Good morning. Thank you for attending today's Mayville Engineering Company First Quarter Earnings Call. My name is Foran, and I will be your moderator for today's call. It is now my pleasure to pass the conference over to our host, Nathan Elwell with Investor Relations. Mr. Elwell, please proceed.

Thank you. Welcome, everyone, and thank you for joining us on today's call. A few quick items before we begin. First, please note that some of the information that you will hear during this call will consist of forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended. Such statements express our expectations, anticipations, beliefs, estimates, intentions, plans and forecasts. Because these forward-looking statements involve risks, assumptions and uncertainties, our actual results could differ materially from those in the forward-looking statements. For more information regarding such risks and uncertainties, please see our filings with the Securities and Exchange Commission, including our full filing on Form 10-K for the period ended December 31, 2021. We assume no obligation and do not intend to update any such forward-looking statements, except as required by federal securities laws. Second, this call will involve a discussion of certain non-GAAP financial measures. Reconciliation of these measures to the closest GAAP financial measure is included in the earnings press release, which is available at mecinc.com. Joining me on the call today are Bob Kamphuis, Chairman, President and Chief Executive Officer; Todd Butz, Chief Financial Officer; and Ryan Raber, EVP of Strategy, Sales and Marketing. First, Bob will provide an overview of our performance, then Todd will review our financial results and guidance. With that, I'll hand the call over to Bob. Please go ahead.

Thank you, Nathan. Good morning, everyone. Before we begin discussing our results, I want to touch on the retirement announcement we made at the end of March. After more than 16 years leading the company, I decided to retire from MEC on September 30 of this year. The timing of the announcement allows a full 6 months for the Board to complete the search, with the able assistance of Heidrick & Struggles, and ensure a smooth transition. Having successfully navigated the pandemic, today, MEC is in a strong financial position with a positive outlook and numerous growth opportunities in its future. I believe it is the right time for me to step aside and let a new leader take the reins. Over the past 16 years, we produced tremendous growth and have been recognized as the largest fabricator in the United States by Fabricator magazine for the past 11 years in a row. More importantly, I've been fortunate to work with and put together an outstanding and dedicated team. I'm confident in the future of the company, and I look forward to ensuring a successful transition in the coming quarters. And as a meaningful shareholder myself, I look forward to watching the company's continued success for many years to come. With that said, let's turn to the quarter. Year-to-year net sales increased approximately 21% to $136.3 million and net income increased 50% to $3.8 million compared to last year. Basic earnings per share increased $0.06 to $0.19 per share. We delivered adjusted EBITDA of $14.8 million as supply chain disruptions that impacted our customers' schedules during the fourth quarter of 2021 merely deferred our volumes into the first quarter. We also continue to recover general inflationary pressures on raw materials, labor and other product content through contractual material price adjustments and increased commercial pricing. In summary, we delivered a much better performance when compared to the same period last year. We continued to execute effectively and manage through the ongoing supply chain constraints that are impacting many of our customers. Our operations team has done a tremendous job in maintaining MEC supply chain, which is 98% focused in the U.S., while working to adapt and overcome the challenges. While the Omicron surge caused some manufacturing companies to falter, we were able to maintain our production capacity. First, since the pandemic began, we provided a clean and safe environment for our employees. Second, when we have seen increased absenteeism through illness, we've worked to minimize the impact by moving employees to other locations and finding ways to still deliver. Agility and adaptability are still part of our mantra. The end markets we serve continue to forecast strong demands over the mid and long-term. While the commercial vehicle market has seen the largest impact from supply chain disruption to date and continues to expect disruption through 2022, we have seen sequential improvement due to the ongoing strength in freight demand and robust backlogs at the OEMs. This leads us to believe this will continue to be a strong market for MEC over the medium to long-term. Powersports continues to be a strong and growing market for us. Overall, strength in retail demand, coupled with low dealer inventories, are leading to increased volumes as customers work to restock over the course of 2022. The construction and access end markets have continued to show strength with residential construction maintaining its stability and with non-residential also showing some signs of improvement. We believe that we'll continue to see increased volumes in the future based on low dealer inventories and the need to restock fleets. In the ag market, we continue to see strengthening demand here. Advancements in equipment productivity, combined with low machine inventory, low global crop inventories, and strong crop prices will continue to drive volume growth over the mid- to long-term. Farmers are making a positive margin dollar. Concluding with our military segment, which remains a stable market for us, our customers have a solid backlog for U.S. government contracts, and we continue to see opportunities based on upcoming vehicle updates and unique opportunities such as a new 2-year aftermarket program we are working on for a top customer. While supply chain disruptions persist, pandemic-related issues have declined since February, and we anticipate volumes will gradually improve as 2022 progresses. Importantly, our new business pipeline remains strong. We continue to build relationships and convert on new opportunities to expand our customer base and the markets we serve with the capabilities and product offerings we already have. Our sales team continues to see business opportunities with new and existing customers coming from, number one, new model and program launches; number two, new product line offerings by customers; number three, outsourcing by OEMs; number four, reshoring by OEMs; and number five, takeover business with several top powersports customers. I'll walk through some of the more exciting and noteworthy opportunities we see today. We continue to launch new programs and products in the commercial vehicle market, leading to market share gains. In the most recent quarter, we focused on model changeovers, particularly with the future greenhouse gas emissions regulatory standards and related vehicle updates. We've been working closely with another major OEM on a long-term outsourcing project, which leveraged our acquisition of DMP as a significant cross-selling synergy opportunity. The powersports market continues to be a very active space for us. We see reshoring activity where we are able to leverage our footprint with a leading powersports customer to gain market share, and we continue to work on outsourcing projects, plus takeover and new model launches with some of our newer customers. In the agricultural space, we see opportunities on numerous new programs as our customers update their equipment to the latest technology for farmer productivity improvement, while also seeing increased opportunities in the small ag and turf care space for takeover business. In the military end market, our market share on tactical wheeled vehicles continues to expand with our customers launching their next-generation of products and new product development activities that have the potential to bolster revenues in the coming years. Overall, the new business pipeline remains robust with numerous projects being actively pursued. We are excited about the multiple avenues for growth with both current and potential new customers, and we'll continue to provide updates in the coming quarters. We can also continue to see a pipeline of interesting M&A opportunities and focus on analyzing the potential targets that could open up new end markets, expand product offerings, develop new relationships with new blue-chip customers and possibly extend our geographic reach. Strategic fit and rational valuation goals remain our top considerations, and we will continue to pursue logical deals as the year progresses. As we mentioned in our last call, we are in the process of repurposing our investments in Hazel Park, Michigan, and investing in redeployable automation and capacity to support the growth of our base business. We will be ramping up in the second half of this year to support meaningful volume from new projects and growth with current customers. We remain very bullish about the location, the technology skilled workforce in Southeast Michigan, and are pleased with the speed and amount of changes we've already made over the past 2 months, which bodes well for the future. Speaking of Hazel Park, I would just like to reiterate our position regarding the fitness customer. As we outlined during our last call in February, our fitness customer informed us that it does not forecast any demand for any products or parts that are the subject of our agreement with that customer for the remainder of the agreement's term, which ends in March of 2026. As such, we have taken and will continue to take steps to reduce operating costs and capital investment for this project wherever appropriate. It is important to reiterate that we remain confident in the protections provided by our agreement with this customer and continue to vigorously pursue this matter to ensure that terms are honored. Our first quarter results reflect a stable to improving volume trends we are experiencing, which, in conjunction with the commercial pricing increases we have implemented, led to improved results. We continue to observe positive demand signals across all of our customers and end markets. We see the potential for significant new business opportunities and remain ready to increase our production volumes as needed. We are investing in the right technologies and facilities that will allow us to successfully address this demand. I'd now like to turn the call over to Todd to discuss our financial results in more detail. Todd?

Thanks, Bob. I'll begin with a look at our first quarter. We recorded first quarter net sales of $136.3 million, a 21% increase over the first quarter of last year, which was primarily driven by contractual raw material price pass-through to customers, commercial price increases, and improved volumes. Manufacturing margins were $14.9 million for the quarter, in line with last year and inclusive of commercial pricing increases, which were slightly offset by Hazel Park transition costs of $1.9 million during the quarter. Manufacturing margin percentages were 10.9% versus 13.1% in the same prior year period. The decline was primarily due to Hazel Park transition costs and the dilutive impact of material price pass-through to our customers that increased sales but did not impact margin dollars. SG&A expenses were $5.7 million for the first quarter of 2022 as compared to $4.7 million for the same prior year period. The increase stems from higher labor and information technology costs, consulting and professional fees, and a return to more normalized spending patterns. For the first quarter, income tax expense was $1.2 million on pretax income of approximately $5 million. Our federal net operating loss carryforward was approximately $18.5 million as of quarter end, which was driven by pretax losses incurred in prior years. The NOL does not expire and will be used to offset future pretax earnings. We continue to anticipate our long-term effective tax rate to be approximately 27% based on current tax regulations. Adjusted EBITDA was $14.8 million for the first quarter as compared to $13 million for the same prior year period. Adjusted EBITDA margin percent decreased by 80 basis points to 10.8% in the quarter, due primarily to the dilutive impact of material price pass-throughs. Basic earnings per share were $0.19, a $0.06 increase over last year. Now let me address our capital expenditures, balance sheet, and liquidity figures. Overall, capital expenditures for the first quarter were in line with our expectations at approximately $13 million as compared to $5.6 million for the same prior year period. The increase primarily relates to the final capital payment related to our former fitness customer, the repurposing of the Hazel Park, Michigan facility, and continued investment in new technology and automation. As of March 31, 2022, total outstanding debt, which includes bank debt, capital lease, and finance agreements, was $86.8 million as compared to $49 million at the same point last year. The increase in debt relates to working capital increases due to higher steel prices and production levels as well as capital spending. Now, I'd like to discuss 2022 guidance. We are reiterating the financial outlook we first provided in February. We continue to expect net sales between $480 million and $530 million, adjusted EBITDA between $58 million and $70 million. Again, it's worth repeating that our outlook assumes no revenues or recoveries associated with the fitness customer. As we noted last quarter, we were still assessing our capital plans in light of changes in our customer base. And as you saw in the release, we are now providing that information as promised. For 2022, we expect our capital spending to be between $55 million and $65 million, which will be focused primarily on investments in new technology and automation, adding equipment related to new programs with existing customers, and the repurposing of assets at the new Hazel Park, Michigan facility. While supply chain disruptions persist, and we continue to keep a watchful eye on COVID risk, end market demand remains strong, and we believe our volumes will gradually improve as we move through the second half of 2022 as our customer supply chain challenges begin to improve. We continue to expand our existing relationships and convert new business opportunities as companies seek our market-leading operational expertise and unparalleled flexible production capabilities. The low end of our 2022 outlook represents considerable projected growth over recent years' results and what eclipsed our record performance in 2019. I will now turn the call back over to Bob.

Thank you, Todd. So, while supply chain disruptions persist, pandemic-related problems have stabilized somewhat, and we anticipate volumes on a per day basis will gradually improve as we move through 2022. We continue to build relationships and convert new business opportunities to expand our customer base and the markets we serve. We see meaningful opportunities for growth in our future and believe we are well positioned to address them in the years ahead. All in all, the near- and long-term future prospects look very bright for MEC. As I look towards the last 5 months of my tenure with MEC, I know I will be leaving a market-leading company and well-experienced team that's well positioned for many years to come. Operator, we'd like to open the call for questions now.

Our first question comes from the line of Mig Dobre with Baird.

It's Joe Grabowski on for Mig this morning. Your Q1 sales were well ahead of our expectations. EBITDA margin was about in line with what we were expecting. You maintained your guidance, which makes sense after only 1 quarter. I was wondering how Q1 compared to your own internal forecast and expectations.

Well, I guess, from an internal standpoint, I think we met our internal expectations. I think, from a sales standpoint, we probably started the year expecting to see material price adjustments going down a bit from where it ended the year, and it did modestly, but perhaps less so than one would imagine. So we performed as we expected. And Todd, maybe you have some additional color to add to that?

I would like to point out that the material pricing was generally in line with our expectations for the first quarter. As Bob mentioned, demand in the end market remains strong, and we achieved our internal expectations.

And maybe asking about those material pricing pass-throughs, we did see steel pick another kind of leg up in the first quarter. Just wondering how the pass-throughs worked in the first quarter and kind of where you're at as far as any maybe lags that might have existed in the quarter.

I think we made adjustments as necessary. As the market changed, we adapted accordingly. Ryan, do you have any additional comments on that?

And Joe, just to reiterate, those are generally kind of addressed at a macro level on a quarterly basis. So, coming out of the fourth quarter, which is really the peak kind of a slow decline in steel prices over the quarter, it did bounce back up a little bit with the conflict going on in Europe. But as we look ahead in the future, that will soften up again. So we'll continue to maintain our activities when it comes to material price adjustments with the customer. The lag last year, really there was a really sharp steep trajectory that happened this year. There will be some softening mainly as we go into the second quarter, the way the contracts work and then likely some modest increases that would occur again in the third quarter.

And then, my last question, maybe drilling into commercial vehicle. Class 8 truck orders have been quite negative in the past 6 months. Production has also been negative, but to a lesser degree. Backlogs are still up year-over-year. I guess, what are you hearing from your Class 8 customers regarding demand for your products going forward over the next couple of quarters?

Yes, our outlook remains positive with strong demand. Reflecting on the early fourth quarter of last year when we experienced significant supply chain disruptions, the situation in the first quarter improved noticeably. The current challenge is finding ways to increase build rates, which are already scheduled out for weeks or days due to parts shortages. While net orders are down, this is against the backdrop of a robust backlog for 2022, and OEMs are limiting their order intake. We have no indications of a market softening; the backlog remains strong, and OEMs continue to express a desire to boost daily production rates.

Our next question comes from the line of Larry De Maria with William Blair.

As it relates to Hazel Park, when might we get some tangible announcements on the filling of that space? Kind of curious about the ramp in the second half and into next year. And you maintained your guidance, but now we have some business going into Hazel. So, are we assuming some of the base business is softer and Hazel picks up some of that weakness? How are you thinking about that?

The way we're thinking about it is, the work that we're moving there has already been launched. So, the launch risk has been very mitigated, and we're creating additional capacity then in those locations that need the additional capacity for their key customers. So we're mitigating some risk, but we're also growing that capacity. Over time, as experience happens, we'll get some more direction there. And we can talk more about it quarterly, but it's going in the right direction. We're pleased with our progress, and more to come.

So, are there specific numbers we can point towards the second half Hazel in terms of maybe absolute dollars or something like this? And is there still potential for upside this year in Hazel with new wins or is that more likely in '23?

Yes. It will be a ramp year this year in the second half. So, I think the benefits will come in '23.

And then, you talked about having, I guess, decent visibility on the cash repayment from the fitness customer. Can you just maybe delve into that a little bit more? Is that likely to occur this year? How confident are you? And just help us understand the outlook there.

I think, the right way to put it is, we're actively working on that with them. And there's not a lot of commentary we can add around that at this time. But as information is available, we will certainly update everyone on that progress.

Last question, you've mentioned a positive military outlook. Can you provide some general trends and direction on that, perhaps growth rates or dollar amounts, for the next few years? Have we established a base level from which we will grow that might be countercyclical to the potential recession we are beginning to consider?

I think, Larry, going back into 2019, even during COVID, the military market has been a very stable one for us. Right now, we're in the process of doing some updates on customer vehicles that's allowing us to grow some share. So there is some incremental revenue that's happening in that space. And then, long-term, we also feel positive with our customers. They've won some more substantial contracts with the government that we feel will also be participating with them as they get into the launches kind of looking out indefinitely in 2023 should give us some more opportunity to grow in that space in the years to come.

When you think about it, Larry, I guess we're not just taking what we have and going with the market. We're getting new business, we're getting new market share, and those things certainly help that picture no matter what.

There are currently no further questions registered. We have a follow-up question with Larry De Maria from William Blair.

As long as there are no more questions, I'll ask 1 more. Just maybe on the powersports, again, similar to the question on the military and the possibility of a recession, how do you think this plays out?

Yes, Larry, I'm not sure if you completed your question, as it seemed like you got cut off at the end. In terms of powersports, we're observing that financing, influenced by interest rates, could affect volume. However, as we track our customers in the side-by-side and ATV markets, as well as the marine boating industry and motorcycles, we see that inventory is still about 70% lower than pre-COVID levels, with strong backlogs and most units already presold. This creates a positive outlook at the OEM level. Some OEMs have indicated they may not be able to restock inventory until 2023. If retail demand remains steady and there's no rapid rise in interest rates, we are confident that retail demand will stay robust, requiring restocking at the dealer level, which appears favorable from a medium to long-term perspective in powersports. I believe that wraps up our discussion for today. Thank you for your time and continued interest in MEC. We look forward to meeting you in person at the William Blair Conference next month in Chicago. Thanks for joining our call today.

This concludes the Mayville Engineering Company first quarter earnings call. Thank you for your participation. You may now disconnect your lines.