Mayville Engineering Company, Inc. Announces Fourth Quarter and Full Year 2020 Results
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 services, today announced results for the fourth quarter and full year ended December 31, 2020.
Fourth Quarter 2020 Highlights:
-
Produced net sales of
$95.3 million -
Recorded net income of
$1.0 million -
Generated Adjusted EBITDA of
$9.3 million , or9.8% of net sales -
Reduced total funded debt to
$47.9 million , resulting in a leverage ratio of 1.5x
“We executed effectively in the fourth quarter and were pleased with our performance, which, in many aspects, was a significant improvement over our fourth quarter 2019 results,” noted Robert D. Kamphuis, Chairman, President and CEO. “As we look back at 2020, we are pleased with the way we reacted as the pandemic took hold and our continued focus on optimizing our cost structure through facility and process improvements, as well as fortifying our financial position. With market conditions continuing to stabilize, we are confident in our ability to execute our strategy in 2021 as we pursue further productivity gains thru new technologies and automation and explore growth opportunities.”
Fourth Quarter Results
Net sales were
Manufacturing margins were
Profit sharing, bonuses, and deferred compensation expenses were
Other selling, general and administrative expenses were
Interest expense was
Adjusted EBITDA and Adjusted EBITDA margin were
Balance Sheet and Liquidity
During 2020, the Company further strengthened its balance sheet by paying down debt by
Capital expenditures were
CFO, Todd Butz stated, “As market dynamics improved during the second half of 2020, we methodically paid down debt, further strengthening our balance sheet. From a financial and operating perspective, we are well positioned to execute our strategy in 2021 and beyond.”
Outlook
Based on the ongoing economic uncertainty related to the pandemic, and consistent with most of our customers, the Company is not providing a financial outlook for 2021.
Kamphuis commented, “We are encouraged by the generally improving conditions in our end markets, and have made significant strides over the past year, through cost optimization and our investments in automation and technology. These improvements are sustainable, providing a clear path to our goal of
Conference Call
The Company will host a conference call on Wednesday, March 3rd, 2021 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 (888) 349-0091 within the United States, call (855)-669-9657 within Canada, or +1 (412) 317-0780 from outside the United States and Canada.
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 coronavirus (COVID-19) has had and will continue to have on our business, financial condition, cash flows, results of operations and supply chain (including future uncertain impacts); 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; 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, 2019, as such were previously supplemented and amended in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020 and which may be further 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 our previously filed Annual Report on Form 10-K for the year ended December 31, 2019 and in our to be filed Annual Report on Form 10-K for the year ended December 31, 2020. 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 component. Our customers operate in diverse end markets, including heavy- and medium-duty commercial vehicle, construction & access equipment, powersports, agriculture, military and other end markets. Along with process engineering and development services, MEC maintains an extensive manufacturing infrastructure with 19 facilities 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 (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 (IPO), 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, one-time increases in deferred compensation and long term incentive plan expenses related to the IPO, stock-based compensation and restructuring expenses related to the closure of the Greenwood facility. 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. |
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Consolidated Balance Sheet |
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(in thousands, except share amounts) |
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|
|
December 31, |
|
|
December 31, |
|
||
2020 |
2019 |
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ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
121 |
|
|
$ |
1 |
|
Receivables, net of allowances for doubtful accounts of |
|
|
42,080 |
|
|
|
40,188 |
|
Inventories, net |
|
|
41,366 |
|
|
|
45,692 |
|
Tooling in progress |
|
|
3,126 |
|
|
|
1,589 |
|
Prepaid expenses and other current assets |
|
|
2,555 |
|
|
|
3,007 |
|
Total current assets |
|
|
89,248 |
|
|
|
90,477 |
|
Property, plant and equipment, net |
|
|
106,688 |
|
|
|
125,063 |
|
Assets held for sale |
|
|
3,552 |
|
|
|
— |
|
Goodwill |
|
|
71,535 |
|
|
|
71,535 |
|
Intangible assets-net |
|
|
61,467 |
|
|
|
72,173 |
|
Capital lease, net |
|
|
2,581 |
|
|
|
3,227 |
|
Other long-term assets |
|
|
3,462 |
|
|
|
1,107 |
|
Total |
|
|
338,533 |
|
|
|
363,582 |
|
LIABILITIES, TEMPORARY EQUITY, AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Accounts payable |
|
|
33,495 |
|
|
|
32,173 |
|
Current portion of capital lease obligation |
|
|
626 |
|
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