Mayville Engineering Company, Inc. · NYSE:MEC
Mayville Engineering — Q3 2024 Earnings Presentation
18 slides from Mayville Engineering's earnings presentation, Nov 6, 2024
Slide 1: 3Q24 Results Presentation
3Q24 Results Presentation November 6, 2024
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995: This presentation contains statements that are forward-looking in nature which express the beliefs and expectations of management including statements regarding the Company’s expected results
Slide 3: 3Q24 Financial Performance
3Q24 FINANCIAL PERFORMANCE Execution of strategic priorities and cost rationalization will continue to support margins and free cash flow generation The difficult customer demand • Net sales declined 14.4% y/y, due to customer channel inventory rationalization environment caused by soft end-market d
Slide 4: Third Quarter Financial Performance
THIRD QUARTER FINANCIAL PERFORMANCE Net Sales Adj. EBITDA & Margin Adjusted Diluted EPS Free Cash Flow ($MM) ($MM & % of Net Sales) ($/share) ($MM) (14.4%) (11.2%) (0.5%) 0% (6.2%) $158.2 $0.21 $0.21 $19.2 $16.1 $17.1 $15.1 $135.4 12.1% 12.6% 3Q23 3Q24 3Q23 3Q24 3Q23 3Q24 3Q23 3Q24 4 See the appendi
Slide 5: Near-Term End-Market Outlook
NEAR-TERM END-MARKET OUTLOOK 4Q24 and 1H25 expected to reflect a cyclical trough in customer demand as the interest rate environment normalizes Commercial Construction Powersports Agriculture Military Other Vehicle & Access MEC Macro Market Dynamics and Catalysts for Above-Market Growth • Demand tro
Slide 6: 3Q Net Sales & Adjusted EBITDA Performance Highlights
3Q NET SALES & ADJUSTED EBITDA PERFORMANCE HIGHLIGHTS Execution of its MBX initiative and cost rationalization drove improved operating leverage Customer demand troughed Net sales decreased 14.4% y/y, driven by soft end market 3Q Net Sales Reconciliation demand across our segments. Construction & Ac
Slide 7: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES Capital allocation priorities focused on maximizing cash flow and return on invested capital Balanced approach to capital allocation Capital Expenditures ($MM) $59 Consistent Debt Paydown • Net leverage of 1.6x as of September 30, 2024 • Expect to be near or below the l
Slide 8: Disciplined Capital Management
DISCIPLINED CAPITAL MANAGEMENT Flexible balance sheet with ample liquidity to support long term growth Total Cash & $250 $250 $198 Available Liquidity1 ($MM) $150 $114 Total Debt2 ($MM) $75 Net Leverage Ratio3 2.1x 1.6x 1.3x $63 $55 Net Working Capital4 $39 2022 2023 3Q24 1) Assumes continued compli
Slide 9: 2024 Financial Guidance
2024 FINANCIAL GUIDANCE As of November 5, 2024 Business Outlook Financial Assumptions • End-market demand is expected to • Leveraging newly acquired aluminum • Organic net sales growth of 1.5% to 2.5% • Capital expenditures of $13 to $15 million soften in the second half of the year in extrusion cap
Slide 10: Value Creation Roadmap
Value Creation Roadmap (1) MBX Framework expected to drive substantial financial value and shareholder returns Sales Performance Adjusted EBITDA Performance Free Cash Flow Performance $s in Millions $s in Millions and as a % of Sales $s in Millions 14 - 320-480 ~ 20% 20% $750 - $850 BPS CAGR $65 - $
Slide 11: Organic Growth Acceleration
Organic Growth Acceleration (1) 2-Year Organic Revenue CAGR of 14% - 20%, before incremental M&A Two Year Sales Reconciliation (1) $s in Millions $25 - $45 ($15) - ($20) $40 - $50 $750 - $850 $120 - $185 Pricing Excellence End of Life MSA $580 - $590 Growth 2024E 2026E (1) Inclusive of Mid-States Al
Slide 12: Accelerated Margin Expansion
Accelerated Margin Expansion Targeting 2-Year Adjusted EBITDA margin expansion of 300bps – 480bps 2-Year Adjusted EBITDA Margin Reconciliation Adjusted EBITDA as a % of Sales ~ 50bps (150) - (160)bps ~ 50bps 80 - 120bps Leveraging SG&A 14 - 16% 150 - 200bps Supply Chain Productivity Wage Inflation M
Slide 13: Investment Thesis
INVESTMENT THESIS Strategic evolution story supported by attractive re-shoring and outsourcing mega trends • Strong demand fundamentals across our end markets, supporting profitable growth • Value creation platform expected to drive Adjusted EBITDA margins to 14% - Strategic 16% and organic revenue
Slide 14: Appendix
APPENDIX
Slide 15: Historical Material Price Pass-Through
HISTORICAL MATERIAL PRICE PASS-THROUGH Material Price Pass-Throughs (Y-o-Y Change in $MMs) 1Q 2Q 3Q 4Q Full Year 2022 $ 14.6 $ 10.4 $ 2.5 $ 0.5 $ 28.0 2023 $ (9.9) $ (8.3) $ (0.5) $ (0.4) $ (19.1) 2024 $ — $ (1.1) $ (0.7) $ (1.8) 15
Slide 16: Non-GAAP Reconciliation of Adjusted EBITDA
Non-GAAP Reconciliation of Adjusted EBITDA Q3 ($MM) 2024 2023 Net income and comprehensive income $ 3.0 $ 1.4 Interest expense 2.7 3.9 Provision for income taxes 0.1 0.6 Depreciation and amortization 9.5 9.6 EBITDA $ 15.2 $ 15.5 MSA acquisition related costs — 0.5 Stock-based compensation expense 1.
Slide 17: Non-GAAP Reconciliation of Adjusted Net Income & Diluted EPS
Non-GAAP Reconciliation of Adjusted Net Income & Diluted EPS Q3 ($MM, except share amounts and per share values) 2024 2023 Net income and comprehensive income $ 3.0 $ 1.4 MSA acquisition related costs — 0.5 Stock-based compensation expense 1.4 1.3 Legal costs due to former fitness customer 0.5 1.0 C
Slide 18: Non-GAAP Reconciliation of Free Cash Flow
Non-GAAP Reconciliation of Free Cash Flow Q3 2024 2023 ($MM) Net cash provided by operating activities $ 17.9 $ 19.6 Purchase of property, plant and equipment (2.9) (3.5) Free cash flow $ 15.1 $ 16.1 18
Mayville Engineering Company — Q3 2024 Earnings Presentation on 6ix