Mayville Engineering Company (NYSE: MEC) (the “Company” or
“MEC”), a leading value-added provider of design, prototyping and
manufacturing solutions serving diverse end-markets, will host an
Investor Day at its Hazel Park, Michigan facility today, September
14, 2023, beginning at 9:00 a.m. ET.
At the Investor Day event, MEC will provide a progress update on
its MEC Business Excellence (MBX) value creation framework,
including a focus on targeted commercial growth, best-in-class
operational execution and its capital allocation priorities. Within
its presentation, MEC will also introduce new, three-year
performance targets, as outlined below.
“Today, we are introducing three-year performance targets that
highlight the significant value creation potential of our
business,” stated Jag Reddy, President and CEO of MEC. “Multi-year
secular trends toward reshoring and outsourcing, together with
growing demand for integrated supply chain solutions across both
existing and underserved adjacent markets, create a compelling
opportunity for MEC in the years ahead. We will seek to further
optimize recent investments in world-class engineering, design and
manufacturing capabilities, while deploying efficient, standardized
processes that enhance both our value proposition with customers
and the long-term profitability of our business. We are excited by
the outlook for our business and look forward to continuing to
build a leading platform of scale across our diverse
end-markets.”
STRATEGIC PRIORITIES UPDATE
In 2022, MEC launched MBX, a holistic, strategic framework
designed to drive profitable growth through targeted commercial
expansion within higher-value adjacent markets; the implementation
of more efficient business processes; improved asset optimization
and productivity; and further standardization across the
enterprise. MBX positions MEC to provide a solutions-based platform
equipped to scale with the unique requirements of existing
customers, while capitalizing on underserved demand within emerging
growth sectors, including energy transition. In combination, MEC
believes the MBX framework will contribute to ratable growth in
sustained revenue, margin realization and profitability.
Organic Growth Acceleration. MEC intends to further
leverage commercial expansion opportunities provided by
reshoring/outsourcing megatrends within its vertical markets, while
leveraging existing production capacity at Hazel Park and related
manufacturing facilities. The Company anticipates these actions
will result in net sales growth of $170 to $240 million between
year-end 2023 and year-end 2026.
Ratable Margin Expansion. During the next three years,
MEC intends to drive significant margin expansion through a
combination of sustained volume growth; value-based pricing;
improved asset optimization; and process improvements. These
initiatives, in combination with continued normalization in supply
chain and further optimization of the Hazel Park facility, are
expected to result in between 14% to 16% Adjusted EBITDA Margin, or
300 to 400 basis points of margin expansion, between year-end 2023
and year-end 2026.
Significant Free Cash Flow Generation. Between year-end
2023 and year-end 2026, the Company anticipates that it will
generate approximately $200 million in free cash flow. The Company
is committed to maximizing shareholder value through a reduction in
debt outstanding; investments in high-return, accretive acquisition
opportunities; and through a programmatic share repurchase
program.
REITERATING FULL-YEAR 2023 FINANCIAL GUIDANCE
Today, MEC is reiterating its full-year 2023 financial guidance,
as outlined below:
Low-End
High End
Full-Year 2023 Net Sales ($MM)
$580
$610
Full-Year 2023 Adjusted EBITDA ($MM)
$66
$71
Full-Year 2023 Capital Expenditures
($MM)
$15
$20
INTRODUCING FULL-YEAR 2026 FINANCIAL TARGETS
Today, MEC is introducing full-year 2026 financial targets, as
outlined below:
Low-End
High End
Full-Year 2026 Net Sales ($MM)
$750
$850
Full-Year 2026 Adjusted EBITDA ($MM)
$105
$135
Full-Year 2026 Adjusted EBITDA Margin
(%)
14%
16%
Full-Year 2026 Free Cash Flow ($MM)
$65
$75
INVESTOR DAY WEBCAST
The investor day event will be held today at 9:00 a.m. Eastern
Time and will include presentations by Jag Reddy, MEC’s President
and Chief Executive Officer; Todd Butz, MEC’s Chief Financial
Officer; Rand Stille, MEC’s Chief Operating Officer, and Ryan
Raber, MEC’s Executive Vice President of Strategy, Sales and
Marketing.
A webcast of the event and a link to the accompanying
presentation materials are available in the Investor Relations
section of the MEC corporate website at https://ir.mecinc.com, and
a replay of the webcast will be available at the same site
following the event.
ABOUT MAYVILLE ENGINEERING COMPANY
Founded in 1945, Mayville Engineering Company (MEC) is a leading
U.S.-based, vertically-integrated, value-added manufacturing
partner providing a full suite of manufacturing solutions from
concept to production, including design, prototyping and tooling,
fabrication, aluminum extrusion, coating, assembly and aftermarket
components. 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 22
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
The financial target information provided in this press release
includes the forward-looking financial measures 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 adjusted
net income (loss) before interest, taxes, depreciation and
amortization (Adjusted EBITDA), Adjusted EBITDA as a percentage of
net sales (Adjusted EBITDA margin) and free cash flow, which
management uses 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
or cash provided by operating activities, or any other performance
measure derived in accordance with GAAP as an indicator of our
operating performance.
The Company calculates forward-looking Adjusted EBITDA and
Adjusted EBITDA margin based on internal forecasts that omit
certain amounts that would be included in forward-looking GAAP net
income (loss). The Company calculates free cash flow based on
forward-looking cash provided from operating activities less
forward-looking capital expenditures. The Company is not able to
provide a reconciliation of forward-looking Adjusted EBITDA,
Adjusted EBITDA margin or free cash flow guidance to
forward-looking GAAP net income (loss) or forward-looking cash flow
provided by operating activities because forecasting the exact
timing or impact of items, including, without limitation, the
impact of macroeconomic, industry and operational changes through
2026, that have not yet occurred and are out of its control is
inherently uncertain and unavailable without unreasonable efforts.
Further, the Company believes that such reconciliations would imply
a degree of precision and certainty that could be confusing to
investors and could have substantial impact on GAAP measures of
financial performance.
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; 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, 2022, 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, 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20230914048627/en/
INVESTOR CONTACT
Stefan Neely or Noel Ryan (615) 844-6248 MEC@val-adv.com
Mayville Engineering (NYSE:MEC)
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