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Mar 31, 2023
MEC Q1 2023 Earnings Report
MEC's first quarter results were announced, showing solid organic sales growth driven by commercial vehicle, military, and powersports markets, but margins were impacted by supply chain disruptions and Hazel Park facility ramp-up.
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.
Revenue by Segment
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.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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