NN, Inc. (NASDAQ:NNBR) Q4 2022 Earnings Call Transcript

Andrew Wall: Yes. So this is Andrew Wall. I’ll take that. The way I think about it is we continue to do it every single day, engaging customers to address the uncontrolled inflation that we’re having. I think we’ve made some pretty significant progression, I’d say, over last year, if you look at the results that Warren shared a bit earlier in his slides. And we’re continuing to do that in this quarter even today, right? So we’re still working through that with customers. I don’t think the job is done. We are starting to see some pushback where in certain small pockets, things are deflating a bit or inflation is not as bad but we’re continuing to work it. So to answer your question, it’s kind of hard to say how far along are we. We’re going to continue to move it forward, and be able to report a little bit more of that after the close of the first quarter, right?

Warren Veltman: So — but Rob, let me just say this, when you look at the slide that we presented on this we talked about $12 million of pricing actions that we’ve already taken, and I’ll reiterate some of my comments, right? When you look at that, the noninflationary pricing is more predominant for us in the Mobile Solutions area because as we talked about last year, we were able to affect pricing pretty consistently on the Power side as we saw our cost structure move. But when you look at what’s going on in the Mobile, we were able to get — we were able to get material-related pricing but it was the non-material piece that they pushed back. And so far, through the first quarter of this year on an annualized rate, I think we’ve closed out $8.6 — $8.5 million, $8.6 million of annualized price increases on the Mobile side.

And Andrew and his team are working. Most of that was domestic, North American-based. So we’re working very hard on the international side right now in Europe and in China, where some of the inflation in China hasn’t been as great but Andrew and his teams are pushing hard there as well. And I would tell you, we’re probably as it relates to what we’ve worked through from our total population. We’re probably 60%, 65% of the way of working through the issue. So we still have opportunity with Mobile. What we put on the slide was only what we — Andrew and his team have closed out.

Robert Brown: Okay. Great. And then second question is on the outlook. I think you talked about kind of an offsetting recession, issues with some pent-up demand. But how do you sort of think through the visibility on ’23 at this point in the — given some of the moving pieces out there, I’m sure it’s not great. But how do you think of visibility and what are your sort of customer indications say?

Warren Veltman: Yes. I think that when you look at the automotive piece of it, right, they’re projecting at least the latest update that we got from IHS is projecting some form of stability because of pent-up demand, as Andrew said, that currently is our expectation. So we’re expecting some, I would call it, modest growth on the automotive side then you have the pricing adjustments that we’ve made on top of that. And Andrew went through some of the things that we’re seeing from a growth standpoint on the electrical. Certainly, interest rates and how that moves during the year is going to have an impact on that. If mortgage rates continue to stay high or higher, that could impact some of the business that we have on the electrical side with new housing starts and that type of thing. But we do see — longer term, we see those markets moving in a positive direction. Anything, Andrew, you want to add there?