NNBR 10-K & 10-Q changes, risk factors and insider trading

•fluctuations in interest rates and currency exchange rates, including the relative strength or weakness of the U.S. dollar against foreign currencies that are important to our business;

•differing labor regulations;

We currently source certain raw materials from international suppliers. Import tariffs, taxes, customs duties and/or other trade regulations imposed by the U.S. government on foreign countries, or by foreign countries on the U.S., could significantly increase the prices we pay for raw materials. Changes in U.S. administrative policy have led, and may continue to lead, to significant increases in tariffs for imported goods among other possible changes, which has and may continue to result in foreign governments proposing or implementing their own retaliatory tariffs on goods imported from the U.S. Additionally, our customers’ businesses may be negatively impacted by import tariffs, taxes, customs duties and/or other trade regulations imposed by the U.S. government on foreign countries or by foreign countries on the U.S., which could, in turn, reduce our customers’ demand for the components that we manufacture for them. Any reduction in customer demand for our components as a result of such tariffs, taxes, customs duties and/or other trade regulations, could have a material adverse effect on our business, prospects, financial condition, results of operations, cash flows or liquidity. We cannot predict whether, and to what extent, there may be changes to international trade agreements or whether quotas, duties, tariffs, exchange controls or other restrictions on our products will be changed or imposed. See “—Changes in U.S. administrative policy, including the imposition of or increases in tariffs, changes to existing trade agreements and any resulting changes in international trade relations, may have an adverse effect on our business.”

Approximately 46% of our revenues are denominated in foreign currencies, which may result in additional risk of fluctuating currency values and exchange rates and controls on currency exchange. Changes in the value of foreign currencies could increase our U.S. dollar costs for, or reduce our U.S. dollar revenues from, our foreign operations. Any increased costs or reduced revenues as a result of foreign currency fluctuations could affect our profits. In 2025, the U.S. dollar weakened against foreign currencies which unfavorably affected our revenue by $0.6 million. In contrast, a weakening of the U.S. dollar may beneficially affect our business, prospects, financial condition, results of operations, or cash flows.

Increased prices or significant shortages of the commodities that we use in our businesses have had, and could continue to have, a material adverse effect on our business, prospects, financial condition, liquidity, results of operations or cash flows.

We purchase large quantities of steel, aluminum, alloy and other metal commodities, for the manufacture of our products. We also purchase significant quantities of copper and precious metals, including gold and silver used in the manufacture of certain of our products. Historically, prices for commodities and precious metals have fluctuated, however prices for certain metals, including, but not limited to, silver, have recently shown increased volatility. Significant price increases for these commodities and precious metals have, and could continue to have, an adverse effect on our liquidity and operating profits if we cannot timely mitigate the price increases by successfully sourcing lower cost commodities or precious metals or by passing the increased costs on to customers. Shortages or other disruptions in the supply of these commodities or precious metals could also delay sales or increase costs.

Our business depends upon good relations with our employees. Work stoppages, slowdowns or legal action by our employees represented by labor councils or unions, as applicable, may have a material adverse effect on our business, financial condition, results of operations and cash flows.

Certain of our production employees working outside the United States are represented by labor councils or unions. Although we believe that employee and labor councils and/or unions relations are generally positive, there is no assurance that this will continue in the future, and problems or changes affecting employees in certain locations may affect relations with our employees at other locations. We may also be subject to labor union efforts to organize groups of our employees from time to time. These organizational efforts, if successful, decrease our operational flexibility, which could adversely affect our operating efficiency. In addition, our response to any organizational efforts could be perceived negatively and harm our business and reputation. Work stoppages may also be caused by the inability of national unions and the governments of countries in which we operate from reaching agreement and are outside of our control. Labor disputes, work stoppages or other disruptions in our production or in our supply chain could have a material adverse effect on our customer relations, our productivity, the profitability of our facilities and on our operations as a whole, resulting in an adverse impact on our business, financial condition, results of operations and cash flows.

We and the third parties with whom we work are subject to numerous, evolving U.S. and foreign laws, regulations, and rules, contractual obligations, industry standards, policies and other obligations related to data privacy and security. Our (or the third parties with whom we work) actual or perceived failure to comply with such obligations could materially adversely affect our business, financial condition, results of operations, and reputation.

We and the third parties with whom we work are, and may increasingly become, subject to various laws, rules, regulations, treaties, decisions and industry standards, as well as contractual obligations, relating to data privacy and security in the jurisdictions in which we operate.

In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, privacy laws, consumer protection laws, and similar laws (e.g., wiretapping laws). Rights provided by such laws may include the right to access, correct, or delete certain personal data, and to opt-out of certain data processing activities, such as targeted advertising, profiling, and automated decision-making. For example, the California Consumer Privacy Act of 2018 (“CCPA”) applies to personal data of California residents, and requires businesses to provide specific disclosures in privacy notices and honor requests of such individuals to exercise certain privacy rights. The CCPA provides fines and allows private litigants affected by certain data breaches to recover significant statutory damages. The exercise of these rights may impact our business and ability to provide our products and services.

Outside the United States, an increasing number of laws, regulations, and industry standards may govern data privacy and security. For example, we may be subject to data protection and privacy laws in the European Union, Brazil, Mexico, and China, including the European Union’s General Data Protection Regulation (“EU GDPR”), Brazil’s General Data Protection Law (Lei Geral de Proteção de Dados Pessoais, or “LGPD”) (Law No. 13,709/2018), Mexico’s Federal Law on the Protection of Personal Data Held by Private Parties (Ley Federal de Protección de Datos Personales en Posesión de los Particulares), and China’s Personal Information Protection Law (“PIPL”), each of which imposes strict requirements on the processing of personal data. For example, under GDPR, companies may face temporary or definitive bans on data processing and other corrective actions; fines of up to the greater of 20 million Euros under the EU GDPR or 4% of annual global revenue; or private litigation brought by classes of data subjects.

In addition, we may be unable to transfer personal data from Europe and other jurisdictions to the United States or other countries due to data localization requirements or limitations on cross-border data flows. Europe and other jurisdictions have enacted laws requiring data to be localized or limiting the transfer of personal data to other countries. Although there are currently various mechanisms that may be used to transfer personal data from Europe to the United States in compliance with law, these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures.

In addition to data privacy and security laws, we are contractually subject to industry standards adopted by industry groups and may become subject to such obligations in the future. We are also bound by other contractual obligations related to data privacy and security, and our efforts to comply with such obligations may not be successful. We publish privacy policies and other statements concerning data privacy, and security. Regulators in the United States are increasingly scrutinizing these statements, and if these policies, materials or statements are found to be deficient, lacking in transparency, deceptive, unfair, misleading, or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators or other adverse consequences. We or third parties with whom we work may at times fail (or be perceived to have failed) in efforts to comply with data privacy and security obligations, and we could face significant consequences, including but not limited to: government enforcement actions, litigation and mass arbitration demands, additional reporting requirements and/or oversight, bans or restrictions on processing personal data, or orders to destroy or not use personal data.

Any of these events could result in significant adverse consequences, including fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our processing or transferring of personal data necessary to operate our business, which could have a material adverse effect on our reputation, business, or financial condition.

Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through theft or misuse), sophisticated nation states, and nation-state-supported actors.

In particular, severe ransomware attacks are becoming increasingly prevalent – particularly for companies like ours that are engaged manufacturing – and can lead to significant interruptions in our operations, loss of sensitive data and income, reputational harm, and diversion of funds. Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments. Future or past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies. Furthermore, we may discover security issues that were not found during due diligence of such acquired or integrated entities, and it may be difficult to integrate companies into our information technology environment and security program. Our third-party service providers could also be the source of a cybersecurity attack on, or breach of, our information technology systems. Techniques used in cybersecurity attacks to obtain unauthorized access, disable or sabotage information technology systems change frequently, as data breaches and other cybersecurity events have become increasingly commonplace, including as a result of the intensification of state-sponsored cybersecurity attacks during periods of geopolitical conflict.

Certain data privacy and security obligations have required us to implement and maintain specific security measures or industry-standard or reasonable security measures to protect our information technology systems and sensitive information. Applicable data privacy and security obligations may require us, or we may voluntarily choose, to notify relevant stakeholders, including affected individuals, customers, regulators, and investors, of security incidents, or to take other actions, such as providing credit monitoring and identity theft protection services. Such disclosures and related actions can be costly, and the disclosure or the failure to comply with such applicable requirements could lead to adverse consequences. Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations. We cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or to mitigate liabilities arising out of our privacy and security practices, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims. In addition to experiencing a security incident, third parties may gather, collect, or infer sensitive information about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position.

The risks of substantial costs, liabilities and limitations on our operations related to compliance with these laws and regulations are an inherent part of our business, and future conditions may develop, arise or be discovered that create substantial compliance or remediation liabilities and costs. Compliance with environmental, health and safety legislation and regulatory requirements may prove to be more limiting and costly than we anticipate. We maintain a compliance program to assist in preventing and, if necessary, correcting environmental problems. To date, we have committed, and expect to continue to make, significant expenditures in our efforts to achieve and maintain compliance with these requirements at our facilities. If we violate or fail to comply with these laws, regulations or permits, we could be fined or otherwise sanctioned by regulators. Under some environmental laws and regulations, we could also be held responsible for all the costs relating to any contamination at our past or present facilities and at third-party waste disposal sites.

Changes in U.S. administrative policy, including the imposition of or increases in tariffs, changes to existing trade agreements and any resulting changes in international trade relations, may have an adverse effect on our business.

Changes in laws or policies governing the terms of trade, and in particular increased trade restrictions, tariffs or taxes on imports from countries where our customers, suppliers or we manufacture products, such as Mexico and China, could have a material adverse effect on our business and financial results. For example, the U.S. government has recently taken actions or made proposals that are intended to address trade imbalances or trade practices, specifically with China, among other countries, which include encouraging increased production in the U.S. These proposals could result in increased customs duties and the renegotiation of some U.S. trade agreements. Changes in U.S. and foreign governments’ trade policies have resulted and may continue to result in tariffs on imports into, and exports from, the U.S. In the past, the U.S. imposed tariffs on imports from several countries, including China, Canada, the European Union, India and Mexico. In response, China, Canada, the European Union, India and Mexico have proposed or implemented their own tariffs on certain exports from the U.S. into those countries. Because we, our customers, and our suppliers conduct business in China and Mexico, potential reductions in trade with China and Mexico and diminished relationships between China and Mexico and the U.S., as well as the continued escalation of tariffs, could have a material adverse effect on our business and results of operations.

The impact of these tariffs is subject to a number of factors, including the effective date and duration of such tariffs, changes in the amount, scope and nature of the tariffs in the future, any retaliatory responses to such actions that the target countries may take and any mitigating actions that may become available. We can provide no assurance that any strategies we implement to mitigate the impact of such tariffs or other trade actions will be successful. A trade war or other significant changes in trade regulations could have a material adverse effect on our business, financial condition and results of operations.

If renegotiations of existing tariffs are unsuccessful or additional tariffs or trade restrictions are implemented by the U.S. or other countries in connection with a global trade war, the resulting escalation of trade tensions could have a material adverse effect on world trade and the global economy. Even in the absence of further tariffs or trade restrictions, the related uncertainty and the market's fear of an economic slowdown could lead to a decrease in consumer spending, and we may experience lower net sales than expected. Reduced net sales may result in reduced operating cash flows if we are not able to appropriately manage inventory levels or leverage expenses.

Changes in U.S. or foreign tax laws, or an extended government shutdown, could have a material adverse effect on our business, cash flow, results of operations and financial condition.

We are subject to taxes in a variety of U.S. and foreign jurisdictions, including Mexico. Significant judgment is required to determine our consolidated income tax provision and related liabilities. Our effective tax rate could be affected by various factors, such as changes in the mix of earnings in jurisdictions with varying statutory tax rates, changes in the recognition and/or release of valuation allowances, changes in the amount of unrecognized tax benefits, our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements, and changes to tax rates or tax laws, regulations, or accounting principles (or interpretations thereof). The taxing authorities of the jurisdictions in which we operate may disagree with our determinations as to the income and expenses attributable to specific jurisdictions. If such a disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest, and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows, and lower overall profitability of our operations.

We currently have a $12.9 million tax refund receivable, which is being processed for refund at the Internal Revenue Service based on provisions in the Coronavirus Aid, Relief, and Economic Security Act. Significant delays in receiving our tax refund could adversely impact us.

The U.S. and foreign tax laws and regulations, as well as the administrative interpretations of those laws and regulations, are constantly under review and may be changed at any time, possibly with retroactive effect. For instance, the recently enacted legislation commonly referred to as the One Big Beautiful Bill Act (along with prior U.S. federal tax reform legislation) has resulted in significant changes to the taxation of business entities, including, among other changes, imposition of minimum taxes and excise taxes, changes to the taxation of income derived from international operations, changes in the deduction and amortization of research and development expenditures, and limitations on the deductibility of business interest. Future guidance from the Internal Revenue Service and other tax authorities with respect to these and other legislation may affect us, and certain aspects of such legislation could be repealed or modified in future legislation or sunset in future years. No assurance can be given as to whether, when, or in what form changes to the applicable tax laws applicable to us may be enacted. Changes in tax laws or interpretations of existing tax laws could materially affect our business, cash flow, results of operations, and financial condition.

Our ability to use our Net Operating Loss carryforwards and certain other tax attributes may be limited.

As of December 31, 2025, we had federal and tax effected state Net Operating Loss (“NOL”) carryforwards of approximately $47.9 million and $16.7 million, respectively. Federal NOL carryforwards generated in taxable years beginning after December 31, 2017, may be carried forward indefinitely but are permitted to be used in any taxable year to offset only up to 80% of taxable income in such taxable year, if any. State utilization and carryforward limitations vary by state. There also may be periods during which the use of state NOL carryforwards is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.

Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which generally is defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOL carryforwards and certain other tax attributes to offset its post-change income or taxes may be limited. We may have experienced ownership changes in the past, and we may experience ownership changes as a result of subsequent shifts in our stock ownership, some of which may be outside of our control. If our ability to use our NOL carryforwards and certain other tax attributes is materially limited by any ownership change, it could harm our future results of operations by effectively increasing our future tax obligations.

The Company has been, and could in the future be, subject to actions or requests from activist stockholders, and such activism could adversely affect the strategic direction and business results of the Company.

The Company has been, and may again be, subject to actions and requests from activist stockholders. We value constructive input from investors and regularly engage in dialogue with our stockholders. The Board of Directors (the “Board”) and management team are committed to acting in the best interests of all of our stockholders. There can be no assurance, however, that the actions taken by the Board and management in seeking to maintain constructive engagement with our stockholders will be successful, and we may be subject to formal or informal actions or requests from stockholders or others that could adversely affect the strategic direction or business results of the Company. Uncertainties related to, or the results of, any actions or requests by activist stockholders could cause our stock price to experience periods of volatility. We cannot predict, and no assurances can be given as to, the outcome or timing of any matters relating to actions or requests by activist stockholders or the ultimate impact on our business, liquidity, financial condition, results of operations, or strategy.

•Intentionally shifting the business portfolio by expanding in targeted growth markets;

•Expanding margins through improved sales mix;

•Refinancing of our term loan.

•Electric grid and data center investment trends;

•Automation and processing speed trends for the type of equipment needed to manufacture the Company’s products;

•Global prices for the types of metals and precious metals the Company uses in its products;

The following paragraphs describe several important factors that have influenced, and we expect will continue to influence our results of operations for the year ended December 31, 2025, that management believes are important to provide an understanding of the business and results of operations or that may influence operations in the future.

We continue to monitor the ongoing impacts of current macroeconomic and geopolitical events, including changing conditions from global trade negotiations and tariffs, inflationary cost pressures on metal, raw materials, and other manufacturing inputs, elevated interest rates, supply chain disruptions, and ongoing military conflicts.

Global trade negotiations continue to create volatility in the marketplace. New trade restrictions and/or increases in tariffs could have a material impact on our business, financial condition, or results of operations by increasing our input costs and decreasing demand, although the nature of those trade restrictions and tariffs remains unclear. Additionally, tariffs may increase the risk for elevated inflation more generally, which may drive an increase in other input costs and have made it more difficult to procure precious metals. In particular, prices for commodities and certain metals, including, but not limited to, gold, silver and copper, have recently shown increased volatility. Significant price increases for these commodities and precious metals have, and could continue to have, an adverse effect on our liquidity and operating profits if we cannot timely mitigate the price increases by successfully sourcing lower cost commodities or precious metals or by passing the increased costs on to customers. See “Item 1A. Risk Factors—Increased prices or significant shortages of the commodities that we use in our businesses have had, and could continue to have, a material adverse effect on our business, prospects, financial condition, liquidity, results of operations or cash flows.”

We cannot predict the future impact on our end-markets or input costs, including tariffs and their potential implications and ramifications, nor our ability to recover all cost increases, including the cost of raw materials, through pricing or the timing of such recoveries.

During the second half of 2024, we identified two manufacturing facilities to close due to volume rationalization which will reduce costs and improve operational efficiency. During the first quarter of 2025, we ceased production activities at our Mobile Solutions plants in Juarez, Mexico and Dowagiac, Michigan. Additionally, we continue to evaluate our global footprint, which may result in further consolidation actions to further improve our overall cost structure.

During the year ended December 31, 2025, a customer in our Mobile Solutions segment represented 11% of consolidated net sales. During the years ended December 31, 2024 and 2023, no single customer accounted for 10% or more of consolidated net sales.

Year Ended December 31, 2025 compared to the Year Ended December 31, 2024

Consolidated Results

Depreciation and Amortization. Depreciation and amortization decreased by $9.4 million or 20.7% during the year ended December 31, 2025, compared to the year ended December 31, 2024 primarily due to the impact of historical purchase accounting step-up basis becoming fully depreciated in the second half of 2024.

Loss on Extinguishment of Debt. Loss on extinguishment of debt was $3.0 million during the year ended December 31, 2025 due to the termination of the 2021 Term Loan Facility, see Note 9 to the Consolidated Financial Statements.

Other Income, Net. Other income, net remained consistent during the year ended December 31, 2025, compared to the year ended December 31, 2024.

Cash provided by operations was $5.7 million for the year ended December 31, 2025, compared with $11.1 million for the year ended December 31, 2024. The decline was due to a decrease in other operating liabilities, an increase in inventory and timing of dividend received from the joint venture. This decrease was partially offset by lower accounts receivable and higher accounts payable.

Term Loan Facility

On April 16, 2025 (the “Closing Date”), we entered into a Term Loan Credit Agreement by and among the Company, the lenders from time to time party thereto (collectively, the “Lenders”) and Alter Domus (US) LLC, as administrative agent (the “Term Loan Agent”) for the Lenders (the “Term Loan Credit Agreement”). The Term Loan Credit Agreement establishes a new $128.0 million senior secured Term Loan Facility (the “Term Loan Facility”) consisting of (i) a $118.0 million of term loan funded in full on the Closing Date (the “Closing Date Term Loans”) and (ii) $10.0 million of delayed draw term loan commitments (any delayed draw term loans funded thereunder, the “Delayed Draw Term Loans”, and together, with the Closing Date Term Loans, the “Term Loans”). As of December 31, 2025, we had $11.4 million of outstanding letters of credit issued under the ABL Facility and $26.7 million in undrawn commitments, as well as $10.0 million in delayed draw term loan commitments, which was fully drawn in January 2026. The Term Loans mature on April 16, 2030. We used the proceeds from the Closing Date Term Loan to repay all of our outstanding obligations under our outstanding term loan facility (see Note 9 to the Consolidated Financial Statements).

Under the Term Loan Credit Agreement, interest rates on the Term Loans are determined based on the type of Term Loan, the length of the interest period, and our Consolidated Net Leverage Ratio (as defined in the Term Loan Credit Agreement). The Term Loans currently bear interest at either: 1) one-month, three-month, or six-month term secured overnight finance rate (“SOFR”) with a credit spread adjustment, subject to a 2.00% floor, plus an applicable margin ranging from 8.75% to 9.75% based on our Consolidated Net Leverage Ratio (as defined therein) (“Adjusted Term SOFR Rate Loans”); or 2) the greater of various benchmark rates, with certain adjustments, plus an applicable margin ranging from 7.75% to 8.75% based on our Consolidated Net Leverage Ratio (“Base Rate Loans”). For interest payments due before April 16, 2027, we may elect to pay a portion of interest in-kind (“PIK Election”), subject to a minimum cash interest of 5.25% for Adjusted Term SOFR Rate Loans and 4.25% for Base Rate Loans. The applicable margin increases by 0.50% on borrowings to which the PIK Election is made. At December 31, 2025, the Term Loans bore interest, including amounts we have elected to pay as PIK interest, based on one-month Adjusted Term SOFR, at 13.57%.

The risk factors under "Risks Related to Our Capital Structure" and "The price of our common stock may be volatile" in Item 1A, "Risk Factors" in our 2025 Annual Report, including those relating to our indebtedness and potential future equity issuances, should be read in conjunction with “Item 2 Unregistered Sales of Equity Securities and Use of Proceeds” below and Note 18, "Subsequent Events," to the Condensed Consolidated Financial Statements in this Quarterly Report, which describes the recent private placement described in Item 2 below.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by words such as, but not limited to, “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “predicts,” “projects,” “will,” and similar expressions. These include, among other things, statements relating to the future growth of NN’s business and revenues, competitive position, expected new business wins, capital expenditures, and other aspects of the Company’s business operations, financial condition, and strategies. Forward-looking statements may appear throughout this report and other documents we file with the Securities and Exchange Commission (SEC), including without limitation, the following sections: Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q and Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as updated in our subsequent Quarterly Reports on Form 10-Q. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those reflected in the forward-looking statements. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s filings made with the SEC, which are available on the SEC website at www.sec.gov. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Private Placement

On June 30, 2026, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Purchasers”), pursuant to which the Company agreed to sell and issue to the Purchasers 24,509,804 shares (the “Shares”) of our common stock in a private placement transaction (the “Private Placement”). The purchase price per share of common stock in the Private Placement was $3.06 per share (the “Purchase Price”). The closing of the Private Placement occurred on July 2, 2026 (the “Closing”). We received total net proceeds from the Private Placement of $70.4 million, after deducting offering expenses paid by the Company.

Series D Perpetual Preferred Stock Redemption and Exchange

On August 5, 2026, we entered into an Exchange Agreement (the “Exchange Agreement”) with NHTV Holdings, LP (the “Holder”), the holder of the Series D Preferred Stock issued pursuant to the Certificate of Designation of Series D Perpetual Preferred Stock (the “Certificate of Designation”). Pursuant to the terms of the Exchange Agreement, on August 5, 2026, we exchanged 9,850 shares of Series D Preferred Stock for 5,500,000 newly issued shares of our common stock, par value $0.01 per share (the “Common Stock” and the transaction, the “Exchange”). The Exchange was conditioned upon the concurrent consummation of the Redemption (defined below).

In addition, pursuant to the Exchange Agreement, the Holder agreed to reduce (a) the Cash Dividend Rate (as defined in the Certificate of Designation) to an amount equal to 10.0% per annum of the then current Liquidation Preference (as defined in the Certificate of Designation) and (b) the Preference Accrual Rate (as defined in the Certificate of Designation) to an amount equal to 10.0% per annum of the then current Liquidation Preference, in each case through August 5, 2027. After August 5, 2027, the Cash Dividend Rate and the Preference Accrual Rate will revert to the amounts as calculated in accordance with the Certificate of Designation. The Holder also agreed that in the event we redeem in full for cash all of the then-outstanding Series D Preferred Stock from the Holder in accordance with the Certificate of Designation and pay the Holder the aggregate Redemption Price (as defined in the Certificate of Designation) otherwise payable in respect thereof on or before December 31, 2026 (the “Final Redemption”), the aggregate Redemption Price payable by us in respect of the Final Redemption Price will be reduced by $5.0 million.

On August 5, 2026, the Company redeemed 36,750 shares of Series D Preferred Stock pursuant to the optional redemption provision of the Certificate of Designation for an aggregate redemption price of $70.0 million (the “Redemption”). The Redemption was conditioned upon the concurrent consummation of the Exchange.

Following the Exchange and the Redemption, on August 5, 2026, 18,400 shares of Series D Preferred Stock remained outstanding with an aggregate Liquidation Preference of $35.0 million.

Selling, General, and Administrative Expense. Selling, general, and administrative expense increased by $0.5 million during the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to higher compensation costs and unfavorable foreign exchange effects.

Interest Expense. Interest expense increased by $0.1 million during the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to an increase in average debt balances.

Loss on Extinguishment of Debt. Loss on extinguishment of debt was $3.0 million during the three months ended June 30, 2025 due to the termination of the 2021 Term Loan Facility. No debt extinguishment has occurred during the three months ended June 30, 2026.

Other Income, Net. Other income, net decreased by $0.4 million during the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to lower warrant revaluation impacts.

Loss from operations increased by $0.8 million or 75.4% during the three months ended June 30, 2026, compared to the same period in the prior year. The increase was primarily due to higher costs from an unfavorable plant mix.

Six Months Ended June 30, 2026 compared to the Six Months Ended June 30, 2025

Consolidated Results

Net Sales. Net sales increased by $33.6 million, or 15.7%, during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to higher selling prices, reflecting the pass-through of increased raw material costs to customers, higher volumes, and favorable foreign exchange effects.

Cost of Sales. Cost of sales increased by $24.5 million, or 13.5%, during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to raw material price increases, higher volumes, and unfavorable plant mix costs.

Selling, General, and Administrative Expense. Selling, general, and administrative expense increased by $2.6 million during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to higher compensation costs, consulting fees, and legal fees. The remaining impact was primarily driven by unfavorable foreign exchange and inflationary effects.

Depreciation and amortization. Depreciation and amortization increased by $0.9 million during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to the impact of capital expenditures placed in service in the current and prior year.

Interest Expense. Interest expense increased by $0.6 million during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to higher average debt balances offset by lower amortization of debt issuance costs and discounts.

Loss on Extinguishment of Debt. Loss on extinguishment of debt was $3.0 million during the six months ended June 30, 2025 due to the termination of the 2021 Term Loan Facility. No debt extinguishment has occurred during the six months ended June 30, 2026.

Other Expense (Income), Net. Other expense (income), net changed unfavorably by $3.1 million during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to noncash derivative mark-to-market loss recognized during the first six months of 2026 compared to noncash derivative mark-to-market gain in the first six months of 2025.

Provision for Income Taxes. Our effective tax rate was (7.1)% for the six months ended June 30, 2026, compared to (12.0)% for the six months ended June 30, 2025. The rate for the six months ended June 30, 2026 was unfavorably impacted due to the accrual of tax on non-permanently reinvested unremitted earnings of foreign subsidiaries and by the limitation of the amount of tax benefit recorded for losses in certain jurisdictions where we believe it is more likely than not that a future tax benefit may not be realized.

Share of Net Income from Joint Venture. Share of net income from the JV remained unchanged during the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The JV, in which we own a 49% investment, recognized net sales of $71.0 million and $64.3 million for the six months ended June 30, 2026 and 2025, respectively.

Results by Segment

MOBILE SOLUTIONS

Net sales increased by $4.1 million, or 3.2%, during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to favorable foreign currency effects, higher selling prices reflecting the pass-through of increased raw material costs to customers, and higher sales volumes, partially offset by the impact of rationalization actions taken in 2025 to improve profitability.

Loss from operations increased by $0.2 million or 5.9% during the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily related to unfavorable raw material price increases and an unfavorable plant mix. These were partially offset by lower costs due to plant rationalization benefits and favorable foreign exchange effects.

POWER SOLUTIONS

Net sales increased by $29.5 million, or 33.5%, during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to higher selling prices, reflecting the pass-through of increased raw material costs to customers and higher volumes.

Income from operations increased by $6.5 million during the six months ended June 30, 2026 compared to the same period in the prior year, primarily due to higher selling prices, improved product mix, and higher volumes.

Cash provided by operations was $11.8 million for the six months ended June 30, 2026, compared to cash used in operations of $4.0 million for the six months ended June 30, 2025. The favorable change is primarily due to a $12.7 million collection of a tax refund claim and other favorable operating impacts.

Cash used in investing activities was $8.4 million for the six months ended June 30, 2026, compared with $7.2 million for the six months ended June 30, 2025. The higher use of cash is primarily due to additional purchases of property, plant and equipment.

Cash provided by financing activities decreased by $1.0 million during the six months ended June 30, 2026, compared with the same period in 2025. The decrease is primarily due to net repayments made against our asset backed credit facilities, offset by the $10.0 million of proceeds from the Delayed Draw Term Loan.

As of June 30, 2026, our primary sources of liquidity were cash and cash equivalents, availability under our ABL Facility, and cash flows from operating activities. On July 2, 2026, we received net proceeds of approximately $70.4 million from the closing of the Private Placement. On August 5, 2026, we completed the Redemption utilizing cash received in the Private Placement and completed the Exchange. We believe that the execution of these transactions will help support our long-term liquidity.

Based on our current cash position, anticipated cash flows from operating activities, and anticipated borrowing capacity under the ABL Facility, we believe we will have sufficient liquidity to fund our operations, capital expenditures, and debt service requirements for the next 12 months. Our ability to meet these requirements is subject to the factors described in Item 1A, "Risk Factors," in our 2025 Annual Report, including the level and timing of future cash flows, prevailing economic conditions, and restrictions under our credit agreements.

As of June 30, 2026, we had total available liquidity of: