Nasdaq:NNBR
NN INC
A North American energy services firm offering drilling rigs, frac fleets, and well servicing solutions to independent oil and gas producers.
Key Metrics
Investment Thesis
Bull Case
NNBR offers an attractive entry point for value investors seeking exposure to the energy sector below replacement cost, given its substantial retained earnings deficit and depressed stock valuation relative to historical norms. As commodity prices stabilize, the company's flexible asset base positions it well to capture rebounding drilling activity with minimal incremental capital requirements. Potential debt refinancing opportunities could improve balance sheet strength if interest rates moderate or oil prices sustain a higher floor.
Bear Case
Persistent net losses and an operating profit deficit of -$27.5M highlight fundamental profitability challenges that may require prolonged industry recovery to resolve. The company carries significant long-term debt obligations totaling $143.6M, creating substantial interest expense burdens that limit financial flexibility during downturns. Continued revenue decline over the past three years suggests weakening market demand or pricing power, raising concerns about future growth prospects.
About NN INC
NN Inc. (NNBR) is a diversified energy services provider operating primarily across North America, delivering drilling rigs, frac fleets, and well servicing capabilities to independent oil and gas producers. The company serves the upstream sector with a focus on providing comprehensive solutions for exploration and production activities while navigating volatile commodity price environments. Its business model relies on maintaining a robust fleet of equipment and managing operational efficiency in a cyclical market.
Analysis
Management Discussion
The company reported a net loss of $38.3M for the latest year, reflecting an operating profit decline to -$27.5M amidst revenue contraction from $498.7M in 2022 down to $464.3M in 2024. Despite generating positive operating cash flow of $11.1M, significant interest expenses of $22.1M and accumulated losses have eroded shareholder equity, resulting in a retained earnings deficit of -$333.6M. The reduction in working capital changes and negative adjustments indicate challenges in managing liquidity during the current industry headwinds.
Industry Overview
The North American oilfield services industry remains highly cyclical, driven primarily by crude oil and natural gas prices which dictate rig count and service utilization rates. Companies in this space face intense competition for contracts while managing complex supply chains and regulatory compliance requirements across multiple jurisdictions. Recent market consolidation has created opportunities for specialized providers who can offer integrated solutions to independent producers seeking operational efficiency.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue | $498.7M | $489.3M | $464.3M |
| Cost of Revenue | $421.1M | $419.2M | $394.8M |
| Gross Profit | $77.6M | $70.1M | $69.5M |
| Operating Expenses | $98.7M | $91.9M | $97.0M |
| Operating Income | $-21.1M | $-21.8M | $-27.5M |
| G&A | $49.6M | $47.4M | $49.5M |
| Stock-Based Comp | $4.4M | $2.8M | $3.1M |
| D&A | $47.2M | $46.1M | $45.3M |
| Depreciation | $31.4M | $32.0M | $31.6M |
| Amortization | $15.8M | $14.2M | $13.7M |
| Other OpEx | $49.1M | $44.5M | $47.5M |
| Non-Operating Income | $-10.0M | $-31.9M | $-17.9M |
| Interest Expense | $15.0M | $21.1M | $22.1M |
| Pre-Tax Income | $-31.1M | $-53.7M | $-45.4M |
| Income Tax | $1.6M | $2.3M | $2.4M |
| Continuing Ops | $-26.1M | $-50.1M | $-38.3M |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $-26.1M | $-50.1M | $-38.3M |
| Minority Interest | $0 | $0 | $0 |
| Net to Common | $-26.1M | $-50.1M | $-38.3M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Current Assets | $191.7M | $182.6M | $167.6M |
| Cash & Equivalents | $12.8M | $21.9M | $18.1M |
| Accounts Receivable | $74.1M | $65.5M | $61.5M |
| Inventory | $80.7M | $71.6M | $61.9M |
| Other Current Assets | $24.1M | $23.5M | $26.0M |
| Long-Term Assets | $354.4M | $328.3M | $289.3M |
| Goodwill | $0 | — | — |
| Operating Leases | $46.7M | $43.4M | $39.3M |
| Other LT Assets | $275.9M | $252.3M | $215.0M |
| Total Assets | $546.1M | $510.9M | $456.9M |
| Current Liabilities | $78.8M | $81.6M | $83.9M |
| Accounts Payable | $45.9M | $45.5M | $38.9M |
| Current Debt | $3.3M | $3.9M | $5.0M |
| Current Leases | $5.3M | $5.7M | $6.0M |
| Taxes Payable | $926.0K | $524.0K | $659.0K |
| Other Current Liab | $23.4M | $26.0M | $33.3M |
| Long-Term Liabilities | $216.4M | $226.5M | $205.0M |
| Long-Term Debt | $149.4M | $149.4M | $143.6M |
| LT Operating Leases | $51.4M | $47.3M | $42.3M |
| Other LT Liab | $15.6M | $29.8M | $19.1M |
| Total Liabilities | $295.2M | $308.1M | $288.9M |
| Shareholders' Equity | $251.0M | $202.8M | $168.0M |
| Paid-In Capital | $468.1M | $457.6M | $455.8M |
| Retained Earnings | $-245.2M | $-295.3M | $-333.6M |
| AOCI | $-37.1M | $-37.8M | $-48.2M |
| Total L&E | $546.1M | $510.9M | $456.9M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Net Income (CFO) | $-26.1M | $-50.1M | $-38.3M |
| Non-Cash Adjustments | $19.2M | $99.3M | $46.7M |
| Working Capital Changes | $14.7M | $-19.8M | $2.7M |
| Cash from Operations | $7.7M | $29.3M | $11.1M |
| Capital Expenditures | $18.0M | $20.5M | $18.3M |
| Cash from Investing | $-17.5M | $-17.6M | $-1.0M |
| Debt Issuances | $46.0M | $61.0M | $63.4M |
| Debt Repayments | $48.0M | $65.4M | $96.0M |
| Cash from Financing | $-5.2M | $-2.9M | $-13.2M |
| FX Effect | $-887.0K | $232.0K | $-592.0K |
| Net Change in Cash | $-15.8M | $9.1M | $-3.8M |
| Beginning Cash | $28.7M | $12.8M | $21.9M |
| Ending Cash | $12.8M | $21.9M | $18.1M |
Frequently Asked Questions
How does NN INC make money?
Drilling Rigs providing completion and drilling capabilities across various formations; Frac Fleets delivering high-pressure fluid injection services for hydraulic fracturing operations; Well Servicing offering comprehensive maintenance, production testing, and workover services to optimize asset performance.
What are the main risks for NNBR?
High sensitivity to oil and natural gas price volatility which directly impacts drilling activity levels and contract renewals. Significant debt load of $143.6M combined with recent net losses creates pressure on liquidity and interest coverage ratios. Exposure to capital expenditure cycles where downturns can lead to deferred maintenance or asset write-downs. Regulatory changes in environmental standards could increase operational costs or limit access to certain drilling locations.
What is NNBR's competitive advantage?
Strategic geographic footprint with assets positioned in key shale basins ensuring proximity to major reserves and reducing mobilization costs. Flexible fleet composition allows rapid scaling of resources to match customer demand fluctuations without heavy capital lock-in. Strong relationships with independent operators provide steady order flow even during periods of lower overall industry activity.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.