NN, Inc. (NNBR): Business Model Canvas [10-2024 Updated]

In the dynamic landscape of manufacturing, NN, Inc. (NNBR) stands out with a robust Business Model Canvas that effectively outlines its strategic approach to delivering high-quality components across various industries. This model highlights key elements such as valuable partnerships, innovative activities, and a diverse customer base, all contributing to its competitive edge. Dive deeper to explore how NN, Inc. crafts value through its unique offerings and strategic initiatives.

NN, Inc. (NNBR) - Business Model: Key Partnerships

Suppliers of raw materials and components

NN, Inc. relies heavily on various suppliers for raw materials and components essential to its manufacturing processes. The company sources materials such as metals, plastics, and electronic components from a global network of suppliers. These suppliers are critical for maintaining production efficiency and quality standards across NN's product lines.

As of September 30, 2024, NN, Inc. reported total inventories of $69.6 million, which includes raw materials valued at $24.1 million, work in process at $24.8 million, and finished goods at $20.7 million. The company's ability to manage these inventories effectively is influenced by its relationships with suppliers, ensuring timely delivery and cost-effective sourcing.

Joint ventures in automotive and industrial sectors

NN, Inc. has established joint ventures to enhance its market presence, particularly in the automotive and industrial sectors. One notable joint venture, in which NN holds a 49% stake, recognized net sales of $95.1 million for the nine months ended September 30, 2024, compared to $75.9 million for the same period in 2023. This growth reflects the successful collaboration within the joint venture, allowing NN to leverage shared resources and expertise to achieve higher sales volumes.

The share of net income from this joint venture increased by $3.5 million during the same period, driven by improved sales and gross margins. Such partnerships enable NN to mitigate risks associated with market fluctuations and enhance its competitive edge in the industry.

Strategic alliances with technology firms

Strategic alliances with technology firms play a crucial role in NN, Inc.'s business model, particularly in enhancing product innovation and operational efficiency. These alliances focus on integrating advanced technologies in manufacturing processes and product development.

For instance, NN's collaborations in the technology sector are aimed at improving automation and precision in manufacturing, which can lead to reduced production costs and improved product quality. The financial implications of these partnerships are significant, as they can lead to increased sales and reduced operational expenses over time.

As per the latest financial reports, NN, Inc. experienced a decrease in net sales of approximately $18.96 million, or 5.0%, for the nine months ended September 30, 2024, compared to the previous year. This decline underscores the importance of continuous innovation and the need for strategic partnerships to stimulate growth.

Partnership Type	Details	Financial Impact
Suppliers of Raw Materials	Global network providing essential materials for manufacturing	Raw materials inventory valued at $24.1 million as of September 30, 2024
Joint Ventures	49% stake in a joint venture with net sales of $95.1 million	Share of net income increased by $3.5 million
Strategic Alliances	Collaborations with technology firms for innovation	Sales impact evident with a decrease of $18.96 million in net sales

NN, Inc. (NNBR) - Business Model: Key Activities

Manufacturing high-precision components

NN, Inc. specializes in the manufacturing of high-precision components, primarily serving the automotive, industrial, and medical sectors. The company's manufacturing capabilities encompass a diverse array of products, including electric power steering systems, electric braking systems, and other critical automotive components.

For the nine months ended September 30, 2024, NN, Inc. reported net sales of $357.8 million, a decrease of $19 million, or 5.0%, compared to the same period in the previous year. This decline was attributed to the sale of its Lubbock operations and rationalized production volumes at various plants undergoing turnarounds.

During the same period, cost of sales decreased by $21.2 million, or 6.6%, primarily due to lower sales volume and reduced labor costs associated with facility closures.

Research and development for product innovation

Research and development (R&D) is a crucial component of NN, Inc.'s strategy to drive product innovation and maintain competitive advantage. The company focuses on developing advanced technologies and high-precision components that meet the evolving demands of its customers.

For the nine months ended September 30, 2024, NN, Inc. incurred a total selling, general, and administrative expense of $37.1 million, which includes R&D expenditures. This reflects an increase of $1.3 million from the previous year. The increased investment in R&D aims to enhance product offerings and expand into new markets.

In the Power Solutions segment, net sales for the nine months ended September 30, 2024, were reported at $141.3 million, slightly down from $142.6 million in the previous year. However, income from operations increased by $3.5 million, indicating effective management of R&D expenditures and operational efficiencies.

Quality control and assurance processes

Quality control and assurance are integral to NN, Inc.'s operations, ensuring that all manufactured components meet stringent industry standards and customer specifications. The company employs rigorous testing and inspection protocols throughout the manufacturing process.

For the nine months ended September 30, 2024, NN, Inc. reported a loss from operations of $10.7 million, an improvement from a loss of $13.9 million in the same period of the prior year. This improvement can be attributed to enhanced quality control measures that have reduced defects and waste, leading to cost savings and improved operational performance.

In terms of financial performance, the company’s effective tax rate was recorded at (5.3)% for the nine months ended September 30, 2024, compared to (4.4)% for the same period in the previous year, reflecting the impact of operational efficiencies and effective management of quality assurance processes.

Key Activity	Performance Metrics (2024)	Year-over-Year Change
Manufacturing	Net Sales: $357.8 million	-5.0%
Research and Development	SG&A Expense: $37.1 million	+1.3 million
Quality Control	Loss from Operations: $10.7 million	Improvement of $3.2 million

NN, Inc. (NNBR) - Business Model: Key Resources

Skilled workforce in engineering and manufacturing

As of September 30, 2024, NN, Inc. employed approximately 1,200 individuals across its manufacturing and engineering divisions. The company emphasizes a strong focus on hiring skilled engineers and technicians, particularly in its Mobile and Power Solutions segments. The company has invested in training programs aimed at enhancing the skill sets of its workforce, thereby improving operational efficiencies and product quality.

Advanced manufacturing facilities

NN, Inc. operates several state-of-the-art manufacturing facilities, with a total of 10 locations worldwide. The company has recently invested approximately $17 million in upgrading its manufacturing equipment to incorporate advanced technologies such as automation and robotics. This modernization effort aims to enhance production capacity and reduce operational costs. The facilities are strategically located to serve key markets, including automotive, general industrial, and medical sectors.

Facility Location	Investment in Upgrades (2024)	Primary Products Manufactured
Greenville, SC	$5 million	Precision components for automotive
Elkhart, IN	$4 million	Medical device components
Wichita, KS	$3 million	Industrial motor components
Mexico City, Mexico	$2 million	General industrial components
Hannover, Germany	$3 million	Electrical components

Intellectual property and patents

NN, Inc. holds a portfolio of over 50 patents related to its manufacturing processes and product designs. The company has invested approximately $2 million in research and development to foster innovation and maintain its competitive edge in the market. This intellectual property is crucial for protecting the company's technological advancements and ensuring a reliable revenue stream through licensing agreements.

Patent Description	Filing Year	Status
High-precision component manufacturing	2021	Granted
Automated assembly technology	2022	Pending
Energy-efficient manufacturing process	2023	Granted

NN, Inc. (NNBR) - Business Model: Value Propositions

High-quality and reliable components for diverse industries

NN, Inc. specializes in manufacturing high-precision components for various sectors, including automotive, general industrial, and medical markets. For the nine months ended September 30, 2024, the company reported net sales of $357.8 million, with significant contributions from its Mobile Solutions and Power Solutions segments, generating $216.6 million and $141.3 million in sales, respectively.

In the automotive sector alone, net sales reached $170.6 million during the same period, showcasing the company's robust position in this competitive market. The emphasis on quality is reflected in their manufacturing processes, which adhere to stringent industry standards, ensuring reliability and performance across their product offerings.

Customization capabilities to meet client specifications

NN, Inc. offers extensive customization options for its components, allowing clients to tailor products to specific needs. This capability is crucial in industries such as automotive, where precision and adherence to client specifications are paramount. The company reported a decrease in net sales of approximately $19 million, or 5.0%, during the nine months ended September 30, 2024, primarily due to the sale of its Lubbock operations but maintained a focus on enhancing customization services.

In the Power Solutions segment, income from operations improved significantly, increasing from $8.3 million in 2023 to $11.8 million in 2024. This growth was driven by reduced costs and increased customization options, illustrating NN, Inc.'s commitment to meeting diverse customer demands.

Strong customer support and service

NN, Inc. prioritizes customer support, providing comprehensive service to ensure client satisfaction. The company's selling, general, and administrative expenses for the nine months ended September 30, 2024, amounted to $37.1 million, reflecting investments in customer service initiatives. Their proactive approach includes dedicated account management and responsive technical support, which are critical in fostering long-term relationships with clients.

Additionally, the company reported a share of net income from joint ventures of $6.6 million for the nine months ended September 30, 2024, an increase from $3.1 million in the prior year, indicating successful collaboration and enhanced service offerings.

Segment	Net Sales (2024)	Net Sales (2023)	Income from Operations (2024)	Income from Operations (2023)
Mobile Solutions	$216.6 million	$234.1 million	$(5.2) million	$(6.1) million
Power Solutions	$141.3 million	$142.6 million	$11.8 million	$8.3 million
Total	$357.8 million	$376.7 million	$(10.7) million	$(13.9) million

NN, Inc. (NNBR) - Business Model: Customer Relationships

Long-term contracts with major clients

NN, Inc. has established strategic long-term contracts with several major clients in the automotive and industrial sectors. These contracts are essential for ensuring a stable revenue stream and fostering strong customer loyalty. For instance, the company reported net sales of $357.8 million for the nine months ended September 30, 2024, a decrease from $376.7 million during the same period in 2023, primarily attributed to the sale of its Lubbock operations and customer settlements.

Collaborative partnerships for product development

NN, Inc. engages in collaborative partnerships to enhance product innovation and development. The company’s joint ventures have shown promising results, with a net income from joint ventures increasing to $6.6 million for the nine months ended September 30, 2024, compared to $3.1 million in the same period in 2023. This reflects a strategic focus on leveraging partnerships to boost product offerings and market relevance.

Regular communication and feedback loops

To maintain strong customer relationships, NN, Inc. implements regular communication and feedback mechanisms. This includes quarterly business reviews and customer satisfaction surveys. In addition, the company reported a significant increase in share of net income from joint ventures, highlighting effective collaboration with partners to meet customer needs.

Metric	Q3 2024	Q3 2023	Change
Net Sales	$113.6 million	$124.4 million	($10.8 million)
Loss from Operations	($3.8 million)	($7.0 million)	$3.2 million
Net Income from Joint Ventures	$2.2 million	$1.7 million	$0.5 million
Customer Settlements Impact	Unspecified	Unspecified	Negative impact noted

NN, Inc. (NNBR) - Business Model: Channels

Direct sales to OEMs and industrial clients

NN, Inc. primarily engages in direct sales to Original Equipment Manufacturers (OEMs) and industrial clients, which form a significant portion of its revenue stream. For the nine months ended September 30, 2024, the company reported net sales of $357.8 million, a decrease from $376.7 million in the same period of 2023. This decline was primarily attributed to the sale of its Lubbock operations and customer settlements received in 2023.

Online platforms for marketing and customer engagement

In 2024, NN, Inc. has increasingly utilized online platforms for marketing and customer engagement. The company aims to enhance its digital presence and leverage online channels to reach more customers effectively. Despite overall challenges, the shift towards digital marketing strategies is expected to improve customer interaction and accessibility to their product offerings.

Trade shows and industry events

Participation in trade shows and industry events is a critical channel for NN, Inc. to showcase its products and innovations. These events provide opportunities for direct engagement with potential customers and industry stakeholders. The company has been active in various industry-specific exhibitions throughout 2024, aiming to enhance its market visibility and establish relationships with key players in the automotive, industrial, and medical sectors.

Channel	Details	2024 Financial Impact
Direct Sales	OEMs and industrial clients	Net sales of $357.8 million (down from $376.7 million in 2023)
Online Platforms	Digital marketing strategies and customer engagement	Expected to enhance customer reach and sales
Trade Shows	Active participation in industry events	Improved market visibility and customer relationships

NN, Inc. (NNBR) - Business Model: Customer Segments

Automotive manufacturers

NN, Inc. serves a significant portion of the automotive industry, providing high-precision components and assemblies. For the three months ended September 30, 2024, net sales from automotive manufacturers amounted to $55.1 million, which includes $48.1 million from the Mobile Solutions segment and $7.1 million from the Power Solutions segment.

During the nine months ended September 30, 2024, total net sales in the automotive sector were $170.6 million, compared to $191.3 million for the same period in 2023, reflecting a decline due to various operational adjustments.

General industrial companies

For general industrial companies, NN, Inc. reported net sales of $27.5 million for the three months ended September 30, 2024, with $17.4 million from Mobile Solutions and $10.1 million from Power Solutions.

In the nine-month period ending September 30, 2024, sales to general industrial companies totaled $90.5 million, a decrease from $97.2 million reported in 2023.

Electrical and electronic equipment manufacturers

In the electrical and electronic equipment sector, NN, Inc. generated net sales of $20.3 million in the third quarter of 2024. The sales primarily stem from the Power Solutions segment, which focuses on components used in smart meters, charging stations, circuit breakers, and transformers.

For the nine months ended September 30, 2024, total sales in this category reached $62.0 million, which is an increase from $50.0 million during the same period in 2023.

Customer Segment	Q3 2024 Sales ($ million)	9M 2024 Sales ($ million)	9M 2023 Sales ($ million)
Automotive Manufacturers	55.1	170.6	191.3
General Industrial Companies	27.5	90.5	97.2
Electrical and Electronic Equipment Manufacturers	20.3	62.0	50.0

NN, Inc. (NNBR) - Business Model: Cost Structure

Manufacturing costs (materials, labor)

For the three months ended September 30, 2024, NN, Inc. reported a cost of sales of $97,131 thousand, down from $104,543 thousand in the same period of 2023, reflecting a 7.1% decrease. This decline was primarily attributed to decreased sales volume and lower labor costs associated with facility closures.

For the nine months ended September 30, 2024, the cost of sales was $299,474 thousand, compared to $320,648 thousand for the same period in 2023, marking a decrease of 6.6%. This reduction was largely due to lower sales volume and labor costs.

R&D expenses for product development

NN, Inc. has not disclosed specific figures for R&D expenses in the latest financial reports. However, the overall expenses related to product development are reflected within the general operating expenses. The company aims to invest strategically in R&D to enhance product offerings, particularly in its Mobile and Power Solutions segments.

Selling, general, and administrative expenses

For the three months ended September 30, 2024, selling, general, and administrative (SG&A) expenses totaled $10,257 thousand, a decrease from $11,693 thousand in the previous year, indicating a reduction of $1,436 thousand.

For the nine months ended September 30, 2024, SG&A expenses were $37,116 thousand, compared to $35,833 thousand for the same period in 2023, reflecting an increase of $1,283 thousand primarily due to higher travel and stock compensation expenses, partially offset by lower salaries from a reduction in headcount.

Cost Category	Q3 2024 (in $ thousands)	Q3 2023 (in $ thousands)	% Change
Cost of Sales	97,131	104,543	-7.1%
SG&A Expenses	10,257	11,693	-12.2%

Cost Category	9M 2024 (in $ thousands)	9M 2023 (in $ thousands)	% Change
Cost of Sales	299,474	320,648	-6.6%
SG&A Expenses	37,116	35,833	3.6%

NN, Inc. (NNBR) - Business Model: Revenue Streams

Sales of manufactured components

For the nine months ended September 30, 2024, NN, Inc. reported total net sales of $357.8 million, a decrease from $376.7 million in the same period of the previous year, reflecting a decline of approximately 5.0%. The breakdown of net sales by segment shows:

Segment	Net Sales (in thousands)	Change from Previous Year
Mobile Solutions	$216,593	Decrease of $17,539 (7.5%)
Power Solutions	$141,324	Decrease of $1,294 (0.9%)

The decline in sales was primarily attributed to the sale of the Lubbock operation and rationalized volume at plants undergoing turnarounds. However, increases in precious metals pass-through pricing partially offset these declines.

Service contracts and maintenance agreements

NN, Inc. has positioned itself to provide ongoing service contracts and maintenance agreements, especially within its Power Solutions segment. For the nine months ended September 30, 2024, income from operations in this segment was reported at $11.8 million, compared to $8.3 million in the prior year, indicating an increase of $3.5 million due to lower costs associated with closed facilities.

These service contracts contribute significantly to revenue stability and customer retention, as they ensure ongoing revenue streams from existing customers.

Revenue from joint ventures and partnerships

Revenue from joint ventures has been a key component of NN, Inc.'s financial performance. For the three months ended September 30, 2024, the company's share of net income from joint ventures was $2.2 million, up from $1.7 million in the same period the previous year. The joint venture recognized net sales of $32.4 million in Q3 2024, compared to $30.3 million in Q3 2023, reflecting a positive growth trend.

The following table summarizes the performance of the joint venture:

Period	Net Sales (in millions)	Net Income from JV (in millions)
Q3 2024	$32.4	$2.2
Q3 2023	$30.3	$1.7

This increase in joint venture income indicates successful collaboration and strategic partnerships that enhance revenue streams beyond direct sales.

Article updated on 8 Nov 2024

Resources:

1. NN, Inc. (NNBR) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of NN, Inc. (NNBR)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View NN, Inc. (NNBR)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.