NNBR - Earnings call transcript Q4 2024

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Operator

Hello, and welcome to The NN, Inc., Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Stephen Poe, Investor Relations. Please go ahead.

Stephen Poe

Thank you, operator. Good morning, everyone, and thanks for joining us. a NN, you Relations call of the fourth website. for update. Last presentation we been with like and and has quarter Poe our which well evening, thank announcing Relations as ended Investor our to attending issued XXXX, and Stephen full Inc.'s for on December team, Investor section I'd business financial year I'm results release XX, the as press posted today's supplemental earnings a of press Group release copy supplemental a you may IR the needs Alpha presentation, at anyone If the or contact nnbr@alpha-ir.com.

Operating call Our and turn presenters Officer; Vice where X, on information. Harold morning our to the Bohnert, and Executive President this Tim Chief French, President statements Slide Officer; Senior Officer. Please Chris and find Bevis, disclosure Chief you'll and Senior Financial be forward-looking Vice Chief will and President

for that the ask forward-looking supplemental note I'd in filed, statements live Form Q&A to XX, applies begin, section December The in the regarding report today's XXXX. on as presentation ended today's contained we you year language the press made well release, the call, as of the fiscal including same Risk cautionary when language company's take session on conference Before the Factors webcast. and, comments annual of XX-K

supplemental will performance company's and topics. conditions results, rates, A be risks and caution presentation rules. pandemics and control. other with outside and operating defined the are of the markets, divestitures, includes should release CEO, and military Davis. crises of subject Slide acquisitions in worldwide and which section Harold such sales, company's Our are used industrial the of margins, the presentation. Please by financial I other and conditions of impacts public X, measures general exchange the turn the in will condition tax flow, savings, also inflation, non-GAAP economic statements The our and SEC the sector, our These various contain and future regarding reconciliation economic as health non-GAAP contained the final the conflicts today tables forward-looking to statements in and uncertainties, measures foreign now of synergies, presentation turn cash supply to chain rates, is many press constraints, of to and over cost call cash

Harold Bevis

Thank you, Stephen, everyone. and good morning,

and myself, As Q&A and session Chris mentioned, Tim the be have end. at update will an giving French a

Let's go started. get ahead and

I'd new $XXX plants that And we were December and of in a which capital process, of million and loan now. immediate NN's leadership produced of we night will with our If few you turn structure development Chris place, refinancing has new fulsome X-year like enacted later. refresh X underperforming, X new a a at 'XX approximately a that is business is program a could of as year on update, XX% program, results, which plan, give first including business new to a and a now in significant business give new fix-it-or-close-it produced highlights. awards, Page underway you which a top update began on business to last transformation team, ABL in term

we're As including timely significant cost a thing. growth, they're we advancement tariffs look full we XXXX, as and cash year generation, impacts. to barring expect on all outs tariff the of And about fronts, to any talk going

this year. We have business new XX win launching programs

our areas, stamped operational particularly headcount. medical levels, at we add and in CapEx and selectively continue to cash business further and will electrical development our footprint help is to people few new expected our products. to products, drive new normal will Our continue products be And a to we optimize

and moving it's goal chains and complicated, important the all playing jobs of NN. paybacks. slow of administration for the know companies encourage global profits and volumes, about tariffs. the as like from supply papers capital-intensive manufacturing common project to word sense, U.S. for Trump the and It's us like a But reasons safety are Lastly, of out just reshoring in consumer

and factory vehicle billion testing. several and dollars build several For year instance, for car another a to then it takes years

and that So these short-lived positive minimal presidential impact the the I time are am will that give so And exemptions. Most changes an a the lines take X to outside administration. like of us are believe getting going but impacts, long-term far. we've some this duration had with you time generally update already, suppliers Big be parts

Turning and like details plan on on to just more them. a the bit X, Page I'd page little reiterate next X-year our to give you

We them. haven't changed

serve, growth in important. Sales growth. in naturally fall sales is sales And your very we First, don't the industries lap.

this it been now plant a win. You offer in It's of an lot are we've get assumption. And XX first seventh now and line business $XX row program not the and million individual we're a and on X the of that's have, $XX us. components but tests People innovative I and been the which out land for doing million goal is program ending right year properly, programs of in year. manager $XXX target into a to a base underneath and is already working. for top programs to operational launching that. million business, a to many had track quarter. We've that or to is as for in number quarters have Anyone our have big We've mentioned, quarter. and they who's don't to big work accountability. A on do. won We've And been new minimize conservative hustle outlook. we that's of intend far based buildings equipment, some definitely a solutions, back And once. plants, headed of been we And a that end installed launch guidelines to that in place a a at our and to firm of do targets winning us. that indications give when have number programs, leverage of matrix be to We CapEx

component plant operating our cost major to improvement plan Sigma plant, of year, teams our is this and at shared aggressive into and we want our component also. a our reduce continuous combine of condense well, second very Six cost our which programs, footprint, programs Overall, X-year team, every continue are plan working a implement X% reduction. working The Kaizan our is well

is correct our balance Third refresh component to and sheet.

and and ex-China. We us expect $XX China funding money in and CapEx China free each flow and sending million kind have sliced per back invest to to of generate We've to cash off million itself $XX year have, and sufficient of a China quarter, our to and it's goals. it's that in working bit. Again, want our equipment, to building update achieve we very land and give a leverage I'll we installed fine, base

bear goal their share plants all And to is end of self-sustaining it. we generative, happy our Our where flow with overhead are cash burden. we're and free fair have today progress made, be our we've and

ABL are We will dilutive update process closed, correct And and term a fixed being deal and that have loan is an in new Tim give plants, to on. update a that. underway on place will an our or which Chris a big give

last at We're we're and the is X going margins on this year. We've this and in of update the plants. closing outlook it the And closed an up, and process give we full year point tracking to geared in our for X we that. quarter plants, X time. and underway of to on have year at you of our fourth were getting EBITDA All

happy our first and we're to overall, plan, X-year full we're So our it. with year recommitting and

the here, year another this need I turn couple this couple complete, formative think of we're is of judgment is you we people we more in is been year our If areas quickly about we've trying quarters still Page be XX% business in, being And a X, around transformation parts to plan. nonautomotive. to around are we will the of leadership think and format X Through complete. a of primarily using for mentioned. We of XX% where to fixing new a our unprofitable new first track is us we're team our our complete. grow that of XX% This as And a us.

doing money which our a turnaround the time this that mid-'XX year's those all them amount year, until EBITDA outlook. on has on 'XX, see been in this and can Page on is of underperforming, X, of graphic remarkable planning from are plants short here a making what in at You were

with it. We you. shed bridge a we're had pleased to bit So little for will Chris of which business,

drive to is goal and we doing that. our the gross been have up So margins,

We have a long-term goal of XX%.

all to that's to banker. we natural part pretty piece our company. we're So ways sales -- more We had with and own, our balance And we so reported get Chris do. On win on our now. we're loan. that year. last the we're enough sheet, China underway own, I previously And on with we also to with growing very pretty the on have is to did now took putting we and their and ABL a that much this way tailwinds starting and have under much the that working last we well. growing And work year-over-year business And started term we tracking

We is that and have some of now rate. into run our launching won business the we've going

So overall, on is transformation we believe track. that our

I'd bit to On of into And we that go a like Chief start done what update underperforming French, like to were front kind an about to a the got Officer, led our Tim? of and page, more us. Tim the group, and we finish, to that what's little initiative plants please. I'd in request Tim next have Operating who's give the detail

Tim French

Good you, everyone. morning, Thank Harold.

X. talk I'll said, Slide Harold to As

followed "Group are million of $XXX those adjusted These being familiar progress, on our the locations XXXX. with X." For revenue and of million you that EBITDA responsible in you'll negative the shown. slide be facilities are for Their of $XX.X term listed of have

customer giving impacting they and ability due of the it scorecards, backlogs. which unfavorable each impacting And our significant to were us grow past financial relationships is negatively addition poor commercially. In was our to because them customer had performance, ratings

well leadership in these X manage service decided facilities, QX. The efforts other Dowagiac unprofitable, that gain transferred concluded improvements last and on to these in-depth in Mexico. and we we've as well in intensely to these improvements required focus from business functional operational facilities portions Juarez, business the while inventory to the equipment an and approval included facilities, the quarters, have the us facility. in X in of improving that we we the to division. Portion Both has focused in Production Mobile analysis, We Dowagiac, grades as pricing, Juarez, to reinstalled KPI increased Michigan; performance interaction. banks their our staff, This We decided or the been on build were customer. service of closed determined the After as had trackers track related are are shed to we and and removed, we the alternative top and of equipment businesses on facilities. facilities the and Over close engineering implemented to processes. on focused as remaining X and organizational customer PPAP in the has locations.

scorecards actions EBITDA a over last with to wins. that's from successful. been help closures. comes we about now when our quarters As commercial the It's all losing the our really team. These losing $XXX,XXX. customers, have a $XX In to benefiting million facilities result, inclusive big green securing business have XXXX, extremely went adjusted That's new it of just the X and of

still adjusted every Our with with this that to having facilities. $X looking is happy in previously of group the XXXX, free We're stated, to result, be generating focus specifically need and expected million positive working. on noting facility in It's plan flow, over is million remaining X revenue as adjusted $XX forward worth we operational transformation approximately improving pretty but Harold cash to EBITDA EBITDA.

the at been But facility new free facility Our business. capacity. is profitability and has to flow. will stabilize operating This very awarded completed, the will once be stand-alone Marnaz, France cash close SOP the

or with enhancements transforming continuous program competitiveness. We're Each will Harold success to is the efforts. these of improvement stopping facilities, economic deliver facilities we're underperforming our we're part While of not mentioned early our consistent done. that pleased our not larger in a that slowing earlier

very walk XXXX. All in identified X, when for Group detail. facility of closure, to the excited can Chris we one all, execute our have in about turn performance we're forward we we through over with financial them. With that, seen happy the and we've more do Chris? to we're to lease with what Additionally, I'll which improvements the going in it expires more to plan

Christopher Bohnert

everyone. Today, pro Tim. both information presenting basis. GAAP a morning, and you, Good on I'll a Thank be forma

facility began XXXX we after presenting performance and this in reminder, to of Lubbock business the depiction July. past of As sale a a pro quarter give representation better the our our forma and operating third of financial results

fourth in of arrived and the our presentation. Today, we our other GAAP that non-GAAP we the appendix ongoing adjustments have made fourth detail to results reporting start also in of I'll sales Starting We $XXX.X detailed consolidated in about our on quarter. X, what I'll X% quarter business. We our consider that Slide where the came pro to net QX forma million, to translate be with the adjustments last compared for our a results at reflecting as-reported numbers, decline year.

by XXXX. While margin efficiencies continue million, volumes, our a macro strategically environment reported an expansion the operating This lower operational we our from us of profitability profitability, $X.X adjusted dynamic million. operating the the drive prior sales. XX% net was rationalized $XX over increase improvement and allowing income where sale management, to $X.X delivered of top facility sales loss underscores million disciplined to quarter, strong despite was line impacted the and as performance improve noted we on in year slide. Adjusted million the and to -- million, a operating improved of $X.X in QX EBITDA the to cost commitment grew Adjusted a Lubbock $XX.X

Now the to a of which of sale we shifting a on These $XXX.X the center right-hand cost our outlined Lubbock forma which pro foreign compared forma On pro of income the operating and of adjusted the of our a basis, side, last pro page. QX results and the exchange million, sales million, volume EBITDA year-over-year. quarter ability rationalized table items, in adjusts to XX% net and initiatives. reflected through the compared the On operating $XX.X highlight 'XX. On efficiency key the impacts, diligent fourth for up of expansion at million X% strengthening $X.X increase including facility, a $X.X operations basis, pro adjusted basis, year. results million to drive an forma forma quarter margin fourth was improvement grew our to underlying to

detail Slide turning our to Now X, results the for consolidated we full year.

EBITDA net X% of XXXX. by our impact we top the year prior driven reported onetime expand sales year-over-year, volume of by this grew to decline declining in solid impacts. Despite year and adjusted foreign This For operating the full up EBITDA us $X.X $XXX.X our Lubbock million $X.X $XX.X our to marking million, basis XX.X%, a settlement the was X.X% fiscal allowed focus line improvements adjusted to of was points versus the XXXX. for sale deliver returns. Adjusted XXX year, full year-over-year and compared million, strategic customer income Adjusted profitability to on expanded the XX% increase up and results million, compression, from exchange a margin rationalization, year. in XX% last facility, operational

forma net a to million our pro forma of ongoing versus less from essentially year. XX% increase momentum, EBITDA to operational a detailed $X has the XXXX, view The by were year margin a the solid operating results positive our business last what and evidenced strong income adjusted XX% year. declining a forma basis for revenues. profitability, points we on on million X.X% expanded results largely XXXX, XXX prior was operating adjusted numbers, basis onetime as flat controlling compared forma of EBITDA pro EBITDA and income same XX.X% pro flat effect adjusted on the than was to Moving was earlier, sales had and our Adjusted up provide or largely million, million, to on adjusted X.X%. Pro $X.X items $XX.X full $XXX.X which

pro the quarter incremental to of million income segment of we compared as-reported facility. XX. Fourth revenue million prior inclusion sale by the to the down million EBITDA, EBITDA primarily now was grow Power primarily compared forma further our fourth Lubbock sales again, quarterly $XXX,XXX On Slide $XX.X quarter was The million decline $XX.X X%. Power Lubbock prior from basis, On Lubbock. new with to margins year, and wins the of again, full a net in our to in the in or on results, and and sales year adjusted year turn quarter, elimination sales $X.X starting a ahead, enhance our sale cost $X.X million of leverage. I'll dilutive the were to Power slightly $XXX.X Solutions net Looking by in a of a increased basis, expect million, EBITDA the segment volumes slightly million, basis, facility. was provide totaled our down due fixed X%. Solutions million business year. profit will pro Solutions adjusted driven last sale On the forma pro increased forma operating the fourth million. revenue slightly basis, On prior due $X.X adjusted $XXX.X year year's $X.X to by $X.X compared full or

the Solutions expanding from For million, EBITDA adjusted increased XX.X% $XX with forma to up grew a prior million, increase in to million full adjusted Solutions margins year, million year, XX.X%. from year-over-year. On an to the $XX.X Power pro $XX $XX.X Power EBITDA basis,

X%. The of $X.X in Solutions $XX the million reflects Now million, of and benefits period. increase XX. metrics our which increase also impacted of a prior I'll fourth improve our by The in foreign and the EBITDA quarter the financial QX the the expanded our sales year, in margins marking the to revenue. contributed exited. Adjusted EBITDA the adjusted from $XX.X growth of up over XXX turning structure basis to segment. year million that increases slight cost actions decline headwinds Mobile Further, primarily the for of nearly was million. productivity. $XX.X $X.X XXXX. highlight in margin to $X.X in rationalization some strong compared points slight quarter offset our to exchange Pricing from quarter the of fourth was was fourth reduction decline XX.X%, million of the prior for decline impacts million Revenue to quarter net the EBITDA sales volume million, we delivered just driven in XX.X% Adjusted in was $X.X by a volume fourth unprofitable of business the and Slide

from million, XXXX, of by full impacted XXXX, primarily The well the unfavorable revenue $XXX.X and year of onetime $X.X exit as as sales was down impacts $XXX.X customer to business, For million, which unprofitable strategic a due in was fiscal Mobile Solutions the exchange settlement XXXX. million. $X.X in million foreign decrease

our by a $X.X from offset this basis, grew $X.X demand China revenue which increasing partially $XX.X million, the year However, up forma the to more full with our decreased than strategic EBITDA pro or continue XX.X%. to year Adjusted of adjusted see million full in throughout year. On EBITDA fourth points the and basis impact margins of X.X%. XX% business. million cost-out growth was from to by full Similar operations, the our of unprofitable from exit improving reflect XXXX, XXX $XX.X the to actions for million year benefit by quarter, results

beyond Slide to improvements, Harold As that was business, adjusted the our a execute on to in reminder, XX, mentioned where which we and our beating in our EBITDA towards transformation. Please expanding turn achieve North sights ongoing minimum XX% an with that and American our as on are sheet margin goal several we initial goals further tracking I'll a update Solutions balance quarters Mobile earlier. provide

sheet, As previously refinancing our mentioned, balance progress having of our improving ABL executed at a XXXX. year-end we made on

which our now is Our well loan, focus underway. on is term refinancing

cost securing process transformation with terms centered organic a financial our create capital, that helps allow the the goals refinancing strategic operational pursue execute is M&A and and appropriate. potentially lowering of full a opportunities flexibility favorable through growth additional alongside are improved capital navigate as deliver of enhancing our By opportunities overall once more our we us structure, we by to will our achieving loan the that to timing cost capacity aim lenders, First, us potential. our on

effort of with and solid term in we take we've pool after financing Second, ways a partners, then, completing advantage interested to progress. banking Since lenders potential of process rebooted our the made loan late ABL the the term XXXX loan after and relaunching investment options. significant refinancing parting

in the to We year. conclude first this this sometime of process half expect

equity we'll a value paying as our of allow capital Finally, we deleveraging and view holders. We modifications An strategy position to optimization. also creating forward remain us balance our for while committed over sheet efforts for broader down structure equity to we these potential holistic as continue to part to debt, will move and to transformation time. our evaluate structure improved continue preferred

briefly Now Slide turn where to XX, our talk about XXXX. I'll outlook please for

of in million, the As a million $XX 'XX, wins million $XXX full million with million we're market of to midpoint. markets trade the fluid These as cause key turn a over hold markets XXXX drive variable and as a today, ranges at lower and policy. that the remain to the Operator? the very our is range our the $XX plan. Thank transformation and stable with to to range business $XX assume and year, elements a new for of aligned experiencing to sales reminder, the of would call $XXX operator EBITDA note approximately and the face we that And significant central levels. We Current year our change. We the global in they they you. similarly of if currencies the downstream our factors results in same the external very projecting it adjusted not nearly to these though conditions, I'll and ranges, back are shifting that, of the net early volatility half likely international market us environment and from conditions questions. remain to deviate unpredictable the subject the for will where rest of note of impact are

Operator

[Operator Gomes Capital. from with Instructions] comes Joe question NOBLE Today's first

Joseph Gomes

margin, $X.X job tremendous at EBITDA about XX% million, to kind looking roughly these into And translates of my wanted out of you're adjusted have of X $XX done a which just with So Group the I kind the of of million, 'XX your almost of roughly turnaround plants, sales there. of EBITDA outlook, revenue. view in guys the X% a start talking

you entire get that take margin plants how EBITDA where those you adjusted able level one, currently is, the to company? question to the were that, the does of up And overall? for margin do the high can do are you kind if that you at XX% think So EBITDA

Harold Bevis

That's to of amount I'll mean, Chris. us, have For those Yes. X open part capacity. Joe, okay? a plants, decent I start, Tim,

revenue And fixes here. there's so cost and

we've have some the equipment equipment. We discarded plants closures, process and the In plant of machinery. in other relocating some upgraded good the older by of the these equipment, we've of

So compete we're with equipment locations. of And to better built the out we're size business up able development of the opportunities better that those profile, plants. the we've tracking for those

part with of go-forward kind our optimization of a So getting and revenue the to has up. revenue do

Our we been reshoring with Joe, And is looks with are tariffs to first the the the programs, reshoring it launching in the increasing here, China from the facts, in slightly that's XX is the happening all of -- U.S. Tim, and are Kentwood? one quarter that's activities.

Tim French

Yes, it is.

Harold Bevis

Yes.

discrete programs from XX soil, all have we've help. have are and secured we that to going So moved that China U.S. those to

it your you give cents. Tim, it And of to to over revenue. hand I'll part two So is

Tim French

Yes.

base position our unsellable it those put scorecard. have due basically backlog, And a with you in with one we think the the and key keep performance the mind Group what really of at through. the of is financial X one things if significant I it in facilities But customer was of existing of a causes us our existing of of showed didn't almost very underlying to favorable lot past that customers. look because bad was the rendered the

are to group. able teams scorecards we've to green commercial to now now our have able So with backlogs customers, and eliminate that significant been effectively the that sell

the So getting us still which exactly by those what the saying I was next with room more base shift although that opened going additional Harold for is customers. now facilities is where operational a in for position is was there's to with volume, improvements, some we've favorable door the

Joseph Gomes

are Great. medical I businesses -- electrical wanted also update to give and a Harold, us and kind components the here. unfolding of components on touch how the little base maybe those

Harold Bevis

Yes.

now. So to organically. we have million about to to goals million medical $XX We're at -- grow right $XX win sub for that

$XX pipeline. We've an a to have about We It's get high able -- quality. million approved been supplier. become

an we The to products we're selling. the big And we're a on still step machine have customers going wanted into And of that you're through with products. approval and products to become for first track. is supplier get approved really we stamp that processes that couple

so the opportunities gradual. and getting it's -- then looking And approval then securing the at wins, the

Medical million of We then $XX another million. have year this $X we'll a year, $X wins, a million and get goal in an get to to

is So that we're We in? small on track, plants to is some do, we're -- it XX but person. products medical we're medical the Medical of need on track. have out another shipping things now We Tim, just and products making

Tim French

Yes.

Harold Bevis

supplier. products, So we're shipping we're got out electrical our in our products win an stamped first a it's increasing our and medical products now, of of similar XX approved story Europe plants. medical and certifications. On We've we're except for largely already

have products us we of that so in in well. Stamped pipelines are good for the on for and as it's also And getting matter action, automotive. a

], It's of as the our "[ stamped The of The auto part just say, good company Gee, automotive that's part of stamped Christmas Merry or so part part is is people capital auto. the is of really not intensive." medical. your as true. intensive electrical Some business capital machine

in the stamped that us dye own And lot So price. by in is our times, model good business part piece the back the the dyes. financing machines the business the ubiquitous are has and customization in amortize dyes the customers take a those we into a of and dyes make letting

for we're effort added big some And is tonnage thing both the we a the products some after longer going our One expanding busbar. stamped, have in and So in equipment after. big China and high Busbar States, needed we beds presses. United couple dedicated and a things we're our all of it's is electrical there. We've just grid. on aperture. A

per by buildup, just down that wins of and So through, same trying year. going it's it a gradual we're the to chop Joe, we're amount

And far, tracking goals. we're to so our

Joseph Gomes

And more again, if get for to your me, one Harold, Great. wanted here. view, your I insight just may. kind of

tariffs. about almost XX-some-odd report orders Class truck X supposedly on concerned came year-over-year, recent percent So down XX% extremely month-over-month, out people

press dollars. You through. not could they see through thousands, Passenger reports, the thousands vehicle go of if or up stay prices tens tariffs of go

trying here. any day, next your know potentially way trying you thinking and thing the of just that. get guys day. impact to to go I whole your things on one at how Just off get and company thoughts on to it's are of view your this The around of seem the But the fluid. tariffs kind looking could this very

Harold Bevis

welcome. not trucks, question. much your to you're Yes, very answer I'll We're Class X tethered but

work to Our trucks. commercial is vehicle tethered business

engine. So to liter Ford our biggest Cummins engine, GM's the Godzilla engine tethered that we're -- we're V. X.X, on diesel a is the Gen X.X

So we're primarily clear engines. for Cummins a X to be you a to of big have there's industry have And have something learned parts Class all as engine them. X into work Class in to COVID, you like the go trucks, XXX,XXX that also, truck. build the vehicle. Volvo, parts truck on the PACCAR, engines, But And during participant

right, can't for just I don't okay, You all steering I'm except a or say, have something. wheel

clear and lot So to you trucks have of big parts. build the have a to be

Class up asset. goes it's of the a and And the in to they trucks Class have sensitive asset fleets back payback they're businesses, that buyers to disruptions chain time a on buy the the now. into And happening supply like the people buy. X are that investment are so very have And right trucks because majority who are the the trucks, bad to price, primarily the if X off

trucks, some truck. and really world. it. delivery participating the work Class We're and have in Class X demand delivery supply X. X vans, garbage trucks, So I in not irregularity not We're X, into We're you think the Class in

of impacted, our deal set the Joe, business a be issues to crowd, to they truck have So with. but different X isn't Class going

Operator

The with Capital Street question Rob Brown from Markets. Lake next comes

Robert Brown

sort long-term Congratulations progress. happen On on your get point? XX% of all what margin goal, to gross there from the to this has

Harold Bevis

Good Yes. question. it of X, Part group X, of of Group be Tim's X. soon to of is group

of the amongst is and plants make When -- getting you're kidding. Part not next dedicated also this on by is procurement X versus every that together. no, So And get what's and next? question this. do we Tim overhead to has But to math sharing the have plant Group all kind putting the it consolidation of a Joe staff revenue of structures scheduling up asked dilutive. Tim of if our problem I'm rid what's the it's

of So common other common a because structure close the overhead each type amongst because implementing common -- they of either manufacturing he's or plants do. to shared they're

when alluded or to they're either/or in will but and onboarding the case And very be, and page, the which plant very, it need Tim in where sell we And it's So it a win, secured that. effectively go ramping that his plant. of French, above the both. is up. to France plant on they've very, fully development actually will game-changing average It out already isn't

And Now to plant plant, to from plant then you're down hoping one and -- large we're one Ohio. it's that Wellington, that's dilutive, that's reshoring. benefit

out pretty big but close to positive that We into EBITDA, We're the have run does to it plant. plant. dilutive going the pipeline to having a structure your is nubbed cost make It point.

is so of the part fixing it. And diluters

whole which the in QX, of program accretive is and to to, business, onboard award we onboard of to Chris referring installed did structure, accretive new intent which leverage is business the in did that's we and The year our and cost the was 'XX. business other part

So X-year plan. a we have

onboard then more we're a of business The you this first to books, we if requires win And what in of tracked have do, it impatient have patience is it's and the track. a kind And case little little of case where -- of then bit that's that we and to will. to Wellington, in because and France we and we're wanted on bit other year the plant. special plants. it We with a it. And

So Not will out? to wait many. play how many we years -- that long for how

now one is on Tim's to the like one radar of you that's fix. Tim, would add to screen right that that kind to So anything question?

Tim French

No, it you Harold. I think covered all,

You hit key all points. the

Harold Bevis

Thank you.

Robert Brown

on Great. do on tariffs? and move then And things that U.S. Yes, flexibility to and kind on maybe Or you the reshoring of or comprehensive. much to of versa of mitigation have with business business longer a the adjusting tariffs locations international some as is you the how process? vice this kind tariffs can sort your with comes, very of, the, these from around -- to deal your do between

Harold Bevis

it of power, -- a concern part tariffs is by our very, vehicle into very you product part cross-border because go is pretty the a any doesn't substitutions to doesn't of company issues. The We're it. to it's makers to -- a plague. go OE It's that's issues, require any medical. tied the cost significant our the impacted through impact parts. have require the process. is OE They automotive for biggest safety and our PPAP the slow any a understand don't and those It do automotive our through steering Well, impact to tests. it like avoid We and braking, the -- go to crash through have

So once system, change. locked into high a you're kind there's resistance a to of

mainly for it's awards are and taking that by supply fall right to I proactive -- referred The going move just volume we long-term won soil. the cost ramping U.S. systems their to the maker that simplify now they're medium sports through the reshore. excuse term, it, because initiative X me, in medium-duty and of cars earlier, on short people chain we up fuel the cars, in decided Tier doing they are were their sports So a to and that customers those of

really see we don't So lot. a

and of have impacts You tariffs. the indirect direct

have problem, of to materials. be volume. We everybody's But or anyone a of are and -- their minimal of the if direct pipeline. it on a kind So for at not. a vehicles are terms on indirect problem can on structure they're in won't our what clear is impact impact build The the minimal being to the our clear problem bill to to our causes That impacts direct anyone. if OE, happens of volumes the costs build OE cost

anything quickly including gave So exposure. doing a that's a flip-flopping where anything No reprieve, in really the another not last and quick we And It's right papers, them lot majority haven't thing. the now. heard with there's X, Trump our President of of yet. big one's the night

right So now. happening nothing major

Our exposure probably then indirect Bob. probably And our topic, also the it's only of supply chains. be comment, direct It minimal stamp a today, but that's time so will and my well. industry as now right should it really I minimal based, change and date minimal, because and hits fluid can are we have just is

Robert Brown

question, on the is Power Solutions guess, last business. The I Great.

the You've the eliminated see do segment? trends I some guess, market How demand capacity you there. in revenue that and

Harold Bevis

Yes.

on thing to Eaton The centers, up is kind Group person also the whole grid clearly to data have a Schneider. power. And with control on Itron, an upgraded. putting business, strain reporters still So strong need of transformer has if and year a though buys even any grid demand we grid the lot AI electrical the the street The are street data people be expect the EV, infrastructure for Honeywell that the that an and of electrical in are investment. plateauing, EVs, grid. EVs EV is there The speak center a to -- the -- and

And with wasn't so grid type there's of -- demand. installed the these

So primarily strong our grid very business on still -- is we're edge.

our that to we're we we're distribution. as those well. the increased circuit make on in of is We're that wins into business strong, new And amount So into grid edge. business And we've have decent products. panels, capacity a in we're breaker the and meters,

pretty 'XX So Solutions the strong. outlook is in for Power

Operator

Riley. Crawford comes next question from Mike with B. The

Mike Crawford

versus maybe some and like been regarding you additional about how Can the wins of deliveries now much on-time the been to securing? your past any talk metrics attributable deliveries, you've in that's

Harold Bevis

you that will one? Tim, take

Tim French

what by past just have a is the the the Sure. due can we percentage. we We backlog not past Group don't board. in dropped backlogs. I And track our on time quoting of significantly, it due and as process X in full but tell track across But you standard in

green past or ratings allowed would in-full move backlogs be from the an indication all to delivery an scorecards of has what as that's So to our favorable get and able due metric. -- we've been of And on-time now from us the customers that forward.

in at are process this and in-full an it on-time implementing point, the But format. we don't We of in track that metric.

Mike Crawford

more... a you've is due increase wins? those And reduced an backlogs past you seen have and order correlation that in between new Or where seen

Tim French

factors our little able business as with we're fact board, contributing wins business you're been that -- hold our Yes. Group new across the a customer, has green X, new business as of Definitely. over basically or aren't what's to when Definitely that we're that facilities seen when don't generate in part favorable a hold. able scorecard to not from existing Because while been and wins off you new we've ones. the the we've a new business seen last new well called have one wins. the of And new a customers you're business on correlation. to generate rating of Even the

Harold Bevis

them. existing majority were wins Mike. all I with XX% on the almost have and business our our been can there, help with on XX customers. customers. our Tim a we top the hold new wins new in stats been little when And of came of And door, of with have the I

we on So I off down Tier people list, and Itron hold Cummins hold where and and secured Sensata, business could the new and with. top business wins new we go serve right now the were came DENSO, all X

the hold. level, Tim, think, the our where at business customers majority were on we highest I So new of come wins have from

Tim French

that opened to it again. start for winning that's attempting getting make hold, was us by And business I door Exactly. the off is point new the to

Mike Crawford

or what direction. being customers out seeing we're targeting, U.S.? not of breakdown shipped the that of think Africa China majority exported be between to Great. to stays But I there then the China is your goes be now end some or other but in where customers products what In it China the markets might is are JV, just in also in what China, Brazil products Europe. of to a and China. there And their stay to think vast shift But those made I

Harold Bevis

Yes.

ICE comment that on is profitable China XX Mike. leaving of getting are driving much the JV, are doing that the the does competitive BYD, true million does there's of final is as And to that have that European movement vehicles. and the operations which we up is So guys at Wall. few I largest U.S. But The point, export look BYD their top of between are more would say little than then big and parts there's systems output end about a you and assembly with in in Geely JV instance. the OEs, $XXX market. makes it, The around out ending And the Great countries the are the hybrid China, one And world. JV European if are that our into them which Europe, China that. Europe that and for that your plants. of revenue Weifu, Xs many They're your it exported for a bit of ships topic, their now. out go country the customer rebalancing components Tier seeing the

them, steering shifting these load braking make in systems, China of in systems, see to things versus making instance, them Germany. we for China kind to So

automotive on part making through in loads the going just the so And roof. China are

We are at capacity the in JV.

competitive. We entity, capacity The the we're are adding at globally capacity what cost do. are our they foreign in and in They're costs wholly-owned lowest areas. at both

we for very profitable us So to see demand coming operations. both They're well. as

Operator

Sidoti with Company. next comes John The & Franzreb question from

John Franzreb

wins. written business that Or Are like the are target? they to I'd XX% at Harold, start that being with XX% threshold? new approaching they

Harold Bevis

gross the margins, talking John? You're

John Franzreb

Yes, sir.

Harold Bevis

Yes, sir. being above written that. They're

required. look actual we We if look the some at caps, cost. ROI also We and floors and at is have CapEx

at to an add So variable are has have just we're capacity already if or the costs add with look have expensed machine to to it have and open we carry supervision, other that if that been quoting so is add the If business it. we all it has equipment, and we and the machine cost. into and a shift open overhead we that associated cost. And varies that,

new we it don't XX%. get. if what return we the we that and from got, new also be. The and that from we at walked XX% we much that million opportunity think of wins probably look and of see can We in And would and We the biggest our what of year, also away have $XXX And cost of from opportunity made, we above their we cases, be wins cost-based the economics. it walked but needed. primarily pricing. quarter, got bottom market then as biggest do X-tiered $XX of is wasn't because And we there. pricing, last ROIs, because is the as So bear at is it's about in the price million ROI Most had the will look on quotes we pricing. structure we we the bottom we away fourth X-tiered we them walked had, away then the spending it all might

calculated because of exact what getting give I and John. business. that you So And part new it. is contribution big margins we it it future, big Part getting would question half? can't the business in. Chris, we'll that part earlier are a the the in we is cost of gross And too. down, new of haven't was A ratios is the picking. clearly it asked costs, -- cherry Tim you of up part report Half we're on bringing our the guess? more and

Christopher Bohnert

roughly half. about Yes. and half Yes,

John Franzreb

might -- have this. color, I just And good Harold. missed That's

that? Regarding the leased? the time the And are they sales or you asset in kind disclosed Would facilities line future? of owned closings, those be have of plant

Harold Bevis

want to that? you do Tim, take

Tim French

for got operation Dowagiac has Yes. in currently be QX prepping sale. facility facility early listed have an machinery Production leased We've facility, that that should ended relocation. but is people the stopped in packaging building is it in and still owned the We've a is should -- estimate. we Juarez. cease production. for It current

Harold Bevis

close. to other we John, going And that plant, we're the mentioned

because plant that in as know leased. the was said haven't it. one the don't -- reported We It's name earlier, the plant of people we the

John Franzreb

last the on loan regarding preferred? updated one any and thoughts question sheet, the of update the the term refinancing timing any of on balance guess I the

Harold Bevis

Yes, Chris?

Christopher Bohnert

Yes, the in we're the John. of middle Thanks, refinance. Yes.

mentioned, first interest We quite bit it this get a and we're expecting done half I had in of once rebooted I everything. the to year. As of Harold

John. And refinance, got of options on different lot the we so a

take that a of narrowed yet, third the lot step screen, report it's and So on we we're the we'll the took at with kind we're prefs our in radar structure heading on as very part where refinance. and a look now. Not pleased look at our it those to options but down, a and of right total cap

Harold Bevis

China disallowed and full to domiciled U.S. for -- the we pivoted, with we on the in much to receivables John, -- value get the because assets doing work China I'd that that the pretty China were say we are them debt.

And local preferred. balance our set of so having local cash up we turned China before own we and the their in to sheet the extracting first get to do after attention banking them financing out got and

on send getting and So to for company the and we're are just their ATM the Chris. into their big own to own it right We're do back loan now China to an funding working the term trying overall X things machine. money turn then on

John Franzreb

enough, Fair Harold.

Operator

turn back management our would now over session. the I remarks. to concludes This call to for question-and-answer like closing

Harold Bevis

and insight our questions. how Appreciate to Thank us you after that, to you, some in QX. With the you, everyone, forward time, for look the on reporting operator. better thank we next and it, gave report even progress good

Operator

Thank has for conference today's now The you concluded. presentation. attending

You may now disconnect your lines.

NN (NNBR) 6 Mar 252024 Q4 Earnings call transcript