product lifecycle focus Our engineering expertise and deep knowledge of precision manufacturing processes adds proprietary value throughout the complete lifecycle of our products.
As used in this Annual Report, the terms the “Company,” “we,” “our,” or “us” refer to NN, Inc., and its subsidiaries. As of December 31, 2023, we had 27 facilities in North America, South America, Europe, and China. Our enterprise and management structure is designed to accelerate growth and further balance our portfolio by aligning our strategic assets and businesses.
As used in this Annual Report, the terms the “Company,” “we,” “our,” or “us” refer to NN, Inc. and its subsidiaries. As of December 31, 2024, we had 26 facilities in North America, South America, Europe, and China. Our enterprise and management structure is designed to accelerate growth and further balance our portfolio by aligning our strategic assets and businesses.
We use a combination of programs (which vary by geography and level) to attract and retain our employees, including annual performance bonuses, quarterly gainsharing bonuses, and equity awards.
We use a combination of programs (which vary by geography and level) to attract and retain our employees, including annual performance bonuses, periodic gainsharing bonuses, and equity awards.
Our parts are often qualified for, or specified in, customer designs, reducing the ability for customers to change suppliers. 5 Table of Contents Our ability to make products with tight-tolerance and extreme precision requirements enables our customers to satisfy the critical functionality and performance requirements of their products.
Our parts are often qualified for, or specified in, customer designs, reducing the ability for customers to change suppliers. Our ability to make products with tight-tolerance and extreme precision requirements enables our customers to satisfy the critical functionality and performance requirements of their products.
Respect for human rights is fundamental to our business and our commitment to ethical business conduct, as is embodied by our Human Rights Policy, which sets forth our expectations related to workplace discrimination; diversity, equity and inclusion; workplace conditions; and freedom of association.
Respect for human rights is fundamental to our business and our commitment to ethical business conduct, as is embodied by our Human Rights Policy, which sets forth our expectations related to workplace discrimination; workplace conditions; and freedom of association.
These activities form the basis for succession planning activities, up to and including the senior leadership level. We also have apprenticeships, internships, and cooperative education programs in place at certain locations, which we intend to expand more broadly across the company.
These activities form the basis for succession planning activities, up to and including the senior leadership level. 7 Table of Contents We also have apprenticeships, internships, and cooperative education programs in place at certain locations, which we intend to expand more broadly across the company.
Headcount As of December 31, 2023, we employed a total of 2,926 full and part-time employees and 234 temporary workers, which includes 1,177 employees in the U.S. and 1,983 employees in other countries employed by our international subsidiaries. Of our total employment, approximately 12% are management/staff employees and 88% are production employees.
Headcount As of December 31, 2024, we employed approximately 2,600 full and part-time employees and 300 temporary workers, which includes approximately 1,000 employees in the U.S. and 1,900 employees in other countries employed by our international subsidiaries. Of our total employment, approximately 12% are management/staff employees and 88% are production employees.
Supply and Cost Pressures In each of our segments, we at times have been affected by upward price pressure on steel principally due to general increases in global demand. In general, we pass through material cost fluctuations to our customers in the form of changes in selling price.
Supply and Cost Pressures In each of our segments, we at times have been affected by upward price pressure on the raw materials we purchase due to changes in commodity pricing. In general, we pass through material cost fluctuations to our customers in the form of changes in selling price.
In 2023, our top ten customers accounted for approximately 47% of our net sales. In 2023, 67% of our products were sold to customers in North America, 14% to customers in Asia, 10% to customers in South America, and 9% to customers in Europe.
In 2024, our top ten customers accounted for approximately 51% of our net sales. In 2024, 64% of our products were sold to customers in North America, 17% to customers in Asia, 10% to customers in South America, and 9% to customers in Europe.
Additionally, all employees are subject to company code of ethics policies that prohibit the disclosure of information critical to the operations of our business. Seasonal Nature of Business General economic conditions impact our business and financial results, and certain businesses experience seasonal and other trends related to the industries and end markets that they serve.
Seasonal Nature of Business General economic conditions impact our business and financial results, and certain businesses experience seasonal and other trends related to the industries and end markets that they serve.
We believe a diverse and inclusive workplace results in business growth and encourages increased innovation, retention of talent, and a more engaged workforce.
Throughout our business, we foster an ethical, safe, and supportive workplace where our employees thrive. We believe an inclusive workplace results in business growth and encourages increased innovation, retention of talent, and a more engaged workforce.
Bevis served as President and Chief Executive Officer of Commercial Vehicle Group, Inc., from March 2020 to May 2023, and as a Director from June 2014 to May 2023. Mr. Bevis served as Chief Executive Officer of Boxlight Corporation from January 2020 to March 2020 and as a Director from March 2018 to March 2020. Previously, Mr.
Bevis has served the Company as President, Chief Executive Officer and Director since May 2023. Prior to joining the Company, Mr. Bevis served as President and Chief Executive Officer of Commercial Vehicle Group, Inc. (“CVGI”), from 9 Table of Contents March 2020 to May 2023, and as a Director from June 2014 to May 2023. Mr.
The information provided in our 2021 Sustainability Report and 2022 ESG Annual Report, as well as on our website, is not part of this Annual Report, and is therefore not incorporated by reference into this Annual Report or other filings with the SEC.
The information provided in our ESG Reports, as well as on our website, is not part of this Annual Report, and is therefore not incorporated by reference into this Annual Report or other filings with the SEC. Information about our Executive Officers The following table lists our executive officers as of February 14, 2025: Name Age Position Harold C.
Even if such 8 Table of Contents intellectual property claims against us are without merit, investigating and defending these types of lawsuits takes significant time, may be expensive and may divert management attention from other business concerns.
Even if such intellectual property claims against us are without merit, investigating and defending these types of lawsuits takes significant time, may be expensive and may divert management attention from other business concerns. 8 Table of Contents Additionally, we rely on certain data and processes, including trade secrets and know-how, and the success of our business depends, to some extent, on such information remaining confidential.
Sales and Marketing A primary emphasis of our marketing strategy is to expand key customer relationships by offering high quality, high-precision, application-specific customer solutions with the value of a single supply chain partner for a wide variety of products and components.
We ordinarily ship our products directly to customers within 60 days, and in many cases, during the same calendar month of the date on which a sales order is placed. 6 Table of Contents Sales and Marketing A primary emphasis of our marketing strategy is to expand key customer relationships by offering high quality, high-precision, application-specific customer solutions with the value of a single supply chain partner for a wide variety of products and components.
We manufacture a variety of products including electrical contacts, connectors, contact assemblies, and precision stampings for the electrical end market and high precision products for the aerospace and defense end market utilizing our extensive process technologies for optical grade plastics, thermally conductive plastics, titanium, Inconel, magnesium, and electroplating.
We manufacture a variety of products including electrical contacts, connectors, contact assemblies, and precision stampings for the electrical end market and high precision products for the aerospace and defense end market utilizing our extensive process technologies. Our medical business includes the production of a variety of tools and instruments for the orthopedics and medical/surgical end markets.
Nixon is a member of the Society for Human Resource Management (“SHRM”) and has earned her Senior Professional in Human Resources and SHRM – Senior Certified Professional designations.
Nixon is a member of the Society for Human Resource Management (“SHRM”) and has earned her Senior Professional in Human Resources and SHRM – Senior Certified Professional designations. Jami A. Statham was appointed Senior Vice President, General Counsel and Corporate Secretary in July 2024. Prior to joining the Company, Ms.
Basic types include hot rolled steel, cold rolled steel (both carbon and alloy), stainless, extruded aluminum, die cast aluminum, gray and ductile iron castings, hot and cold forgings, and mechanical tubing. Some material is purchased directly under contracts, some is consigned by the customer, and some is purchased directly from the steel mills.
Basic types include hot rolled steel, cold rolled steel (both carbon and alloy), stainless steel, steel alloys, copper alloys, extruded aluminum, die cast aluminum, aluminum alloy bar, gray and ductile iron castings, hot and cold forgings, titanium alloys, plastics, and mechanical tubing.
We have differentiated ourselves among our competitors by providing customers engineered solutions and a broad reach and breadth of manufacturing capabilities. We believe it is for these reasons, and because of our proven ability to produce high-quality, precision parts and components on a cost-effective basis, that customers choose us to meet their manufacturing needs.
We believe it is for these reasons, and because of our proven ability to produce high-quality, precision parts and components on a cost-effective basis, that customers choose us to meet their manufacturing needs. Differentiated, system-critical products The tight-tolerance and high-quality nature of our precision products is specifically suited for use in the most demanding applications that require superior reliability.
We believe our production capabilities provide a competitive advantage as few other manufacturers are capable of meeting tolerance demands at any volume level requested by our customers. As the need for tight-tolerance precision parts, subassemblies, and devices continues to increase, we believe that our production capabilities will place us at the forefront of the industry.
As the need for tight-tolerance precision parts, subassemblies, and devices continues to increase, we believe that our production capabilities will place us at the forefront of the industry. We have differentiated ourselves among our competitors by providing customers engineered solutions and a broad reach and breadth of manufacturing capabilities.
Bevis served as President of OmniMax International from October 2017 to February 2019 and President, Chief Executive Officer and Director of Xerium Technologies, Inc. from August 2012 to April 2017. Michael C. Felcher has served the Company as Senior Vice President and Chief Financial Officer since July 2021. Mr.
Bevis served as Chief Executive Officer of Boxlight Corporation from January 2020 to March 2020 and as a Director from March 2018 to March 2020. Previously, Mr. Bevis served as President of OmniMax International from October 2017 to February 2019 and President, Chief Executive Officer and Director of Xerium Technologies, Inc. from August 2012 to April 2017. Christopher H.
We continue to strengthen our focus towards providing meaningful disclosures through the publishing of our 2022 ESG Annual Report in June 2023, in which we identified specific actions that we have taken, and will continue to take, to address our ESG priorities.
We continue to strengthen our focus towards providing meaningful disclosures through our sustainability reports (collectively, “ESG Reports”), which we publish on a periodic basis. Our ESG Reports identify specific actions that we have taken, and will continue to take, to address our ESG priorities.
Our medical business includes the production of a variety of tools and instruments for the orthopaedics and medical/surgical end markets. Competitive Strengths High-precision manufacturing capabilities We believe our ability to produce high-precision parts at high production volumes is among the best in the market.
Competitive Strengths High-precision manufacturing capabilities We believe our ability to produce high-precision parts at high production volumes is among the best in the market. Our technology platform consists of high precision machining, progressive stamping, laser welding, material science, assembly, and design optimization.
Our technology platform consists of high precision machining, progressive stamping, injection molding, laser welding, material science, assembly, and design optimization. In-house tool design and process know-how create trade secrets that enable consistent production tolerances of less than one micron while producing millions of parts per day.
In-house tool design and process know-how create trade secrets that enable consistent production tolerances of less than one micron while producing millions of parts per day. Parts are manufactured to application-specific customer design and co-design standards that are developed for a specific use.
This group also procures resins and metal stampings from several domestic and foreign suppliers. Power Solutions bases purchase decisions on quality, service and price. Generally, we do not enter into written supply contracts with our suppliers or commit to maintain minimum monthly purchases of materials.
Through our diverse network of suppliers, we minimize supplier concentration risk and provide a stable supply of raw materials at competitive pricing. This group also procures metal stampings from several domestic and foreign suppliers. Power Solutions bases purchase decisions on quality, service and price.
Parts are manufactured to application-specific customer design and co-design standards that are developed for a specific use. The high-precision capabilities are part of our zero-defect design process, which seeks to eliminate variability and manufacturing defects throughout the entire product lifecycle.
The high-precision capabilities are part of our zero-defect design process, which seeks to eliminate variability and manufacturing defects throughout the entire product lifecycle. We believe our production capabilities provide a competitive advantage as few other manufacturers are capable of meeting tolerance demands at any volume level requested by our customers.
Additionally, we rely on certain data and processes, including trade secrets and know-how, and the success of our business depends, to some extent, on such information remaining confidential. Each officer is subject to a non-competition and confidentiality agreement that seeks to protect this information.
Each officer is subject to a non-competition and confidentiality agreement that seeks to protect this information. Additionally, all employees are subject to company code of ethics policies that prohibit the disclosure of information critical to the operations of our business.
Power Solutions Power Solutions uses a wide variety of metals in various forms, including precious metals like gold, silver, palladium, and platinum, as well as plastics. Through our diverse network of suppliers, we minimize supplier concentration risk and provide a stable supply of raw materials at competitive pricing.
Some material is purchased directly under contracts, some is consigned by the customer, and some is purchased directly from the steel mills. Power Solutions Power Solutions uses a wide variety of metals in various forms, including precious metals like gold, silver, palladium, and platinum, as well as copper, copper alloys, brass, brass alloys, and plastics.
Felcher served in a variety of finance roles at United Technologies Corporation and Goodrich Corporation. Timothy M. French was appointed Senior Vice President and Chief Operating Officer in August 2023. Prior to joining the Company, Mr.
Bohnert was appointed Senior Vice President and Chief Financial Officer in June 2024. Prior to joining the Company, Mr. Bohnert served as advisor to the CEO and CFO at CVGI from September 2022 to June 2024 and as Chief Financial Officer of CVGI from October 2020 to September 2022. Previously, Mr.
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Our products are developed for specific uses within critical systems and are typically designed in conjunction with the system designer.
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Generally, we do not enter into long term supply contracts with our suppliers or commit to maintain minimum monthly purchases of materials.
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We 6 Table of Contents ordinarily ship our products directly to customers within 60 days, and in many cases, during the same calendar month of the date on which a sales order is placed.
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Bevis 65 President, Chief Executive Officer and Director Christopher H. Bohnert 58 Senior Vice President and Chief Financial Officer Timothy M. French 61 Senior Vice President and Chief Operating Officer D. Gail Nixon 54 Senior Vice President and Chief Human Resources Officer Jami A. Statham 44 Senior Vice President, General Counsel and Corporate Secretary Harold C.
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Diversity, Equity, and Inclusion Diversity, equity, and inclusion are at the core of our values and strategic business priorities. Throughout our business, we champion equality, supporting parity for women and under-represented groups as we work to create ethical, safe, and supportive workplaces where our employees thrive.
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Bohnert served as Chief Accounting Officer at Calumet Specialty Products Partners, L.P. from October 2017 to August 2019 and as Chief Financial Officer of its Finished Lubricants & Chemicals business from August 2019 through October 2020. Timothy M. French has served the Company as Senior Vice President and Chief Operating Officer since August 2023. Prior to joining the Company, Mr.
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Information about our Executive Officers The following table lists our executive officers as of February 28, 2024: Name Age Position Harold C. Bevis 64 President, Chief Executive Officer and Director Michael C. Felcher 51 Senior Vice President and Chief Financial Officer Timothy M. French 60 Senior Vice President and Chief Operating Officer D.
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Statham served as Executive Director, Deputy General Counsel for Nexteer Automotive Corporation from July 2022 to July 2024, and as Assistant General Counsel from June 2019 to July 2022. Previously, she served as Senior Legal Counsel at Autoneum North America, Inc. from March 2017 to May 2019.
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Gail Nixon 53 Senior Vice President and Chief Human Resources Officer 9 Table of Contents Harold C. Bevis was appointed President, Chief Executive Officer and Director in May 2023. Prior to joining the Company, Mr.
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Felcher joined the Company in June 2018 and served as Vice President, Chief Accounting Officer until July 2021. Prior to joining the Company, Mr. Felcher served as the Vice President, North America Chief Financial Officer for JELD-WEN, Inc., a publicly held, global manufacturer of doors and windows, from 2013 to 2017. Previously, Mr.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe difficulties of combining the operations of acquired companies include, among others: • the diversion of management’s attention to integration matters; • difficulties in the integration of operations and systems, including, without limitation, the complexities associated with managing the expanded operations of a significantly larger and more complex company, addressing possible differences in corporate cultures and management philosophies and the challenge of integrating complex systems, technology, networks, and other assets of each of the acquired companies; • difficulties in achieving anticipated cost savings, synergies, business opportunities, and growth prospects from combining the acquired businesses with our own; • the inability to implement effective internal controls, procedures, and policies for acquired businesses as required by the Sarbanes-Oxley Act of 2002 within the time periods prescribed thereby; • the exposure to potential unknown liabilities and unforeseen increased expenses or delays associated with acquired businesses; • challenges in keeping existing customers and obtaining new customers; • challenges in attracting and retaining key personnel; and • the disruption of, or the loss of momentum in, ongoing operations or inconsistencies in standards, controls, procedures and policies. 17 Table of Contents Many of these factors will be outside of our control and any one of them could result in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy, which could materially impact our business, prospects, financial condition, results of operations, or cash flows.
Biggest changeThe difficulties of combining the operations of acquired companies include, among others: • the diversion of management’s attention to integration matters; • difficulties in the integration of operations and systems, including, without limitation, the complexities associated with managing the expanded operations of a significantly larger and more complex company, addressing possible differences in corporate cultures and management philosophies and the challenge of integrating complex systems, technology, networks, and other assets of each of the acquired companies; • difficulties in achieving anticipated cost savings, synergies, business opportunities, and growth prospects from combining the acquired businesses with our own; • the inability to implement effective internal controls, procedures, and policies for acquired businesses as required by the Sarbanes-Oxley Act of 2002 within the time periods prescribed thereby; • the exposure to potential unknown liabilities and unforeseen increased expenses or delays associated with acquired businesses; • challenges in keeping existing customers and obtaining new customers; • challenges in attracting and retaining key personnel; and • the disruption of, or the loss of momentum in, ongoing operations or inconsistencies in standards, controls, procedures and policies.
If that occurs, our customers’ confidence in us and long-term demand for our products could decline. Any of these events could materially and adversely affect our product sales, financial condition, and operating results. 10 Table of Contents We operate in and sell products to customers outside the U.S. and are subject to several risks related to doing business internationally.
If that occurs, our customers’ confidence in us and long-term demand for our products 10 Table of Contents could decline. Any of these events could materially and adversely affect our product sales, financial condition, and operating results. We operate in and sell products to customers outside the U.S. and are subject to several risks related to doing business internationally.
Our debt obligations could have important consequences, including: • increasing our vulnerability to adverse economic, industry, or competitive developments; • requiring a substantial portion of our cash flows from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flows to fund operations, capital expenditures, and future business opportunities; • exposing us to the risk of increased interest rates, which could cause our debt service obligations to increase significantly; • making it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including restrictive covenants and borrowing conditions, could result in an event of default under our debt agreements; • restricting us from making strategic acquisitions or causing us to make non-strategic divestitures; • limiting our ability to obtain additional financing for working capital, capital expenditures, product and service development, debt service requirements, acquisitions, and general corporate or other purposes; and • limiting our flexibility in planning for, or reacting to, changes in our business or market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged and who, therefore, may be able to take advantage of opportunities that our leverage may prevent us from exploiting.
Our debt obligations could have important consequences, including: • increasing our vulnerability to adverse economic, industry, or competitive developments; • requiring a substantial portion of our cash flows from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flows to fund operations, capital expenditures, and future business opportunities; • exposing us to the risk of increased interest rates, which could cause our debt service obligations to increase significantly; 15 Table of Contents • making it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including restrictive covenants and borrowing conditions, could result in an event of default under our debt agreements; • restricting us from making strategic acquisitions or causing us to make non-strategic divestitures; • limiting our ability to obtain additional financing for working capital, capital expenditures, product and service development, debt service requirements, acquisitions, and general corporate or other purposes; and • limiting our flexibility in planning for, or reacting to, changes in our business or market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged and who, therefore, may be able to take advantage of opportunities that our leverage may prevent us from exploiting.
Our participation in joint ventures is subject to risks that may not be present with other methods of ownership, including: • our joint venture partners could have investment and financing goals that are not consistent with our objectives, including the timing, terms, and strategies for any investments, and what levels of debt to incur or carry; • we could experience an impasse on certain decisions because we do not have sole decision-making authority, which could require us to expend additional resources on resolving such impasses or potential disputes, including litigation or arbitration; • our ability to transfer our interest in a joint venture to a third party may be restricted and the market for our interest may be limited; • our joint venture partners might become bankrupt, fail to fund their share of required capital contributions or fail to fulfill their obligations as a joint venture partner, which may require us to infuse our own capital into the venture on behalf of the partner despite other competing uses for such capital; and • our joint venture partners may have competing interests in our markets that could create conflict of interest issues.
Our participation in joint ventures is subject to risks that may not be present with other methods of ownership, including: • our joint venture partners could have investment and financing goals that are not consistent with our objectives, including the timing, terms, and strategies for any investments, and what levels of debt to incur or carry; 18 Table of Contents • we could experience an impasse on certain decisions because we do not have sole decision-making authority, which could require us to expend additional resources on resolving such impasses or potential disputes, including litigation or arbitration; • our ability to transfer our interest in a joint venture to a third party may be restricted and the market for our interest may be limited; • our joint venture partners might become bankrupt, fail to fund their share of required capital contributions or fail to fulfill their obligations as a joint venture partner, which may require us to infuse our own capital into the venture on behalf of the partner despite other competing uses for such capital; and • our joint venture partners may have competing interests in our markets that could create conflict of interest issues.
Changes in U.S. tax laws could have a material adverse effect on our business, cash flow, results of operations, and financial condition. The U.S. tax laws and regulations, as well as the administrative interpretations of those laws and regulations, are constantly under review and may be changed at any time, possibly with retroactive effect.
Changes in U.S. or foreign tax laws could have a material adverse effect on our business, cash flow, results of operations, and financial condition. The U.S. and foreign tax laws and regulations, as well as the administrative interpretations of those laws and regulations, are constantly under review and may be changed at any time, possibly with retroactive effect.
Any adverse regulatory action, depending on its magnitude, may restrict us from effectively marketing and selling our products. Foreign governmental regulations have become increasingly stringent and more common, and we may become subject to more rigorous regulation by foreign governmental authorities in the future.
Any adverse regulatory action, depending on its magnitude, may restrict us from effectively marketing and selling our products. U.S. and foreign governmental regulations have become increasingly stringent and more common, and we may become subject to more rigorous regulation by governmental authorities in the future.
Approximately 29% of our revenues are denominated in foreign currencies, which may result in additional risk of fluctuating currency values and exchange rates and controls on currency exchange. Changes in the value of foreign currencies could increase our U.S. dollar costs for, or reduce our U.S. dollar revenues from, our foreign operations.
Approximately 31% of our revenues are denominated in foreign currencies, which may result in additional risk of fluctuating currency values and exchange rates and controls on currency exchange. Changes in the value of foreign currencies could increase our U.S. dollar costs for, or reduce our U.S. dollar revenues from, our foreign operations.
Though to date, we have experienced no loss or lack of access to cash in our operating accounts, in the event of a failure of any of these financial institutions where we maintain our deposits or other assets, we may incur a loss to the extent such loss exceeds the FDIC insurance limitation, which could have a material adverse effect upon our liquidity, financial condition and our results of operations.
Though to date, we have experienced no loss or lack of access to cash in our 19 Table of Contents operating accounts, in the event of a failure of any of these financial institutions where we maintain our deposits or other assets, we may incur a loss to the extent such loss exceeds the FDIC insurance limitation, which could have a material adverse effect upon our liquidity, financial condition and our results of operations.
In addition, due to the market capitalization of our stock, our stock tends to be more volatile than large capitalization stocks that comprise the Dow Jones Industrial Average or Standard and Poor’s 500 Index. 16 Table of Contents Provisions in our charter documents and Delaware law may inhibit a takeover, which could adversely affect the value of our common stock.
In addition, due to the market capitalization of our stock, our stock tends to be more volatile than large capitalization stocks that comprise the Dow Jones Industrial Average or Standard and Poor’s 500 Index. Provisions in our charter documents and Delaware law may inhibit a takeover, which could adversely affect the value of our common stock.
These provisions apply even if the offer may be considered beneficial by some of our stockholders. If a change of control or change in management is delayed or prevented, the market price of our common stock could decline. Risks Related to Acquisitions and Divestitures Acquisitions may constitute an important part of our future growth strategy.
These provisions apply even if the offer may be considered beneficial by some of our stockholders. If a change of control or change in management is delayed or prevented, the market price of our common stock could decline. 17 Table of Contents Risks Related to Acquisitions and Divestitures Acquisitions may constitute an important part of our future growth strategy.
As a result of doing business internationally, we face risks associated with the following: • changes in tariff regulations, which may make our products more costly to export or import; • changes in monetary and fiscal policies, laws and regulations, and other activities of governments, agencies and similar organizations; • recessions or marked declines specific to a particular country or region; • the potential imposition of trade restrictions or prohibitions; • the potential imposition of import tariffs or other duties or taxes; • difficulties establishing and maintaining relationships with local original equipment manufacturers, distributors and dealers; • difficulty in staffing and managing geographically diverse operations; • political uncertainty, instability, civil unrest, government controls over certain sectors and human rights concerns in countries, including but not limited to, China, in which our suppliers, manufacturing operations, and customers are located; and • changes in the geopolitical environment, wars, conflicts, or trade barriers or blockades in the European Union and Asia, which may adversely affect business activity and economic conditions globally and could continue to contribute to instability in global financial and foreign exchange markets, as well as disrupt the free movement of goods, services, and people between countries.
As a result of doing business internationally, we face risks associated with the following: • changes in tariff regulations, which may make our products more costly to export or import; • changes in monetary and fiscal policies, laws and regulations, and other activities of governments, agencies and similar organizations; • recessions or marked declines specific to a particular country or region; • the potential imposition of trade restrictions or prohibitions; • the potential imposition of import tariffs or other duties or taxes; • difficulties establishing and maintaining relationships with local original equipment manufacturers, distributors and dealers; • difficulty in staffing and managing geographically diverse operations; • compliance with respect to anti-bribery, competition, export and import, trade sanctions, data privacy, environmental, human rights and other laws; • political uncertainty, instability, civil unrest, government controls over certain sectors and human rights concerns in countries, including but not limited to, China, in which our suppliers, manufacturing operations, and customers are located; and • changes in the geopolitical environment, wars, conflicts, or trade barriers or blockades in the European Union and Asia, which may adversely affect business activity and economic conditions globally and could continue to contribute to instability in global financial and foreign exchange markets, as well as disrupt the free movement of goods, services, and people between countries.
Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations.
Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher 16 Table of Contents interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations.
We may not realize all of the anticipated benefits from completed acquisitions or any future strategic portfolio acquisition, or those benefits may take longer to realize than expected. We either may not realize all of the anticipated benefits from completed acquisitions or any future strategic portfolio acquisition, or it may take longer to realize such benefits.
We may not realize all of the anticipated benefits from any future strategic portfolio acquisition, or those benefits may take longer to realize than expected. We either may not realize all of the anticipated benefits from any future strategic portfolio acquisition, or it may take longer to realize such benefits.
Additionally, we need qualified managers and skilled employees with technical and manufacturing industry experience to operate our businesses successfully. From time to time, there may be shortages of skilled labor, which may make it more difficult and expensive for us to attract and retain qualified employees.
Additionally, we need qualified managers and skilled employees with technical and manufacturing industry experience to operate our businesses successfully. From time to time, there may be shortages of skilled labor, which may make it more difficult and expensive for us to attract and retain qualified 12 Table of Contents employees.
We also collect and hold personally identifiable information of our employees in connection with their employment. In addition, we engage third-party service providers that may collect and hold personally identifiable information of our employees in connection with providing business services to us, including web hosting, accounting, payroll and benefit services.
We also collect and hold personally identifiable information of our employees in connection with their employment. In addition, we engage third-party service providers that may collect and hold personally identifiable information of our employees in connection with providing business services to us, including, but not limited to, web hosting, accounting, payroll and benefit services.
A successful product 11 Table of Contents recall claim requiring that we bear a substantial part of the cost of correction or the loss of a key customer could have a material adverse effect on our business, prospects, financial condition, results of operations, or cash flows.
A successful product recall claim requiring that we bear a substantial part of the cost of correction, or the loss of a key customer could have a material adverse effect on our business, prospects, financial condition, results of operations, or cash flows.
Risks Related to Our Operations We depend heavily on a relatively limited number of customers, and the loss of any major customer would have a material adverse effect on our business. During 2023, sales to various U.S. and foreign divisions of our ten largest customers accounted for approximately 47% of our consolidated net sales.
Risks Related to Our Operations We depend heavily on a relatively limited number of customers, and the loss of any major customer would have a material adverse effect on our business. During 2024, sales to various U.S. and foreign divisions of our ten largest customers accounted for approximately 51% of our consolidated net sales.
Our ability to meet those financial ratios and tests will depend on our ongoing financial and operating performance, which, in turn, will be subject to economic conditions and to financial, market, and competitive factors, many of 15 Table of Contents which are beyond our control.
Our ability to meet those financial ratios and tests will depend on our ongoing financial and operating performance, which, in turn, will be subject to economic conditions and to financial, market, and competitive factors, many of which are beyond our control.
Any new pandemic or other public health crises, or future public health crises, could have a material impact on our business, financial condition, results of operations and cash flows going forward.
Any new pandemic or other public health crises, or future public health crises, could have a material impact on our business, financial condition, results of 13 Table of Contents operations and cash flows going forward.
Any increased costs or reduced revenues as a result of foreign currency fluctuations could affect our profits. In 2023, the U.S. dollar strengthened against foreign currencies which unfavorably affected our revenue by $0.6 million. In contrast, a weakening of the U.S. dollar may beneficially affect our business, prospects, financial condition, results of operations, or cash flows.
Any increased costs or reduced revenues as a result of foreign currency fluctuations could affect our profits. In 2024, the U.S. dollar strengthened against foreign currencies which unfavorably affected our revenue by $3.5 million. In contrast, a weakening of the U.S. dollar may beneficially affect our business, prospects, financial condition, results of operations, or cash flows.
We obtain a majority of our raw materials from overseas suppliers, actively participate in overseas manufacturing operations and sell to a large number of international customers. During the year ended December 31, 2023, sales to customers located outside of the U.S. accounted for 40% of our consolidated net sales.
We obtain a substantial portion of our raw materials from overseas suppliers, actively participate in overseas manufacturing operations, and sell to a large number of international customers. During the year ended December 31, 2024, sales to customers located outside of the U.S. accounted for 43% of our consolidated net sales.
In addition, we have $26.4 million available for future borrowings under our asset backed credit facility (the “ABL Facility”).
In addition, we have $15.0 million available for future borrowings under our asset backed credit facility (the “ABL Facility”).
The principal amount outstanding under our term loan facility (the “Term Loan Facility”) as of December 31, 2023, was $148.1 million, and based on the interest rate then in effect, annual cash interest payments would be approximately $18.3 million, with an additional $2.9 million accrued as paid-in-kind interest.
The principal amount outstanding under our term loan facility (the “Term Loan Facility”) as of December 31, 2024, was $114.4 million, and based on the interest rate then in effect, annual cash interest payments would be approximately $13.0 million, with an additional $1.1 million accrued as paid-in-kind interest.
The risks of substantial costs, liabilities, and limitations on our operations related to compliance with these laws and regulations are an inherent part of our business, and future conditions may develop, arise or be discovered that create substantial environmental compliance or remediation liabilities and costs. 13 Table of Contents Our business activities are subject to various laws and regulations relating to pollution control and protection of the environment.
The risks of substantial costs, liabilities, and limitations on our operations related to compliance with these laws and regulations are an inherent part of our business, and future conditions may develop, arise or be discovered that create substantial environmental compliance or remediation liabilities and costs.
In addition, we could be adversely affected by violations of the Foreign Corrupt Practices Act (the “FCPA”) and similar worldwide anti-bribery laws, as well as export controls and economic sanction laws.
In addition, we could be adversely affected by violations of the Foreign Corrupt Practices Act (the “FCPA”) and similar worldwide anti-bribery laws, as well as export controls, which may include International Traffic in Arms Regulation and Export Administration Regulations, and economic sanction laws.
If a recall were to happen as a result of our components failing, we could bear a substantial part of the cost of correction. In addition to the cost of fixing the parts affected by the component, a recall could result in the loss of a portion of or all of the customer’s business and damage our reputation.
In addition to the cost of fixing the parts affected by the component, a recall could result in the loss of a portion of or all of the customer’s business and damage our reputation.
To date, we have committed significant expenditures in our efforts to achieve and maintain compliance with these requirements at our facilities, and we expect that we will continue to make significant expenditures related to such compliance in the future.
Compliance with environmental, health, and safety legislation and regulatory requirements may prove to be more limiting and costly than we anticipate. To date, we have committed significant expenditures in our efforts to achieve and maintain compliance with these requirements at our facilities, and we expect that we will continue to make significant expenditures related to such compliance in the future.
The military conflicts (including the Russia/Ukraine conflict, the conflict in Israel and surrounding areas, and the Houthi movement in Yemen and the surrounding Red Sea region), and related sanctions, export controls or other actions that may be initiated by nations could adversely affect our business and our supply chain or our business partners or customers in other countries.
The military conflicts (including the ongoing war between Russia and Ukraine and conflict in the Middle East), and related sanctions, export controls or other actions that may be initiated by nations could adversely affect our business and our supply chain or our business 11 Table of Contents partners or customers in other countries.
Our markets are highly competitive, and many of our competitors have significant advantages that could adversely affect our business. We face substantial competition in the sale of components, system subassemblies, and finished devices in the vertical end markets into which we sell our products.
We face substantial competition in the sale of components, system subassemblies, and finished devices in the vertical end markets into which we sell our products.
Some of the medical devices that we produce may be subject to regulation by numerous government agencies, including the Food and Drug Administration (“FDA”) and comparable agencies outside the U.S. To varying degrees, each of these agencies requires us to comply with laws and regulations governing the development, testing, manufacturing, labeling, marketing and distribution of medical devices.
Some of the medical devices that we produce may be subject to regulation by numerous government agencies, including the Food and Drug Administration (“FDA”) and comparable agencies outside the U.S.
If we violate or fail to comply with these laws, regulations, or permits, we could be fined or otherwise sanctioned by regulators. Under some environmental laws and regulations, we could also be held responsible for all the costs relating to any contamination at our past or present facilities and at third-party waste disposal sites.
Under some environmental laws and regulations, we could also be held responsible for all the costs relating to any contamination at our past or present facilities and at third-party waste disposal sites. We maintain a compliance program to assist in preventing and, if necessary, correcting environmental problems.
Further, we may be required to expend significant additional resources to continue to enhance information security measures and internal processes and procedures or to investigate and remediate any information security vulnerabilities. 12 Table of Contents A data security incident could compromise our or our service providers’ information technology systems, and the information stored by us or our service providers, including personally identifiable information of employees, could be accessed, misused, publicly disclosed, corrupted, lost, or stolen.
A data security incident could compromise our or our service providers’ information technology systems, and the information stored by us or our service providers, including personally identifiable information of employees, could be accessed, misused, publicly disclosed, corrupted, lost, or stolen.
Further, there can be no assurance that our commitments will be successful, that our products will be accepted by the market, that proposed regulation or deregulation will not have a negative competitive impact or that economic returns will reflect our investments in new product development. 14 Table of Contents The standards by which ESG efforts and related matters are measured are developing and evolving, and we could be criticized for the scope of our initiatives and goals, or lack thereof.
Further, there can be no assurance that our commitments will be successful, that our products will be accepted by the market, that proposed regulation or deregulation will not have a negative competitive impact or that economic returns will reflect our investments in new product development.
These laws and regulations govern, among other things, discharges to air or water, the generation, storage, handling, and use of automotive hazardous materials, and the handling and disposal of hazardous waste generated at our facilities. Under such laws and regulations, we are required to obtain permits from governmental authorities for some of our operations.
Our business activities are subject to various laws and regulations relating to pollution control and protection of the environment. These laws and regulations govern, among other things, discharges to air or water, the generation, storage, handling, and use of automotive hazardous materials, and the handling and disposal of hazardous waste generated at our facilities.
Accordingly, we and our service providers may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures.
Accordingly, we and our service providers may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures. Further, we may be required to expend significant additional resources to continue to enhance information security measures and internal processes and procedures or to investigate and remediate any information security vulnerabilities.
No assurance can be given as to whether, when, or in what form changes to the U.S. tax laws applicable to us may be enacted.
No assurance can be given as to whether, when, or in what form changes to the applicable tax laws applicable to us may be enacted. Changes in tax laws, tax rulings, or interpretations of existing laws could materially affect our business, cash flow, results of operations, and financial condition.
We cannot guarantee that we will be able to obtain marketing clearance for our new products or enhancements or modifications to existing products.
To varying degrees, each of these agencies requires us to comply with laws and regulations governing the development, testing, manufacturing, labeling, marketing and 14 Table of Contents distribution of medical devices. We cannot guarantee that we will be able to obtain marketing clearance for our new products or enhancements or modifications to existing products.
Failure of our products could result in a product recall. The majority of our products are components of our customers’ products that are used in critical industrial applications. A failure of our components could lead to a product recall.
In the event our products and solutions fail to meet these standards, our reputation could be harmed, which could damage our competitive advantage, causing us to lose customers and resulting in lower revenues. The majority of our products are components of our customers’ products that are used in critical industrial applications.
Removed
We maintain a compliance program to assist in preventing and, if necessary, correcting environmental problems. Compliance with environmental, health, and safety legislation and regulatory requirements may prove to be more limiting and costly than we anticipate.
Added
With respect to taxes, trade policies and tariffs there is uncertainty as the political landscape changes due to the recent U.S. presidential and congressional elections.
Removed
Changes in U.S. tax laws, tax rulings, or interpretations of existing laws could materially affect our business, cash flow, results of operations, and financial condition. 18 Table of Contents We currently, and may in the future, have assets held at financial institutions that may exceed the insurance coverage offered by the Federal Deposit Insurance Corporation (“FDIC”), and the loss of such assets could have a severe negative affect on our operations and liquidity.
Added
Changes in U.S. administrative policy may lead to significant increases in tariffs for imported goods among other possible changes, which could strain international trade relations and increase the risk that foreign governments implement retaliatory tariffs on goods imported from the United States.
Removed
On March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver. Similarly, on March 12, 2023, Signature Bank and Silvergate Capital Corp. were each swept into receivership.
Added
Any widespread imposition of new or increased tariffs could increase the cost of, and reduce the demand for, our products, as well as result in increased inflationary pressure, any of which could have a material adverse effect on our business, prospects, financial condition, results of operations, or cash flows.
Removed
A statement by the Department of the Treasury, the Federal Reserve and the FDIC stated that all depositors of SVB would have access to all of their money after only one business day of closure, including funds held in uninsured deposit accounts.
Added
Quality problems with our products could harm our reputation, erode our competitive advantage and could result in a product recall. Quality is important to us and our customers, and our products and solutions are held to high quality and performance standards.
Added
A failure of our components could lead to a product recall. If a recall were to happen as a result of our components failing, we could bear a substantial part of the cost of correction.
Added
Our inability to effectively manage the timing, quality and costs of new program launches could adversely affect our financial performance. In connection with the award of new business, we obligate ourselves to deliver new products and services that are subject to our customers' timing, performance and quality standards.
Added
Additionally, we must effectively coordinate the activities of numerous suppliers in order for the program launches of our products to be successful. Given the complexity of new program launches, we may experience difficulties managing product quality, timeliness and associated costs.
Added
In addition, new program launches require a significant ramp up of costs; however, our sales related to these new programs generally are dependent upon the timing and success of our customers' introduction of new products.
Added
Our inability to effectively manage the timing, quality and costs of these new program launches could adversely affect our financial condition, operating results and cash flows. We face the challenge of accurately aligning our capacity with our demand. We face periods when demand fluctuates significantly higher or lower than our normal operating levels, including variability driven by supply chain inconsistency.
Added
Accurately forecasting our expected volumes and appropriately adjusting our capacity are important factors in determining our results of operations and cash flows. We manage our capacity by adjusting our manufacturing workforce, capital expenditures and purchases from suppliers.
Added
In periods of weak demand, we may face under-utilized capacity and un-recovered overhead costs, while in periods of strong demand we may experience unplanned costs and could fail to meet customer demand. We cannot guarantee that we will be able to adequately adjust our manufacturing capacity in response to significant changes in customer demand, which could harm our business.
Added
If we do not accurately align our manufacturing capabilities with demand it could have a material adverse effect on our results of operations, financial condition and cash flows. Our markets are highly competitive, and many of our competitors have significant advantages that could adversely affect our business.
Added
Under such laws and regulations, we are required to obtain permits from governmental authorities for some of our operations. If we violate or fail to comply with these laws, regulations, or permits, we could be fined or otherwise sanctioned by regulators.
Added
The standards by which ESG efforts and related matters are measured are developing and evolving, and we could be criticized for the scope of our initiatives and goals, or lack thereof.
Added
Many of these factors will be outside of our control and any one of them could result in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy, which could materially impact our business, prospects, financial condition, results of operations, or cash flows.
Added
Unstable market and economic conditions and adverse developments with respect to financial institutions and associated liquidity risk may have serious adverse consequences on our business, financial condition and stock price.
Added
The global credit and financial markets have recently experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, inflationary pressure and interest rate changes, increases in unemployment rates and uncertainty about economic stability.
Added
The financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflict, terrorism or other geopolitical events.
Added
Sanctions imposed by the United States and other countries in response to such conflicts may also adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability.
Added
More recently, the closures of Silicon Valley Bank and Signature Bank and their placement into receivership with the Federal Deposit Insurance Corporation (“FDIC”) created bank-specific and broader financial institution liquidity risk and concerns.
Added
Although the Department of the Treasury, the Federal Reserve and the FDIC jointly confirmed that depositors at Silicon Valley Bank and Signature Bank would continue to have access to their funds, even those in excess of the standard FDIC insurance limits, under a systemic risk exception, future adverse developments with respect to specific financial institutions or the broader financial services industry may lead to market-wide liquidity shortages, impair the ability of companies to access near-term working capital needs, and create additional market and economic uncertainty.
Added
There can be no assurance that future credit and financial market instability and a deterioration in confidence in economic conditions will not occur. Our general business strategy may be adversely affected by any such economic downturn, liquidity shortages, volatile business environment or continued unpredictable and unstable market conditions.
Added
If the equity and credit markets deteriorate, or if adverse developments are experienced by financial institutions, it may cause short-term liquidity risk and also make any necessary debt or equity financing more difficult, more costly and more dilutive.
Added
Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and stock price and could require us to delay or modify our business plans. Item 1B. Unresolved Staff Comments None.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAlthough impacts of past cybersecurity incidents have been immaterial to date, the impacts of such events in the future may materially and adversely affect our business, financial condition, or results of operations. 19 Table of Contents
Biggest changeAlthough impacts of past cybersecurity incidents have been immaterial to date, the impacts of such events in the future may materially and adversely affect our business, financial condition, or results of operations.
Penetration testing is conducted by an outside party on a continual basis, resulting in rapid discovery and remediation of any potential weaknesses. To ensure employee compliance with our processes, we require yearly cybersecurity training and conduct phish testing, including simulated phishing attempts, multiple times per month.
Penetration testing is conducted by an outside party on a continual basis, resulting in rapid discovery and remediation of potential weaknesses. To ensure employee compliance with our processes, we require yearly cybersecurity training and conduct phish testing, including simulated phishing attempts, multiple times per month.
We have around the clock security operations center coverage that uses an industry leading security information and event management tool to aggregate and analyze data and provide immediate alerts for any breaches. All hardware within our information systems run an industry-standard anti-virus solution, and we have an established patching program in place to keep security updates current.
We have around the clock security operations center coverage that uses an industry leading security information and event management tool to aggregate and analyze data and provide immediate alerts of potential breaches. All hardware within our information systems run an industry-standard anti-virus solution, and we have an established patching program in place to keep security updates current.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLeased Joint Venture Location General Character Country Owned or Leased Wuxi, China Plant China Leased Corporate Location General Character Country Owned or Leased Charlotte, North Carolina Office U.S.A Leased
Biggest changeLeased Joint Venture Location General Character Country Owned or Leased Wuxi, China Plant China Leased Corporate Location General Character Country Owned or Leased Charlotte, North Carolina Office U.S.A Leased (1) Facilities that we plan to close during 2025.
Owned Juarez, Mexico Plant Mexico Leased Kamienna Gora, Poland Plant Poland Owned Kentwood, Michigan Plant 1 U.S.A. Leased Kentwood, Michigan Plant 2 U.S.A. Leased Kentwood, Michigan Plant 3, Warehouse U.S.A. Leased Kentwood, Michigan Office U.S.A. Owned Marnaz, France Plant France Owned Marshall, Michigan Plant 1 U.S.A.
Owned Juarez, Mexico (1) Plant Mexico Leased Kamienna Gora, Poland Plant Poland Owned Kentwood, Michigan Plant 1 U.S.A. Leased Kentwood, Michigan Plant 2 U.S.A. Leased Kentwood, Michigan Plant 3, Warehouse U.S.A. Leased Kentwood, Michigan Office U.S.A. Owned Marnaz, France Plant France Owned Marshall, Michigan Plant 1 U.S.A.
These plants are generally well maintained, in good operating condition, and suitable and adequate for their use. The following table lists the current locations of our facilities by segment. Mobile Solutions Group Location General Character Country Owned or Leased Campinas, Brazil Office Brazil Leased Dowagiac, Michigan Plant U.S.A.
These plants are 20 Table of Contents generally well maintained, in good operating condition, and suitable and adequate for their use. The following table lists the current locations of our facilities by segment. Mobile Solutions Group Location General Character Country Owned or Leased Campinas, Brazil Office Brazil Leased Dowagiac, Michigan (1) Plant U.S.A.
Item 2. Properties As of December 31, 2023, we owned or leased 27 facilities in a total of six countries, which includes a manufacturing facility owned by the JV in China. Utilization of these sites may vary with product mix and economic, seasonal, and other business conditions. Our plants generally have sufficient capacity for existing needs and expected near-term growth.
Item 2. Properties As of December 31, 2024, we owned or leased 26 facilities in a total of six countries, which includes a manufacturing facility owned by the JV in China. Utilization of these sites may vary with product mix and economic, seasonal, and other business conditions. Our plants generally have sufficient capacity for existing needs and expected near-term growth.
Owned Attleboro, Massachusetts Plant 1 U.S.A. Owned Attleboro, Massachusetts Plant 2 U.S.A. Leased Attleboro, Massachusetts Plant 3 U.S.A. Owned Attleboro, Massachusetts Office, Warehouse U.S.A. Owned Foshan City, China Plant China Leased Lubbock, Texas Plant U.S.A. Owned Mexico City, Mexico Plant Mexico Owned North Attleboro, Massachusetts Plant U.S.A. Owned Palmer, Massachusetts Plant U.S.A.
Owned Attleboro, Massachusetts Plant 1 U.S.A. Leased Attleboro, Massachusetts Plant 2 U.S.A. Leased Attleboro, Massachusetts Plant 3 U.S.A. Leased Attleboro, Massachusetts Office, Warehouse U.S.A. Leased Foshan City, China Plant China Leased Mexico City, Mexico Plant Mexico Owned North Attleboro, Massachusetts Plant U.S.A. Owned Palmer, Massachusetts Plant U.S.A.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings As disclosed in Note 13 of the Notes to Consolidated Financial Statements included elsewhere in this Annual Report, we are engaged in certain legal proceedings, and the disclosure set forth in Note 13 relating to certain commitments and contingencies is incorporated herein by reference. Item 4.
Biggest changeItem 3. Legal Proceedings As disclosed in Note 12 of the Notes to Consolidated Financial Statements included elsewhere in this Annual Report, we are engaged in certain legal proceedings, and the disclosure set forth in Note 12 relating to certain commitments and contingencies is incorporated herein by reference. Item 4.
Mine Safety Disclosures Not applicable. 20 Table of Contents PART II
Mine Safety Disclosures Not applicable. 21 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+1 added−0 removed1 unchanged
Biggest changeThe Incentive Plans provides for the withholding of shares or units to satisfy income tax obligations. It does not specify a maximum number of shares or units that can be withheld for this purpose. These shares may be deemed to be “issuer purchases” of shares that are required to be disclosed pursuant to this Item. Item 6.
Biggest changeAmended and Restated 2022 Omnibus Incentive Plan and prior plans (collectively the “Incentive Plans”). The Incentive Plans provides for the withholding of shares or units to satisfy income tax obligations. It does not specify a maximum number of shares or units that can be withheld for this purpose.
The following graph and table assume that a $100 investment was made at the close of trading on December 31, 2018. We cannot assure you that the performance of our common stock will continue in the future with the same or similar trend depicted on the graph.
The following graph and table assume that a $100 investment was made at the close of trading on December 31, 2019. We cannot assure you that the performance of our common stock will continue in the future with the same or similar trend depicted on the graph.
See Part III, Item 12 – “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Annual Report for information required by Item 201 (d) of Regulation S-K. 21 Table of Contents Issuer Purchases of Equity Securities The following table provides information about purchases we made during the quarter ended December 31, 2023.
See Part III, Item 12 – “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Annual Report for information required by Item 201(d) of Regulation S-K. 22 Table of Contents Issuer Purchases of Equity Securities The following table provides information about purchases we made during the quarter ended December 31, 2024.
The following graph and table compare the cumulative total shareholder return on our common stock with the cumulative total shareholder return of: (i) the Russell 2000 ® Index, which is a broad equity market index, and (ii) the S&P SmallCap 600 ® Industrials Index, which is a published industry index, for the period from December 31, 2018, to December 31, 2023.
The following graph and table compare the cumulative total shareholder return on our common stock with the cumulative total shareholder return of: (i) the Russell 2000 ® Index, which is a broad equity market index, and (ii) the S&P SmallCap 600 ® Industrials Index, which is a published industry index, for the period from December 31, 2019, to December 31, 2024.
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Our common stock is traded on Nasdaq under the trading symbol “NNBR.” As of February 21, 2024, there were 3,767 beneficial owners of record of our common stock.
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Our common stock is traded on Nasdaq under the trading symbol “NNBR.” As of February 11, 2025, there were 4,040 beneficial owners of record of our common stock.
Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plan or Programs (1) October 2023 2,016 $ 1.76 — — November 2023 2,488 2.00 — — December 2023 — — — — Total 4,504 $ 1.89 — — _______________________________ (1) Shares were withheld to pay for tax obligations due upon the vesting of share-based awards held by employees granted under the NN, Inc. 2022 Omnibus Incentive Plan and prior plans (collectively the “Incentive Plans”).
Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plan or Programs (1) October 2024 3,689 $ 3.74 — — November 2024 — — — — December 2024 1,396 3.27 — — Total 5,085 $ 3.61 — — _______________________________ (1) Shares were withheld to pay for tax obligations due upon the vesting of share-based awards held by employees granted under the NN, Inc.
Comparison of Five-Year Cumulative Total Return (Performance results through December 31, 2023) 2018 2019 2020 2021 2022 2023 NN, Inc. $ 100.00 $ 141.31 $ 100.36 $ 62.62 $ 22.91 $ 61.08 Russell 2000 $ 100.00 $ 125.52 $ 150.58 $ 172.90 $ 137.56 $ 160.85 S&P SmallCap 600 Industrials $ 100.00 $ 129.64 $ 145.17 $ 182.76 $ 165.58 $ 218.30 Source: Zachs Investment Research, Inc.
Comparison of Five-Year Cumulative Total Return (Performance results through December 31, 2024) 2019 2020 2021 2022 2023 2024 NN, Inc. $ 100.00 $ 71.02 $ 44.31 $ 16.21 $ 43.22 $ 35.33 Russell 2000 $ 100.00 $ 119.96 $ 137.74 $ 109.59 $ 128.14 $ 142.93 S&P SmallCap 600 Industrials $ 100.00 $ 111.97 $ 140.98 $ 127.72 $ 168.39 $ 197.28 Source: Zachs Investment Research, Inc.
Added
These shares may be deemed to be “issuer purchases” of shares that are required to be disclosed pursuant to this Item. Item 6. Reserved 23 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYears Ended December 31, 2023 2022 2021 Net sales 100.0 % 100.0 % 100.0 % Cost of sales (exclusive of depreciation and amortization shown separately below) 85.7 % 84.4 % 81.7 % Selling, general, and administrative expense 9.7 % 10.0 % 10.8 % Depreciation and amortization 9.4 % 9.5 % 9.7 % Other operating expense (income), net (0.3) % 0.4 % (0.2) % Loss from operations (4.5) % (4.2) % (1.9) % Interest expense 4.3 % 3.0 % 2.7 % Loss on extinguishment of debt and write-off of debt issuance costs — % — % 0.5 % Derivative payments on interest rate swap — % — % 0.4 % Loss on interest rate swap — % — % 0.4 % Other expense (income), net 2.2 % (1.0) % (1.1) % Loss from continuing operations before provision for income taxes and share of net income from joint venture (11.0) % (6.2) % (4.7) % Provision for income taxes (0.5) % (0.3) % 0.4 % Share of net income from joint venture 1.2 % 1.3 % 1.3 % Loss from continuing operations (10.2) % (5.2) % (3.0) % Income from discontinued operations, net of tax — % — % 0.3 % Net loss (10.2) % (5.2) % (2.8) % 24 Table of Contents Year Ended December 31, 2023 compared to the Year Ended December 31, 2022 Years Ended December 31, 2023 2022 $ Change Net sales $ 489,270 $ 498,738 $ (9,468) Cost of sales (exclusive of depreciation and amortization shown separately below) 419,175 421,105 $ (1,930) Selling, general, and administrative expense 47,436 49,635 (2,199) Depreciation and amortization 46,120 47,231 (1,111) Other operating expense (income), net (1,657) 1,859 (3,516) Loss from operations (21,804) (21,092) (712) Interest expense 21,137 15,041 6,096 Other expense (income), net 10,730 (5,064) 15,794 Loss from continuing operations before provision for income taxes and share of net income from joint venture (53,671) (31,069) (22,602) Provision for income taxes (2,285) (1,621) (664) Share of net income from joint venture 5,806 6,592 (786) Net loss $ (50,150) $ (26,098) $ (24,052) Net Sales .
Biggest changeYears Ended December 31, 2024 2023 2022 Net sales 100.0 % 100.0 % 100.0 % Cost of sales (exclusive of depreciation and amortization shown separately below) 85.0 % 85.7 % 84.4 % Selling, general, and administrative expense 10.7 % 9.7 % 10.0 % Depreciation and amortization 9.8 % 9.4 % 9.5 % Other operating expense (income), net 0.5 % (0.3) % 0.4 % Loss from operations (5.9) % (4.5) % (4.2) % Interest expense 4.8 % 4.3 % 3.0 % Loss on extinguishment of debt 0.1 % — % — % Other expense (income), net (1.0) % 2.2 % (1.0) % Loss before provision for income taxes and share of net income from joint venture (9.8) % (11.0) % (6.2) % Provision for income taxes (0.5) % (0.5) % (0.3) % Share of net income from joint venture 2.1 % 1.2 % 1.3 % Net loss (8.2) % (10.2) % (5.2) % 25 Table of Contents Year Ended December 31, 2024 compared to the Year Ended December 31, 2023 Years Ended December 31, 2024 2023 $ Change Net sales $ 464,290 $ 489,270 $ (24,980) Cost of sales (exclusive of depreciation and amortization shown separately below) 394,812 419,175 (24,363) Selling, general, and administrative expense 49,481 47,436 2,045 Depreciation and amortization 45,302 46,120 (818) Other operating expense (income), net 2,243 (1,657) 3,900 Loss from operations (27,548) (21,804) (5,744) Interest expense 22,095 21,137 958 Loss on extinguishment of debt 349 — 349 Other expense (income), net (4,558) 10,730 (15,288) Loss before provision for income taxes and share of net income from joint venture (45,434) (53,671) 8,237 Provision for income taxes (2,410) (2,285) (125) Share of net income from joint venture 9,571 5,806 3,765 Net loss $ (38,273) $ (50,150) $ 11,877 Net Sales .
The ongoing global conflicts continue to create volatility in global financial and energy markets, creating energy and supply chain shortages, which has added to the inflationary pressures experienced by the global economy. We continue to actively work with our suppliers to minimize impacts of supply shortages on our manufacturing capabilities.
Ongoing military conflicts continue to create volatility in global financial and energy markets, creating energy and supply chain shortages, which has added to the inflationary pressures experienced by the global economy. We continue to actively work with our suppliers to minimize impacts of supply shortages on our manufacturing capabilities.
Although our business has not been materially impacted by these ongoing global conflicts as of the date of this filing, we cannot reasonably predict the extent to which our operations, or those of our customers or suppliers, will be impacted in the future, or the ways in which the conflicts may impact our business, financial condition, results of operations and cash flows.
Although our business has not been materially impacted by these ongoing military conflicts as of the date of this filing, we cannot reasonably predict the extent to which our operations, or those of our customers or suppliers, will be impacted in the future, or the ways in which the conflicts may impact our business, financial condition, results of operations and cash flows.
Specifically, the realization of deferred tax assets and the certainty of tax positions taken are largely dependent upon management weighting the current positive and negative evidence for recording tax benefits and expenses. A significant piece of objective negative evidence evaluated is cumulative losses incurred over the three-year period ended December 31, 2023.
Specifically, the realization of deferred tax assets and the certainty of tax positions taken are largely dependent upon management weighting the current positive and negative evidence for recording tax benefits and expenses. A significant piece of objective negative evidence evaluated is cumulative losses incurred over the three-year period ended December 31, 2024.
Sales Concentration During the years ended December 31, 2023, 2022 and 2021, no single customer accounted for 10% or more of consolidated net sales. Financial Data as a Percentage of Net Sales The following table presents the percentage of our net sales represented by statement of operations line item.
Sales Concentration During the years ended December 31, 2024, 2023 and 2022, no single customer accounted for 10% or more of consolidated net sales. Financial Data as a Percentage of Net Sales The following table presents the percentage of our net sales represented by statement of operations line item.
Outstanding borrowings under the Term Loan Facility bear interest at either 1) one-month, three-month, or six-month 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%.
Outstanding borrowings under the Term Loan Facility bear interest at either: 1) one-month, three-month, or six-month Adjusted Term SOFR, subject to a 1.00% floor, plus an applicable margin of 6.875%; or 2) the greater of various benchmark rates plus an applicable margin of 5.875%.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with, and is qualified in its entirety by, the Consolidated Financial Statements and the Notes thereto and the Selected Financial Data included elsewhere in this Annual Report.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with, and is qualified in its entirety by, the Consolidated Financial Statements and the Notes thereto included elsewhere in this Annual Report.
Management generally focuses on these trends and relevant market indicators: • Trends related to the geographic migration of competitive manufacturing, electric vehicles, and electrification; • Costs subject to regional and global inflationary environments, including, but not limited to: • Raw materials; • Wages and benefits, including health care costs; • Regulatory compliance; and • Energy; • Global automotive production rates; • Global industrial growth and economics; • Residential and non-residential construction rates; • Regulatory environment for United States public companies and manufacturing companies; • Currency and exchange rate movements and trends; • Interest rate levels and expectations; and • Changes in tariff regulations.
Management generally focuses on these trends and relevant market indicators: • Trends related to the geographic migration of competitive manufacturing, electric vehicles, and electrification; • Costs subject to regional and global inflationary environments, including, but not limited to: • Raw materials; • Wages and benefits, including health care costs; • Regulatory compliance; and • Energy; • Global automotive production rates; • Global industrial growth and economics; • Residential and non-residential construction rates; • Regulatory environment for U.S. public companies and manufacturing companies; • Currency and exchange rate movements and trends; • Interest rate levels and expectations; and • Changes in tariff regulations.
A detailed discussion of our results of operations and liquidity and capital resources for the year ended December 31, 2022 compared to the year ended December 31, 2021 are not included herein and can be found in Item 7.
A detailed discussion of our results of operations and liquidity and capital resources for the year ended December 31, 2023 compared to the year ended December 31, 2022 are not included herein and can be found in Item 7.
Future adverse changes in market conditions or adverse operating results of the underlying assets could result in having to record additional impairment charges not previously recognized. 28 Table of Contents
Future adverse changes in market conditions or adverse operating results of the underlying assets could result in having to record additional impairment charges not previously recognized. 29 Table of Contents
We pay a commitment fee of 0.375% for unused capacity under the ABL Facility. We were in compliance with all requirements under our Term Loan Facility and ABL Facility as of December 31, 2023. Both credit facilities allow for optional expansion of available borrowings, subject to certain terms and conditions.
We pay a commitment fee of 0.25% for unused capacity under the ABL Facility. We were in compliance with all requirements under our Term Loan Facility and ABL Facility as of December 31, 2024. Both credit facilities allow for optional expansion of available borrowings, subject to certain terms and conditions.
Results of Operations Factors That May Influence Results of Operations The following paragraphs describe factors that have influenced results of operations for the year ended December 31, 2023, that management believes are important to provide an understanding of the business and results of operations or that may influence operations in the future. 23 Table of Contents Macroeconomic Conditions We continue to monitor the ongoing impacts of current macroeconomic and geopolitical events, including changing conditions from ongoing global conflicts, inflationary cost pressures, elevated interest rates, supply chain disruptions, and labor shortages and disruptions.
Results of Operations Factors That May Influence Results of Operations The following paragraphs describe factors that have influenced results of operations for the year ended December 31, 2024, that management believes are important to provide an understanding of the business and results of operations or that may influence operations in the future. 24 Table of Contents Macroeconomic Conditions We continue to monitor the ongoing impacts of current macroeconomic and geopolitical events, including changing conditions from ongoing military conflicts, inflationary cost pressures, elevated interest rates, supply chain disruptions, and labor shortages and disruptions.
Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 10, 2023. Overview and Management Focus During 2023, the Company initiated an enterprise transformation plan to grow sales, profits, free cash flow and shareholder value.
Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 12, 2024. Overview and Management Focus During 2024, the Company continued its enterprise transformation plan to grow sales, profits, free cash flow and shareholder value.
Our effective tax rate for the year ended December 31, 2023 was unfavorably impacted by the accrual of tax on non-permanently reinvested unremitted earnings of foreign subsidiaries and by the limitation on the amount of tax benefit recorded for loss carryforwards in certain jurisdictions where we believe it is more likely than not that a 25 Table of Contents portion of the future tax benefit may not be realized.
Our effective tax rate for the years ended December 31, 2024 and 2023 were unfavorably impacted by the accrual of tax on non-permanently reinvested unremitted earnings of foreign subsidiaries and by the limitation on the amount of tax benefit recorded for loss carryforwards in certain jurisdictions where we believe it is more likely than not that a portion of the future tax benefit may not be realized.
Other Receivables In 2021, we filed a refund claim with the IRS as a result of the Coronavirus Aid, Relief, and Economic Security Act. 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.
Other Receivables In 2021, we filed a refund claim with the IRS as a result of the Coronavirus Aid, Relief, and Economic Security Act. 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.
This amount of borrowing capacity is net of $10.9 million of outstanding letters of credit at December 31, 2023, which are considered as usage of the ABL Facility. The Term Loan Facility requires quarterly principal payments of $0.4 million with the remaining unpaid principal amount, including accrued paid-in-kind interest, due on the final maturity date of September 22, 2026.
This amount of borrowing capacity is net of $10.4 million of outstanding letters of credit at December 31, 2024, which are considered as usage of the ABL Facility. The Term Loan Facility requires quarterly principal payments of $0.4 million with the remaining unpaid principal amount due on the final maturity date of September 22, 2026.
The U.S. economy has experienced inflationary increases and elevated interest rates, as well as supply issues in materials, services, and labor due to economic policy, the COVID-19 pandemic and global conflicts. While these impacts stabilized during 2023, we cannot predict the future impact on our end-markets or input costs nor our ability to recover cost increases through pricing.
The U.S. economy has experienced inflationary increases and elevated interest rates, as well as supply issues in materials, services, and labor due to economic policy and military conflicts. We cannot predict the future impact on our end-markets or input costs nor our ability to recover cost increases through pricing.
The effective tax rate for the year ended December 31, 2023 was favorably impacted by the recording of interest income on the Company’s federal income tax refund requested as a result of the Coronavirus Aid, Relief, and Economic Security Act, as well as the recording of a benefit of a pending state refund claim.
The effective tax rate for the years ended December 31, 2024 and 26 Table of Contents 2023 were favorably impacted by the recording of interest income on the Company’s federal income tax refund requested as a result of the Coronavirus Aid, Relief, and Economic Security Act, as well as the recording of a benefit of a state refund claim.
The joint venture, in which we own a 49% investment, recognized net sales of $109.6 million and $101.6 million for the year ended December 31, 2023 and 2022, respectively.
The joint venture, in which we own a 49% investment, recognized net sales of $130.8 million and $109.6 million for the years ended December 31, 2024 and 2023, respectively.
Liquidity and Capital Resources Credit Facility The principal amount outstanding under our term loan facility (the “Term Loan Facility”) as of December 31, 2023, was $148.1 million, without regard to unamortized debt issuance costs and discount. As of December 31, 2023, we had $26.4 million available for future borrowings under the ABL Facility.
Liquidity and Capital Resources Credit Facilities The principal amount outstanding under our Term Loan Facility as of December 31, 2024, was $114.4 million, without regard to unamortized debt issuance costs and discount. As of December 31, 2024, we had $5.4 million outstanding borrowings under the ABL Facility and $15.0 million available for future borrowings under the ABL Facility.
Our effective tax rate was (4.3)% for the year ended December 31, 2023, compared to (5.2)% for the year ended December 31, 2022.
Provision for Income Taxes. Our effective tax rate was (5.3)% for the year ended December 31, 2024, compared to (4.3)% for the year ended December 31, 2023.
Share of Net Income from Joint Venture. Share of net income from the joint venture decreased by $0.8 million during the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to higher fixed costs and increased depreciation and interest expense, partially offset by higher revenue.
Share of Net Income from Joint Venture. Share of net income from the joint venture increased by $3.8 million during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to higher sales and increased margin partially offset by higher fixed costs, depreciation and income taxes.
Historical operating results and percentage relationships among any amounts included in the Consolidated Financial Statements are not necessarily indicative of trends in operating results for any future period. Unless otherwise noted herein, all amounts are in thousands, except per share numbers.
Historical operating results and percentage relationships among any amounts included in the Consolidated Financial Statements are not necessarily indicative of trends in operating results for any future period. Unless as otherwise noted indicated, all U.S. dollar amounts presented in tables are in thousands.
The local currency of each foreign facility is also its functional currency. 27 Table of Contents Seasonality and Fluctuation in Quarterly Results General economic conditions impact our business and financial results, and certain businesses experience seasonal and other trends related to the industries and end markets that they serve.
Seasonality and Fluctuation in Quarterly Results General economic conditions impact our business and financial results, and certain businesses experience seasonal and other trends related to the industries and end markets that they serve.
Selling, general, and administrative expense decreased by $2.2 million during the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to lower stock compensation expense and lower professional fees, partially offset by higher incentive compensation expense. Other Operating Expense (Income), Net.
Selling, General, and Administrative Expense. Selling, general, and administrative expense increased by $2.0 million during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to higher travel, stock compensation and severance expense, partially offset by lower salaries due to a reduction in headcount. Other Operating Expense (Income), Net.
Years Ended December 31, 2023 2022 Interest on debt $ 21,638 $ 14,071 Gain recognized on interest rate swap (1,815) (428) Amortization of debt issuance costs and discount 1,941 1,361 Capitalized interest (1,330) (610) Other 703 647 Total interest expense $ 21,137 $ 15,041 Other Expense (Income), Net.
Years Ended December 31, 2024 2023 Interest on debt $ 21,320 $ 21,638 Gain recognized on interest rate swap (1,048) (1,815) Amortization of debt issuance costs and discount 2,288 1,941 Capitalized interest (1,191) (1,330) Other 726 703 Total interest expense $ 22,095 $ 21,137 Other Expense (Income), Net.
Footprint Optimization We have taken specific steps to consolidate our footprint by identifying less profitable end markets and focusing our strategic growth initiatives in markets where we believe we will be able to maximize profitability.
Footprint Optimization We have taken specific steps to consolidate our footprint by identifying less profitable end markets and focusing our strategic growth initiatives in markets where we believe we will be able to maximize profitability. During the second half of 2024, we identified two manufacturing facilities to close due to volume rationalization which will reduce costs and improve operational efficiency.
The timing of the receipt of the refund remains uncertain. Functional Currencies We currently have foreign operations in Brazil, China, France, Mexico, and Poland.
The timing of the receipt of the refund is expected in the first half of 2025. 28 Table of Contents Functional Currencies We currently have foreign operations in Brazil, China, France, Mexico, and Poland. The local currency of each foreign facility is also its functional currency.
Working capital, which consists of current assets less current liabilities, was $100.9 million as of December 31, 2023, compared to $112.9 million as of December 31, 2022. The decrease in working capital was primarily due to a decrease in accounts receivable and inventory and increases in accrued salaries, wages and benefits.
These decreases were partially offset by an increase in accrued salaries, wages and benefits. Working capital, which consists of current assets less current liabilities, was $83.7 million as of December 31, 2024, compared to $100.9 million as of December 31, 2023.
Cost of Sales. Cost of sales decreased by $1.9 million, or 0.5%, during the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to lower sales volume associated with facility closures.
These decreases were partially offset by the net impact of contractual pass-through material pricing provisions. Cost of Sales. Cost of sales decreased by $24.4 million, or 5.8%, during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to lower sales volume and lower labor costs associated with facility closures.
Beginning in the second quarter of 2023, interest expense was increased on a paid-in-kind basis at a rate between 1.00% and 2.00%, dependent on the Company’s leverage ratio. Based on the interest rate in effect at December 31, 2023, annual cash interest payments would be approximately $18.3 million, with an additional $2.9 million accrued as paid-in-kind interest.
Based on the interest rate in effect at December 31, 2024, annual cash interest payments would be approximately $13.0 million, with an additional $1.1 million accrued as paid-in-kind interest.
The ABL Facility bears interest on a variable borrowing rate based on 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.
The ABL Facility bears interest on a variable borrowing rate based on 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 1.0%, depending on the benchmark.
Cash Flows Cash provided by operations was $29.3 million for the year ended December 31, 2023, compared with cash provided by operations of $7.7 million for the year ended December 31, 2022.
Cash Flows Cash provided by operations was $11.1 million for the year ended December 31, 2024, compared with $29.3 million for the year ended December 31, 2023. The decline was due to decreases in accounts receivable and inventory during 2023 compared 27 Table of Contents with a decrease in accounts payable during 2024.
Net sales decreased by $9.5 million, or 1.9%, during the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to reduced volume, including the impact from the closure of the Taunton and Irvine facilities, lower customer settlements and unfavorable foreign exchange effects of $0.6 million. These decreases were partially offset by higher customer pricing.
Net sales decreased by $25.0 million, or 5.1%, during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to the sale of our Lubbock operations, customer settlements received in 2023, rationalized volume at plants undergoing turnarounds and unfavorable foreign exchange effects of $3.5 million.
These programs allow us to improve working capital and cash flows at the same or lower interest rates as available on our ABL Facility. Our access to these programs is dependent on our customers ongoing agreements with the third-parties.
In exchange, we receive payment on the receivables, less a discount, sooner than under the customary credit terms we have extended to that customer. These programs allow us to improve working capital and cash flows at the same or lower interest rates as available on our ABL Facility.
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. In exchange, we receive payment on the receivables, less a discount, sooner than under the customary credit terms we have extended to that customer.
In addition, we received $8.3 million from the sale and leaseback of equipment, with $3.4 million of the net proceeds used to repay a portion of the outstanding borrowings under the Term Loan Facility and the balance used for ongoing operational investments 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.
Other expense (income), net changed unfavorably by $15.8 million during the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to noncash derivative mark-to-market losses recognized during 2023 compared to gains recognized during 2022. Provision for Income Taxes.
Other expense (income), net changed favorably by $15.3 million during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to the $7.2 million gain on sale of the Lubbock operations and a $10.8 million decrease in noncash derivative mark-to-market losses, partially offset by unfavorable foreign exchange effects associated with intercompany borrowings.
These increases were partially offset by lower sales volume. Changes in Financial Condition from December 31, 2022 to December 31, 2023 Overview From December 31, 2022 to December 31, 2023, total assets decreased by $35.2 million primarily due to decreases in accounts receivable, inventory, property, plant and equipment and intangible assets.
Changes in Financial Condition from December 31, 2023 to December 31, 2024 Overview From December 31, 2023 to December 31, 2024, total assets decreased by $54.0 million primarily due to decreases in property, plant and equipment and intangible assets due to depreciation and amortization as well as the impairment of machinery and equipment at a plant that will close in 2025.
Results by Segment MOBILE SOLUTIONS Year Ended December 31, 2023 2022 $ Change Net sales $ 303,335 $ 293,536 $ 9,799 Loss from operations $ (11,749) $ (2,165) $ (9,584) Net sales increased by $9.8 million, or 3.3%, during the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to higher customer pricing, partially offset by lower volume, and lower customer settlements.
Results by Segment MOBILE SOLUTIONS Year Ended December 31, 2024 2023 $ Change Net sales $ 283,944 $ 303,335 $ (19,391) Loss from operations $ (18,078) $ (11,749) $ (6,329) Net sales decreased by $19.4 million, or 6.4%, during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due rationalized volume at plants undergoing turnarounds, contractual reduction in customer pass-through material pricing, a customer settlement received in 2023 and unfavorable foreign exchange effects of $3.3 million.
During the first half of 2023, we closed our Taunton and Irvine sites in the Power Solutions group and three underutilized Mobile Solutions sites to reduce operating costs. Additionally, we continue to evaluate our global footprint, which may result in further consolidation or expansion actions to further improve our overall cost structure.
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. Additionally, we continue to evaluate our global footprint, which may result in further consolidation actions to further improve our overall cost structure.
POWER SOLUTIONS Year Ended December 31, 2023 2022 $ Change Net sales $ 185,948 $ 205,204 $ (19,256) Income from operations $ 11,096 $ 3,536 $ 7,560 Net sales decreased by $19.3 million, or 9.4%, during the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to lower volumes, including the impact from the closure of the Taunton and Irvine facilities.
POWER SOLUTIONS Year Ended December 31, 2024 2023 $ Change Net sales $ 180,545 $ 185,948 $ (5,403) Income from operations $ 13,111 $ 11,096 $ 2,015 Net sales decreased by $5.4 million, or 2.9%, during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to the sale of our Lubbock operations, premium pricing received on a certain customer project during the first quarter of 2023 and unfavorable foreign exchange effects of $0.2 million.
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.
Sale Leaseback Transactions During the year ended December 31, 2024, we entered into several sale-leaseback transactions. We received $16.9 million from the sale and leaseback of three properties, with the net proceeds used to repay a portion of the outstanding borrowings under the Term Loan Facility.
Interest expense increased by $6.1 million during the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to higher interest rates and the addition of a 2.00% paid-in-kind interest component on the Term Loan subsequent to the amendment in the first quarter of 2023.
Interest expense increased by $1.0 million during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to a decrease in the gain recognized on interest rate swap and an increase in the amortization of debt issuance costs. These were partially offset by lower interest rates and lower outstanding balances.
Income from operations increased by $7.6 million during the year ended December 31, 2023 compared to the same period in the prior year, primarily due to lower costs associated with the facilities that closed in the second quarter of 2023, premium pricing on a certain customer project in the first quarter of 2023, a legal settlement reached during the first quarter of 2022, and sublease income earned on closed facilities.
These decreases were partially offset by higher precious metals pass-through pricing. Income from operations increased by $2.0 million during the year ended December 31, 2024 compared to the same period in the prior year, primarily due to an increase in sublease income earned on closed facilities and lower depreciation and amortization expense due to sold or fully utilized assets.
Cash used in financing activities was $2.9 million for the year ended December 31, 2023, compared with $5.2 million for the year ended December 31, 2022. The decrease was primarily due to an increase in international loans during 2023.
Cash used in financing activities increased by $10.4 million during the year ended December 31, 2024 compared to the same period in 2023, primarily due to higher repayments of long-term debt and debt issuance costs in 2024, partially offset by proceeds from the sale-leaseback transactions in 2024 and proceeds from international loans in 2023.
Other operating expense (income), net changed favorably by $3.5 million primarily due to sublease income recognized in 2023 and a legal settlement recorded in 2022. Interest Expense.
Other operating expense (income), net changed unfavorably by $3.9 million primarily due to the impairment of machinery and equipment at a plant that will close in 2025, partially offset by increased sublease income earned on closed facilities and gains on sale of property, plant and equipment. Interest Expense.
Removed
The main tenets of the Company’s transformation plan are: • Empowered leadership team that is accountable to outcomes; • Supplementing the team with added talent and experienced professionals; • Investing $100 million of capex over a five year period with strategic intentions; • Strategic footprint overlay to blend down the Company’s cost structure to lower total-cost product offerings; • Building and converting upon a high-probability pipeline of new business opportunities that fit the Company’s capacity and forward direction; • Deliver excellent customer service and quality in a safe and sustainable manner; • Expand margins through a variety of contemporary approaches, but especially continuous improvement algorithms; • Annually generate free cash flow; • Face reality and address underperforming areas of the Company; and • Recruit, retain and incent the best possible team of employees globally.
Added
The main tenets of the Company’s transformation plan are: • Strengthening our team with new executive and functional leadership; • Fixing unprofitable areas of the business; • Advancing and strengthening profitability; • Improving our balance sheet; and • Accelerating sales growth.
Removed
These decreases were partially offset by higher material and labor costs, increased costs due to inefficient manufacturing processes associated with product launches, and unfavorable foreign exchange effects. Selling, General, and Administrative Expense.
Added
We continue to execute our transformation plan through: • Obtaining new business wins in targeted growth areas; • Cost improvement plans and the rationalizing of our footprint; • Improving underperforming plants; • Achieving net cost-down through our continuous improvement program; • Reduced leverage through improved operating performance and a strategic divestiture; and • Lowering our cost of capital and improving our capital structure.
Removed
These increases were partially offset by the recognition of gains from the interest rate swap and a higher amount of interest expense that was capitalized in the current year compared with 2022.
Added
Loss from operations changed unfavorably by $6.3 million during the year ended December 31, 2024 compared to the prior year, primarily due to the impairment of machinery and equipment at a plant that will close in 2025. The change was also impacted by higher depreciation expense and selling, general and administrative costs.
Removed
Our effective tax rate for the year ended December 31, 2022 was favorably impacted by the change in assertion and reduction in the accrual of tax on non-permanently reinvested unremitted earnings of foreign subsidiaries and unfavorably impacted by the limitation on the amount of tax benefit recorded for loss carryforwards in certain jurisdictions where we believe it is more likely than not that a portion of the future tax benefit may not be realized.
Added
Additionally, accounts receivable, inventory and property, plant and equipment decreased due to the sale of our Lubbock operations during the year. These decreases were partially offset by increases in our investment in a joint venture.
Removed
Loss from operations changed unfavorably by $9.6 million during the year ended December 31, 2023 compared to the prior year, primarily due to higher material and labor costs, lower sales volume, lower customer settlement and unfavorable foreign exchange effects. In addition, costs increased due to production challenges associated with new business launches.
Added
From December 31, 2023 to December 31, 2024, total liabilities decreased by $19.2 million, primarily due to a decrease in accounts payable, a decrease in other non-current liabilities due to the exercise of warrants in 2024 and a reduction in long-term debt due to the partial pay down of the outstanding balance with proceeds from the sale of our Lubbock operations.
Removed
These decreases were partially offset by higher customer pricing and premium pricing on a certain customer project.
Added
The decrease in working capital was primarily due to decreases in accounts receivable and inventory, and an increase in accrued salaries, wages and benefits. These were partially offset by a decrease in accounts payable.
Removed
The closure of two Power Solutions facilities contributed to the decrease in inventory and property, plant and equipment, and the decline in intangible assets is due to amortization. From December 31, 2022 to December 31, 2023, total liabilities increased by $12.9 million, primarily due to an increase in other non-current liabilities due to fair value adjustments of outstanding warrants.
Added
These declines were partially offset by a larger dividend received from the JV in 2024. Cash used in investing activities was $1.0 million for the year ended December 31, 2024, compared with cash used in investing activities of $17.6 million for the year ended December 31, 2023.
Removed
The difference was primarily due to decreases in accounts 26 Table of Contents receivable and inventory during the year ended 2023 compared to increases in these balance during the corresponding period of 2022.
Added
The favorable change is primarily due to the $17.0 million received for the sale of the Lubbock operations during 2024.
Removed
Cash used in investing activities during the year ended December 31, 2023 changed minimally from the prior year as higher expenditures for property, plant and equipment was partially offset by the proceeds from the sale of equipment at the Taunton and Irvine facilities in the first half of 2023.
Added
Beginning with the second quarter of 2023, interest was increased on a paid-in-kind basis at a rate between 1.00% and 2.00%, 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.
Removed
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.
Added
The effective interest rate of 9.715% on this transaction, which terminates in 2044, was lower than the borrowings on the Term Loan Facility.
Added
Our access to these programs is dependent on our customers ongoing agreements with the third-parties.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed4 unchanged
Biggest changeA one-percent increase in one-month SOFR would have resulted in a net increase in interest expense of $1.5 million on an annualized basis. At December 31, 2023, using Adjusted SOFR plus a 2.00% spread, any borrowings under the ABL Facility would have been at a 7.445% interest rate.
Biggest changeA one-percent increase in one-month SOFR would have resulted in a net increase in interest expense of $1.1 million on an annualized basis. 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%.
To help reduce exposure to foreign currency fluctuation, we have incurred debt in euros in the past. Various strategies to manage this risk are available to management, including producing and selling in local currencies and hedging programs. We did not hold a position in any foreign currency derivatives as of December 31, 2023. 29 Table of Contents
To help reduce exposure to foreign currency fluctuation, we have incurred debt in euros in the past. Various strategies to manage this risk are available to management, including producing and selling in local currencies and hedging programs. We did not hold a position in any foreign currency derivatives as of December 31, 2024. 30 Table of Contents
To manage interest rate risk, we have used, and may in the future use, interest rate swap agreements. At December 31, 2023, we had $148.1 million of principal outstanding under the Term Loan Facility without regard to capitalized debt issuance costs.
To manage interest rate risk, we have used, and may in the future use, interest rate swap agreements. At December 31, 2024, we had $114.4 million of principal outstanding under the Term Loan Facility without regard to capitalized debt issuance costs.

Other NNBR 10-K year-over-year comparisons