Good day, and welcome to the NN, Inc. fourth quarter 2025 earnings conference call. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Joseph Kameniti, Investor Relations. Please go ahead.

Thank you, Chloe. Good morning, everyone. Thanks for joining us. I am Joseph Kameniti with the NN, Inc. Investor Relations team, and I would like to thank you for attending today's earnings call and business update. Last evening, we issued a press release announcing our financial results for the fourth quarter and full year ended 12/31/2025, as well as a supplemental presentation, which has been posted to the Investor Relations section of our website. If anyone needs a copy of the press release or the supplemental presentation, you may contact Alpha IR Group at NNBR@alpha-ir.com. Joining us today from NN, Inc.'s management team are Harold C. Bevis, President and Chief Executive Officer; Christopher H. Bohnert, Senior Vice President and Chief Financial Officer; and Timothy M. French, our Senior Vice President and Chief Operating Officer. Please turn to slide two, where you will find our forward-looking statements and disclosure information. Before we begin, I would like for you to take note of the cautionary language regarding forward-looking statements contained in today's press release, supplemental presentation, and the Risk Factors section in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025. The same language applies to comments made on today's conference call, including the Q&A session, as well as the live webcast. Our presentation today will contain forward-looking statements regarding sales, margins, inflation, supply chain constraints, foreign exchange rates, tax rates, acquisitions and divestitures, synergies, cash and cost savings, future operating results, performance of worldwide markets, general economic conditions and economic conditions in the industrial sector, including the potential impacts or ramifications of tariffs, impacts of pandemics and other public health crises and/or military conflicts, the company's financial condition, and other topics. These statements should be used with caution and are subject to various risks and uncertainties, many of which are outside the company's control, which may cause actual results to be materially different from such forward-looking statements. The presentation also includes certain non-GAAP measures as defined by SEC rules. A reconciliation of such non-GAAP measures is contained in the tables in the financial section of the press release and the supplemental presentation. Please turn to slide four, and I will now turn the call over to CEO, Harold C. Bevis.

Thank you, Joe, and good morning, everyone. Thanks for spending a few minutes with us as we give you an update on the business and the state of the transformation in 2026. On slide four, I will begin with spending some time discussing the highlights of the fourth quarter. And Joe, can you advance to slide four? Mine looks like the webcast is slow. Thank you. 2025 marked NN, Inc.'s third consecutive year of improved results, and we were able to increase adjusted EBITDA results toward recent company highs and our adjusted operating income grew meaningfully, showing a significant improvement versus 2024. And we were able to fund a large vintage year of growth programs with our free cash flow. Importantly, we completed the majority of the heavy-spending portion of our transformation plan, which saw us close and consolidate four plants and right-size about 800 people. Second point is we are well underway in showing success in strategically evolving our business portfolio. We are intentionally shifting our sales profile towards higher-value end markets and higher-value capabilities and intentionally shifting away from low-value commodity automotive part-making and certain markets in the automotive arena. We are fixing and/or exiting the unprofitable plants that we inherited and business trips, and we are replacing this business with new wins in desirable areas. Our new business wins program continues to perform well, and we continue to focus it away from commodity auto part business. We have now won more than $200 million worth of new business since the launch of this transformation plan in mid-2023. Ahead of us this year are record levels of program launches. On top of that, we have a pipeline now that stands at over $800 million of high-quality prospects. One fun point that I wanted to point out is that…

Thank you, Harold. Good morning, everyone. Today, I will be presenting our financial information on both a GAAP, or an as-reported basis, and pro forma basis to provide transparency into our operating results, primarily due to the exit of certain unprofitable business in this year and part of last year. I will start on slide seven, where we detail our financial results for the fourth quarter. I will get into the full year as well. Slide seven shows our as-reported GAAP results on the left side, pro forma adjustments in the middle, and pro forma results on the right side, as we have done in previous quarters. As a reminder, we use these adjustments to provide a representation of how management views and makes decisions about our business on a current and go-forward basis. The pro forma specific adjustments to the fourth quarter include last year's contribution from strategically rationalized sales volumes and the impacts of foreign currency translation on our non-U.S. operations. On an as-reported basis, net sales for the quarter were $104.7 million, declining by about $1.8 million versus last year's fourth quarter. On a pro forma basis, accounting for the adjustments I referenced earlier, our net sales increased $1.4 million, up about 1.4% versus the prior-year fourth quarter. Adjusted operating income for the fourth quarter was $3.3 million compared to $2.4 million in last year's fourth quarter. On a pro forma basis, operating income was down slightly to $3.2 million, or about 5.7% versus the prior year. Our adjusted EBITDA was $12.9 million, as Harold mentioned, for the quarter, up from $12.1 million a year ago. On a pro forma basis, adjusted EBITDA increased $1.1 million, or 9.3% year over year. Adjusted EBITDA margin was 12.3% of net sales. This represents about a 100 basis point improvement…

Now turning to slide 10, our Mobile Solutions segment, which covers our machined products business. Net sales for the fourth quarter were $59.3 million compared to the prior year of $63.8 million. Net sales comparisons were primarily impacted by the rationalization of dilutive business and lower volume in North American auto customers, partially offset by favorable foreign exchange effects. For the full year, pro forma net sales of $244.0 million declined $25.0 million, or 9.3%, compared to results of $269.0 million in the prior year. We note that while we observed weakness in the North American auto markets across the year, our sales comparison was largely concentrated to one specific auto part customer which had pushed out volumes due to its own production disruptions. Our fourth quarter adjusted EBITDA in the Mobile Solutions segment was $10.0 million, up slightly versus last year's fourth quarter on a pro forma basis. Quarterly adjusted EBITDA results reflected our successful shedding of unprofitable sales, which has improved the margin mix of the business, combined with overall lower operating costs. These factors have helped drive adjusted EBITDA margins to 16.9% for the quarter, up about 160 basis points from the same period a year ago. For the full year, Mobile Solutions adjusted EBITDA of $33.5 million declined 4%. Notably, adjusted EBITDA margins of 13.7% showed expansion of about 70 basis points for the full year versus full-year 2024, displaying the impact of business rationalization and footprint consolidation. On the new business front, we continued achieving new wins in innovative programs totaling $26.2 million in the fourth quarter and $58.6 million for the full year. We won over 200 individual award programs in 2025, including machined parts in defense and medical markets, as well as high-quality automotive programs focused on more innovative next-generation fuel efficiency for internal combustion powertrains. Thank you. With that, I will turn the call over to Tim, who will discuss our commercial and operational progress. Tim?

Thank you, Chris. I will begin with slide 11. Our new business momentum has continued to build and is now translating into meaningful scale and future growth. As Harold mentioned towards the top of the call, over the trailing three years, we have secured over $200 million of new business wins. With quarterly commercial performance remaining consistently strong across that timeline. Importantly, these awards are coming in at an average gross margin of about 27% and are concentrated in strategic markets where we see the best long-term value. It is worth noting that the implied margins on these wins are meaningfully above the multiyear goal of 20% and higher than current levels for the business. As these programs launch, they will be accretive to the overall margin profile and help support profitability and earnings improvement. Over the last three years, we have fundamentally rebuilt our sales pipeline, which had atrophied in the years before the launch of the transformation. Now our pipeline sits strongly at $800 million of potential opportunities. Our commercial execution is focused on disciplined growth. We are winning where our technology and differentiation matter most, particularly across defense, medical, data center, and other high-reliability applications. Supporting this outlook, our global team of roughly 40 commercial and technical personnel are actively pursuing and executing against the pipeline. These opportunities convert to wins, launch cadence steps up meaningfully. 2026 will be a very big year for launches as we expect to launch over 100 programs. As I mentioned, the new programs are margin accretive and continue to shift our mix towards structurally stronger, higher-reliability end markets while reducing relative exposure to commodity automotive. Overall, the combination of strong bookings, a deep pipeline, and strong launch schedule gives us confidence in the durability and quality of our growth trajectory. Turning…

Did we lose Tim? Operator, can you hear Tim?

Can you not hear me, Harold?

Yeah. I can hear you.

Okay. Well, then just closing, these include robotics, artificial intelligence, automation equipment, as well as opportunities for material and vendor substitution. With that, I will turn the call back over to Harold. Chris, are you able to hear me?

Yeah. I can hear you, Tim.

Harold, is your line muted? Everyone, please stand by while I check the speaker line. Harold, please proceed.

Thank you. Tim, are you there?

Yes. I am.

Okay. I got dropped for some reason. Are you to me now?

Yeah. I completed, and we are ready for you on slide 13.

Thank you. I apologize to the listening group here. I got dropped off the call somehow. I would like to talk about the markets for a moment, starting with the electrical grid and data center market, which is 60% of our sales, that there is a strong market outlook for this year. There are many announcements being made to expand aggressively the data center infrastructure. We participate in this market in the U.S. and in China. There is a big announcement by Amazon and a lot of the data center builders, and we continue to see growth in this area. The next market underneath that on the chart is the China automotive market, where we have been in that market for about twenty years, in the China automotive market and the China commercial vehicle market, and the China data center market now. But the automotive market has a good outlook for the year. It started off at the beginning of the year kind of weak. BYD and Geely being big end OEs that we service, they have had some timing issues in their local market. But this remains a strong element of the NN, Inc. portfolio, both sales for use in China as well as the export market for those vehicles and those parts. On the commercial vehicle side, we expect to see this market improving this year. As I previously mentioned, the growth looks like it is going to be sooner than had been forecast, as orders have come in strong for the first few months of the year already, and there are structural reasons for that if you follow that market, so it looks sustainable. It is not a fluke. Defense electronics is 10% of our business, and it is growing strongly, specifically with an end customer we…

Thank you. We will now begin the question-and-answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. Our first question today comes from John Edward Franzreb with Sidoti. Please go ahead.

Good morning. This is Justin on for John.

Hello, Justin.

Hey. Can you expand on the data center end market opportunity, including any additional color on the size, expected ramp timeline, and margin profile of your first direct data center win?

Yes. We have a couple of product angles into the data center market. We are focused on the cabinetry that houses the equipment and specifically the cooling. It is a very high-precision, micron-tolerance type setup so that the cooling does not escape the cooling system and damage equipment, and it plays right into our capability as a very precise, micron-level tolerance achiever. The first entry point was to become an approved supplier to the equipment-building crowd as a provider of watertight coupling, and it turns out it is very much needed. The cabinets are dense with this type of product. We are putting our hands around the size of the TAM. It is a very specific thing, and we do intend to report out on it in our next public call. We have a team underway with that right now. The second product that we are targeting into the data center market is cable assemblies. At the top of the rack is a distribution of the electricity busbar as well as high-voltage cable assemblies, and we can make those also. The new team we hired at the end of last year from the electrical products background, with Mohammed Farhad as our leader technically, and then Tim Merrill and three other people that are account managers that know the industry well, are now prospecting. We do have formal pipelines, and we do have customers delineated, and that is what we are doing. It is not a long ramp-up either. It is not like the gestation period for getting onto a medical equipment or an automobile or commercial vehicle. It is an immediate ramp-up kind of industry because the supply industry is behind. There is a need for more gigawatts of power in data centers than is in place, so it is an immediate ramp-up business for us. We are quite excited about it.

Very helpful. Thanks for the color there. Maybe shifting gears to transformation, with the heavy lifting behind you, including plant closures and exiting dilutive businesses, what does the roadmap for sustaining sales growth in 2026 look like?

Yeah. So roughly speaking, if you look at the 10-K and the numbers that Chris and his team have put out there, we are going to be doubling our capital spending. The biggest use of our free cash flow is cash interest to service our debt, and the second is CapEx, and so we are increasing the amount of CapEx that we are going to allocate to growth to really continue the paths that we are on. So this year, growth primarily, 85% to 90% is from new wins, and it is going to come from wins that preceded the beginning of the year. We are ramping up business that we already won. This year's wins primarily will benefit 2027 to 2028, with the exception of areas that are immediate ramp-up like data center, like defense ramp-ups that are happening right now, like the volume increases that are going on in commercial vehicle platforms where we are already approved. There is just an increased production rate. So 2026, we can see very well, Justin, and the new wins program for this year will create the outline for 2027 and 2028.

Great. Thanks. Good luck in 2026. I will turn it back.

Thank you, Justin.

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

Congratulations on all the progress. On the kind of the ramp of new business in 2026, I think your chart showed a pretty strong ramp of sort of full program kind of ramp rates. But what is the cadence of ramp in 2026 in terms of revenue this year versus future years?

Yeah. You want to take that one?

Sure. Obviously, when we are ramping up launches, it is not an immediate turn-on of the peak annual sales. So we are launching over 100 programs this year, and we would expect to see somewhere around between $20 million and $25 million of revenue from those launches that occur in 2026. But you also have to keep in mind that we launched programs in 2025 that will continue to escalate as well. But from launches purely in 2026, it will be between $20 million and $25 million of revenue.

Okay. Great. That is very helpful. And then on your CapEx outlook, I think doubling that would put it around $25 million to $30 million. What sort of CapEx activity are you planning, and what program areas do you need CapEx for?

You want to do that, Tim?

Sure. The bulk of our CapEx goes towards growth programs. We will be spending well over $15 million in growth programs, and it is not focused on any specific area. It is tied to a program launch and capability requirements within that. But 75% of our CapEx spending will be focused on capital required for launching new business. Does that answer your question?

Yep. Very good. Thanks, Tim. I guess one last question just on Q1 activity. You mentioned some strength in Q1. How much visibility do you have beyond that? Is Q2 looking strong as well, or is that really hard to say at this point?

We have released orders into the second quarter already, and we have, Rob, a real healthy backlog already. We have a shippable backlog that hit us a little bit by surprise with the strength that happened in commercial vehicles over the last few months. We have forecasts with our customers. Generally, we force specificity through our raw material lead times, so we can already see Q2. Yes. For Q3 and Q4, we do not have firm releases that go out that far, so we just have expectations from our customers, and it is looking to be very, very consistent with the sales guidance we just gave. I wanted to add another point to your last question, Rob, on CapEx. If you look at our net CapEx last year, it was about $10 million, and this year it is going to be about $20 million, and to Tim's point, it is primarily going to be on more growth, funding more growth programs that will help this year and next year, and primarily next year. Primarily, the capital spending for this year will help make 2027 larger because we are basically saying yes to more programs. In fact, we yesterday said yes to a pretty large program that was about $1 million of capital, for example, and it will take about six months to get the machine. It is one machine that we need, that we are out of capacity on, and we already have the load for it. The spending this year, primarily the extra spending, will primarily help next year. The $10 million kind of rate, we had already pre-spent that with programs that we were awarded last year. So absolutely inflecting up intentional growth in these target areas, and it is already hitting the first quarter.

Okay, great. Thank you. I will turn it over.

Thank you.

We will conclude our question-and-answer session, and I would like to turn back to Harold C. Bevis for any closing remarks.

Thank you, Chloe. Thank you, everyone, for staying on the phone for a bit with us, and we are pretty happy to report this update on the business. It is quite positive. It is a nice inflection point for us to be reporting on growth and growth and growth now, and we want to get more growth. It has been our game plan all along to get the ugly restructuring out of the way. We had to part ways with about 800 employees and sever them and pay those severances. We had to close four plants. But it is behind us, and we are thankful for that, and we have a more profitable, cash-generative company now, and we are using it to our advantage to be competitive in the areas where we want to. We are off to a good start. Thank you for your support, and we look forward to speaking with you again in the future. With that, we will end our call for today.

Thank you.

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