Mayville Engineering Company Announces Fourth Quarter and Full-Year 2022 Results

February 28, 2023

Mayville Engineering Company (NYSE: MEC) (the “Company” or “MEC”), a leading value-added provider of design, prototyping and manufacturing solutions serving diverse end-markets, today announced results for the three and twelve-months ended December 31, 2022.

FOURTH QUARTER 2022 RESULTS

(All comparisons versus the prior-year period)

  • Net sales of $128.5 million, or +13.8% y/y
  • Net income of $2.4 million, +$15.9 million y/y
  • Diluted earnings per share of $0.12, an increase of $0.77 y/y, including the impact of $2.0 million or $0.10 per share of costs related to the ramp up of Hazel Park
  • Adjusted EBITDA of $11.6 million, or +26.2% y/y

FULL-YEAR 2022 RESULTS

(All comparisons versus the prior-year period)

  • Net sales of $539.4 million, or +18.6% y/y
  • Net income of $18.7 million, +$26.2 million y/y
  • Diluted earnings per share of $0.91 an increase of $1.27 y/y, including the impact of $3.3 million or $0.16 per share of costs related to the ramp up of Hazel Park
  • Adjusted EBITDA of $60.8 million, or +31.5% y/y

FULL-YEAR 2023 FINANCIAL GUIDANCE

  • Net sales guidance of between $540 million and $580 million
  • Adjusted EBITDA guidance of between $62 million and $71 million
  • CAPEX guidance of between $20 million and $25 million

MANAGEMENT COMMENTARY

“Our strong fourth quarter results demonstrate continued, favorable demand conditions across our diverse end-market portfolio, together with focused execution on our multi-year business transformation initiatives,” stated Jag Reddy, President and Chief Executive Officer. “With the recent implementation of our MBX Initiative, we’ve identified multiple opportunities for margin expansion and profitable growth, with an emphasis on operational and productivity improvements, together with targeted commercial expansion in both existing and adjacent markets.”

“As a vertically integrated, tier-one supplier of scale, MEC is uniquely equipped to deliver a one-stop solution that combines design, prototyping, and fabrication expertise across the entire product lifecycle,” continued Reddy. “We continued to capitalize on our market-leading position during the fourth quarter, delivering significant year-over-year growth in net sales, Adjusted EBITDA and net income. Overall, we continued to see demand strength across our commercial vehicle, construction & access, agriculture and military end-markets, which partially offset softness in powersports and other categories.”

“Adjusted EBITDA increased 26.2% on a year-over-year basis in the fourth quarter, while Adjusted EBITDA margin, excluding the impact of the ramp-up of our Hazel Park facility, increased 240 basis points to 10.5%,” continued Reddy. “We expect the planned expenses related to the ramp-up of Hazel Park will adversely impact our margins by approximately 100 basis-points in 2023. However, we believe the impact of the Hazel Park ramp up will be partially offset by ongoing MBX-related asset optimization and plant utilization initiatives.”

“Over the near-to-medium term, we intend to prioritize allocation of capital towards bolt-on acquisitions of complementary assets; investments in productivity and automation; debt reduction; and opportunistic share repurchases under our existing authorization,” continued Reddy. “On the acquisition front, we remain focused on expanding our fabrication capabilities to include lightweight materials, such as aluminum, plastics and composites, particularly as we seek to build our presence within newer verticals, such as energy transition and emerging technologies. As before, we remain highly focused on maintaining adequate liquidity to support the growth of our business, while maintaining net leverage at or below 2.5x.”

“While customer quoting activity and order rates remain strong, we are mindful of the potential for a softening in the broader macroeconomic outlook during 2023,” continued Reddy. “Through our MBX Initiative, we remain focused on achieving above-market performance through the economic cycle, while continuing to drive ratable margin expansion and profitable growth. Although we currently see no slowing in our largest end-markets, our full-year 2023 financial guidance assumptions reflect the potential challenges that may manifest as we move through the year.”

“Entering 2023, our team is energized by the opportunities for growth that lay ahead, particularly as we begin to reap the self-help benefits afforded by MBX,” concluded Reddy. “Later this year, we intend to introduce a multi-year strategic roadmap, one that will include mid-cycle operating and financial targets that capture the full potential of MEC. We look forward to sharing more information with you at that time.”

PERFORMANCE SUMMARY

Net sales increased by 13.8% on a year-over-year basis in the fourth quarter 2022, driven by a combination of increased commercial sales volumes and continued price discipline, partially offset by supply chain challenges affecting some of our customers.

Manufacturing gross margin was $13.0 million in the fourth quarter 2022, or 10.1% of net sales, versus $9.4 million, or 8.3% of net sales, in the prior year period. The 180 basis point year-over-year improvement in manufacturing gross margin was driven by volume growth due to ongoing inventory replenishment in customer channels, improved fixed-cost absorption; and commercial price actions. These actions were partially offset by the planned impact from the ramp-up of our Hazel Park, Michigan facility during the fourth quarter of 2022, and lower scrap income.

Profit sharing, bonus and deferred compensation expense increased $0.6 million to $4.1 million in the fourth quarter of 2022. Other selling, general and administrative expenses were $6.0 million in the fourth quarter of 2022 as compared to $5.0 million for the same prior year period. The increase in these expenses during the fourth quarter primarily reflect an increase in consulting, legal and professional fees and higher salaries, wages and benefits due to inflation.

Interest expense was $1.2 million in the fourth quarter 2022, compared to $0.4 million in the prior year period, primarily due to higher interest rates.

MEC reported Adjusted EBITDA of $11.6 million in the fourth quarter 2022, or 9.0% of net sales, versus $9.2 million, or 8.1% of net sales, in the prior-year period. Fourth quarter 2022 Adjusted EBITDA reflects $2.0 million of losses associated with the ramp-up of production at our Hazel Park facility. Excluding the impact of the ramp-up of the Hazel Park facility, Adjusted EBITDA margin would have been approximately 10.5%.

Net income for the fourth quarter of 2022 was $2.4 million, or $0.12 per diluted share, versus a loss of ($13.6) million, or ($0.65) per diluted share, in the prior-year year period. Fourth quarter 2022 net income includes the impact of $2.0 million, or $0.10 per share of costs related to the ramp up of Hazel Park.

END-MARKET UPDATE

 

 

Twelve Months Ended

 

 

December 31,

 

 

2022

 

2021

Commercial Vehicle

 

$

212,992

 

$

156,488

Construction & Access

 

 

111,525

 

 

92,298

Powersports

 

 

87,531

 

 

90,247

Agriculture

 

 

57,412

 

 

49,827

Military

 

 

24,831

 

 

24,147

Other

 

 

45,101

 

 

41,819

Net Sales

 

$

539,392

 

$

454,826

Commercial Vehicles

MEC is a Tier 1 supplier to many of the country’s top original equipment manufacturers (OEM) of commercial vehicles providing exhaust & aftertreatment, engine components, cooling, fuel and structural systems for both heavy- and medium-duty commercial vehicles.

Net sales to the commercial vehicle market were $213.0 million in 2022, an increase of 36.1% versus the prior-year period. The increase in sales was primarily the result of volume increases and strengthened end market demand due to historically low customer inventories, partially offset by temporary disruptions in customer supply chains. Net sales into the commercial vehicle market represented 39.5% of total net sales in 2022, versus 34.4% in the prior-year period.

Construction & Access

MEC manufactures thousands of parts for the construction & access market including fenders, hoods, supports, frames, platforms, frame structures, doors and tubular products such as exhaust & aftertreatment, engine components, cooling system components, handrails and full electro-mechanical assemblies.

Net sales to the construction & access market were $111.5 million in 2022, an increase of 20.8% versus the prior-year period. The increase in sales was primarily driven by fleet restock demand amid lower dealer inventories. Net sales into the construction & access market represented 20.7% of total net sales in 2022, versus 20.3% in the prior-year period.

Powersports

MEC manufactures stampings and complex metal assemblies and coatings for the marine propulsion, all-terrain vehicles (ATV), multi-utility vehicles (MUV) and motorcycle markets. MEC’s powersports expertise includes axle housings, steering columns, swing arms, fenders, suspension components, ATV/MUV racks, cowl assemblies and vehicle frames.

Net sales to the powersports market were $87.5 million in 2022, a decline of 3.0% versus the prior-year period. The decrease in sales was the result of supply chain challenges affecting some of our customers, partially offset by new project wins from both new and existing customers. Net sales into the powersports market represented 16.2% of total net sales in the fourth quarter 2022, versus 19.8% in the prior-year period.

Agriculture

MEC is an integral partner in the supply chain of the world’s leading agriculture OEMs manufacturing thousands of parts including fenders, hoods, supports, frames, platforms, frame structures, doors and tubular products such as exhaust, engine components, cooling system components, handrails and full electro-mechanical assemblies.

Net sales to the agriculture market were $57.4 million during 2022, an increase of 15.2% versus the prior-year period. The increase in sales was driven mostly in large agriculture by elevated crop prices, which contributed to strong demand for new equipment, particularly given the limited inventory of used equipment available to the market. Net sales into the agriculture market represented 10.6% of total net sales in 2022, versus 11.0% in the prior-year period.

Military

MEC holds the International Traffic in Arms Regulations (ITAR) certification and produces components for the United States military. Products include exhaust, engine components, cooling, fuel, suspension, structural systems and chemical agent resistant coating (CARC) painting capabilities.

Net sales to the military market were $24.8 million in 2022, an increase of 2.8% versus the prior-year period. Contributions from new programs, together with recent new vehicle introductions, contributed to the year-over-year sales growth. Net sales into the military market represented 4.6% of total net sales in 2022, versus 5.3% in the prior-year period.

Other

MEC also produces a wide variety of components and assemblies for customers in the power generation, industrial equipment, mining, forestry, communications, and medical markets.

Net sales to other end markets for 2022 were $45.1 million, an increase of 7.8% year-over-year. Sales in this market primarily relate to MEC Outdoors, tooling, automotive and additional miscellaneous markets. Net sales into other markets represented 8.4% of total net sales in 2022, versus 9.2% in the prior-year period.

STRATEGIC UPDATE

During the fourth quarter, MEC continued the implementation of its MEC Business Excellence (MBX) initiative, a value-creation framework designed to improve performance across all aspects of the organization. Upon full implementation, MEC expects MBX to drive improved margin capture, free cash generation and profitability over a multi-year period. The key elements of MBX include the following:

  • Development of a High-Performance Culture. The foundation to strategic execution is an organization with a performance-oriented culture. Through MBX, we are effectuating this cultural change through promoting breakthrough thinking, implementing key performance metrics reviews and other daily lean management routines.
  • Sustainable Operational Excellence. In practice, operational excellence amounts to increased standardization, lean manufacturing, and automation of our various production processes, all of which will help us to improve productivity and reduce costs across the value chain. Improved productivity and utilization will not only be a catalyst for improved margins and cash flow, but it will also allow for more agility in response to evolving customer needs through the economic cycle.
  • Driving Commercial Excellence. With disciplined segmentation and positioning of our products and services to move up the value chain, we intend to capture additional growth opportunities from customers who value our full suite of design, prototyping and aftermarket services.
  • Disciplined Capital Deployment. We will seek to expand within high-growth, adjacent markets, while continuing to build our share-of-wallet with existing customers. As part of this initiative, we intend to prioritize capital investment toward lightweight materials fabrication, ensuring we are well positioned to support customer growth into EVs, energy infrastructure and renewables with impending energy transition.
  • Human Resource Optimization. Given our significant manufacturing footprint, we are heavily reliant on a stable pipeline of skilled and experienced talent pool. To that end, we will continue to prioritize the recruitment and retention of skilled trades, even as we seek to increase automation across our business. We will seek to utilize competitive, performance-based incentives to attract and retain high-potential candidates for development and advancement. Through these efforts, we will aim to create multi-tiered succession planning and a stable recruiting pipeline to ensure long-term business growth.

BALANCE SHEET UPDATE

At December 31, 2022, MEC had net debt outstanding of $74.9 million and total cash and availability on its senior secured revolving credit facility of $197.71 million. At the end of the fourth quarter, the ratio of net debt to trailing twelve-month Adjusted EBITDA was 1.3x, consistent with its long-term net leverage target of at or below 2.5x.

FINANCIAL GUIDANCE

The Company issued financial guidance for the full year 2023. All guidance is current as of the time provided and is subject to change.

 

 

FY 2022

 

FY 2023

(in Millions)

 

Actual

 

Forecast

Net Sales

 

$539.4

 

$540 - $580

Adjusted EBITDA

 

$60.8

 

$62 - $71

Capital Expenditures

 

$58.6

 

$20 - $25

The Company’s 2023 guidance reflects an estimated 4% to 5% decrease in net sales related to lower raw material pass-through costs as compared to the 5.5% increase in 2022. The Company’s guidance also reflects an estimated $4 million to $6 million negative impact of under-absorbed overhead costs associated with the ramp up of production at its Hazel Park, Michigan facility.

______________

1 This amount is reduced to approximately $125.5 million after taking into account the $72.2 million of outstanding borrowings under the credit facility as of December 31, 2022.

FOURTH QUARTER AND FULL-YEAR 2022 RESULTS CONFERENCE CALL

The Company will host a conference call on Wednesday, March 1, 2023 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time).

For a live webcast of the conference call and to access the accompanying investor presentation, please visit www.mecinc.com and click on the link to the live webcast on the Investors page.

For telephone access to the conference, call (844) 200-6205 within the United States, call (833) 950-0062 within Canada, or +1 (929) 526-1599 from outside the United States and Canada and please use the Access Code: 308930.

FORWARD-LOOKING STATEMENTS

This press-release includes forward-looking statements that reflect plans, estimates and beliefs. Such statements involve risk and uncertainties. Actual results may differ materially from those contemplated by these forward-looking statements as a result of various factors. Important factors that could cause actual results or events to differ materially from those expressed in forward-looking statements include, but are not limited to: macroeconomic conditions, including inflation, rising interest rates and recessionary concerns, as well as ongoing supply chain challenges, labor availability and cost pressures, and the COVID-19 pandemic, have had, and may continue to have, a negative impact on our business, financial condition, cash flows and results of operations (including future uncertain impacts); risks relating to developments in the industries in which our customers operate; risks related to scheduling production accurately and maximizing efficiency; our ability to realize net sales represented by our awarded business; the COVID-19 pandemic continues to negatively affect our business, financial condition, cash flows, results of operations, supply chain (including the supply chain issues encountered by our original equipment manufacturer customers) and raw material availability, as well as customer demand (including future uncertain effects); failure to compete successfully in our markets; our ability to maintain our manufacturing, engineering and technological expertise; the loss of any of our large customers or the loss of their respective market shares; risks related to entering new markets; our ability to recruit and retain our key executive officers, managers and trade-skilled personnel; volatility in the prices or availability of raw materials critical to our business; manufacturing risks, including delays and technical problems, issues with third-party suppliers, environmental risks and applicable statutory and regulatory requirements; our ability to successfully identify or integrate acquisitions; our ability to develop new and innovative processes and gain customer acceptance of such processes; risks related to our information technology systems and infrastructure; geopolitical and economic developments, including foreign trade relations and associated tariffs; results of legal disputes, including product liability, intellectual property infringement and other claims; risks associated with our capital-intensive industry; risks related to our treatment as an S Corporation prior to the consummation of our initial public offering; risks related to our employee stock ownership plan’s treatment as a tax-qualified retirement plan; and other factors described in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021, as such may be amended or supplemented in our subsequently filed Quarterly Reports on Form 10-Q. This discussion should be read in conjunction with our audited consolidated financial statements included in the Company’s previously filed Annual Report on Form 10-K for the year ended December 31, 2021, and our to be filed Annual Report on Form 10-K for the year ended December 21, 2022. We undertake no obligation to update or revise any forward-looking statements after the date on which any such statement is made, whether as a result of new information, future events or otherwise, except as required by federal securities laws.

ABOUT MAYVILLE ENGINEERING COMPANY

Founded in 1945, Mayville Engineering Company (MEC) is a leading U.S.-based value-added provider of design, prototyping and manufacturing solutions serving diverse end-markets. Our customers operate in diverse end markets, including heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, agriculture, military and other end markets. Along with process engineering and development services, MEC maintains an extensive manufacturing infrastructure with 20 facilities across seven states. These facilities make it possible to offer conventional and CNC (computer numerical control) stamping, shearing, fiber laser cutting, forming, drilling, tapping, grinding, tube bending, machining, welding, assembly and logistic services. MEC also possesses a broad range of finishing capabilities including shot blasting, e-coating, powder coating, wet spray and military grade chemical agent resistant coating (CARC) painting.

NON-GAAP FINANCIAL MEASURES

This press release contains financial information calculated in a manner other than in accordance with U.S. generally accepted accounting principles (“GAAP”).

The non-GAAP measures used in this press release are EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin.

EBITDA represents net income (loss) before interest expense, provision (benefit) for income taxes, depreciation, and amortization. EBITDA Margin represents EBITDA as a percentage of net sales for each period. Adjusted EBITDA represents EBITDA before CEO transition costs, stock-based compensation, Hazel Park transition costs due to the former fitness customer and impairment charges on long-lived assets and (gain) loss on contracts specifically purchased to meet obligations under the agreement with our former fitness customer. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of net sales for each period. We present Adjusted EBITDA and Adjusted EBITDA Margin as management uses these measures as key performance indicators, and we believe they are measures frequently used by securities analysts, investors and other parties to evaluate companies in our industry. These metrics are supplemental measures of our operating performance that are neither required by, nor presented in accordance with, GAAP. These measures should not be considered as an alternative to net income (loss), or any other performance measure derived in accordance with GAAP as an indicator of our operating performance. These measures have limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP.

Our calculation of EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin may not be comparable to the similarly named measures reported by other companies. Potential differences between our measures of EBITDA and Adjusted EBITDA compared to other similar companies’ measures of EBITDA and Adjusted EBITDA may include differences in capital structure and tax positions.

Please reference our reconciliation of net income (loss), the most directly comparable measure calculated in accordance with GAAP, to EBITDA, Adjusted EBITDA and the calculation of EBITDA Margin and Adjusted EBITDA Margin included in this press release.

Mayville Engineering Company, Inc.

Consolidated Balance Sheet

(in thousands, except share amounts)

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

 

 

2022

 

2021

ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

127

 

 

$

118

 

Receivables, net of allowances for doubtful accounts of $545 at December 31, 2022 and $631 at December 31, 2021

 

 

58,001

 

 

 

55,417

 

Inventories, net

 

 

71,708

 

 

 

70,157

 

Tooling in progress

 

 

7,938

 

 

 

3,950

 

Prepaid expenses and other current assets

 

 

3,529

 

 

 

2,924

 

Total current assets

 

 

141,303

 

 

 

132,566

 

Property, plant and equipment, net

 

 

145,771

 

 

 

120,746

 

Assets held for sale

 

 

83

 

 

 

 

Goodwill

 

 

71,535

 

 

 

71,535

 

Intangible assets, net

 

 

43,809

 

 

 

50,761

 

Operating lease assets

 

 

36,073

 

 

 

 

Other long-term assets

 

 

2,007

 

 

 

3,865

 

Total assets

 

$

440,581

 

 

$

379,473

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Accounts payable

 

$

53,735

 

 

$

50,119

 

Current portion of operating lease obligation

 

 

4,857

 

 

 

 

Accrued liabilities:

 

 

 

 

 

 

Salaries, wages, and payroll taxes

 

 

7,288

 

 

 

8,684

 

Profit sharing and bonus

 

 

6,860

 

 

 

5,289

 

Current portion of deferred compensation

 

 

18,062

 

 

 

 

Other current liabilities

 

 

11,646

 

 

 

13,280

 

Total current liabilities

 

 

102,448

 

 

 

77,372

 

Bank revolving credit notes

 

 

72,236

 

 

 

67,610

 

Operating lease obligation, less current maturities

 

 

31,891

 

 

 

 

Deferred compensation, less current portion

 

 

3,132

 

 

 

25,117

 

Deferred income tax liability

 

 

11,818

 

 

 

8,641

 

Other long-term liabilities

 

 

1,189

 

 

 

2,462

 

Total liabilities

 

$

222,714

 

 

$

181,202

 

Commitments and contingencies

 

 

 

 

 

 

Common shares, no par value, 75,000,000 authorized, 21,645,193 shares issued at December 31, 2022 and 21,386,382 at December 31, 2021

 

 

 

 

 

 

Additional paid-in-capital

 

 

200,945

 

 

 

197,186

 

Retained earnings

 

 

26,274

 

 

 

7,547

 

Treasury shares at cost, 1,472,447 shares at December 31, 2022 and 1,050,448 at December 31, 2021

 

 

(9,352

)

 

 

(6,462

)

Total shareholders’ equity

 

 

217,867

 

 

 

198,271

 

Total

 

$

440,581

 

 

$

379,473

 

Mayville Engineering Company, Inc.

Consolidated Statement of Net Income (Loss)

(in thousands, except share amounts and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31,

 

December 31,

 

 

2022

 

2021

 

2022

 

2021

Net sales

 

$

128,527

 

 

$

112,975

 

 

$

539,392

 

 

$

454,826

 

Cost of sales

 

 

115,542

 

 

 

103,567

 

 

 

478,323

 

 

 

403,451

 

Amortization of intangible assets

 

 

1,738

 

 

 

2,676

 

 

 

6,952

 

 

 

10,706

 

Profit sharing, bonuses, and deferred compensation

 

 

4,076

 

 

 

3,488

 

 

 

7,997

 

 

 

11,500

 

Employee stock ownership plan expense (income)

 

 

(1,668

)

 

 

(825

)

 

 

 

 

 

 

Other selling, general and administrative expenses

 

 

6,038

 

 

 

5,043

 

 

 

24,692

 

 

 

20,409

 

Impairment of long-lived assets and (gain) loss on contracts

 

 

 

 

 

16,151

 

 

 

(4,346

)

 

 

16,151

 

Income (loss) from operations

 

 

2,801

 

 

 

(17,125

)

 

 

25,774

 

 

 

(7,391

)

Interest expense

 

 

(1,217

)

 

 

(440

)

 

 

(3,380

)

 

 

(2,003

)

Income before taxes

 

 

1,584

 

 

 

(17,565

)

 

 

22,394

 

 

 

(9,394

)

Income tax expense (benefit)

 

 

(797

)

 

 

(4,002

)

 

 

3,667

 

 

 

(1,943

)

Net income (loss) and comprehensive income (loss)

 

$

2,381

 

 

$

(13,563

)

 

$

18,727

 

 

$

(7,451

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.12

 

 

$

(0.66

)

 

$

0.92

 

 

$

(0.37

)

Diluted

 

$

0.12

 

 

$

(0.65

)

 

$

0.91

 

 

$

(0.36

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

20,229,811

 

 

 

20,460,361

 

 

 

20,399,737

 

 

 

20,404,543

 

Diluted

 

 

20,552,054

 

 

 

20,885,930

 

 

 

20,682,628

 

 

 

20,830,977

 

Mayville Engineering Company, Inc.

Consolidated Statement of Cash Flows

(in thousands)

 

 

 

Twelve Months Ended

 

 

December 31,

 

 

2022

 

2021

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net income (loss)

 

$

18,727

 

 

$

(7,451

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation

 

 

22,359

 

 

 

21,077

 

Amortization

 

 

6,952

 

 

 

10,706

 

Allowance for doubtful accounts

 

 

(86

)

 

 

(667

)

Inventory excess and obsolescence reserve

 

 

80

 

 

 

(935

)

Stock-based compensation expense

 

 

3,759

 

 

 

4,962

 

(Gain) loss on disposal of property, plant and equipment

 

 

(161

)

 

 

(1,311

)

Impairment of inventory and loss on contracts

 

 

 

 

 

700

 

Impairment of long-lived assets and (gain) loss on contracts

 

 

(4,346

)

 

 

16,151

 

Deferred compensation

 

 

(3,923

)

 

 

(514

)

Non-cash lease expense

 

 

4,251

 

 

 

 

Other non-cash adjustments

 

 

329

 

 

 

325

 

Changes in operating assets and liabilities – net of effects of acquisition:

 

 

 

 

 

 

Accounts receivable

 

 

(2,498

)

 

 

(12,670

)

Inventories

 

 

(1,631

)

 

 

(27,896

)

Tooling in progress

 

 

(3,988

)

 

 

(824

)

Prepaids and other current assets

 

 

(616

)

 

 

(1,013

)

Accounts payable

 

 

9,361

 

 

 

11,836

 

Deferred income taxes

 

 

4,710

 

 

 

(3,323

)

Operating lease obligations

 

 

(3,856

)

 

 

 

Accrued liabilities

 

 

3,003

 

 

 

5,304

 

Net cash provided by operating activities

 

 

52,426

 

 

 

14,457

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Purchase of property, plant and equipment

 

 

(58,610

)

 

 

(39,309

)

Proceeds from sale of property, plant and equipment

 

 

7,942

 

 

 

5,348

 

Net cash used in investing activities

 

 

(50,668

)

 

 

(33,961

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Proceeds from bank revolving credit notes

 

 

437,939

 

 

 

385,226

 

Payments on bank revolving credit notes

 

 

(433,312

)

 

 

(362,873

)

Repayments of other long-term debt

 

 

(1,107

)

 

 

(268

)

Deferred financing costs

 

 

 

 

 

 

Purchase of treasury stock

 

 

(4,947

)

 

 

(2,153

)

Payments on finance leases

 

 

(322

)

 

 

(544

)

Proceeds from the exercise of stock options

 

 

 

 

 

139

 

Other financing activities

 

 

 

 

 

(26

)

Net cash provided by (used in) financing activities

 

 

(1,749

)

 

 

19,501

 

Net increase (decrease) in cash and cash equivalents

 

 

9

 

 

 

(3

)

Cash and cash equivalents at beginning of period

 

 

118

 

 

 

121

 

Cash and cash equivalents at end of period

 

$

127

 

 

$

118

 

Mayville Engineering Company, Inc.

Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31,

 

December 31,

 

 

2022

 

2021

 

2022

 

2021

 

Net income (loss) and comprehensive income (loss)

 

$

2,381

 

 

$

(13,563

)

 

$

18,727

 

 

$

(7,451

)

 

Interest expense

 

 

1,217

 

 

 

440

 

 

 

3,380

 

 

 

2,003

 

 

Provision (benefit) for income taxes

 

 

(797

)

 

 

(4,002

)

 

 

3,667

 

 

 

(1,943

)

 

Depreciation and amortization

 

 

7,755

 

 

 

8,233

 

 

 

29,311

 

 

 

31,783

 

 

EBITDA

 

 

10,556

 

 

 

(8,892

)

 

 

55,085

 

 

 

24,392

 

 

CEO transition costs

 

 

 

 

 

 

 

 

1,512

 

 

 

 

 

Stock-based compensation expense

 

 

905

 

 

 

1,192

 

 

 

3,759

 

 

 

4,962

 

 

Hazel Park transition costs due to former fitness customer

 

 

91

 

 

 

 

 

 

4,768

 

 

 

 

 

Impairment of inventory and loss on contracts

 

 

 

 

 

700

 

 

 

 

 

 

700

 

 

Impairment of long-lived assets and (gain) loss on contracts

 

 

 

 

 

16,151

 

 

 

(4,346

)

 

 

16,151

 

 

Adjusted EBITDA

 

$

11,552

 

 

$

9,151

 

 

$

60,778

 

 

$

46,205

 

 

Net sales

 

$

128,527

 

 

$

112,975

 

 

$

539,392

 

 

$

454,826

 

 

EBITDA Margin

 

 

8.2

 

%

 

(7.9

)

%

 

10.2

 

%

 

5.4

 

%

Adjusted EBITDA Margin

 

 

9.0

 

%

 

8.1

 

%

 

11.3

 

%

 

10.2

 

%

 

INVESTOR CONTACT
Stefan Neely or Noel Ryan
(615) 844-6248
MEC@val-adv.com

Source: Mayville Engineering Company