Mayville Engineering Company, Inc. · NYSE:MEC
Mayville Engineering — Q3 2022 Earnings Presentation
18 slides from Mayville Engineering's earnings presentation, Nov 2, 2022
Slide 1: 3Q 2022 Earnings Call
3Q 2022 Earnings Call November 2, 2022 mecinc.com
Slide 2: Disclaimer
Disclaimer Forward-Looking Statements This presentation contains forward-looking statements that involve risks and uncertainties. All statements other than statementsof historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of w
Slide 3: Executive Summary
Executive Summary $’s in millions except for EPS data Q3 2022 Q3 2021 • Strong Q3 2022 Financial Results Net Sales $136.3 $109.0 ― Net sales growth 25% Net Income $6.6 $0.3 ― Net income up 22x from PY Basic EPS $0.32 $0.01 ― Basic EPS increased 32x ― Adjusted EBITDA improved 61% Adjusted EBITDA $16.
Slide 4: 100-Day CEO Observations and Reflections
100-Day CEO Observations and Reflections OBSERVATIONS OPPORTUNITIES ❑ Hardworking employees take ❑ Better utilization of plant capacity pride in supporting customers ❑ Significant growth potential over ❑ Great culture of safety, quality next 5 years and delivery ❑ Positive pricing potential: ❑ Long-
Slide 5: Long-Term Strategic Priorities
Long-Term Strategic Priorities Driving Profitable Expanding EBITDA Optimizing Capital Growth Margins beyond 15% Allocation • Growing share of wallet with • Commercial Excellence: • Moderating CapEx spend to current customers Strategic and Value pricing approx. $20M - $25M starting in 2023 • Diversif
Slide 6: Industry Outlook
Industry Outlook 2022 2023 Market Market Market Outlook Outlook Commentary ▪ OEM’s forecasting strength through 1H ‘23 followed by sequential slowdown Commercial through 2H ‘23 going into the ‘24 emissions change Vehicles ▪ Current ACT forecast predicts 296K units in ‘23 down 4.5% from 310K in ‘22 ▪
Slide 7: Recent Customer Wins
Recent Customer Wins • Secured strategic EV win in • Significant takeover win for • Secured reshoring project • Cross-selling into Side-by-Side space on high horsepower tractor for a commercial vehicle customer’s industrial battery enclosure customer infrastructure products • MEC’s capacity and • En
Slide 8: Introducing MEC Business Excellence
Introducing MEC Business Excellence Strategy Execution Operating Excellence • Strategy Deployment Process • Lean Value Stream Mapping & • Breakthrough Thinking Kaizen Culture • Daily Lean Management (KPI • Sales, Inventory & Operations Reviews, VSM, 5S) Planning (SIOP) • Root Cause Countermeasures •
Slide 9: MBX Case Study: Quarterly President's Kaizen
MBX Case Study: Quarterly President’s Kaizen • Developed Value Stream Map • Identified Areas of Waste Initial State • Introduced Cellular Layout Improved State • Established Single Piece Flow • Reduced Inventory - $25K • Non-Standard Work • Line Balance: Tack-Robot-Finish Tact Times • Reduced Travel
Slide 10: Q3 2022 Financial Performance
Q3 2022 Financial Performance $’s in millions except for share data Net Sales Adj. EBITDA Net Income Basic EPS ($ per share) +25.0% +61.4% +22x PY +32x PY $16.1 $6.6 $0.32 $136.3 11.8% $10.0 $109.0 9.2% $0.3 $0.01 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Key Performance Driver
Slide 11: Strong Balance Sheet and Liquidity Position
Strong Balance Sheet and Liquidity Position Capital Structure ($MM) Leverage Ratio 4 09/30/2022 1 Net Debt $74.1 3.0x 2.43 $300MM of total borrowing capacity including 2.5x $200MM revolver + $100M accordian 2 2.0x 3 1.46 Free Cash Flow ($MM) 1.5x 1.39 1.30 $7 1.0x $3 0.5x 1Q22 2Q22 3Q22 0.0x 5 2019
Slide 12: Full Year 2022 Guidance
Full Year 2022 Guidance Net Sales Guidance $MM Original FY22 Updated 2022 Narrowed Guidance Guidance ($MM) Sales $480 - $530 $520 – $540 14% - 19% Adjusted EBITDA $58 – $70 $58 – $65 Compared to 2021 of $455MM Capital Expenditures $55 – $65 $55 – $65 Adjusted EBITDA Updated Guidance Assumptions $MM
Slide 13: Compelling Path to Growth and Value Creation
Compelling Path to Growth and Value Creation Recognized market leader, value-added manufacturing partner with unmatched footprint and scale Differentiated operating model with advanced capabilities to serve diverse end markets Well positioned to capitalize on recovering industry dynamics with long-s
Slide 14: Appendix
Appendix Supplemental Materials
Slide 15: P&L Performance
P&L Performance Q3 Year-to-Date ($MM except for share data) 2022 2021 2022 2021 Net sales $ 136.3 $ 109.0 $ 410.9 $ 341.9 Cost of sales 120.8 98.1 362.8 299.9 Amortization of intangible assets 1.7 2.7 5.2 8.0 Profit sharing, bonuses, and deferred compensation 0.2 1.9 3.9 8.0 Employee stock ownership
Slide 16: EBITDA and Adjusted EBITDA Reconciliation
EBITDA and Adjusted EBITDA Reconciliation Q3 Year-to-Date ($MM) 2022 2021 2022 2021 Net income and comprehensive income $ 6.6 $ 0.3 $ 16.3 $ 6.1 Interest expense 0.8 0.5 2.2 1.6 Provision for income taxes 1.5 0.1 4.5 2.1 Deprecation and amortization 7.1 8.0 21.6 23.6 EBITDA $ 16.0 $ 8.8 $ 44.5 $ 33.
Slide 17: Adjusted EBITDA Margin Normalized
Adjusted EBITDA Margin Normalized 17
Slide 18: THANK YOU
THANK YOU 3Q 2022 Earnings Call
Mayville Engineering Company — Q3 2022 Earnings Presentation on 6ix