Mayville Engineering Company, Inc. · NYSE:MEC
Mayville Engineering — Investor Presentation (August 2019)
27 slides from Mayville Engineering's investor presentation, Aug 7, 2019
Slide 1: Investor Presentation
Investor Presentation Robert Kamphuis – Chairman, President & CEO Todd Butz - CFO August 2019
Slide 2: Disclaimer
Disclaimer Forward-Looking Statements This presentation contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of
Slide 3: MEC Team
MEC Team Robert D. Kamphuis, Chairman, President and Chief Executive Officer • Joined as President and CEO in 2005, and has served as Chairman, President and CEO since 2007 • Prior to joining MEC, held various roles with Giddings & Lewis, including as President and CEO of Gilman Engineering and Manu
Slide 4: Investment Highlights
Investment Highlights $524MM 2x Larger Than Next 1 Largest U.S. Metal Fabricator(1) 2018A Pro Forma Competitor(1) Net Sales(2) Increasing Trend Towards Proven Ability to Expand 2 Significant Addressable Market OEM Outsourcing Content Per Platform (10%) Max Peak-to-Trough Sales Volatility(3) Business
Slide 5: Why MEC? Stability through Cycles – Agility, Adaptability, (Re)Alignment
Why MEC? Stability through Cycles – Agility, Adaptability, (Re)Alignment Ultimate ReSource Differentiated Well Positioned for Long-Term, for Customers’ Complex Industrial Company Profitable Growth Manufacturing Needs #1 largest fabricator in the U.S. Agile and adaptable business Variety of long-term
Slide 6: Market Leader with Unique, Differentiated Competitive Position
Market Leader with Unique, Differentiated Competitive Position MEC is More Than 2x the Size of its Next Largest Competitor(1) (2) Able to provide the broadest range of production capabilities… Prototype & Fabrication Performance Structures Tubes Tanks …serving a diverse range of end markets… Sleeper
Slide 7: Addressing Secular Trend of Outsourcing
Addressing Secular Trend of Outsourcing Key Drivers ✓ Reduce manufacturing costs Workforce and Capex Rely on third party expertise Constraints ✓ and core competency ✓ Increase responsiveness & agility Asset reduction OEM Strategic Focus on Core Product Development ✓ Product design expertise Focus on
Slide 8: Unique Value Proposition
Unique Value Proposition A Single-Source Solution for Customers Unmatched Scale and Footprint Broad Range of End-to-End Solutions and Capabilities Extensive Application Expertise Across Multiple Markets Supply Chain Simplification and Reduction Strategic Alignment with Customers Reduced Working Capi
Slide 9: Full Service Offering
Full Service Offering Providing Value-Added Services for Customers Virtuous Cycle of Continuous Improvement Entry Point into the MEC “Ecosystem” Manufacturing Process Create Customer Refinement Defined Concept Product Manufacturing Collaboratively Process Designed and Planning Developed Prototyping
Slide 10: Ongoing Margin Expansion
Ongoing Margin Expansion Benefiting From Continuous Investments and Operating Leverage Strong Adjusted EBITDA Margin Expansion (Not Adj. for DMP) 12.3% Fiber Lasers Robotic Brake Presses 9.6% 2017A 2018A 260+ bps Adjusted EBITDA ✓ Increased Efficiency ✓ Increased Efficiency Margin Expansion(1)(2) •
Slide 11: Technology Investments = Customer Retention and Increased Efficiency
Technology Investments = Customer Retention and Increased Efficiency Robotic Brake Presses Fiber Lasers Laser Material Handling Technologically Advanced Automation- Focused Investments Tube Lasers with Horizontal Machining Automated Material Center Automation - Feeders Pallet System Robotic Weld Sys
Slide 12: Maximizing Cash Flow Stability
Maximizing Cash Flow Stability Agility Adaptability Alignment Powersports Proprietary customer insights Automotive Commercial Flexible, re-deployable asset base Vehicle Diversified breadth of capabilities Military Construction Preferred manufacturing partner Agriculture Aligned markets & capacity he
Slide 13: MEC: Growing With Customers
MEC: Growing With Customers 5 ✓Utilize M&A integration expertise to M&A Upside extend capabilities, geographies and markets 4 Enter New Adjacent ✓Leading edge, flexible asset base allows MEC Markets to win product launches and models 3 Core Application ✓Support new product and market expansions for
Slide 14: Diverse End Markets and Ability to Shift with Demand
Diverse End Markets and Ability to Shift with Demand End Market Diversification (% of Net Sales) 100% 9% 14% 15% 14% 6% 4% 7% 80% 7% 9% 11% 11% 13% 17% ✓ Diverse End 60% Markets 27% 28% 32% 24% 40% 17% ✓ Diversity Within 18% 15% End Markets 20% 35% 27% 19% 21% 0% 2015 2016 2017 2018 Pro Forma Heavy-
Slide 15: Demonstrated Ability to Manage Through Industrial Cycle
Demonstrated Ability to Manage Through Industrial Cycle Peak to Trough Revenue Analysis (2013 – 2017) MEC Agricultural Machinery Construction Commercial Vehicles Powersports (10%) (12%) (17%) (27%) (30%) • Agile business model allows strategic allocation of capacity to favorable end markets as indus
Slide 16: Demonstrated M&A Capabilities
Demonstrated M&A Capabilities M&A Strategy Acquisition of Defiance Metal Products (“DMP”) To accelerate growth: Prioritize targets • Acquired DMP for $115M - December 2018 that complement MEC from a capability, market or geographic • Ohio-based manufacturer of metal products perspective for the heav
Slide 17: Leading Platform Built Over Time
Leading Platform Built Over Time Strategically Located Facilities Year Acquisition Capability Extension To Best Serve Customers Military products, 2004 Custom Metal Products complex fabrication 2004 Phoenix Coaters CARC painting Tube bending, forming 2009 Fabricating Specialists and welding Powerspo
Slide 18: Financial Overview
Financial Overview
Slide 19: Financial Highlights
Financial Highlights (10%) $524MM 13% Max Peak-to-Trough 2018A Pro Forma Sales Volatility Sales Growth Net Sales (’17A – ’18A(1)) Since 2013 End Market Average Decline(2): (23%) ~11% 260+ bps >50% 2018A Pro Forma 2018A Adjusted Free Adjusted EBITDA(3) Adjusted EBITDA(3)(4) Cash Flow(3) Margin Expans
Slide 20: Strong Financial Momentum and Trajectory for Growth
Strong Financial Momentum and Trajectory for Growth Revenue Adjusted EBITDA(1) & Adjusted EBITDA Margin(1) ($MM) $600 ($MM) $524 $500 $57 $400 $355 $313 $44 $300 $30 12.3% $200 11.0% 9.6% $100 $0 2017A 2018A PF 2018A 2017A 2018A PF 2018A Capex & Percentage of Sales Free Cash Flow(1) ($MM) $40 $40 ($
Slide 21: Long-Term Strategic Targets: Significant Potential
Long-Term Strategic Targets: Significant Potential • Grow & Maintain Deeply Embedded Relationships with Leading #1 or #2 Blue Chip OEMs Organic Revenue Growth CAGR: • Further Geographic and Market Expansion Opportunities to Grow High Single Digits OEM Customer Base • Leverage Core Product Capabiliti
Slide 22: MEC 1H19 Results
MEC 1H19 Results Net Sales ($MM) Adjusted EBITDA ($MM)(1) $288 $34.4 $178 $24.8 1H 2018 1H 2019 1H 2018 1H 2019 Note: Q1 2018 not adjusted for DMP Our independent registered public accounting firm has not reviewed, audited or performed any procedures on these preliminary financial results and, as a
Slide 23: Appendix
Appendix
Slide 24: Experienced Team
Experienced Team Years Age at MEC Prior Experience Robert D. Kamphuis 61 14 Chairman, President and CEO Todd M. Butz 47 10 Chief Financial Officer Stephen P. Mance 60 8 Chief Operating Officer Ryan F. Raber Executive Vice President – 36 9 Strategy, Sales and Marketing Eric J. Welak Executive Vice Pr
Slide 25: EBITDA and Adjusted EBITDA Reconciliation
EBITDA and Adjusted EBITDA Reconciliation For the Year Ended December 31, (US$ in millions) 2018: Pro Forma 2018 2017 Net Income $18.1 $17.9 $5.2 Interest Expense 8.9 3.9 4.2 Provision (Benefit) from Income Taxes 1.0 (0.5) -- Other -- -- 0.0 Depreciation and Amortization 29.4 20.5 20.7 EBITDA $57.4
Slide 26: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation For the Year Ended December 31, (US$ in millions) 2018 2017 Net Income $17.9 $5.2 Depreciation and Amortization 20.5 20.7 Change in Net Working Capital (7.5) 3.8 Capital Expenditures (17.9) (11.3) Purchase Accounting Related Adj. 9.9 0.0 Pre-ESOP Free Cash Flow $22.9 $1
Slide 27: Investor Presentation
Investor Presentation Robert Kamphuis – Chairman, President & CEO Todd Butz - CFO August 2019
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