Breaking Down NN, Inc. (NNBR) Financial Health: Key Insights for Investors

You're looking at NN, Inc. (NNBR) right now, seeing a stock trading near its lows but with whispers of a major turnaround-and you need to know if the underlying financials actually support the hype. Honestly, the numbers for the 2025 fiscal year paint a fascinating, if defintely complex, picture. On one hand, management is guiding for an annual record in operational performance, projecting Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) to land between $53 million and $63 million, and a solid Free Cash Flow of $14 million to $16 million. That's real, tangible cash generation. But here's the rub: the consensus still forecasts a GAAP loss, with Earnings Per Share expected to be around -$0.73 per share, which reflects the ongoing, expensive strategic transformation and market volatility. So, you have a company generating record cash from its core business while still posting a net loss-a classic value trap or a deep-value opportunity? With analysts assigning an average price target implying an upside of over 205.85%, we need to break down exactly what's driving that massive potential and what near-term risks, like that negative EPS, you need to manage before making a move.

Revenue Analysis

You're looking at NN, Inc. (NNBR) and seeing a stock price that has been volatile, so you need a clear-eyed view of where the money is actually coming from. The direct takeaway is that while the top-line revenue is contracting in 2025 due to a deliberate portfolio cleanup, the underlying shift toward higher-margin business is defintely improving profitability metrics like Adjusted EBITDA.

For the full 2025 fiscal year, NN, Inc. is guiding for net sales in the range of $420 million to $440 million, with the midpoint at $430 million. This is a slight revision downward from earlier estimates, driven by conservative forecasts in the automotive market. This company is actively shedding lower-performing business to create a more scalable core.

Segment Contribution and Growth Dynamics

NN, Inc. operates with two main revenue engines: Mobile Solutions and Power Solutions. The story here is one of strategic rebalancing. In the third quarter of 2025, the company reported total net sales of $103.9 million, which was an 8.5% decline year-over-year. That decline is intentional, but you need to see the segment breakdown to grasp the true picture.

The Mobile Solutions segment, which focuses on machined products and includes the soft global automotive market-about 40% of total sales-is where the contraction is most visible. Conversely, the Power Solutions segment is showing solid growth, which is a positive sign for future margin expansion.

Here's the quick math on the Q3 2025 segment contribution:

Strategic Revenue Shifts and Opportunities

The decline in the Mobile Solutions segment is largely due to the rationalization of underperforming business units and lower volumes in certain automotive customer channels. But the Power Solutions segment is picking up the slack, showing a 4.6% sales increase, fueled by new program launches in the electrical and defense markets, plus a boost from higher precious metals pass-through pricing.

This is a pivot, not a collapse. The company is diversifying away from its traditional reliance on automotive, with defense and electronic systems now representing about 15% of revenue and medical equipment at 5%. Management is targeting $60 million to $70 million in new business wins for 2025, with over 100 new programs launching this year that are expected to generate over $45 million in future annualized sales. That's a significant forward-looking pipeline.

• Shedding low-margin business improves long-term quality.
• New program launches are offsetting automotive weakness.
• Diversification into defense and medical is the clear growth path.

You can learn more about the institutional interest in this shift by Exploring NN, Inc. (NNBR) Investor Profile: Who's Buying and Why?

Profitability Metrics

You're looking at NN, Inc. (NNBR) and wondering if their turnaround is actually showing up in the numbers. The short answer is yes, but it's a story of two margins: the raw GAAP figures still show a loss, but the adjusted numbers reveal a significant operational improvement. The company is defintely getting healthier, but they are not out of the woods yet.

For the third quarter of 2025 (Q3 2025), NN, Inc. reported net sales of $103.9 million. This revenue translated into a GAAP (Generally Accepted Accounting Principles) gross profit of $17.5 million, an operating loss of $2.2 million, and a net loss of $6.7 million.

Here's the quick math on the core margins for Q3 2025, plus the more telling adjusted figures:

Trends and Operational Efficiency

The real story here is the trend and the operational efficiency improvements. The jump in the gross margin is a clear win. The GAAP Gross Margin improved to 16.8% in Q3 2025 from 14.5% in the same quarter last year, and the Adjusted Gross Margin hit 18.8%, up from 16.3% in Q3 2024. That's a huge step.

This improvement is directly linked to operational efficiency and cost management. The company has been actively rationalizing underperforming business segments, especially within their Mobile Solutions division, and implementing a successful continuous improvement cost-reduction program. They are cutting the dead weight and focusing on higher-margin work, like their Power Solutions segment, which saw a 4.7% sales growth. The goal is to reach a 20% Adjusted Gross Margin in Q4 2025, which would be a massive milestone.

• Cost Management: Rationalized unprofitable plants and businesses.
• Segment Mix: Power Solutions is driving growth and margin expansion.
• Operating Leverage: Adjusted Operating Income rose to $4.0 million from $1.3 million year-over-year.

Industry Comparison: The Gap to Close

While the internal improvement is impressive, NN, Inc.'s profitability ratios still lag behind the broader industrial sector. For a company in the industrial/manufacturing space, a general average Gross Margin typically falls between 25% and 35%. For the more specific Auto Parts sector, the average Gross Profit Margin is around 22.4% and the average Net Profit Margin is about 1.7%.

NN, Inc.'s Q3 2025 Adjusted Gross Margin of 18.8% is closing the gap but is still below the 22.4% Auto Parts average. The GAAP Net Loss of -6.45% is a stark contrast to the sector's positive 1.7% average. The core challenge remains translating that strong gross margin improvement into consistent, positive net income after all operating expenses, interest, and taxes are factored in. Their strategic plan, which you can read more about here: Mission Statement, Vision, & Core Values of NN, Inc. (NNBR), is clearly focused on this final step.

The good news is the trend is moving in the right direction; the bad news is the structural profitability is still below the industry benchmark. Your action item is to watch Q4 2025 results closely to see if they hit that 20% adjusted gross margin target and how close the GAAP Net Loss gets to zero.

Debt vs. Equity Structure

You're looking at NN, Inc. (NNBR)'s balance sheet to see how they fund their growth, and the quick takeaway is that the company is currently leaning heavily on debt relative to its peers, but they've been busy restructuring that debt to buy themselves time.

NN, Inc. has a significant debt load, reporting total debt of US$154.9 million as of September 2025. This figure is a critical anchor for any investor analysis, showing the overall financial obligation. Here's the quick math on their liabilities: the company had US$90.9 million in liabilities due within the next 12 months, which is your short-term watch item, plus another US$203.1 million in liabilities due beyond that, representing the long-term burden. That's a lot of weight for a company with a market capitalization of around $86 million at the time.

NN, Inc.'s reliance on debt is clear when you look at the Debt-to-Equity (D/E) ratio. The company's D/E ratio is currently sitting at 1.30 (LTM data through late 2025). To be fair, this is a high number, especially when you compare it to the industry standard for Industrial Machinery & Supplies & Components, which is around 0.5002 as of early 2025. A ratio of 1.30 means the company is funding its assets with $1.30 of debt for every dollar of shareholder equity; the industry average is closer to $0.50. This higher leverage defintely increases the financial risk, but it also means the company is using debt to finance its transformation and growth plans, which can amplify returns if executed well.

The company has been proactive in managing this debt, which is a positive sign. In a two-step initiative completed in April 2025, NN, Inc. successfully refinanced its debt, securing new facilities that mature in 2030. This included a new Asset Backed Loan (ABL) facility of $65 million and a new Term Loan facility of $118 million, totaling $183 million in new financing. This move terminated an existing $150 million term loan, providing improved covenants and a five-year runway, which is crucial for operational stability. That's a smart move to reset the clock on their obligations.

When it comes to balancing debt and equity, NN, Inc. is currently signaling a shift toward the equity side to strengthen its capital base. As of November 2025, the company announced it is actively progressing a preferred equity refinancing initiative. This action suggests management is looking to inject a more permanent, equity-like form of capital to reduce the overall leverage profile and further optimize the balance sheet. This is a common strategy for companies in a turnaround phase looking to reduce their debt-servicing pressure and provide a better cushion against market volatility. You can dig deeper into their long-term strategy here: Mission Statement, Vision, & Core Values of NN, Inc. (NNBR).

Here is a summary of the key debt components and their recent status:

• Total Debt (Sept 2025): $154.9 million
• Debt-to-Equity Ratio: 1.30
• New ABL Facility (April 2025): $65 million (Maturity 2030)
• New Term Loan Facility (April 2025): $118 million (Maturity 2030)
• Current Strategic Focus: Pursuing a preferred equity refinancing

Liquidity and Solvency

You're looking at NN, Inc. (NNBR) and asking the right question: can they meet their near-term obligations while funding their transformation? The short answer is yes, but it's a tightrope walk that requires constant attention to cash flow and working capital. The company's recent performance shows a strategic shift toward generating cash, but their balance sheet ratios still signal caution.

Let's look at the latest available liquidity positions. The Current Ratio, which measures current assets against current liabilities, is sitting at approximately 1.87 on a Trailing Twelve Months (TTM) basis as of November 2025. This means NN, Inc. has $1.87 in current assets for every dollar of current liabilities. That's solid, suggesting they can cover their immediate debts. However, the Quick Ratio (or Acid-Test Ratio), which excludes inventory-a less liquid asset-is a much tighter 0.97 for the same period. Honestly, a Quick Ratio below 1.0 is a yellow flag; it means they'd need to sell some inventory to cover all their short-term debts if cash dried up.

Working Capital and Cash Flow Trends

Working capital management is defintely a core focus for NN, Inc. right now. They've been actively managing their current assets and liabilities, and it's paying off. In the third quarter of 2025, the company reported net working capital was below $80 million, which is a significant 21% improvement compared to the second quarter of 2023. This shows management is executing on its plan to tighten up the balance sheet and free up cash tied up in operations.

The cash flow statements for the first half of 2025 tell a mixed but improving story:

• Operating Cash Flow: Net cash used in operating activities was $4.041 million for the six months ended June 30, 2025. This negative figure indicates that core operations were a net user of cash in the first half of the year.
• Investing Cash Flow: Net cash used in investing activities was $7.179 million. This is primarily capital expenditure (CapEx) for property, plant, and equipment, which is necessary for the new business programs they are launching.
• Financing Cash Flow: Net cash provided by financing activities was $1.563 million. This reflects a reliance on external funding, though the company is actively working on a preferred equity refinancing initiative.

The Free Cash Flow Inflection Point

The real opportunity lies in the recent free cash flow (FCF) generation. While the first half of the year was tough, NN, Inc. generated $9.1 million in FCF in the third quarter of 2025 alone, a massive jump from just $0.3 million in the same period last year. This Q3 performance is a strong signal that their cost-reduction programs and working capital actions are hitting the bottom line. Management is guiding for full-year 2025 FCF to be between $14 million and $16 million, which is a clear strength if they hit that target.

Here's the quick math: generating nearly all their guided annual FCF in the second half of the year shows a strong operational turnaround. The risk, still, is their high debt load and the need to refinance. But the positive FCF from each business segment-a key update from their November 2025 business report-is a powerful counter-narrative to the negative operating cash flow from earlier in the year.

For a deeper dive into the company's strategic framework, you can read our full post: Breaking Down NN, Inc. (NNBR) Financial Health: Key Insights for Investors.

Valuation Analysis

You are looking at NN, Inc. (NNBR) and wondering if the recent volatility makes it a bargain or a value trap. The quick answer is that traditional metrics suggest it's undervalued based on its book value and forward earnings before interest, taxes, depreciation, and amortization (EBITDA), but the huge debt load is the real risk factor you must weigh.

NN, Inc.'s stock price has been on a brutal slide this year. As of mid-November 2025, the stock trades around the $1.45 mark, a massive drop from its 52-week high of $4.67 set back in January 2025. That represents a one-year decline of approximately -62.90%. The market is clearly punishing the company for its debt and past performance, but this is exactly where you find potential opportunities if the turnaround plan holds.

Here's the quick math on the key valuation multiples based on November 2025 data:

• Price-to-Book (P/B) Ratio: At 1.43, the stock trades at a small premium to its book value per share of $0.99. This suggests the market sees some value in the assets, but it's not a deep-value play on liquidation.
• Forward P/E Ratio: The forward Price-to-Earnings (P/E) ratio is high at approximately 53.60. Honestly, this metric is less useful right now because the company is still navigating profitability, so earnings are thin and volatile.
• Forward EV/EBITDA: This is the number to watch. With an Enterprise Value (EV) of about $268.26 million and a 2025 Adjusted EBITDA guidance midpoint of $58 million (range of $53 million to $63 million), the forward EV/EBITDA is around 4.63x. This is a very low multiple for a diversified industrial company, suggesting the core business is cheap if they hit their targets.

What this estimate hides is the mountain of total debt, which stands at approximately $154.9 million as of September 2025. That debt is why the EV is so much higher than the market capitalization of about $72.78 million. The low EV/EBITDA is a sign of a leveraged company that is cheap on an operating basis, but the debt risk is defintely elevated.

NN, Inc. does not pay a dividend; the dividend yield is 0.00%. They haven't paid one since 2019. The company is correctly prioritizing cash for operations and debt management, not shareholder distributions. That's a good sign of a realist management team.

Wall Street analysts are split, reflecting the risk/reward profile. The consensus rating is generally a 'Hold' or 'Moderate Buy'. The average 12-month price target is aggressive, ranging from $4.00 to $5.00, which implies a massive upside of over 198% from the current price. This optimism is tied directly to the company hitting its 2025 guidance for Adjusted EBITDA and successfully addressing its preferred equity refinancing efforts, which are intended to strengthen the balance sheet. You can dive deeper into who is taking this bet by Exploring NN, Inc. (NNBR) Investor Profile: Who's Buying and Why?

Risk Factors

You're looking at NN, Inc. (NNBR) and seeing a company in the middle of a serious operational turnaround, but honestly, the near-term risks are significant and tied directly to the global industrial cycle. The core takeaway is this: while management is executing on cost control and new business wins, market volatility is actively undercutting their top-line progress, making the path to sustained profitability defintely challenging.

The company's financial health score is currently rated as weak, and that's reflected in the market's reaction to recent results. You need to focus on two major risk categories: external market pressures and internal financial execution.

External Market and Competition Headwinds

NN, Inc. is heavily exposed to the cyclical nature of its core markets, especially automotive. The volatility in global automotive production and shifting tariff policies are not just theoretical risks; they are impacting the sales numbers right now. For example, the company's Q3 2025 revenue came in at only $103.9 million, missing analyst consensus by a wide margin.

This external pressure has been consistent. Sales have tumbled by an average of 7.4% annually over the last two years, which shows the market trends are working against them in this cycle. Plus, you can't ignore the uncertainty in demand across the electrical and industrial markets, which are key diversification targets for the company.

• Global automotive production volatility.
• Uncertainty in electrical and industrial demand.
• Impact of shifting tariff policies.

Operational and Financial Execution Risks

The biggest internal risk is the continued cash burn, which raises serious questions about the company's ability to achieve sustainable long-term growth. This financial strain is compounded by the fact that new share issuances have diluted shareholder value, contributing to an 18.8% annual decline in earnings per share (EPS) over the last five years. That's a tough number to overcome.

Another major operational hurdle is the successful execution of new program launches. NN, Inc. has a record number of new programs, but any delay in customer launch dates could directly impact their ability to hit the revised full-year 2025 revenue guidance of $420 million to $440 million. They also have to manage the pressure from overcoming record precious metal costs, which squeezes margins.

Here's the quick math on the guidance shift:

Mitigation Strategies and Actionable Progress

To be fair, management isn't sitting still. Their primary mitigation strategy is a relentless focus on cost control and operational efficiency. They are executing on portfolio rationalization-cutting unprofitable and negative cash-flow sales-which helped maintain operating margins even as revenue fell.

They are also aggressively pursuing new business, with a target of launching over 170 sales growth awards in 2025 and 2026. This is the key lever for future growth. The goal is to drive adjusted EBITDA margin expansion, with a target of reaching 14% in Q4 2025, a significant jump from the Q2 2025 adjusted EBITDA margin of 12.2%. You can track the success of these efforts in more detail by reviewing the context in Breaking Down NN, Inc. (NNBR) Financial Health: Key Insights for Investors.

Next step: Check the Q4 2025 earnings release for the actual Adjusted EBITDA margin to see if they hit the 14% target. If they miss, the operational risk is higher than anticipated.

Growth Opportunities

NN, Inc. (NNBR) is nearing a critical inflection point in its business, moving past a period of rationalizing underperforming assets to focus on high-margin, diversified growth. The immediate takeaway is that the strategic pivot into medical and electrical markets, coupled with a record-setting new business pipeline, is expected to drive profitable sales growth and record Adjusted EBITDA in 2025 and 2026.

You're seeing the results of a multi-year transformation plan-the one that included a 20% workforce reduction and the closure of underperforming facilities to create a leaner cost structure. Honestly, this operational discipline is the foundation for the margin resilience we're seeing, not just one-time cuts. For the full fiscal year 2025, the company is maintaining its net sales outlook to range between $430 million and $460 million.

Key Growth Drivers and Market Diversification

The biggest growth driver is the aggressive push into non-automotive sectors, which hedges against the volatility of the traditional passenger vehicle market. NN, Inc.'s expertise in high-precision components, especially in miniaturization and customization, gives it a defintely strong competitive advantage in the medical segment. The company is also expanding its US electrical grid power business.

The new business program is the engine here. The sales and engineering team has grown, and they are converting a massive pipeline into future revenue. Here's the quick math on the near-term potential:

• New Business Wins (2025 Target): $60 million to $70 million
• New Programs Launching (2025): Over 100 programs
• Future Sales from 2025 Launches (Run-Rate): Over $45 million
• Total New Business Pipeline: Over $800 million across 800+ programs

That $800 million pipeline isn't an abstraction; it represents real opportunities in Electrical Power, Vehicle Control, and Medical/Industrial components. They are running a greater than 20% hit rate on closed opportunities, which is a solid conversion rate.

Financial Projections and Strategic Initiatives

The focus on higher-value business is translating directly into profitability. Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for the full year 2025 is expected to reach an annual record, with a guidance range of $53 million to $63 million. This performance is ahead of plan. For example, the adjusted gross margin for the fourth quarter of 2025 is expected to hit 20%, a five-year goal achieved more than two years early.

Still, you need to be a realist: the consensus for full-year 2025 earnings per share (EPS) is a loss of -$0.73. What this estimate hides is that the company is forecasting a return to year-over-year net sales growth in each quarter of 2026.

The company is also actively pursuing strategic initiatives to strengthen the balance sheet and accelerate growth:

They are progressing a preferred equity refinancing initiative to correct and strengthen the balance sheet. Plus, they have an active M&A program in 2025, with several companies in active non-binding diligence for both transformational and smaller tuck-in acquisitions. This is about accelerating scale and growth, not just organic improvement.

For a deeper dive into who is buying NN, Inc. stock now and why, you should read Exploring NN, Inc. (NNBR) Investor Profile: Who's Buying and Why?

Next Step: Your team should model the impact of a $60 million new business win rate on the 2026 revenue forecast by the end of the week.