Company Narrows 2021 Outlook, Reviews End
Markets, Gives Fitness Customer Update and Provides 2022
Guidance
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 components, today
provided a business update, outlined its outlook for 2021 and 2022,
reviewed new business and the end markets it serves, and gave a
fitness customer update.
“As we look at 2022 and beyond, our long-term business prospects
remain strong, despite the negative impact of the supply chain
challenges at our customers, especially in the second half of last
year,” noted Robert D. Kamphuis, Chairman, President and CEO. “We
are making the right investments in our business and maintain a
very strong balance sheet that will provide us with the flexibility
to pursue organic and inorganic growth opportunities going
forward.”
2021 Financial Outlook
The Company narrowed its 2021 financial outlook as follows:
- Net sales are expected to be between $450 million and $455
million.
- Adjusted EBITDA is expected to be between $46 million and $47
million.
“As we finalize our financials for the year, we are narrowing
our guidance to the low end of our predicted ranges, as expected,”
noted Todd M. Butz, CFO. “The supply chain challenges that impacted
our customers did, in turn, cause near-term volume reductions for
MEC, as one would expect. We are pleased that our 2021 performance
is better than our 2020 results and in line with our original 2021
guidance, and we look forward to building upon this performance in
2022.”
The Company plans to issue detailed fourth quarter and full year
financial results on March 1st, 2022.
2021 End Markets Review
Based on results to date, the Company predicts its 2021 results
by end market will break down as follows:
End Market
Approximate % of 2021 Net
Sales
Commercial Vehicle
34%
Construction
20%
Power Sports
20%
Agriculture
11%
Military
5%
Other
10%
Fitness Customer Update
In addition, the Company provided an update regarding its new
customer in the fitness market. The Company no longer expects the
new customer to be a top 10 customer in 2022.
“We have remained on track with the investment and build out of
our new facility in Hazel Park, Michigan and would have been ready
to begin production as and when originally planned,” explained
Kamphuis. “However, due to circumstances beyond MEC’s control, we
will not go into production on the original planned date, and we
are waiting for more direction from the customer. In the meantime,
we will take steps to reduce operating costs and capital investment
at Hazel Park wherever appropriate, and we remain confident in the
protections afforded to us by our contract with the customer.”
2022 Financial Outlook
The Company also provided a preliminary 2022 financial outlook
as follows:
- Net sales are expected to be between $480 million and $530
million.
- Adjusted EBITDA is expected to be between $58 million and $70
million.
- Importantly, the outlook assumes no revenue associated with the
new fitness customer.
“The demand dynamics in all of the core end markets we serve
remain robust,” explained Kamphuis. “Our U.S. focused supply chain
is ready to deliver as our customers’ supply chain issues stabilize
and improve. While uncertainty continues to exist, and has been
considered in our outlook, we do expect significant growth over
both 2020 and 2021 results, as well as improved performance over
our record 2019 results.”
New Business Update
There were numerous new business opportunities completed during
2021 with both current and new customers, looking to expand
capacity to support strong end market demand. Examples include:
- Expanded business relationships through new model program
launches with multiple top customers.
- Secured takeover business to support immediate capacity needs
with several top powersports customers.
- Moved into aftermarket programs and expanded into new product
lines as customers developed augmented offerings.
- Added new customers in 2021 that will lead to new programs
commencing in 2022.
- Continued to see trends in reshoring and outsourcing with both
existing and new customers looking to partner with larger
fabricators to support growth opportunities through 2022 and
beyond.
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, 2020, which may be 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 the Company’s previously 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
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 components. Our
customers operate in diverse end markets, including heavy- and
medium-duty commercial vehicles, construction, powersports,
agriculture, military and other end markets. We have developed
long-standing relationships with our blue-chip customers based upon
a high level of experience, trust and confidence.
Our one operating segment focuses on producing metal components
that are used in a broad range of heavy- and medium-duty commercial
vehicles, construction, powersports, agricultural, military and
other products. For more information, please visit
www.mecinc.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20220209005436/en/
INVESTOR AND MEDIA CONTACT: Nathan Elwell 847-530-0249
nelwell@lincolnchurchilladvisors.com
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