MEC Q1 2023 Earnings Report
Key Takeaways
Mayville Engineering Company (MEC) reported a 4.7% increase in net sales to $142.6 million for the first quarter of 2023. Net income was $2.6 million, with diluted EPS of $0.12. Adjusted EBITDA was $13.8 million, impacted by the Hazel Park facility ramp. The company reiterated its full-year 2023 financial guidance.
Net sales increased by 4.7% year-over-year, driven by increased commercial sales volumes and price discipline.
Net income decreased to $2.6 million, impacted by the Hazel Park facility ramp-up.
Adjusted EBITDA was $13.8 million, with a $1.8 million impact from the Hazel Park facility ramp.
The company is reiterating its full-year 2023 financial guidance.
MEC
MEC
Forward Guidance
The Company issued financial guidance for the full year 2023, expecting net sales between $540 million and $580 million, and Adjusted EBITDA between $62 million and $71 million.
Positive Outlook
- Net sales for 2023 to reflect raw material pass-through costs of between negative 4% to negative 5% of total net sales for the year
- MBX initiatives are expected to improve manufacturing margins by 40 to 70 basis points, which will directly benefit Adjusted EBITDA.
- Company finalized the implementation and alignment of processes and best-practices across the enterprise to drive strategic execution.
- Company held a number of kaizen events to drive continuous improvement in plant operations and commercial pricing processes.
- MEC continued to grow its share of wallet in products supporting thermal management of electric vehicle (EV) batteries.
Challenges Ahead
- Adjusted EBITDA guidance reflects scrap income of between $7 million and $9 million, compared to $13 million in the full year 2022.
- Adjusted EBITDA guidance also reflects $4 million to $6 million of under-absorbed overhead costs associated with the ramp-up of production at the Company’s Hazel Park, Michigan manufacturing facility.
- Macroeconomic conditions, including inflation, rising interest rates and recessionary concerns
- Ongoing supply chain challenges, labor availability and cost pressures
- COVID-19 pandemic, have had, and may continue to have, a negative impact on our business, financial condition, cash flows and results of operations