Mayville Engineering Company, Inc. · NYSE:MEC
Mayville Engineering — Q1 2024 Earnings Presentation
18 slides from Mayville Engineering's earnings presentation, May 8, 2024
Slide 1: 1Q24 Results Presentation
1Q24 Results Presentation May 8, 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: 1Q24 Financial Performance
1Q24 FINANCIAL PERFORMANCE Strategic improvements in pricing and utilization drove margin expansion and free cash flow generation Sustained margin expansion driven by strategic execution on • Net sales +13.1% y/y including organic growth of 3.3% y/y, due to the acquisition of MBX sourcing MSA and su
Slide 4: First Quarter Financial Performance
FIRST QUARTER FINANCIAL PERFORMANCE Net Sales Adj. EBITDA & Margin Adjusted Diluted EPS Free Cash Flow ($MM) ($MM & % of Net Sales) ($/share) ($MM) +13.1% +33.8% +29.4% $7.9 $18.5 $0.22 $161.3 $13.8 $0.17 $142.6 11.5% 9.7% $(8.5) 1Q23 1Q24 1Q23 1Q24 1Q23 1Q24 1Q23 1Q24 4 See the appendix for reconci
Slide 5: 2024 End-Market Outlook
2024 END-MARKET OUTLOOK End-market demand is softening but market-share gains will offset in 2024 Commercial Construction Powersports Agriculture Military Other Vehicle & Access MEC Macro Assumptions: Assumptions: Assumptions: Assumptions: Assumptions: Assumptions: • Demand softening in • Soft • Gro
Slide 6: 1Q Net Sales & Adjusted EBITDA Performance Highlights
1Q NET SALES & ADJUSTED EBITDA PERFORMANCE HIGHLIGHTS Improvements in labor utilization, sourcing and strategic pricing drove margin expansion on growing organic volumes Stable Organic Volume Trends Net sales grew 3.3% y/y during 1Q, driven by new project 1Q Net Sales Reconciliation volumes in Power
Slide 7: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES Capital allocation priorities focused on maximizing cash flow and return on invested capital Balanced approach to capital allocation Capital Expenditures ($MM) $59 Consistent Debt Paydown • Net leverage of slightly below 2.0x as of March 31, 2024 • Targeting leverage of
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 $143 Total Net Debt2 ($MM) $75 Net Leverage Ratio3 2.1x 2.0x 1.3x $63 $66 Net Working $39 Capital4 2022 2023 1Q24 1) Assumes continued co
Slide 9: 2024 Financial Guidance
2024 FINANCIAL GUIDANCE As of May 7, 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 through the year in many key extrusion capabilities
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 10-15% $750 - $850 240-410 ~ 30% $65 - $75 CAGR BPS
Slide 11: 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 12: 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 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 $ - $ - 15
Slide 16: Non-GAAP Reconciliation of Adjusted EBITDA
Non-GAAP Reconciliation of Adjusted EBITDA Q1 ($MM) 2024 2023 Net income and comprehensive income $ 3.2 $ 2.6 Interest expense 3.4 1.7 Provision for income taxes 1.0 0.4 Depreciation and amortization 9.3 7.9 EBITDA $ 16.9 $ 12.6 Stock-based compensation expense 1.2 1.0 Legal costs due to former fitn
Slide 17: Non-GAAP Reconciliation of Adjusted Net Income & Diluted EPS
Non-GAAP Reconciliation of Adjusted Net Income & Diluted EPS Q1 ($MM, except share amounts and per share values) 2024 2023 Net income and comprehensive income $ 3.2 $ 2.6 Stock-based compensation expense 1.2 1.0 Legal costs due to former fitness customer 0.5 0.2 Tax affect of above the adjustments (
Slide 18: Non-GAAP Reconciliation of Free Cash Flow
Non-GAAP Reconciliation of Free Cash Flow Q1 2024 2023 ($MM) Net cash provided by operating activities $ 10.6 $ (6.0) Purchase of property, plant and equipment (2.8) (2.4) Free cash flow $ 7.9 $ (8.5) 18
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