管理層發言
Hello, everyone. Thank you for joining us, and welcome to the NN, Inc. Second Quarter Earnings Call and Webcast. I will now hand the conference over to Joseph Caminiti, Investor Relations. Joseph, please go ahead.
Thank you, Christine. Good morning, everyone, and thanks for joining us. I'm Joe Caminiti, with NN Inc.'s Investor Relations team, and I'd 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 second quarter ended June 30, 2026, as well as a supplemental presentation, which has been posted on 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 management are Harold Bevis, President and Chief Executive Officer; and Chris Bohnert, Senior Vice President and Chief Financial Officer. Please turn to Slide 2, where you'll find our forward-looking statements and disclosure information. Before we begin, I'd like to ask that you take note of the cautionary language regarding forward-looking statements contained in today's press release, supplemental presentation and in the Risk Factors section in the company's annual report on Form 10-Q for the fiscal second quarter ended June 30, 2026. The same language applies to the 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 our worldwide markets, general economic conditions and economic conditions in the industrial sector, including the potential impacts and ramifications of tariffs, the impacts of pandemics and other public health crises or military conflicts, all on 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 of 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 final section of the press release and the supplemental presentation. Please turn to Slide 3, and I will now turn the call over to our CEO, Harold Bevis. Harold?
Thank you, Joe. Good morning, everybody. I would like to announce that we had a really good, strong second quarter. It was consistent with our first quarter. We arranged some looks here for you on Q2 and the first half, and you can see that it's pretty consistent. Our results show significant growth across the business and the first half finished ahead of our expectations. Our second quarter sales increased 19% year-over-year. Our second quarter adjusted EBITDA increased 36%. In our first half, EBITDA increased 35%. And in the first half, we were able to secure $65 million of new business awards. So we had profitable growth achieved across both of our reporting segments. And then subsequent to the end of the quarter, we had a significant strategic development wherein we completed and announced the retirement of $89 million of preferred stock as part of a multi-leg refinancing. Knowing that's one of the big events that we want to talk about today, I want to address it right upfront with Chris, and we're going to turn it over here to Chris to discuss the refinancing on the next page.
Thank you, Harold. Good morning, everyone. I'll begin my remarks on Slide 4. For those of you who have been following along on our progress, you know we've been working hard in the background to improve and optimize our capital structure. We spent the last two quarters alongside our strategic advisers comprehensively assessing the potential options available to address the preferred stock. We concluded that this was the best path to creating a capital structure that allows more of the value we have created through our transformation to accrete to common equity holders and to better position the company to capitalize on the growth we are generating through our commercial programs. As we previously announced back in July, we successfully raised $75 million of capital through a PIPE transaction, bringing multiple new investors into our investor base. This effectively expanded the optionality for how we could strategically address capital structure overhang, namely through the preferred equity security. Last evening, we announced that NN successfully completed a $124 million refinancing transaction to address the preferred. This is a significant strategic and financial milestone for the company as we are largely out from under the structure that NN entered back when the company was experiencing stress in its business and financial performance. I'll take a moment to walk through the details of this multi-legged transaction. First, we utilized cash from the recent PIPE transaction to materially delever the company's balance sheet. We used $70 million of cash to redeem a large portion of the outstanding preferred equity. Second, we equitized roughly $19 million of preferred into NN common stock. Third, the remaining stub of preferred equity of approximately $35 million in total will now carry a lower PIK interest rate of 10% for one year, significantly below the previous rate of 14.5%. Additionally, the remaining preference will be discounted by $5 million if we pay off or refinance it by December 31, 2026. This successful transaction has materially delevered NN and annual PIK interest will be reduced by approximately $13 million. This transaction did not impact our existing term loan. However, we expect to have a greater degree of optionality on how we address existing other debt and the refinance of our term loan when it makes sense strategically and financially. You'll hear Harold discuss NN's five-pillar growth strategy shortly, but achieving this refinancing was a critical step in enabling the acceleration of our growth across the enterprise. This is a significant strategic win for the company and the value will now more comprehensively accrete to our business and our shareholder value creation. Now I'll spend some time walking through our financial performance for the business and its segments, beginning on Slide 5. Q2 net sales of $128.7 million were up $20.8 million or roughly 19% versus the prior year period, supported by growth across both segments. Further, Q2 net sales growth was driven by the contributions from new business launches, higher precious metals pass-through pricing, volume growth and slightly favorable FX translation. Over the first half of the year, net sales of $247.2 million are up $33.6 million or 16%, demonstrating a very strong start to the year and a continuation of our momentum from the first quarter. Our Q2 adjusted gross margin dollars of $26.1 million grew $5 million or 24% versus the prior year period. This growth was supported by a stronger mix of sales as a function of new business launches. Across the first half of the year, adjusted gross margin dollars of $49.2 million are up $10.3 million or 26%. These results reflect a very solid adjusted gross margin of 20.3% in the second quarter and 19.9% year-to-date, each displaying meaningful expansion as margins for the quarter and year-to-date have grown by 80 basis points and 170 basis points, respectively, compared to the respective periods a year ago. Second quarter adjusted EBITDA of $17.9 million grew by $4.7 million or 36% versus last year's second quarter. This increase is led by higher sales and improved mix and volume leverage from past cost improvement actions, partially offset by higher SG&A. Across the first half of 2026, total adjusted EBITDA of $32.1 million is up $8.3 million or 35% versus results of $23.8 million in the first half of 2025. The first half growth in our profitability measure has been driven by similar drivers as noted in our quarterly results. Adjusted EBITDA growth has come with an improvement in our margins and second quarter adjusted EBITDA margins of 13.9% of sales expanded 170 basis points versus last year's second quarter. On a year-to-date basis, through the first two quarters of 2026, adjusted EBITDA margins of 13% are up 190 basis points versus the 11.1% in the first half of 2025. I'll now turn to our segments, starting on Slide 6. In our Power Solutions segment, where our business consists largely of stamped products, net sales for the quarter were $62.3 million, up 40% compared to $44.6 million in the prior year period. This increase was driven by higher precious metals pass-through pricing and higher volumes. Across the first half of the year, Power Solutions net sales of $117.7 million grew 34% versus the first half of 2025, driven largely by the same factors impacting the second quarter. Power Solutions adjusted EBITDA was $12.7 million, an increase of $3.6 million or 40% versus last year's second quarter of $9.1 million, driven by sales growth, improved mix from growth in targeted high-value end markets and contributions from ongoing cost-out initiatives. Additionally, quarterly and first half adjusted EBITDA margins were 20% of net sales, up meaningfully versus the first half of 2025. Our next segment, Mobile Solutions on Slide 7 covers our Machined Products business. Net sales for the quarter were $66.6 million compared to $63.4 million in last year's quarter, an increase of $3.2 million or 5%. This segment has now delivered two consecutive quarters of net sales growth year-over-year. This sales growth reflected solid volumes from new program launches along with favorable foreign exchange impacts. Across the first half of the year, net sales of $129.7 million are up 3% versus $125.6 million in the first half of the prior year period. Our second quarter adjusted EBITDA in the Mobile Solutions segment was $9.8 million, up 13% versus last year's second quarter results of $8.7 million, with the segment's adjusted EBITDA margin of 14.7%, expanding 100 basis points versus 13.7%. Adjusted EBITDA for the first half of 2026 has seen a similar theme play out with $18 million at nearly a 14% margin rate, improving versus $16.8 million or just over 13% of sales. With that, I'll turn the call back over to Harold. Harold?
Thank you, Chris. I appreciate it. I wanted to talk a minute about our growth program and our portfolio objectives that we have. In the second quarter, we continued advancement in that regard, and automotive has now declined to about 40% of the company. Our ultimate goal is to have that be about one-third, not really by shrinking, but by the other areas growing more quickly. And that is, in fact, happening. The top three growth markets that we're focused on are listed here: data center and electric grid, defense and electronics, and medical products. We had decent wins in each of those three segments in the second quarter and year-to-date. And those areas now are over $150 million of our sales, about one-third of the company, and we have near-term targets to increase that percentage. And it obviously starts with prospecting and then bidding on new awards and then winning on close opportunities. And we've been winning at an above-expectation rate and the highest rate that we've ever done. Our prospecting is expanding actually. I wanted to give just some vignette updates on each one of these segments, turning to the next page, starting with just an overview of our five-pillar program. The five components are the three areas I just mentioned, plus high-value vehicle parts where we have a curated portfolio that we attack in the commercial vehicle, recreational vehicle and passenger vehicle space, where we believe that it's very profitable and high return on investment for us and it helps us push our technology, and then high-value stamping. So we have a few niches that we're in on the stamping side as well, and we're staying close to them. Many of them are in the smart home area: smoke detectors, alarm systems, switches. So those are the five areas that we're focused on, on a go-forward basis, and that's how we've organized our sales team, our business development teams, our engineering, and we're allocating our capital to those areas as well. On the next page, I want to dive down a little more deeply into data center and electric grid. As seen on the prior page, it's an $80 million business already on a trailing 12-month basis with a near-term goal of $120 million. We have multiple large opportunities that we're evaluating in this space right now. Everyone knows that AI and data center is one of the biggest things happening in the world, and it's the biggest thing happening to our company. We are getting very large asks to us. We're a well-known precision metal part maker, and that finds itself in a lot of aspects of the data centers, especially with the liquid management regarding the cold plates as well as the pumps to make sure that system is good. But on the top end of the system is electrical, and that also plays into our electrical business, our stamping business and assemblies business. So it's our second largest market right now behind the high-value vehicle parts. But it's closing the gap. And our goal is to have it be our largest segment. Recent news in the quarter that we gave out via a specific press release is that we had some big wins here. We're focused on establishing supply chain positions with the right people and the right platforms, and it's expanding. We started off in Asia. It's now expanded to Europe and into North America. We're leveraging our assets and technical know-how to have leakproof metal parts and also the aesthetic qualities are quite high on these parts as well, and we know how to do that. We have many ramp-ups underway. If you had a chance to look at our 10-Q, you'll note that in Note 3, we expanded the look into the end markets that we serve. And you'll notice that we don't have a lot of sales showing up yet in our machine products business for grid and data center and the wins that we've had are primarily going to be a second-half ramp-up for us, and those ramp-ups are underway. We've secured significant new awards that will be ramping up into the beginning of '27. We already have about 50 machines we're bringing online. We have about 25 in-house already. And we are running out of space. Tim French is not on the call today because he's in China, and he's looking at new space in the area of our plant in Wuxi; we'd like to just be 10 or 15 minutes away. We need about another 100,000 square feet to accommodate the equipment that we're going to need. This business is on track with expanding opportunities. On the next page, I wanted to talk about Defense & Electronics for a minute. That's already at $60 million on a trailing 12-month basis. Our near-term goal there is $90 million. We supply critical components in weapon systems, guided systems, and we're evaluating anti-drone munitions, making the munitions themselves for shooting down drones. Recent news we announced in the quarter was that we have secured a multiyear agreement to produce parts of weapons. And that alone is expected to be about another $12 million to $15 million just with that one customer, and we are ramping up now. We have many, many new firsts associated with that. It's a multiyear project. We had a lot of advancements on surface coatings as well as mastering high-volume titanium machining. Titanium retains heat and swells and changes its dimensions as you're forming it, so there's a lot of things you have to get right to be able to do high-volume titanium machining, but we were able to master that after a few quarters. We're expanding our Defense & Electronics growth platform. We've won a bunch of programs over the last few years, but it's an expanding area for us. And we have a $75 million working pipeline. We've achieved a lot of credentials with the Department of Defense and ITAR and other types of certifications they need in order to compete here. And we have a very, very big aspiration in this area. It's not exploding in demand like data center is, but it's right behind it. So we're opportunity-rich in this segment as well. On the next page, I wanted to talk about Medical. It's smaller than the others. It's about $15 million on a trailing 12-month basis. We have a near-term goal of $40 million, but it is coming from behind, and it's taken us a while to get the credentials that we needed here. It's very clean manufacturing required, as you would guess. It took us a while to get the plant certifications. The parts themselves are not that hard to make. But we did have some breakthroughs this year, and we are approved to make surgical tips, if you will, the ends and pieces that go into the robotic machines to do surgery, and we received our initial purchase orders. So we're underway with the ramp-up there in our Kentwood, Michigan plant. We have had to renovate our quality system. It's taken a multiyear investment program from us, and we've done it. That new business that we announced effectively will double the business itself, and it's upward from there. Our pipeline is now about $75 million in this area also. We have a dedicated team that's found its stride, and we're now evaluating the market in China, the second largest market for robotic-assisted surgery, and we have all the approvals we need to go in with the exact same customers. So this business is gaining momentum for us, and we have a strong team in place, and we have high aspirations for our medical business. With that and the refinancing Chris gave you an overview of, we wanted to let you know that we're raising our guidance for this year. If you look at it, we raised it in the last quarter also due to our actual results, and we were asked about how we think about our guidance. We're letting the results flow before we're changing our outlooks, and we're doing it again here. So we do expect our sales to be $460 million to $480 million this year, our EBITDA $55 million to $65 million and our new business wins $80 million to $100 million. In our earnings release that we put out this morning, you'll see that through July, our new business wins are already $80 million. So we increased the high end of the range there and the expectations. Those are all records for us, and they're bringing along the need for talented people and capital equipment to put in place to be able to produce at a higher level as we add to capacity. So that's our new guidance, and we're very happy about it. As events unfold, we'll look at our guidance further as we go along through the second half of the year. With that, we'd like to turn it over and open up the webcast to a question-and-answer period.
分析師問答
Our first question comes from the line of Rob Brown with Lake Street Capital Markets. We're at the high end of the range and expectations. Those are all records for us, and they bring with them the need for talented people and capital equipment to put in place so we can produce at a higher level as we add capacity. That's our new guidance, and we're very happy about it. As events unfold, we'll reassess our guidance through the second half of the year. With that, we'd like to open the webcast to a question-and-answer period.
Congratulations on all the progress and great to see the steps that have been taken. Just wanted to follow up on the kind of start with the data center market. You've had some nice wins in the quarter. Could you kind of characterize the pipeline in that market? What's sort of the building pipeline? What areas are you most interested in? And just maybe the scale of the pipeline?
Yes. That's on page 10 in the deck. Our products right now, Rob, we're making transformer parts, busbar parts, test probes, the liquid connector parts. We branched into the cold plate itself; it's plated with a nickel-type plating. And we are looking at couplings that go into the heat pumps. The heat pump system itself has well-known suppliers in that area—Danfoss, Parker and Stäubli are examples—and all the couplings are also metal. So we are looking at the stampings that are also inside that go into the racks, both up and down, as well as the WICs and cabling that controls the electricity inside of the center. We have a multiproduct look at the data center ecosystem. We're getting pulled into a few new areas of welding and brazing, and that's fine because we know how to do that, and then you have to be able to automate it. So it's not a one-product story. It's to bring everything the company has to the game plan story. We have a large, expanding pipeline; on this chart here at the bottom, I mentioned that we're now approaching $100 million on prospecting. And just to delineate that, we talk about pipeline figures if we rendered an RFQ and the customer has an RFQ from us. But prospecting begins before that. So we have discussions underway that are large. In our last call, someone asked, how big are you trying to get in these connectors. We think we could do $100 million in that alone over time. The real thing for us is who to partner with, what type of assets we want to put in place, and where we want to put them. So it's an evolving market for us, and it's quite fulsome. It's a big story for us.
Great. And just on the kind of the gross margin improvement, nice to see there. How do you sort of see it? Is it sustainable at this level? Or can you continue to move that up as you change your product mix?
Sure, thanks, Rob. Yes. So we've benefited in a lot of areas with our margins. We took a lot of cost out over the last eight quarters or more. So we've got some leverage based on the overall cost structure reduction. Additionally, we've got new business ramp-ups. We talked in past quarters about how those new business pieces are accretive. We are benefiting from higher precious metals pass-through as well. I think the dependencies on the improvements going forward are going to be more new business brought on at accretive levels, dependency on precious metals and then getting in these new business segments like medical and data center. If we keep diversifying in these other verticals, I think you'll see margins moving up. Obviously, precious metals can drag it down a little bit in the near term if prices come down. But overall, we've got some tailwinds with these new verticals. So keep an eye on these verticals and the revenue they're generating as well as new business, and I think that will help guide the margins going forward.
Your next question comes from the line of Greg Palm with Craig-Hallum.
Congrats on all the positive news and frankly, just really impressive progress. So pretty impressive stuff. Can we maybe just start a little bit tied to the last kind of answer around new business wins. And I'm wondering, at this point, how much of that is currently flowing through the P&L? It sounds like there's actually a pretty big chunk that's still yet to come, at least on the stuff that you've announced, the liquid cooling connectors, the firearms accessories. I think you talked about that ramping up in Q3. I only ask in light of really positive first half results—I'm guessing you're just maybe building some extra conservatism in the second half guide, but maybe you can just address that as those newer business opportunities start to ramp up.
Good point. So Greg, if all things being equal, if we weren't winning new business and things were just steady state, the second quarter usually is our strongest quarter. That's when we have our highest production volumes on existing contracts. Then the next strongest is Q3, then Q1, and Q4 is usually our lightest quarter because our customers tend to free up their inventory positions before they report year-end results. This year is going to be a little different because we have a lot of new wins that we're ramping up in the second half. Your point is true: the announcements we made—Medical, Data Center, and Defense—are not impacting the first half at all. They ramp up in the second half. For instance, the 50 machines to make data center parts will start to hit stride in November. We'll have all the machines installed and the sales outlook in November is going to go over $1 million a month and keep building into Q1. We don't have any benefit from that right now, and the same with Medical and the same with Defense. Through the end of July, we won $80 million worth of business, and the majority of it is immediate ramp-up. So we will benefit from that in the second half. The way we're playing it right now, Greg, is we know that Q4 is usually light, but we have offsetting wins. So that's what's led us to think through our guidance and how much to increase it or not. It's slightly conservative, but we don't really control demand, so we have to get pull signals. Our visibility is really in this quarter. We don't have pulls going into the fourth quarter yet with the exception of data center, where they're saying they want everything to make as soon as we can make it. But we're comfortable right now with the guidance we've given, and it will have those variables playing out.
Okay. Makes sense. And I know you're not addressing the longer-term EBITDA margin guidance here today, but you just realized a 14% EBITDA margin on the quarter on revenue that's significantly lower than what your long-term target is on a quarterly basis. So I don't know, maybe you could just talk about that in light of those targets because it seems like there could be some pretty meaningful upside to that as well.
We have momentum and it looks sustainable. To Chris' point, we're mapping out the material and every part of our cost structure. It looks like we're a couple of points light right now. The longer-term goal for adjusted EBITDA margin is more like 14% to 16% longer term. That's going to be pulled through by a better mix. Our new wins are averaging about five points higher on gross margin versus existing contracts. We'll give an update on longer-term goals in our next update, but right now I would say an appropriate longer-term target should be in the 14% to 16% range on adjusted EBITDA.
Your next question comes from the line of Joe Gomes with NOBLE Capital.
This is George Proost. I'm filling in for Joe this morning. Congratulations on the quarter. I'm curious about the manufacturing expansion you guys mentioned earlier in China and what that looks like in terms of production and timeline to hopefully bring that online?
Right now, we have two facilities in China that are wholly owned foreign enterprises and one JV plant. The machining plant is in Wuxi, China, which is a suburb of Shanghai. That's the plant where we've been doing all of the sampling for the data center customers that we're prospecting with, and it's where we have our approvals. We chose that location to get our certifications, approvals and equipment organized. We believe we can get in about 80 machines into that facility. We've already ordered 50 and we're getting ready to order the next batch. As we think it through, we think that we need space for at least another 200 machines from our estimates. The timing is hard to understand right now because everyone is in a feeding frenzy to get equipment lined up and parts supply. The size of the facility we're looking for would be one that can accommodate another 200 machines after we have filled up our current envelope. The timing—we need to get this done within 12 months.
Okay. Thank you for that background. A follow-up: what materials are the most volatile for you guys right now? And is that altering any of your sourcing decisions?
There are two ways to think about materials: tonnage and dollar value. The biggest dollar-value materials are precious metals—gold and silver. The biggest tonnage is steel and then copper. We have year-over-year inflation in all metals, and we track it closely. We also have tariffs on steel and we monitor those. I don't believe there are any tariffs on gold or silver. Our procurement team, led by our Chief Procurement Officer, tracks all tariffs and surcharges; it's a moving target. We have the right to pass through cost changes, and we do, and we monitor our behavior there. We see full recovery through pass-throughs, so we don't make money on this but we try not to lose money on it. It impacts working capital when you have inflation. It actually makes our percent margins go down when we have large pass-through costs. So a positive dynamic is our percentages are going up even while passing through a big cost at zero gross margin. When metals calm down over time, that will also help our percentages. Those are the main raw materials for the company.
Your next question comes from the line of Barry Haimes with Sage Asset Management.
Congrats on all the progress. I had a couple of questions on the financing. One is, could you tell us how the share count will change? And then secondly, you alluded to the Phase 2, if you will, in terms of renegotiating the term loan. Could you talk a little bit about the progress and possible timing on that?
Thanks for the question. The share count details are in the documents, but to summarize, we swapped about 5.5 million shares for roughly $19 million of reduction in the preferred. So that will increase overall share count. As far as the refinance of the term loan, we're thinking about that and working on it. We have a good relationship with Marathon right now, and we're hopeful that we're able to work out better terms based on how the business is doing. Nothing to announce at this point, but with the lower debt we've achieved through this transaction and expectations for the future, I think that will bode well for reducing rates and getting us more flexibility. With all this new business, we want to have a capital stack that allows for growth and gives us the flexibility to either buy or lease equipment and get much better and more competitive rates, not only on the senior note but on leasing or buying equipment. Harold and I and the team will be working on that diligently in the coming weeks and quarters. More to come on that.
Barry, I'll also give you a couple of numbers. Right now, after the swap, we have 82.6 million shares outstanding, out of an authorized 90 million, and the gap is a reserve for compensation plans and previously issued warrants. So we've used all the available common stock that the company had access to.
Your next question comes from the line of Robert Sussman with Bentley Capital.
I'm absolutely staggered listening to this call and the number of wins and the pipeline that you have. For a company your size, it's just staggering. I'd like to ask you, what is it about the company that is enabling all these wins in such diverse markets? Is there a unique skill set that you have?
Most of the wins have been multiyear in nature. One of the differentiators of a smaller company is its ability to organically grow sales. If you spin back three years, the company was really focused on satisfying automotive customers and then other customers that came to us. We flipped that around and asked what the best use of these assets and this know-how is. There are several large markets where these assets apply. We had to hire executives from those industries, start prospecting and understand our gaps to becoming an approved supplier, and then start quoting and running programs. We're using tools like Salesforce to organize and track why we win and why we lose, and then we drive to outcomes. This year we've had some marquee multiyear programs with big people that helped our credentials and establish us as a real competitor, so we have references now. We're winning higher amounts than we thought, which brings more working capital and more CapEx needs, but we're not in trouble; we just have to be careful and disciplined on pricing. We're running a 27% hit rate year-to-date on closed opportunities, which compares favorably—it's above industry average for a manufacturing company. We're losing over 70% and the reason is discipline on financials. Our prospecting is expanding because we're getting credentials in targeted areas and more looks. We're not going into many new areas; the automotive aftermarket is under consideration, but right now we're focused on the markets that are performing for us.
One follow-up. I assume that there's some lag in passing precious metal prices through. Can you tell us what that lag is? And I assume there has to be some drag on profitability from that lag.
We're allowed to true up to actuals. If we can show that we incurred inflation to deliver an order, it's a true-up. The onus is upon us to match up and be transparent with what our input costs are and the performance of producing those purchase orders. It's smaller than you might think because the company is pretty good at not letting that happen. We have procedures to recover costs through pass-throughs and true-ups, so the impact is manageable.
Your next question comes from the line of Barry Haimes with Sage Asset Management.
One other follow-up. Harold, on your comment you just made on the new business, obviously, creating demand for machines and capital. When you're going through that exercise, what sort of ROIC target or target range do you have in terms of saying, okay, this capital is worth spending on the session such a program?
The floors for our investment decisions are a 25% gross margin and a 25% IRR if spending is needed. Those are the floors. We've been averaging quite a bit above those floors. The real decision-making is around how solid of a commitment the customer is willing to make to us on a multiyear volume basis. You can see when customers have plenty of suppliers bidding because they don't want to make a commitment; they want to date, they don't want to get married. It's different when you can tell you have a differentiated value proposition because they want to lock you in. We're being balanced across a set of customers versus getting exclusive with one, and that affects our decisions. The financials are typically there. We've been selective and have been able to cherry-pick higher-return programs. Through yesterday, we had won 132 programs year-to-date and we're launching programs we've previously won; many are immediate ramp-up. We have well over 150 programs in ramp-up mode right now and nearly every plant has some new business ramp-up. The biggest and most exciting ones are the three areas we talked about—data center and grid, defense and electronics, and medical—because they're high growth and appealing to the market. We're focused on those three areas with a differentiated push.
This concludes the question-and-answer session. I will now turn the call back to Harold Bevis for closing remarks.
Yes. Chris, let's have the team give a summary on the balance sheet and the financials, and then I'll do the business wrap-up.
Sure. As I mentioned, we're very pleased with the strategic refinancing of the balance sheet and we'll continue to work on the senior note and so forth. I think we really have another step to go to get the balance sheet fine-tuned for the growth that we're experiencing, and we'll be working hard on that.
I'm sure that you've detected from our comments and from the Q&A that our momentum has not peaked. Our momentum is building and things have traction here at the company. We're proud of the quarter, but we have bigger aspirations, and we look forward to reporting Q3 with you guys in 90 days. Thank you very much for calling in today. And with that, we'll end the call. Christine?
This concludes today's call. Thank you for attending. You may now disconnect.