Toggle SGML Header (+)


Section 1: 8-K (8-K)

8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 26, 2020

 

 

Mayville Engineering Company, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Wisconsin   001-38894   39-0944729
(State or other jurisdiction
of incorporation)
  (Commission
File Number)
 

(IRS Employer

Identification No.)

715 South Street, Mayville, Wisconsin 53050

(Address of principal executive offices, including zip code)

(920) 387-4500

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading
Symbol(s)

 

Name of each exchange
on which registered

Common Stock, no par value   MEC   New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02.

Results of Operations and Financial Condition.

On February 26, 2020, Mayville Engineering Company, Inc. issued a press release announcing its earnings for its quarter and year ended December 31, 2019. A copy of such press release is furnished as Exhibit 99 to this Current Report on Form 8-K and is incorporated by reference herein.

 

Item 9.01.

Financial Statements and Exhibits.

 

  (a)

Not applicable.

 

  (b)

Not applicable.

 

  (c)

Not applicable.

 

  (d)

Exhibits. The exhibit listed in the exhibit index below is being furnished herewith.

EXHIBIT INDEX

 

Exhibit
Number

    
99    Press Release of Mayville Engineering Company, Inc., dated February 26, 2020 regarding financial results for its quarter and year ended December 31, 2019.

 

2


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  MAYVILLE ENGINEERING COMPANY, INC.
Date: February 26, 2020   By:  

/s/ Todd M. Butz

    Todd M. Butz
    Chief Financial Officer
(Back To Top)

Section 2: EX-99 (EX-99)

EX-99

Exhibit 99

 

LOGO

MAYVILLE ENGINEERING COMPANY, INC. ANNOUNCES

FULL YEAR and FOURTH QUARTER 2019 RESULTS

Performance Impacted by Sudden Demand Changes Starting in Late Third Quarter;

Ends Year in Strong Financial Position

Mayville, WI/February 26, 2020/Mayville Engineering Company (NYSE: MEC) (the “Company” or “MEC”), 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, today announced results for the full year and fourth quarter ended December 31, 2019.

Full Year 2019 Highlights:

 

 

Completed Initial Public Offering (IPO) in May

 

 

Produced net sales of $519.7 million

 

 

Generated a net loss of $4.8 million, which included $28.2 million of one-time charges

 

 

Recorded Adjusted EBITDA of $53.1 million

 

 

Lowered outstanding debt to $72.6 million, or 1.4 times Adjusted EBITDA

 

 

Credit Agreement amended increasing borrowing capacity with more favorable rates

 

 

Increased share buyback authorization to $25.0 million through 2021

 

 

Completed integration of Defiance Metal Products (DMP) acquisition

 

 

Reaffirmed 2020 full-year outlook

“2019 was an important year for our Company during which we reached numerous important milestones including completing our IPO and the integration of DMP,” explained Robert D. Kamphuis, Chairman, President and CEO. “Our full year results highlight the overall strength of our business, which more recently has been impacted by the sudden shifts in demand that we started to experience late in the third quarter. We believe much of the dramatic downshift in demand has slowed and we will continue to align our cost structure to market conditions. Going forward, we are reaffirming our 2020 outlook and remain focused on leveraging our agility to shift our capacities and pursue new customer opportunities.”

Full Year Results

Net sales were $519.7 million for the year ended December 31, 2019 as compared to $354.5 million for same prior year period. The increase of $165.2 million was driven by $188.6 million of net contributions from the former DMP locations slightly offset by modest declines within our legacy business. Both the legacy MEC and former DMP businesses were adversely impacted by sudden declines in market demand that began late in the third quarter and continued through the fourth quarter, particularly in the Commercial Vehicle (CV), Agricultural and Construction end markets served. These market demand changes drove destocking activities which had a more pronounced impact on the legacy MEC business, especially in the fourth quarter. Destocking stems from lower retail sales resulting in customer decisions to reduce dealer inventory levels by reducing and curtailing near-term production schedules. In addition, several, key customers in the CV market experienced labor union issues in the third and fourth quarter of 2019, which negatively impacted production schedules for both the legacy MEC and former DMP businesses.

 

1


Manufacturing margins were $58.7 million for the year ended December 31, 2019 as compared to $50.6 million for the same prior year period. The increase of $8.1 million was driven by $21.1 million of contributions from the former DMP locations offset by declines at the legacy MEC locations. The declines in market demand, destocking, and impact of customer labor issues adversely impacted volumes and the labor absorption associated with it. These circumstances, along with the costs associated with working through the consolidation of the Company’s Virginia facilities, shift consolidations across multiple facilities and increased healthcare costs, coupled with fewer working days in the fourth quarter, negatively impacted our cost. These conditions collectively produced an unusual amount of under-absorbed manufacturing expenses and lower manufacturing margins in the third quarter and especially in the fourth quarter.    

Amortization expenses were $10.7 million for the year ended December 31, 2019 as compared to $4.1 million for the same prior year period. The increase was solely attributable to the amortization of identifiable intangible assets related to the DMP acquisition.

Depreciation expenses were $22.3 million for the year ended December 31, 2019 as compared to $16.4 million for the same prior year period. The increase relates to the addition of DMP and investments in new technology and automation.

Profit sharing, bonuses, and deferred compensation expenses were $25.1 million for the year ended December 31, 2019 as compared to $8.1 million for the same prior year period. The increase of $17.0 million was primarily driven by a one-time $10.2 million increase in deferred compensation plan expense and a one-time $9.9 million increase in long term incentive plan (“LTIP”) expense, both related to the IPO, offset by a $2.6 million reduction in annual incentive-based bonus expense.

Other selling, general and administrative expenses were $25.5 million for the year ended December 31, 2019 as compared to $12.3 million for the same prior year period. The increase of $13.2 million was driven by $5.7 million of one-time IPO and DMP acquisition related expenses, $5.3 million from the former DMP acquired entities, plus additional costs associated with being a public company.

The contingent consideration payable related to the DMP earnout was adjusted to zero during the third quarter of 2019, resulting in a $6.1 million non-cash revaluation adjustment. The Company’s position that no earnout payment is due has been agreed to by DMP’s former shareholders.

Interest expense was $6.7 million for the year ended December 31, 2019 as compared to $3.9 million for the same prior year period. The increase was due to additional debt related to the DMP acquisition, slightly offset by the partial paydown of debt with the IPO proceeds in May and net positive cash flows generated by the business.

Income tax benefits were $4.1 million for the year ended December 31, 2019. The benefit is the result of the Company’s legacy business converting to a C corporation on May 12, 2019, in conjunction with the one-time IPO and DMP acquisition related expenses incurred during the year.

EBITDA and EBITDA Margin percent were $30.9 million and 5.9%, respectively, for the year ended December 31, 2019 as compared to $41.8 million and 11.8%, respectively, for the year ended December 31, 2018. The $10.9 million decline in EBITDA was due to the previously

 

2


mentioned one-time increases in LTIP and deferred compensation expenses and one-time IPO and DMP acquisition related expenses. These charges were slightly offset by the DMP contingent consideration payable revaluation adjustment and the addition of DMP.

Adjusted EBITDA and Adjusted EBITDA Margin percent were $53.1 million and 10.2%, respectively, for the year ended December 31, 2019 as compared to $43.7 million and 12.3%, respectively, for the year ended December 31, 2018. The increase in Adjusted EBITDA was primarily driven by the acquisition of DMP, slightly offset by the aforementioned declines in market demand. Similarly, the decrease in EBITDA Margin percent and Adjusted EBITDA Margin percent was primarily driven by the declines in market demand.

Fourth Quarter Results

Net sales were $102.3 million for the three months ended December 31, 2019 as compared to $91.4 million for same prior year period. The increase of $10.9 million was driven by $33.1 million of net revenues from the former DMP locations, offset by declines within our legacy business. Both the legacy MEC and former DMP business volumes were adversely impacted by the aforementioned sudden declines in market demand and customer labor union issues during the fourth quarter.

Manufacturing margins were $4.0 million for the three months ended December 31, 2019 as compared to $10.4 million for the same prior year period. The decrease of $6.4 million was driven by the aforementioned changes, as well as higher health care costs. Although the Company was able to adjust its cost structure during the fourth quarter to align with 2020 expectations, these events resulted in an unusual amount of under-absorbed manufacturing expenses and abnormally low manufacturing margins for the fourth quarter.

Amortization expenses were $2.7 million for the three months ended December 31, 2019 as compared to $1.3 million for the same prior year period, due to the DMP acquisition.

Depreciation expenses were $5.7 million for the three months ended December 31, 2019 as compared to $4.3 million for the same prior year period, an increase of $1.4 million.

Profit sharing, bonuses, and deferred compensation expenses were $(0.2) million for the three months ended December 31, 2019 as compared to $2.7 million for the same prior year period.

Other selling, general and administrative expenses were $5.2 million for the three months ended December 31, 2019 as compared to $3.8 million for the same prior year period. The increase of $1.4 million was driven by $0.7 million from the former DMP acquired entities with the remainder mostly due to additional costs associated with being a public company.

Interest expense was $0.9 million for the three months ended December 31, 2019 as compared to $1.3 million for the same prior year period. The $0.4 million decline was due to the partial paydown of debt with use of the IPO proceeds in May and net positive cash flows generated by the business throughout the year.

Income tax benefits were $3.9 million for the three months ended December 31, 2019. The benefit is the result of the Company’s legacy business converting to a C corporation on May 12, 2019.

 

3


EBITDA and Adjusted EBITDA each declined by slightly more than $3.0 million for the three months ended December 31, 2019 as compared to the same prior year period. The decline was primarily driven by the previously mentioned issues.

Balance Sheet and Liquidity

The outstanding debt balance was $72.6 million as of December 31, 2019, as compared to $179.9 million as of December 31, 2018. The $107.3 million decline is attributable to the repayment of debt from the $101.8 million of IPO proceeds received in May 2019 in addition to net cash flow generated by the business, slightly offset by one-time IPO and DMP acquisition related payments and share repurchases.

Capital expenditures were $25.8 million for the year ended December 31, 2019 as compared to $17.9 million for the year ended December 31, 2018. The increase related to the addition of DMP and the timing of certain new technology and automation investments. This timing change allows the Company to increase its efficiency improvements at a faster rate which is reflected in lower planned capital expenditures in 2020, expected to be between $12 million and $16 million.

During the third quarter of 2019, the Company entered into an Amended and Restated Credit Agreement. This five-year agreement increased the Company’s borrowing capacity, simplified its debt structure, and provides for total potential borrowing capacity of $300 million through a $200 million revolving credit facility, along with a $100 million accordion feature at a favorable interest rate with less restrictive covenants.

As previously disclosed, the Company’s Board of Directors approved an increase in the Company’s share buyback program to $25.0 million through 2021. The company has utilized $2.6 million available under this program as of December 31, 2019.

“Our focus for 2020 will be to further strengthen our balance sheet to ensure we are well capitalized and able to pursue compelling acquisition opportunities at logical valuations,” noted Todd M. Butz, CFO. “We expect our 2020 free cash flow to be greater than fifty percent of Adjusted EBITDA and believe we are in a strong financial position moving forward.”

Outlook

Based on the Company’s recent performance, the overall economic climate, and industry trends, the Company is reaffirming its 2020 financial outlook as follows:

 

 

Net sales are expected to be between $425 million to $465 million.

 

 

Adjusted EBITDA is expected to be between $39 million and $50 million, which excludes stock-based compensation for 2020.

Conference Call

The Company will host a conference call on Thursday February 27th, 2020 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 (866) 652-5200 within the United States, call (855)-669-9657 within Canada, or +1 (412) 317-6060 from outside the United States and Canada.

 

4


Forward Looking Statements

This press-release includes forward-looking statements that reflect plans, estimates and beliefs. Such statements involve risks 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: failure to compete successfully in our markets; risks relating to developments in the industries in which our customers operate; 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 scheduling production accurately and maximizing efficiency; our ability to realize net sales represented by our awarded business; our ability to successfully identify or integrate acquisitions; risks related to entering new markets; our ability to develop new and innovative processes and gain customer acceptance of such processes; our ability to recruit and retain our key executive officers, managers and trade-skilled personnel; risks related to our information technology systems and infrastructure; manufacturing risks, including delays and technical problems, issues with third-party suppliers, environmental risks and applicable statutory and regulatory requirements; political and economic developments, including foreign trade relations and associated tariffs; volatility in the prices or availability of raw materials critical to our business; 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; our ability to remediate the material weaknesses in internal control over financial reporting identified in preparing our audited consolidated financial statements and to subsequently maintain effective internal control over financial reporting; and other factors listed under “Risk Factors” in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, which may be amended or supplemented by subsequent Quarterly Reports on Form 10-Q or other reports filed with the Securities and Exchange Commission. This discussion should be read in conjunction with our audited consolidated financial statements included in the Company’s previously filed registration statement on Form S-1. 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 the federal securities laws

About Mayville Engineering Company

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, powersports, agriculture, military and other end markets. We have developed long-standing relationships with our blue-chip customers based upon a high level of experience, trust and confidence.

Our one operating segment focuses on producing metal components that are used in a broad range of heavy- and medium-duty commercial vehicles, construction, powersports, agricultural, military and other products.

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”).

 

5


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 (benefit) for income taxes, depreciation, and amortization. EBITDA Margin represents EBITDA as a percentage of net sales for each period. Adjusted EBITDA represents EBITDA before transaction fees incurred in connection with the DMP acquisition and our initial public offering, the loss on debt extinguishment relating to our December 2018 credit agreement, non-cash purchase accounting charges including costs recognized on the step-up of acquired inventory and contingent consideration fair value adjustments, and one-time increases in deferred compensation and long term incentive plan expenses related to the initial public offering and, for 2020, stock-based compensation. 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.

 

6


Mayville Engineering Company, Inc.

Consolidated Balance Sheet

(in thousands except share data)

 

     December 31,
2019
     December 31,
2018
 

ASSETS

     

Cash and cash equivalents

   $ 1      $ 3,089  

Receivables, net of allowances for doubtful accounts of $526 and $801 as of December 31, 2019 and 2018

     40,188        52,298  

Inventories, net

     45,692        53,405  

Tooling in progress

     1,589        2,318  

Prepaid expenses and other current assets

     3,007        1,649  
  

 

 

    

 

 

 

Total current assets

     90,477        112,759  
  

 

 

    

 

 

 

Property, plant and equipment, net

     125,063        123,883  

Goodwill

     71,535        69,437  

Intangible assets-net

     72,173        82,879  

Capital lease, net

     3,227        1,953  

Other long-term assets

     6,894        814  
  

 

 

    

 

 

 

Total

   $ 369,369      $ 391,725  
  

 

 

    

 

 

 

 

7


Mayville Engineering Company, Inc.

Consolidated Balance Sheet (continued)

(in thousands except share data)

 

     December 31,
2019
    December 31,
2018
 

LIABILITIES, TEMPORARY EQUITY, AND SHAREHOLDERS’ EQUITY

    

Accounts payable

   $ 32,173     $ 45,992  

Current portion of capital lease obligation

     598       281  

Current portion of long-term debt

     —         8,606  

Accrued liabilities:

    

Salaries, wages, and payroll taxes

     5,752       7,548  

Profit sharing and bonus

     6,229       6,124  

Other current liabilities

     3,439       14,610  
  

 

 

   

 

 

 

Total current liabilities

     48,191       83,161  
  

 

 

   

 

 

 

Bank revolving credit notes

     72,572       59,629  

Capital lease obligation, less current maturities

     2,687       1,697  

Other long-term debt, less current maturities

     —         111,675  

Deferred compensation and long-term incentive, less current portion

     24,949       13,351  

Deferred income taxes

     19,975       19,123  

Other long-term liabilities

     100       100  
  

 

 

   

 

 

 

Total liabilities

     168,474       288,736  
  

 

 

   

 

 

 

Redeemable common shares, no par value, stated at redemption value of outstanding shares, 60,045,300 authorized, 38,623,806 shares issued at December 31, 2018

     —         133,806  

Retained earnings

     —         26,842  

Treasury stock at cost, 25,180,330 shares at December 31, 2018

     —         (57,659
  

 

 

   

 

 

 

Total temporary equity

     —         102,989  
  

 

 

   

 

 

 

Common shares, no par value, 75,000,000 authorized, 20,845,693 shares issued at December 31, 2019

     —         —    

Additional paid-in-capital

     183,687       —    

Retained earnings

     22,089       —    

Treasury stock at cost 1,213,482 shares at December 31, 2019

     (4,882     —    
  

 

 

   

 

 

 

Total shareholders’ equity

     200,895       —    
  

 

 

   

 

 

 

Total

   $ 369,369     $ 391,725  
  

 

 

   

 

 

 

Share counts give effect to the issuance of a stock dividend of approximately 1,334.34-for-1 related to the Company’s May 2019 IPO. There were 45,000 shares authorized, 28,946 shares issued and 18,871 treasury shares at December 31, 2018.

 

8


Mayville Engineering Company, Inc.

Consolidated Statement of Income (Loss)

(in thousands except share data)

 

     Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
     2019     2018     2019     2018  

Net sales

   $ 102,331       91,432     $ 519,704       354,526  

Cost of sales

     98,297       81,034       460,986       303,948  

Amortization of intangibles

     2,677       1,279       10,706       4,096  

Profit sharing, bonuses, and deferred compensation

     (153     2,713       25,105       8,058  

Employee Stock Ownership Plan expense

     953       1,000       5,453       4,000  

Other selling, general and administrative expenses

     5,170       3,841       25,466       12,276  

Contingent consideration revaluation

     —         (21     (6,054     (21

Income (loss) from operations

     (4,613     1,586       (1,958     22,169  

Interest expense

     (918     (1,274     (6,728     (3,879

Loss on debt extinguishment

     —         (226     (154     (814

Income (loss) before taxes

     (5,530     86       (8,840     17,476  

Income tax expense (benefit)

     (3,857     (505     (4,088     (459
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) and comprehensive income

   $ (1,673   $ 591     $ (4,753   $ 17,935  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share – basic and diluted

        

Net income available to shareholders

   $ (1,673   $ 591     $ (4,753   $ 17,935  

Basic and diluted earnings (loss) per share

   $ (0.08   $ 0.04     $ (0.27   $ 1.29  

Basic and diluted weighted average shares outstanding

     19,711,921       13,443,524       17,447,464       13,891,301  

Tax and share adjusted pro forma information

        

Net income (loss) available to shareholders

   $ (1,673   $ 591     $ (4,753   $ 17,935  

Pro forma provision for income taxes

     —         175       173       4,663  
  

 

 

   

 

 

   

 

 

   

 

 

 

Pro forma net income (loss)

   $ (1,673     416     $ (4,926     13,272  

Pro forma basic and diluted earnings (loss) per share

   $ (0.08   $ 0.03     $ (0.28   $ 0.96  

Pro forma basic and diluted weighted average shares outstanding

     19,711,921       13,443,524       17,447,464       13,891,301  

Weighted average shares give effect to the issuance of a stock dividend of approximately 1,334.34-for-1 related to the IPO.

Tax adjusted pro forma amounts reflect income tax adjustments as if the Company was a taxable entity as of the beginning of 2018 using a 26% effective tax rate.

 

9


Mayville Engineering Company, Inc.

Consolidated Statement of Cash Flows

(in thousands)

 

     Twelve Months Ended
December 31,
 
     2019     2018  

CASH FLOWS FROM OPERATING ACTIVITIES

    

Net income (loss)

   $ (4,753   $ 17,935  

Adjustments to reconcile net income to net cash used in operating activities:

    

Depreciation

     22,296       16,372  

Amortization

     10,706       4,096  

Stock-based compensation

     3,486       —    

Costs recognized on step-up of acquired inventory

     395       583  

Contingent consideration revaluation

     (6,054     (21

Gain on sale of property, plant and equipment

     (62     (177

Deferred compensation and long-term incentive

     11,598       4,466  

Loss (gain) on extinguishment or forgiveness of debt, net

     (367     814  

Provision for doubtful accounts

     —         (48

Non-cash adjustments

     (13     218  

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

    

Accounts receivable

     11,853       1,042  

Inventories

     8,886       (6,873

Tooling in progress

     729       489  

Prepaids and other current assets

     (1,358     (4,425

Accounts payable

     (11,010     834  

Other long-term assets

     (5,992     —    

Accrued liabilities, excluding long-term incentive

     (6,938     1,410  
  

 

 

   

 

 

 

Net cash provided by operating activities

     33,402       36,715  
  

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

    

Purchase of property, plant and equipment

     (25,797     (17,879

Acquisitions, net of cash acquired

     (2,369     (114,700

Proceeds from sale of property, plant and equipment

     76       10  
  

 

 

   

 

 

 

Net cash used in investing activities

     (28,090     (132,569
  

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

    

Proceeds from bank revolving credit notes

     442,154       257,428  

Payments on bank revolving credit notes

     (429,211     (228,137

Repayments of other long-term debt

     (120,046     (87,389

Proceeds from issuance of other long-term debt

     —         167,094  

Proceeds from IPO, net

     101,763       —    

Purchase of treasury stock

     (2,591     (7,833

Deferred financing costs

     —         (2,173

Payments on capital leases

     (469     (123
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     (8,400     98,867  
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     (3,088     3,013  

Cash and cash equivalents at beginning of period

     3,089       76  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 1     $ 3,089  
  

 

 

   

 

 

 

Cash paid for interest

   $ 6,629     $ 4,117  

 

10


Mayville Engineering Company, Inc.

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

(in thousands)

 

     Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
     2019     2018     2019     2018  

Net income (loss)

   $ (1,673   $ 591     $ (4,753   $ 17,935  

Interest expense

     918       1,274       6,728       3,879  

Provision (benefit) for income taxes

     (3,857     (505     (4,088     (459

Depreciation and amortization

     8,350       5,603       33,002       20,468  
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     3,738       6,961       30,890       41,823  

Loss on debt extinguishment

     —         226       154       814  

Costs recognized on step-up of acquired inventory

     —         583       395       583  

Contingent consideration revaluation

     —         (21     (6,054     (21

Deferred compensation expense specific to IPO

     —         —         10,159       —    

Long term incentive plan expense specific to IPO

     —         —         9,921       —    

Other IPO and DMP acquisition related expenses

     1,181       495       7,615       495  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 4,919     $ 8,244     $ 53,080     $ 43,694  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net sales

   $ 102,331     $ 91,432     $ 519,704     $ 354,526  

EBITDA Margin Percentage

     3.7     7.6     5.9     11.8

Adjusted EBITDA Margin Percentage

     4.8     9.0     10.2     12.3

 

11

(Back To Top)