Mayville Engineering Company, Inc. · NYSE:MEC
Mayville Engineering — Q4 2023 Earnings Presentation
20 slides from Mayville Engineering's earnings presentation, Mar 6, 2024
Slide 1: 4Q23 Results Presentation
4Q23 Results Presentation March 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: 4Q23 Financial Performance
4Q23 FINANCIAL PERFORMANCE Successful strategic execution delivers continued organic revenue growth and record quarterly free cash flow Successful commercial growth execution and • Net sales +15.6% y/y including organic growth of 6.1% y/y, due to the acquisition of continued MBX MSA and supported by
Slide 4: Fourth Quarter Financial Performance
FOURTH QUARTER FINANCIAL PERFORMANCE Net Sales Adj. EBITDA & Margin Adjusted Diluted EPS Free Cash Flow ($MM) ($MM & % of Net Sales) ($/share) ($MM) +15.6% +53.2% +40.5% $148.6 $0.21 $19.9 $17.7 $0.15 $11.6 11.9% $128.5 9.0% $(0.7) 4Q22 4Q23 4Q22 4Q23 4Q22 4Q23 4Q22 4Q23 4 See the appendix for recon
Slide 5: Full Year Financial Performance
FULL YEAR FINANCIAL PERFORMANCE Net Sales Adj. EBITDA & Margin Adjusted Diluted EPS Free Cash Flow ($MM) ($MM & % of Net Sales) ($/share) ($MM) +9.1% +8.7% (29.4%) $588.4 $66.1 $23.8 $1.12 $60.8 $0.79 11.3% 11.2% $539.4 $(6.2) FY2022 FY2023 FY2022 FY2023 FY2022 FY2023 FY2022 FY2023 5 See the appendi
Slide 6: 2024 End-Market Outlook
2024 END-MARKET OUTLOOK End-market demand is softening but market-share gains will offset in 2024 Commercial Construction Powersports Agriculture Military Other Vehicle & Access MEC Macro Assumptions: Assumptions: Assumptions: Assumptions: Assumptions: Assumptions: • Demand slowing in 4Q23 • Soft re
Slide 7: 4Q Net Sales & Adjusted EBITDA Performance Highlights
4Q NET SALES & ADJUSTED EBITDA PERFORMANCE HIGHLIGHTS Organic growth tailwinds remain prevalent, while self-help initiatives build momentum Organic growth remains stable 4Q Net Sales Reconciliation Revenues grew 6.1% organically y/y as Powersports, Construction ($s in Millions) & Access & Military n
Slide 8: 2023 Net Sales & Adjusted EBITDA Performance Highlights
2023 NET SALES & ADJUSTED EBITDA PERFORMANCE HIGHLIGHTS Annual net sales and Adjusted EBITDA growth driven by commercial growth and operational excellence Organic growth accelerated through the year 2023 Net Sales Reconciliation Revenues grew 4.3% organically y/y driven by strong demand in ($s in Mi
Slide 9: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES Capital allocation priorities focused on maximizing cash flow and return on invested capital Balanced approach to capital allocation Capital Expenditures ($MM) $59 Consistent Debt Paydown • Net leverage of 2.1x as of December 31, 2023 • Targeting leverage of 1.5x – 2.0x
Slide 10: Disciplined Capital Management
DISCIPLINED CAPITAL MANAGEMENT Flexible balance sheet with ample liquidity to support long term growth Total Cash & $250 Available Liquidity1 $198 $150 ($MM) $150 Total Net Debt2 ($MM) $71 $75 Net Leverage Ratio3 2.4x 2.1x 1.3x $75 $76 $79 Net Working Capital4 2021 2022 2023 1) Assumes continued com
Slide 11: 2024 Financial Guidance
2024 FINANCIAL GUIDANCE As of March 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 $15 to $20 million soften through the year in many key extrusion capabilitie
Slide 12: 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 13: 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 14: 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 15: 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 16: Appendix
ne ° APPENDIX
Slide 17: 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 2021 $ — $ 2.8 $ 5.6 $ 15.0 $ 23.4 2022 $ 14.6 $ 10.4 $ 2.5 $ 0.5 $ 28.0 2023 $ (9.9) $ (8.3) $ (0.5) $ (0.4) $ (19.1) 17
Slide 18: Non-GAAP Reconciliation of Adjusted EBITDA
Non-GAAP Reconciliation of Adjusted EBITDA Full Year Q4 ($MM) 2023 2022 2023 2022 Net income and comprehensive income $ 7.8 $ 18.7 $ 2.2 $ 2.4 Interest expense 11.1 3.4 3.6 1.2 Provision for income taxes 1.0 3.7 (0.4) (0.8) Depreciation and amortization 35.1 29.3 9.6 7.8 EBITDA $ 55.1 $ 55.1 $ 14.9
Slide 19: Non-GAAP Reconciliation of Adjusted Net Income & Diluted EPS
Non-GAAP Reconciliation of Adjusted Net Income & Diluted EPS Full Year Q4 ($MM, except share amounts and per share values) 2023 2022 2023 2022 Net income and comprehensive income $ 7.8 $ 18.7 $ 2.2 $ 2.4 CEO transition costs — 1.5 — — Loss on extinguishment of debt 0.2 — — — MSA acquisition related
Slide 20: Non-GAAP Reconciliation of Free Cash Flow
Non-GAAP Reconciliation of Free Cash Flow Full Year Q4 ($MM) 2023 2022 2023 2022 Net cash provided by operating activities $ 40.4 $ 52.4 $ 26.7 $ 19.1 Purchase of property, plant and equipment (16.6) (58.6) (6.8) (19.8) Free cash flow $ 23.8 $ (6.2) $ 19.9 $ (0.7) 20
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