Mayville Engineering Company, Inc 10-Q for FY2023 Q1

Mayville Engineering Company, Inc. (MEC)

10-Q 2023-05-03 For: 2023-03-31

Added on April 10, 2026

About this 10-Q

Mayville Engineering Company, Inc filed this 10-Q on May 3, 2023, covering the quarter ended March 31, 2023 (FY2023 Q1).

Headline figures

Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $142.65M; up 4.7% from $136.25M a year earlier
Net income: $2.57M; down 32.7% from net income of $3.82M a year earlier
Diluted EPS: $0.12; down 36.8% from $0.19 a year earlier


Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, no par value		MEC		New York Stock Exchange

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →

Wisconsin	39-0944729
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

715 South Street Mayville, Wisconsin	53050
(Address of principal executive offices)	(Zip Code)


Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☒

Emerging growth company	☒


		Page

PART I.	FINANCIAL INFORMATION	5

Item 1.	Financial Statements (Unaudited)	5

	Condensed Consolidated Balance Sheets	5

	Condensed Consolidated Statements of Comprehensive Income	6

	Condensed Consolidated Statements of Cash Flows	7

	Condensed Consolidated Statements of Shareholders’ Equity	8

	Notes to Unaudited Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4.	Controls and Procedures	27

PART II.	OTHER INFORMATION	28

Item 1.	Legal Proceedings	28

Items 1A.	Risk Factors	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28

Item 6.	Exhibits	29

Signatures		30


	March 31,		December 31,
	2023		2022
ASSETS
Cash and cash equivalents	$	126	$	127
Receivables, net of allowances for doubtful accounts of $572 at March 31, 2023 and $545 at December 31, 2022		74,239		58,001
Inventories, net		68,948		71,708
Tooling in progress		8,039		7,938
Prepaid expenses and other current assets		3,470		3,529
Total current assets		154,822		141,303
Property, plant and equipment, net		142,956		145,771
Assets held for sale		81		83
Goodwill		71,535		71,535
Intangible assets, net		42,071		43,809
Operating lease assets		34,787		36,073
Other long-term assets		1,749		2,007
Total assets	$	448,001	$	440,581
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	52,376	$	53,735
Current portion of operating lease obligation		4,894		4,857
Accrued liabilities:
Salaries, wages, and payroll taxes		7,320		7,288
Profit sharing and bonus		1,137		6,860
Current portion of deferred compensation		17,802		18,062
Other current liabilities		12,645		11,646
Total current liabilities		96,174		102,448
Bank revolving credit notes		81,576		72,236
Operating lease obligation, less current maturities		30,648		31,891
Deferred compensation, less current portion		3,229		3,132
Deferred income tax liability		12,136		11,818
Other long-term liabilities		895		1,189
Total liabilities	$	224,658	$	222,714
Commitments and contingencies (see Note 8)
Common shares, no par value, 75,000,000 authorized, 21,779,959 shares issued at March 31, 2023 and 21,645,193 at December 31, 2022		—		—
Additional paid-in-capital		202,011		200,945
Retained earnings		28,845		26,274
Treasury shares at cost, 1,357,929 shares at March 31, 2023 and 1,472,447 at December 31, 2022		(7,513)		(9,352)
Total shareholders’ equity		223,343		217,867
Total	$	448,001	$	440,581


	Three Months Ended
	March 31,
	2023		2022
Net sales	$	142,645	$	136,252
Cost of sales		126,268		121,370
Amortization of intangible assets		1,738		1,738
Profit sharing, bonuses, and deferred compensation		3,003		2,548
Employee stock ownership plan expense		—		490
Other selling, general and administrative expenses		6,966		5,725
Impairment of long-lived assets and gain on contracts		—		(1,183)
Income from operations		4,670		5,564
Interest expense		(1,658)		(567)
Income before taxes		3,012		4,997
Income tax expense		441		1,175
Net income and comprehensive income	$	2,571	$	3,822

Earnings per share:
Basic	$	0.13	$	0.19
Diluted	$	0.12	$	0.19

Weighted average shares outstanding:
Basic		20,315,338		20,398,933
Diluted		20,749,948		20,549,326


	Shareholders' Equity
	Additional		Treasury		Retained
	Paid-in-Capital		Shares		Earnings		Total
Balance as of December 31, 2022	$	200,945	$	(9,352)	$	26,274	$	217,867
Net income		—		—		2,571		2,571
401(k) plan contribution		—		2,500		—		2,500
Purchase of treasury stock		—		(661)		—		(661)
Stock-based compensation		1,066		—		—		1,066
Balance as of March 31, 2023	$	202,011	$	(7,513)	$	28,845	$	223,343

	Shareholders' Equity
	Additional		Treasury		Retained
	Paid-in-Capital		Shares		Earnings		Total
Balance as of December 31, 2021	$	197,186	$	(6,462)	$	7,547	$	198,271
Net income		—		—		3,822		3,822
401(k) plan contribution		—		2,057		—		2,057
Purchase of treasury stock		—		(2,323)		—		(2,323)
Stock-based compensation		1,257		—		—		1,257
Balance as of March 31, 2022	$	198,443	$	(6,728)	$	11,369	$	203,084


	Useful Lives		March 31,		December 31,
	Years		2023		2022
Land		Indefinite	$	1,030	$	1,030
Land improvements		15-39		3,169		3,169
Building and building improvements		15-39		64,861		59,664
Machinery, equipment and tooling		3-10		260,309		250,110
Vehicles		5		4,372		4,359
Office furniture and fixtures		3-7		20,199		19,585
Construction in progress		N/A		13,612		26,435
Total property, plant and equipment, gross				367,552		364,352
Less accumulated depreciation				224,596		218,581
Total property, plant and equipment, net			$	142,956	$	145,771


Balance as of December 31, 2022	$	43,809
Amortization expense		(1,738)
Balance as of March 31, 2023	$	42,071


Year ending December 31,
2023 (remainder)	$	5,128
2024	$	5,192
2025	$	5,192
2026	$	5,192
2027	$	5,192
Thereafter	$	12,364


	Balance at		Fair Value Measurements at
	March 31,		Report Date Using
	2023		(Level 1)		(Level 2)		(Level 3)
Deferred compensation liability	$	21,031	$	21,031	$	—	$	—
Total	$	21,031	$	21,031	$	—	$	—


	Three Months Ended March 31,
	2023	2022
Stock options	—	479,947


	Contract		Contract
	Assets		Liabilities
As of December 31, 2022	$	7,938	$	6,141
Net activity		101		(447)
As of March 31, 2023	$	8,039	$	5,694


	Net Sales				Accounts Receivable
	Three Months Ended				As of		As of
	March 31,				March 31,		December 31,
	2023		2022		2023		2022
Customer
A	15.6	%	18.2	%	11.5	%	11.0	%
B	12.1	%	11.1	%	12.8	%	<10	%
C	15.3	%	15.7	%	<10	%	<10	%
D	<10	%	<10	%	10.8	%	12.6	%


	Units		Options		Total
Balance as of December 31, 2022	$	1,739	$	1,050	$	2,789
Grants		3,560		2,585		6,145
Forfeitures		(211)		(83)		(294)
Expense		(715)		(351)		(1,066)
Balance as of March 31, 2023	$	4,373	$	3,201	$	7,574


		Shares
		Outstanding
Shares as of December 31, 2021		20,335,934
Treasury stock purchases		(200,000)
Common stock issued (including share-based compensation impact)		365,582
Balance as of March 31, 2022		20,501,516

		Shares
		Outstanding
Balance as of December 31, 2022		20,172,746
Treasury stock purchases		(41,148)
Common stock issued (including share-based compensation impact)		290,432
Balance as of March 31, 2023		20,422,030


	March 31,		December 31,
	2023		2022
Finished goods and purchased parts	$	34,641	$	44,728
Raw materials		23,806		17,003
Work-in-process		10,501		9,977
Total	$	68,948	$	71,708


	Useful Lives		March 31,		December 31,
	Years		2023		2022
Amortizable intangible assets:
Customer relationships and contracts		9-12	$	78,340	$	78,340
Trade name		10		14,780		14,780
Non-compete agreements		5		8,800		8,800
Patents		19		24		24
Accumulated amortization				(63,684)		(61,946)
Total amortizable intangible assets, net				38,260		39,998
Non-amortizable brand name				3,811		3,811
Total intangible assets, net			$	42,071	$	43,809


	Three Months Ended
	March 31,				Increase (Decrease)
	2023		2022		$ Change		% Change
Net cash used in operating activities	$	(6,043)	$	(425)		(5,618)	1,322	%
Net cash used in investing activities		(2,255)		(12,620)		10,365	82	%
Net cash provided by financing activities		8,297		13,047		(4,750)	36	%
Net change in cash	$	(1)	$	2	$	(3)	150	%


			Payments Due by Period
	Total		2023 (Remainder)		2024 – 2025		2026 – 2027		Thereafter
Long-term debt principal payment obligations ⁽¹⁾	$	81,576	$	—	$	81,576	$	—	$	—
Equipment financing agreements ⁽²⁾		1,184		1,074		110		—		—
Forecasted interest on debt payment obligations ⁽³⁾		8,048		4,037		4,011		—		—
Finance lease obligations ⁽⁴⁾		1,135		320		717		98		—
Operating lease obligations ⁽⁴⁾		39,242		4,283		10,490		9,329		15,140
Total	$	131,185	$	9,714	$	96,904	$	9,427	$	15,140


				Total Number	Dollar Value of
				of Shares	Shares that
	Total			Purchased as	May Yet Be
	Number			Part of Publicly	Purchased
	of Shares	Average Price		Announced Plans	Under the Plans
Period	Purchased	Paid per Share		or Programs⁽¹⁾	or Programs⁽¹⁾
January 2023	—	$	—	—	$	18,552,679
February 2023	—	$	—	—	$	18,552,679
March 2023	—	$	—	—	$	18,552,679
Total	—			—


Exhibit Number		Description
3		Bylaws of Mayville Engineering Company, Inc., as amended through April 18, 2023 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on April 19, 2023).
31.1		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)


	MAYVILLE ENGINEERING COMPANY, INC.

Date: May 3, 2023	By:	/s/ Jagadeesh A. Reddy
		Jagadeesh A. Reddy
		President & Chief Executive Officer

	By:	/s/ Todd M. Butz
		Todd M. Butz
		Chief Financial Officer