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     105  0 Kommentare Mayville Engineering Company, Inc. Announces Second Quarter 2022 Results

    Mayville Engineering Company (NYSE: MEC) (the “Company” or “MEC”), a leading U.S.-based value-added manufacturing partner that provides a full suite of prototyping and tooling, production fabrication, coating, assembly and aftermarket services, today announced results for the second quarter ended June 30, 2022.

    Second Quarter 2022 Highlights:

    • Net sales grew approximately 15% to $138.3 million
    • Net income increased 80% to $5.9 million
    • Basic earnings per share increased $0.13 to $0.29 as compared to prior year period
    • Delivered Adjusted EBITDA of $18.2 million, up from $14.0 million for the same prior year period
    • Successfully subleased approximately one-third of the Hazel Park facility
    • Company reiterates 2022 guidance
    • Jag Reddy named President and CEO, as well as director and Timothy Christen named non-executive Chair of the Board of Directors effective July 19, 2022

    Jag Reddy, President and Chief Executive Officer noted, “I am excited to have joined MEC at such an interesting time in its proud 77-year history, with macroeconomic trends such as reshoring and the global realignment of supply chains creating significant new opportunities for growth. The MEC team delivered a solid performance this quarter and our outlook for the rest of the year remains positive. We are executing on our commitment to innovation, investments in manufacturing capabilities, and lean initiatives, and I firmly believe we are ideally positioned to take advantage of the growing market opportunities for our products and services. I am energized by my first few weeks at MEC, and the team is focused on leveraging the Company’s strengths to enhance our industry leading position.”

    Second Quarter Financial Results

    Net sales were $138.3 million for the second quarter of 2022, as compared to $120.2 million for same prior year period. The 15% increase was primarily driven by contractual raw material price pass-throughs to customers, commercial pricing increases, and improved volumes.

    Manufacturing margins were $18.3 million for the second quarter of 2022, as compared to $16.3 million for the same prior year period. The increase was driven by the impact of increased commercial pricing and greater demand, offset by Hazel Park transition costs of $1.9 million and other inflationary costs in the quarter.

    Profit sharing, bonuses, and deferred compensation expenses were $1.2 million for the second quarter of 2022, a decrease from the $3.2 million recorded for the same prior year period. The $2.0 million decrease is primarily related to a decrease in deferred compensation expense due to fluctuations within the financial markets.

    Other selling, general and administrative expenses were $6.4 million for the second quarter of 2022 as compared to $5.4 million for the same prior year period. The $1.0 million increase was principally attributable to higher consulting and professional fees, as well as inflationary pressures on wages and benefits.

    Interest expense was $0.8 million for the second quarter of 2022 and $0.5 million for the same prior year period due to higher average debt levels as compared to the prior year period.

    Income tax expense was $1.8 million for the second quarter of 2022 and $1.0 million for the same prior year period. Federal income tax expenses will be offset against our federal net operating loss carryforward of approximately $18.5 million until it is fully utilized.

    Balance Sheet and Liquidity

    Net debt was $79.1 million as of June 20, 2022, which is comprised of the outstanding balance on the Company’s revolver, finance lease liabilities, and equipment financing agreements. Our leverage ratio was 1.52 to 1.00 at the end of the second quarter.

    The Company adopted the annual reporting guidance under ASC 842 Leases on January 1, 2022. As a result, the Company has approximately $37.8 million in right-of-use assets, $4.8 million in current liabilities and $33.5 million in long term liabilities related to operating leases as of June 30, 2022.

    Capital expenditures were in line with internal expectations at $26.4 million through the first half of the year, as compared to $17.0 million in the same period of last year. The increase relates to our ongoing commitment to investing in new technologies and automation and the build out and repurposing of assets at the Company’s Hazel Park, Michigan facility, which is expected to continue throughout the remainder of 2022.

    Outlook

    The Company is reiterating its 2022 financial outlook and continues to expect:

    • Net sales of between $480 million and $530 million,
    • Adjusted EBITDA between $58 million and $70 million.
    • This outlook assumes no revenues associated with the fitness customer.

    The Company continues to expect capital expenditures for 2022 to be between $55 and $65 million, focused primarily on investments in new technology and automation, the addition of equipment relating to new programs with existing customers, and the repurposing of assets at the new Hazel Park, Michigan facility.

    Reddy commented, “Our demand outlook remains positive through the end of the year as we continue to expand our relationships with current customers and explore opportunities with new customers. We expect our volumes will continue to steadily improve as we move through the second half of 2022 as supply chain issues constraining our customers start to subside.”

    Conference Call

    The Company will host a conference call on Wednesday, August 3rd, 2022 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time).

    For a live Internet webcast of the conference call, visit www.mecinc.com and click on the link to the live webcast on the Investors page.

    For telephone access to the conference, call (844) 200-6205 within the United States, call (833) 950-0062 within Canada, or +1 (929) 526-1599 from outside the United States and Canada and please use the Access Code: 768578.

    Forward Looking Statements

    This press-release includes forward-looking statements that reflect plans, estimates and beliefs. Such statements involve risk and uncertainties. Actual results may differ materially from those contemplated by these forward-looking statements as a result of various factors. Important factors that could cause actual results or events to differ materially from those expressed in forward-looking statements include, but are not limited to: the negative impacts the COVID-19 pandemic has had and will continue to have on our business, financial condition, cash flows, results of operations and supply chain, including the supply chain issues encountered by our original equipment manufacturer customers, the current inflationary pressures on wages, benefits, components, and manufacturing supplies and future uncertain impacts; risks relating to developments in the industries in which our customers operate; risks related to scheduling production accurately and maximizing efficiency; failure to compete successfully in our markets; our ability to realize net sales represented by our awarded business; our ability to maintain our manufacturing, engineering and technological expertise; the loss of any of our large customers or the loss of their respective market shares; risks related to entering new markets; our ability to recruit and retain our key executive officers, managers and trade-skilled personnel; volatility in the prices or availability of raw materials critical to our business; manufacturing risks, including delays and technical problems, issues with third-party suppliers, environmental risks and applicable statutory and regulatory requirements; our ability to successfully identify or integrate acquisitions; our ability to develop new and innovative processes and gain customer acceptance of such processes; risks related to our information technology systems and infrastructure; political and economic developments, including foreign trade relations and associated tariffs; results of legal disputes, including product liability, intellectual property infringement and other claims; risks associated with our capital-intensive industry; risks related to our treatment as an S Corporation prior to the consummation of our initial public offering; risks related to our employee stock ownership plan’s treatment as a tax-qualified retirement plan; and other factors described in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021, as such may be amended or supplemented in our subsequently filed Quarterly Reports on Form 10-Q. This discussion should be read in conjunction with our audited consolidated financial statements included in the Company’s previously filed Annual Report on Form 10-K for the year ended December 31, 2021. We undertake no obligation to update or revise any forward-looking statements after the date on which any such statement is made, whether as a result of new information, future events or otherwise, except as required by federal securities laws.

    About Mayville Engineering Company

    Founded in 1945, MEC is a leading U.S.-based value-added manufacturing partner that provides a broad range of prototyping and tooling, production fabrication, coating, assembly and aftermarket components. Our customers operate in diverse end markets, including heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, agriculture, military, and other end markets. Along with process engineering and development services, MEC maintains an extensive manufacturing infrastructure with 20 facilities, of which 19 are in operation, across seven states. These facilities make it possible to offer conventional and CNC (computer numerical control) stamping, shearing, fiber laser cutting, forming, drilling, tapping, grinding, tube bending, machining, welding, assembly and logistic services. MEC also possesses a broad range of finishing capabilities including shot blasting, e-coating, powder coating, wet spray and military grade chemical agent resistant coating (CARC) painting.

    Use of Non-GAAP Financial Measures

    This press release contains financial information calculated in a manner other than in accordance with U.S generally accepted accounting principles (“GAAP”).

    The non-GAAP measures used in this press release are EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin.

    EBITDA represents net income before interest expense, provision for income taxes, depreciation, and amortization. EBITDA Margin represents EBITDA as a percentage of net sales for each period. Adjusted EBITDA represents EBITDA before stock-based compensation, Hazel Park transition costs due to the former fitness customer and impairment charges on long-lived assets and gain on contracts specifically purchased to meet obligations under the agreement with our former fitness customer. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of net sales for each period. These metrics are supplemental measures of our operating performance that are neither required by, nor presented in accordance with, GAAP. These measures should not be considered as an alternative to net income, or any other performance measure derived in accordance with GAAP as an indicator of our operating performance. We present Adjusted EBITDA and Adjusted EBITDA Margin as management uses these measures as key performance indicators, and we believe they are measures frequently used by securities analysts, investors and other parties to evaluate companies in our industry. These measures have limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP.

    Our calculation of EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin may not be comparable to the similarly named measures reported by other companies. Potential differences between our measures of EBITDA and Adjusted EBITDA compared to other similar companies’ measures of EBITDA and Adjusted EBITDA may include differences in capital structure and tax positions.

    Please reference our reconciliation of net income, the most directly comparable measure calculated in accordance with GAAP, to EBITDA and Adjusted EBITDA, and the calculation of EBITDA Margin and Adjusted EBITDA Margin included in this press release.

    Mayville Engineering Company, Inc.

    Consolidated Balance Sheet

    (in thousands, except share amounts)

    (unaudited)

     

     

     

     

     

     

     

     

     

    June 30,

     

    December 31,

     

     

    2022

     

    2021

    ASSETS

     

     

     

     

     

     

    Cash and cash equivalents

     

    $

    105

     

     

    $

    118

     

    Receivables, net of allowances for doubtful accounts of $799 at June 30, 2022
    and $631 at December 31, 2021

     

     

    71,223

     

     

     

    55,417

     

    Inventories, net

     

     

    74,103

     

     

     

    70,157

     

    Tooling in progress

     

     

    5,317

     

     

     

    3,950

     

    Prepaid expenses and other current assets

     

     

    4,580

     

     

     

    2,924

     

    Total current assets

     

     

    155,328

     

     

     

    132,566

     

    Property, plant and equipment, net

     

     

    129,509

     

     

     

    120,746

     

    Assets held for sale

     

     

    1,288

     

     

     

     

    Goodwill

     

     

    71,535

     

     

     

    71,535

     

    Intangible assets, net

     

     

    47,285

     

     

     

    50,761

     

    Operating lease assets

     

     

    37,842

     

     

     

     

    Other long-term assets

     

     

    3,497

     

     

     

    3,865

     

    Total assets

     

    $

    446,284

     

     

    $

    379,473

     

    LIABILITIES AND SHAREHOLDERS’ EQUITY

     

     

     

     

     

     

    Accounts payable

     

    $

    58,679

     

     

    $

    50,119

     

    Current portion of operating lease obligation

     

     

    4,803

     

     

     

     

    Accrued liabilities:

     

     

     

     

     

     

    Salaries, wages, and payroll taxes

     

     

    9,670

     

     

     

    8,684

     

    Profit sharing and bonus

     

     

    6,329

     

     

     

    5,289

     

    Current portion of deferred compensation

     

     

    17,531

     

     

     

     

    Other current liabilities

     

     

    13,495

     

     

     

    13,280

     

    Total current liabilities

     

     

    110,507

     

     

     

    77,372

     

    Bank revolving credit notes

     

     

    76,063

     

     

     

    67,610

     

    Operating lease obligation, less current maturities

     

     

    33,531

     

     

     

     

    Deferred compensation, less current portion

     

     

    2,949

     

     

     

    25,117

     

    Deferred income tax liability

     

     

    11,040

     

     

     

    8,641

     

    Other long-term liabilities

     

     

    1,725

     

     

     

    2,462

     

    Total liabilities

     

    $

    235,815

     

     

    $

    181,202

     

    Commitments and contingencies

     

     

     

     

     

     

    Common shares, no par value, 75,000,000 authorized, 21,645,193 shares issued at
    June 30, 2022 and 21,386,382 at December 31, 2021

     

     

     

     

     

     

    Additional paid-in-capital

     

     

    199,899

     

     

     

    197,186

     

    Retained earnings

     

     

    17,298

     

     

     

    7,547

     

    Treasury shares at cost, 1,112,502 shares at June 30, 2022 and 1,050,448 at
    December 31, 2021

     

     

    (6,728

    )

     

     

    (6,462

    )

    Total shareholders’ equity

     

     

    210,469

     

     

     

    198,271

     

    Total

     

    $

    446,284

     

     

    $

    379,473

     

    Mayville Engineering Company, Inc.

    Consolidated Statement of Net Income

    (in thousands, except share amounts and per share data)

    (unaudited)

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Three Months Ended

     

    Six Months Ended

     

     

    June 30,

     

    June 30,

     

     

    2022

     

    2021

     

    2022

     

    2021

    Net sales

     

    $

    138,337

     

     

    $

    120,213

     

     

    $

    274,589

     

     

    $

    232,833

     

    Cost of sales

     

     

    120,079

     

     

     

    103,933

     

     

     

    241,449

     

     

     

    201,777

     

    Amortization of intangible assets

     

     

    1,738

     

     

     

    2,677

     

     

     

    3,476

     

     

     

    5,353

     

    Profit sharing, bonuses, and deferred compensation

     

     

    1,208

     

     

     

    3,210

     

     

     

    3,755

     

     

     

    6,074

     

    Employee stock ownership plan expense

     

     

    1,330

     

     

     

    228

     

     

     

    1,820

     

     

     

    701

     

    Other selling, general and administrative expenses

     

     

    6,396

     

     

     

    5,362

     

     

     

    12,121

     

     

     

    10,059

     

    Impairment of long-lived assets and gain on contracts

     

     

    (906

    )

     

     

     

     

     

    (2,089

    )

     

     

     

    Income from operations

     

     

    8,492

     

     

     

    4,803

     

     

     

    14,057

     

     

     

    8,869

     

    Interest expense

     

     

    (765

    )

     

     

    (504

    )

     

     

    (1,332

    )

     

     

    (1,036

    )

    Income before taxes

     

     

    7,727

     

     

     

    4,299

     

     

     

    12,725

     

     

     

    7,833

     

    Income tax expense

     

     

    1,798

     

     

     

    1,007

     

     

     

    2,974

     

     

     

    1,996

     

    Net income and comprehensive income

     

    $

    5,929

     

     

    $

    3,292

     

     

    $

    9,751

     

     

    $

    5,837

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Earnings per share:

     

     

     

     

     

     

     

     

     

     

     

     

    Basic

     

    $

    0.29

     

     

    $

    0.16

     

     

    $

    0.48

     

     

    $

    0.29

     

    Diluted

     

    $

    0.29

     

     

    $

    0.16

     

     

    $

    0.47

     

     

    $

    0.28

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Weighted average shares outstanding:

     

     

     

     

     

     

     

     

     

     

     

     

    Basic

     

     

    20,581,945

     

     

     

    20,454,541

     

     

     

    20,490,944

     

     

     

    20,316,936

     

    Diluted

     

     

    20,650,551

     

     

     

    20,864,531

     

     

     

    20,807,677

     

     

     

    20,685,741

     

    Mayville Engineering Company, Inc.

    Consolidated Statement of Cash Flows

    (in thousands)

    (unaudited)

     

     

     

     

     

     

     

     

     

    Six Months Ended

     

     

    June 30,

     

     

    2022

     

    2021

    CASH FLOWS FROM OPERATING ACTIVITIES

     

     

     

     

     

     

    Net income

     

    $

    9,751

     

     

    $

    5,837

     

    Adjustments to reconcile net income to net cash provided by operating activities:

     

     

     

     

     

     

    Depreciation

     

     

    10,975

     

     

     

    10,236

     

    Amortization

     

     

    3,476

     

     

     

    5,353

     

    Allowance for doubtful accounts

     

     

    168

     

     

     

    49

     

    Inventory excess and obsolescence reserve

     

     

    87

     

     

     

    (589

    )

    Stock-based compensation expense

     

     

    2,714

     

     

     

    2,588

     

    Loss (gain) on disposal of property, plant and equipment

     

     

    (625

    )

     

     

    66

     

    Impairment of long-lived assets and gain on contracts

     

     

    (2,089

    )

     

     

     

    Deferred compensation

     

     

    (4,637

    )

     

     

    (170

    )

    Non-cash lease expense

     

     

    2,482

     

     

     

     

    Other non-cash adjustments

     

     

    176

     

     

     

    151

     

    Changes in operating assets and liabilities – net of effects of acquisition:

     

     

     

     

     

     

    Accounts receivable

     

     

    (15,973

    )

     

     

    (16,331

    )

    Inventories

     

     

    (4,033

    )

     

     

    (8,984

    )

    Tooling in progress

     

     

    (1,367

    )

     

     

    1,033

     

    Prepaids and other current assets

     

     

    (1,561

    )

     

     

    (1,094

    )

    Accounts payable

     

     

    9,275

     

     

     

    14,324

     

    Deferred income taxes

     

     

    2,504

     

     

     

    1,484

     

    Operating lease obligations

     

     

    (2,270

    )

     

     

     

    Accrued liabilities

     

     

    6,631

     

     

     

    4,277

     

    Net cash provided by operating activities

     

     

    15,684

     

     

     

    18,230

     

    CASH FLOWS FROM INVESTING ACTIVITIES

     

     

     

     

     

     

    Purchase of property, plant and equipment

     

     

    (26,351

    )

     

     

    (16,986

    )

    Proceeds from sale of property, plant and equipment

     

     

    5,228

     

     

     

    414

     

    Net cash used in investing activities

     

     

    (21,123

    )

     

     

    (16,572

    )

    CASH FLOWS FROM FINANCING ACTIVITIES

     

     

     

     

     

     

    Proceeds from bank revolving credit notes

     

     

    218,867

     

     

     

    157,388

     

    Payments on bank revolving credit notes

     

     

    (210,414

    )

     

     

    (158,791

    )

    Repayments of other long-term debt

     

     

    (547

    )

     

     

     

    Purchase of treasury stock

     

     

    (2,323

    )

     

     

     

    Payments on finance leases

     

     

    (157

    )

     

     

    (310

    )

    Proceeds from the exercise of stock options

     

     

     

     

     

    80

     

    Other financing activities

     

     

     

     

     

    (27

    )

    Net cash provided by (used in) financing activities

     

     

    5,426

     

     

     

    (1,660

    )

    Net decrease in cash and cash equivalents

     

     

    (13

    )

     

     

    (2

    )

    Cash and cash equivalents at beginning of period

     

     

    118

     

     

     

    121

     

    Cash and cash equivalents at end of period

     

    $

    105

     

     

    $

    119

     

    Mayville Engineering Company, Inc.

    Reconciliation of Net Income to EBITDA and Adjusted EBITDA

    (in thousands)

    (unaudited)

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Three Months Ended

     

     

    Six Months Ended

     

     

     

    June 30,

     

     

    June 30,

     

     

     

    2022

     

     

    2021

     

     

    2022

     

     

    2021

     

    Net income and comprehensive income

     

    $

    5,929

     

     

     

    $

    3,292

     

     

    $

    9,751

     

     

     

    $

    5,837

     

    Interest expense

     

     

    765

     

     

     

     

    504

     

     

     

    1,332

     

     

     

     

    1,036

     

    Provision for income taxes

     

     

    1,798

     

     

     

     

    1,007

     

     

     

    2,974

     

     

     

     

    1,996

     

    Depreciation and amortization

     

     

    7,245

     

     

     

     

    7,838

     

     

     

    14,451

     

     

     

     

    15,589

     

    EBITDA

     

     

    15,737

     

     

     

     

    12,641

     

     

     

    28,508

     

     

     

     

    24,458

     

    Hazel Park transition costs due to former fitness customer

     

     

    1,889

     

     

     

     

     

     

     

    3,816

     

     

     

     

     

    Stock based compensation expense

     

     

    1,456

     

     

     

     

    1,388

     

     

     

    2,714

     

     

     

     

    2,588

     

    Impairment of long-lived assets and gain on contracts

     

     

    (906

    )

     

     

     

     

     

     

    (2,089

    )

     

     

     

     

    Adjusted EBITDA

     

    $

    18,176

     

     

     

    $

    14,029

     

     

    $

    32,949

     

     

     

    $

    27,046

     

    Net sales

     

    $

    138,337

     

     

     

    $

    120,213

     

     

    $

    274,589

     

     

     

    $

    232,833

     

    EBITDA Margin

     

     

    11.4

     

    %

     

     

    10.5

    %

     

     

    10.4

     

    %

     

     

    10.5

    %

    Adjusted EBITDA Margin

     

     

    13.1

     

    %

     

     

    11.7

    %

     

     

    12.0

     

    %

     

     

    11.6

    %

     



    Business Wire (engl.)
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    Mayville Engineering Company, Inc. Announces Second Quarter 2022 Results Mayville Engineering Company (NYSE: MEC) (the “Company” or “MEC”), a leading U.S.-based value-added manufacturing partner that provides a full suite of prototyping and tooling, production fabrication, coating, assembly and aftermarket services, …