Mayville Engineering Company, Inc. · NYSE:MEC
Mayville Engineering — Q2 2024 Earnings Presentation
19 slides from Mayville Engineering's earnings presentation, Aug 7, 2024
Slide 1: 2Q24 Results Presentation
2Q24 Results Presentation August 7, 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: 2Q24 Financial Performance
2Q24 FINANCIAL PERFORMANCE Momentum from strategic execution drives growth, margin expansion and robust cash flow generation Strategic execution • Net sales +17.7% y/y including organic growth of 6.9% y/y, due to the acquisition of supports sustainable MSA, market share gains and new project volumes
Slide 4: Second Quarter Financial Performance
SECOND QUARTER FINANCIAL PERFORMANCE Net Sales Adj. EBITDA & Margin Adjusted Diluted EPS Free Cash Flow ($MM) ($MM & % of Net Sales) ($/share) ($MM) +17.7% +28.4% +30.0% $19.2 $0.26 $163.6 $19.6 $0.20 $15.3 $139.0 12.0% 11.0% $(3.7) 2Q23 2Q24 2Q23 2Q24 2Q23 2Q24 2Q23 2Q24 4 See the appendix for reco
Slide 5: 2024 End-Market Outlook
2024 END-MARKET OUTLOOK End-market demand is softening but market-share gains will offset in 2024 Commercial Construction Powersports Agriculture Military Other Vehicle & Access MEC Macro Assumptions: Assumptions: Assumptions: Assumptions: Assumptions: Assumptions: • Demand softening in • Soft resid
Slide 6: Market Share Gains Yield Above-Market Growth
MARKET SHARE GAINS YIELD ABOVE-MARKET GROWTH MEC share gains more than offset softening end-market demand across all key end-markets 2Q End-Market(1) Net Sales Performance vs. Total End-Market Demand New project wins % Change vs. prior year support strong topline Commercial Vehicle Construction & Ac
Slide 7: 2Q Net Sales & Adjusted EBITDA Performance Highlights
2Q NET SALES & ADJUSTED EBITDA PERFORMANCE HIGHLIGHTS Strategic execution resulting in improved operating leverage, better cost absorption and above-market growth Stable Organic Volume Trends Net sales grew 17.7% y/y during 2Q, driven by new project 2Q Net Sales Reconciliation volumes in Powersports
Slide 8: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES Capital allocation priorities focused on maximizing cash flow and return on invested capital Balanced approach to capital allocation Capital Expenditures ($MM) $59 Consistent Debt Paydown • Net leverage of 1.7x as of June 30, 2024 • Expect to be near the low-end of 1.5x
Slide 9: 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 $125 Total Net Debt2 ($MM) $75 Net Leverage Ratio3 2.1x 1.7x 1.3x $63 $59 Net Working Capital4 $39 2022 2023 2Q24 1) Assumes continued co
Slide 10: 2024 Financial Guidance
2024 FINANCIAL GUIDANCE As of August 6, 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 $15 to $20 million soften in the second half of the year in extrusion capab
Slide 11: 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 10-15% $750 - $850 240-410 ~ 30% $65 - $75 CAGR BPS
Slide 12: Organic Growth Acceleration
Organic Growth Acceleration (1) 2-Year Organic Revenue CAGR of 10% - 15%, before incremental M&A Two Year Sales Reconciliation (1) $s in Millions $25 - $45 ($15) - ($20) Pricing Excellence End of Life $40 - $50 $750 - $850 $80 - $135 MSA Growth $620 - $640 2024E 2026E (1) Inclusive of Mid-States Alu
Slide 13: Accelerated Margin Expansion
Accelerated Margin Expansion Targeting 2-Year Adjusted EBITDA margin expansion of 250bps – 400bps 2-Year Adjusted EBITDA Margin Reconciliation Adjusted EBITDA as a % of Sales ~ 50bps ~ 50bps (150) - (160)bps 80 - 120bps MBX / Labor Productivity Wage Inflation 100 - 150bps Leveraging SG&A Plant Utili
Slide 14: 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 15: Appendix
APPENDIX
Slide 16: 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) $ (1.1) 16
Slide 17: Non-GAAP Reconciliation of Adjusted EBITDA
Non-GAAP Reconciliation of Adjusted EBITDA Q2 ($MM) 2024 2023 Net income and comprehensive income $ 3.8 $ 1.6 Interest expense 3.0 2.0 Provision for income taxes 1.4 0.5 Depreciation and amortization 9.4 8.0 EBITDA $ 17.5 $ 12.1 Loss on extinguishment of debt — 0.2 MSA acquisition related costs — 0.
Slide 18: Non-GAAP Reconciliation of Adjusted Net Income & Diluted EPS
Non-GAAP Reconciliation of Adjusted Net Income & Diluted EPS Q2 ($MM, except share amounts and per share values) 2024 2023 Net income and comprehensive income $ 3.8 $ 1.6 Loss on extinguishment of debt — 0.2 MSA acquisition related costs — 0.9 Stock-based compensation expense 1.3 1.4 Field replaceme
Slide 19: Non-GAAP Reconciliation of Free Cash Flow
Non-GAAP Reconciliation of Free Cash Flow Q2 2024 2023 ($MM) Net cash provided by operating activities $ 23.3 $ 0.2 Purchase of property, plant and equipment (4.1) (3.9) Free cash flow $ 19.2 $ (3.7) 19
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