Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 27, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-38894 | |
Entity Registrant Name | Mayville Engineering Company, Inc. | |
Entity Incorporation, State or Country Code | WI | |
Entity Tax Identification Number | 39-0944729 | |
Entity Address, Address Line One | 715 South Street | |
Entity Address, City or Town | Mayville | |
Entity Address, State or Province | WI | |
Entity Address, Postal Zip Code | 53050 | |
City Area Code | 920 | |
Local Phone Number | 387-4500 | |
Title of 12(b) Security | Common Stock, no par value | |
Trading Symbol | MEC | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 20,308,356 | |
Entity Central Index Key | 0001766368 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
ASSETS | ||
Cash and cash equivalents | $ 2,305 | $ 127 |
Receivables, net of allowances for doubtful accounts of $672 at September 30, 2023 and $545 at December 31, 2022 | 72,069 | 58,001 |
Inventories, net | 73,311 | 71,708 |
Tooling in progress | 5,664 | 7,938 |
Prepaid expenses and other current assets | 4,513 | 3,529 |
Total current assets | 157,862 | 141,303 |
Property, plant and equipment, net | 178,014 | 145,771 |
Assets held for sale | 81 | 83 |
Goodwill | 92,650 | 71,535 |
Intangible assets, net | 60,760 | 43,809 |
Operating lease assets | 32,725 | 36,073 |
Other long-term assets | 2,705 | 2,007 |
Total assets | 524,797 | 440,581 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Accounts payable | 53,366 | 53,735 |
Current portion of operating lease obligation | 5,079 | 4,857 |
Accrued liabilities: | ||
Salaries, wages, and payroll taxes | 8,601 | 7,288 |
Profit sharing and bonus | 1,627 | 6,860 |
Current portion of deferred compensation | 266 | 18,062 |
Other current liabilities | 12,520 | 11,646 |
Total current liabilities | 81,459 | 102,448 |
Bank revolving credit notes | 168,412 | 72,236 |
Operating lease obligation, less current maturities | 28,550 | 31,891 |
Deferred compensation, less current portion | 3,495 | 3,132 |
Deferred income tax liability | 12,773 | 11,818 |
Other long-term liabilities | 3,066 | 1,189 |
Total liabilities | 297,755 | 222,714 |
Commitments and contingencies (see Note 9) | ||
Common shares, no par value, 75,000,000 authorized, 21,851,249 shares issued at September 30, 2023 and 21,645,193 at December 31, 2022 | ||
Additional paid-in-capital | 204,664 | 200,945 |
Retained earnings | 31,891 | 26,274 |
Treasury shares at cost, 1,542,893 shares at September 30, 2023 and 1,472,447 at December 31, 2022 | (9,513) | (9,352) |
Total shareholders' equity | 227,042 | 217,867 |
Total | $ 524,797 | $ 440,581 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Condensed Consolidated Balance Sheets | ||
Allowances for doubtful accounts | $ 672 | $ 545 |
Common Stock, No Par Value | $ 0 | $ 0 |
Common Stock, Shares Authorized | 75,000,000 | 75,000,000 |
Common Stock, Shares, Issued | 21,851,249 | 21,645,193 |
Treasury stock at cost | 1,542,893 | 1,472,447 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Condensed Consolidated Statements of Comprehensive Income | ||||
Net sales | $ 158,217 | $ 136,276 | $ 439,843 | $ 410,865 |
Cost of sales | 139,197 | 120,812 | 388,351 | 362,782 |
Amortization of intangible assets | 2,173 | 1,738 | 5,649 | 5,214 |
Profit sharing, bonuses, and deferred compensation | 2,346 | 166 | 8,037 | 3,921 |
Employee stock ownership plan expense (income) | (152) | 1,668 | ||
Other selling, general and administrative expenses | 8,608 | 6,533 | 22,969 | 18,653 |
Impairment of long-lived assets and gain on contracts | (1,737) | (4,346) | ||
Income from operations | 5,893 | 8,916 | 14,837 | 22,973 |
Interest expense | (3,907) | (830) | (7,533) | (2,163) |
Loss on extinguishment of debt | (216) | |||
Income before taxes | 1,986 | 8,086 | 7,088 | 20,810 |
Income tax expense | 554 | 1,490 | 1,471 | 4,464 |
Net income and comprehensive income | $ 1,432 | $ 6,596 | $ 5,617 | $ 16,346 |
Earnings per share: | ||||
Basic | $ 0.07 | $ 0.32 | $ 0.28 | $ 0.80 |
Diluted | $ 0.07 | $ 0.32 | $ 0.27 | $ 0.80 |
Weighted average shares outstanding: | ||||
Basic | 20,439,602 | 20,390,221 | 20,416,914 | 20,457,001 |
Diluted | 20,622,864 | 20,394,386 | 20,644,915 | 20,545,983 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 5,617 | $ 16,346 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 19,849 | 16,342 |
Amortization | 5,649 | 5,214 |
Allowance for doubtful accounts | 127 | (29) |
Inventory excess and obsolescence reserve | 277 | (2) |
Stock-based compensation expense | 3,755 | 2,854 |
(Loss) Gain on disposal of property, plant and equipment | (342) | 11 |
Impairment of long-lived assets and gain on contracts | (4,346) | |
Deferred compensation | (17,433) | (5,368) |
Loss on extinguishment of debt | 216 | |
Non-cash lease expense | 3,348 | 3,006 |
Other non-cash adjustments | 202 | 259 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (6,819) | (11,961) |
Inventories | 7,818 | (4,762) |
Tooling in progress | 2,348 | (2,745) |
Prepaids and other current assets | (769) | (1,093) |
Accounts payable | (4,134) | 10,241 |
Deferred income taxes | 1,017 | 5,491 |
Operating lease obligations | (3,119) | (2,698) |
Accrued liabilities | (3,911) | 6,555 |
Net cash provided by operating activities | 13,696 | 33,315 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of property, plant and equipment | (9,814) | (38,808) |
Proceeds from sale of property, plant and equipment | 753 | 7,736 |
Payment for acquisition, net of cash acquired | (88,593) | |
Net cash used in investing activities | (97,654) | (31,072) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from bank revolving credit notes | 454,587 | 327,170 |
Payments on bank revolving credit notes | (358,411) | (323,410) |
Repayments of other long-term debt | (5,877) | (825) |
Payments of financing costs | (1,206) | |
Purchase of treasury stock | (2,661) | (4,947) |
Payments on finance leases | (296) | (237) |
Net cash provided by (used in) financing activities | 86,136 | (2,249) |
Net increase (decrease) in cash and cash equivalents | 2,178 | (6) |
Cash and cash equivalents at beginning of period | 127 | 118 |
Cash and cash equivalents at end of period | 2,305 | 112 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 7,209 | 1,761 |
Cash paid for taxes | 508 | 640 |
Non-cash property, plant & equipment, net | 1,981 | 6,085 |
Non-cash 401(k) contribution of treasury stock | 2,500 | $ 2,507 |
In conjunction with the acquisition, assets acquired and liabilities assumed were as follows: | ||
Fair value of assets acquired, net of cash acquired | 102,356 | |
Liabilities assumed | (13,763) | |
Cash paid for acquisition, net of cash acquired | $ 88,593 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Additional Paid-in-Capital [Member] | Treasury Shares [Member] | Retained Earnings [Member] | Total |
Beginning, Balance at Dec. 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 | ||
Ending, Balance at Mar. 31, 2022 | 198,443 | (6,728) | 11,369 | 203,084 |
Beginning, Balance at Dec. 31, 2021 | 197,186 | (6,462) | 7,547 | 198,271 |
Net income | 16,346 | |||
Ending, Balance at Sep. 30, 2022 | 200,040 | (9,352) | 23,894 | 214,582 |
Beginning, Balance at Mar. 31, 2022 | 198,443 | (6,728) | 11,369 | 203,084 |
Net income | 5,929 | 5,929 | ||
Stock-based compensation | 1,456 | 1,456 | ||
Ending, Balance at Jun. 30, 2022 | 199,899 | (6,728) | 17,298 | 210,469 |
Net income | 6,596 | 6,596 | ||
Purchase of treasury stock | (2,624) | (2,624) | ||
Stock-based compensation | 141 | 141 | ||
Ending, Balance at Sep. 30, 2022 | 200,040 | (9,352) | 23,894 | 214,582 |
Beginning, Balance at Dec. 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 | ||
Ending, Balance at Mar. 31, 2023 | 202,011 | (7,513) | 28,845 | 223,343 |
Beginning, Balance at Dec. 31, 2022 | 200,945 | (9,352) | 26,274 | 217,867 |
Net income | 5,617 | |||
Ending, Balance at Sep. 30, 2023 | 204,664 | (9,513) | 31,891 | 227,042 |
Beginning, Balance at Mar. 31, 2023 | 202,011 | (7,513) | 28,845 | 223,343 |
Net income | 1,614 | 1,614 | ||
Purchase of treasury stock | (1,000) | (1,000) | ||
Stock-based compensation | 1,354 | 1,354 | ||
Stock options exercised | 58 | 58 | ||
Ending, Balance at Jun. 30, 2023 | 203,423 | (8,513) | 30,459 | 225,369 |
Net income | 1,432 | 1,432 | ||
Purchase of treasury stock | (1,000) | (1,000) | ||
Stock-based compensation | 1,336 | 1,336 | ||
Restricted stock units employee tax withholding | (115) | (115) | ||
Stock options exercised | 20 | 20 | ||
Ending, Balance at Sep. 30, 2023 | $ 204,664 | $ (9,513) | $ 31,891 | $ 227,042 |
Basis of presentation
Basis of presentation | 9 Months Ended |
Sep. 30, 2023 | |
Basis Of presentation | |
Basis of presentation | Note 1. Basis of presentation The interim unaudited condensed consolidated financial statements of Mayville Engineering Company, Inc. and subsidiaries (MEC, the Company, we, our, us or similar terms) presented here have been prepared in accordance with the accounting principles generally accepted in the United States of America (GAAP) and with instructions to Form 10-Q and Article 10 of Regulation S-X. They reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations and financial position for the interim unaudited periods presented. All intercompany balances and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These interim unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K. A summary of the Company’s significant accounting policies is included in the Company’s 2022 financial statements in the Annual Report on Form 10-K. The Company followed these policies in preparation of the interim unaudited Condensed Consolidated Financial Statements except for new accounting pronouncements adopted as described below. Nature of Operations MEC is a leading U.S.-based, vertically-integrated, value-added manufacturing partner providing a full suite of manufacturing solutions from concept to production, including design, prototyping and tooling, fabrication, aluminum extrusion, coating, assembly and aftermarket components. Our customers operate in diverse end markets, including heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, agriculture, military and other end markets. Founded in 1945 and headquartered in Mayville, Wisconsin, we are a leading Tier I U.S. supplier of highly engineered components to original equipment manufacturer (OEM) customers with leading positions in their respective markets. The Company operates 22 facilities located in Arkansas, Michigan, Mississippi, Ohio, Pennsylvania, Virginia, and Wisconsin. Our engineering expertise and technical know-how allow us to add value through every product redevelopment cycle (generally every three to five years for our customers). Our one operating segment focuses on producing metal components that are used in a broad range of heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, agricultural, military and other products. Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Measurement of Credit Losses on Financial Instruments Financial Instruments – Credit Losses Business Combinations The Company accounts for all business combinations in accordance with FASB ASC 805, Business Combinations |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2023 | |
Acquisitions | |
Acquisitions | Note 2. Acquisition On July 1, 2023, the Company completed its acquisition of Mid-States Aluminum (MSA). The acquisition was consummated in accordance with terms and conditions of the certain Unit Purchase Agreement, dated as of June 19, 2023, among the Company and shareholders of MSA. The purchase price of the acquisition was $95,945, subject to adjustments for the amount of cash, indebtedness, net working capital and certain expenses of MSA as of the closing. At the closing of the acquisition, the Company applied an estimate of the adjustments and paid total net consideration of $90,002. The Company financed the acquisition by borrowing under its amended and restated credit agreement, as described in Note 4 – Debt in the Notes to the Condensed Consolidated Financial Statements. Located in Fond du Lac, WI, MSA is an industry leading, vertically-integrated manufacturer of custom aluminum extrusions and fabrications that also offers related services including design, engineering, anodizing and finishing, assembly and packaging. The acquisition enables MEC to secure an attractive entry point within light-weight materials fabrication, while providing significant new cross-selling opportunities with both new and existing customers. The Company accounted for the acquisition using the acquisition method of accounting in accordance with ASC 805, Business Combinations The aggregate purchase price has been allocated to the assets acquired and liabilities assumed based on their preliminary estimated fair values at the acquisition date. The estimate of the excess purchase price over the preliminary estimated fair value of net tangible assets acquired was allocated to identifiable intangible assets and goodwill. The Company engaged an independent third party to assist with the identification and valuation of these intangible assets. Management makes significant estimates and assumptions when determining the fair value of assets acquired and liabilities assumed. These estimates include, but are not limited to, discount rates, projected future net sales, projected future expected cash flows, useful lives, attrition rates, royalty rates and growth rates. These measures are based on significant Level 3 inputs (see Note 13) not observable in the market. The following table is a summary of the assets acquired, liabilities assumed and net cash consideration paid for MSA during 2023: Preliminary Estimated Opening Balance Useful Sheet Allocation Life Cash $ 324 Accounts receivable, net 7,381 Inventory 9,698 Property, plant and equipment 41,271 Other assets 291 Intangible assets Developed technology 4,900 7 Years Customer relationships 17,700 17 Years Goodwill 21,115 Indefinite Total assets acquired 102,680 Accounts payable (2,386) Accrued expenses (1,509) Other liabilities (1,984) Debt (7,884) Total consideration $ 88,917 Inventory was valued at its estimated fair value, which is defined as expected sales price, less costs to sell, plus a reasonable margin for selling effort. The valuation resulted in an inventory fair value step-up of $891 and was fully expensed and reflected in cost of sales on the Condensed Consolidated Statement of Comprehensive Income during the three months ended September 30, 2023. Property, plant and equipment was valued at its estimated fair value using the cost, market and sales comparison approaches. The valuation resulted in a property, plant and equipment fair value step-up of $21,157. Depreciation on property, plant and equipment is computed on a straight-line basis over the estimated useful life of the respective assets. The Company also recorded $17,700 of customer relationships intangible assets with an estimated useful life of 17 years and $4,900 of developed technology intangible assets with an estimated useful life of 7 years. The purchase price allocated to these assets was based on management’s forecasted cash inflows and outflows and using a relief from royalty method for developed technologies and the multi-period excess earnings method for customer relationships. Amortization expense related to these intangible assets is recorded on a straight-line basis and reflected in amortization of intangible expenses on the Consolidated Statements of Comprehensive Income. The purchase price of MSA exceeded the preliminary estimated fair value of identifiable net assets and accordingly, the difference was allocated to goodwill, which is not tax deductible. The Company believes that the information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed; however, the purchase price allocations are preliminary as we continue to gather the necessary information to finalize our fair value estimates and provisional amounts. Provisional amounts include items related to working capital adjustments, intangibles, indemnification of assets and liabilities and deferred taxes. The Company finalized the net working capital true-up in conjunction with the fair value estimates for assets acquired, liabilities assumed, identifiable assets and the net income tax provision. During the three months ended September 30, 2023, the Company adjusted the purchase price by ($1,084) related to working capital adjustments. The offsetting adjustment was primarily related to goodwill. The Company has recorded preliminary estimates for the items noted in the preceding paragraph and will record adjustments, if any, to the preliminary amounts upon finalization of the respective valuations. Such changes are not expected to be significant. The Company expects to complete the purchase price allocation as soon as practicable but no later than one year from the applicable acquisition date. Pro Forma Financial Information (Unaudited) In accordance with ASC 805, the following unaudited pro forma combined results of operations have been prepared and presented to give effect to the MSA acquisition as if it had occurred on January 1, 2022, the beginning of the comparable period, applying certain assumptions and pro forma adjustments. These pro forma adjustments primarily relate to the estimated depreciation expense associated with the fair value of the acquired property, plant and equipment, amortization of identifiable intangible assets, interest expense related to additional debt needed to fund the acquisition, and the tax impact of these adjustments. Additionally, the pro forma adjustments include non-recurring expenses related to transaction costs and the sale of stepped-up inventory. The unaudited pro forma consolidated results are provided for illustrative purposes only, are not indicative of the Company’s actual consolidated results of operations or consolidated financial position and do not reflect any revenue and operating synergies or cost savings that may result from the acquisition. Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Net sales $ 158,217 $ 156,683 $ 470,799 $ 479,490 Net income $ 2,371 $ 6,874 $ 4,052 $ 18,716 |
Select balance sheet data
Select balance sheet data | 9 Months Ended |
Sep. 30, 2023 | |
Select balance sheet data | |
Select balance sheet data | Note 3. Select balance sheet data Inventory Inventories are stated at the lower of cost, determined on the first-in, first-out method, or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Work-in-process and finished goods are valued at production costs consisting of material, labor, and overhead. Inventories as of September 30, 2023 and December 31, 2022 consist of: September 30, December 31, 2023 2022 Finished goods and purchased parts $ 32,413 $ 44,728 Raw materials 29,053 17,003 Work-in-process 11,845 9,977 Total $ 73,311 $ 71,708 The MSA inventory fair value step-up of $891 was fully expensed and included within cost of goods sold in the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2023. Property, plant and equipment Property, plant and equipment as of September 30, 2023 and December 31, 2022 consist of: Useful Lives September 30, December 31, Years 2023 2022 Land Indefinite $ 1,030 $ 1,030 Land improvements 15-39 5,988 3,169 Building and building improvements 15-39 79,573 59,664 Machinery, equipment and tooling 3-10 294,052 250,110 Vehicles 5 4,659 4,359 Office furniture and fixtures 3-7 21,132 19,585 Construction in progress N/A 8,003 26,435 Total property, plant and equipment, gross 414,437 364,352 Less accumulated depreciation 236,423 218,581 Total property, plant and equipment, net $ 178,014 $ 145,771 Depreciation expense was $7,434 and $5,367 for the three months ended September 30, 2023 and 2022, respectively, and $19,849 and $16,342 for the nine months ended September 30, 2023 and 2022, respectively. At December 31, 2021, there was uncertainty as to the level of demand from the former fitness customer. The Company received a notification from the former fitness customer in February 2022 resulting in a change in forecasted future cash flow, triggering an impairment assessment of assets purchased, and assets the Company had committed to purchase, to meet obligations under the agreement with the former fitness customer as of December 31, 2021. As a result, at December 31, 2021, the Company recorded a long-lived asset impairment During the three and nine months ended September 30, 2022, the Company was able to cancel $168 and $2,257 respectively, of purchase commitments for property, plant and equipment relating to the former fitness customer that had previously been recorded in the Consolidated Statements of Comprehensive Income as an impairment of long-lived assets and loss on contracts as of December 31, 2021. The cancellation of loss contracts has resulted in the reversal of these amounts from other current liabilities in the Condensed Consolidated Balance Sheets and recorded in the Condensed Consolidated Statements of Comprehensive Income as an impairment of long-lived assets and gain on contracts for the three and nine months ended September 30, 2022. Throughout the three and nine months ended September 30, 2022, the Company sold $126 and $5,097, respectively, of machinery and equipment originally intended to support production for the former fitness customer, resulting in a gain on sale of the assets of $1,569 and $2,089, respectively. The gain on sale of assets is classified in impairment of long-lived assets and gain on contracts on the Condensed Consolidated Statements of Comprehensive Income as of September 30, 2022. As a result of the previously mentioned impairment, these assets had been written down to fair value at December 31, 2021. The Company adopted ASC 842 on January 1, 2022, classifying finance leases of $958 and $1,103 in property, plant and equipment on the Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022, respectively. Please refer to Note 5 – Leases for additional information. Goodwill The following table sets forth the changes in the carrying amount of goodwill as of September 30, 2023. The carrying value of goodwill was increased by $21,115 during the nine months ended September 30, 2023, related to the acquisition of MSA. Balance as of December 31, 2022 $ 71,535 Acquisition 21,115 Balance as of September 30, 2023 $ 92,650 Intangible Assets The following is a listing of intangible assets, the useful lives in years (amortization period) and accumulated amortization as of September 30, 2023 and December 31, 2022: Useful Lives September 30, December 31, Years 2023 2022 Amortizable intangible assets: Customer relationships and contracts 9-17 $ 96,040 $ 78,340 Trade name 10 14,780 14,780 Non-compete agreements 5 8,800 8,800 Developed technology 7 4,900 — Patents 19 24 24 Accumulated amortization (67,595) (61,946) Total amortizable intangible assets, net 56,949 39,998 Non-amortizable brand name 3,811 3,811 Total intangible assets, net $ 60,760 $ 43,809 Non-amortizable brand name is tested annually during the fourth quarter for impairment, or more frequently if triggering events occur indicating there may be impairment. Changes in intangible assets between December 31, 2022 and September 30, 2023 consist of: Balance as of December 31, 2022 $ 43,809 Amortization expense (5,649) Acquisition (see Note 2) 22,600 Balance as of September 30, 2023 $ 60,760 Amortization expense was $2,173 and $1,738 for the three months ended September 30, 2023 and 2022, respectively, and $5,649 and $5,214 for the nine months ended September 30, 2023 and 2022, respectively. Future amortization expense is expected to be as followed: Year ending December 31, 2023 (remainder) $ 2,087 2024 $ 6,933 2025 $ 6,933 2026 $ 6,933 2027 $ 6,933 Thereafter $ 27,130 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2023 | |
Debt | |
Debt | Note 4. Debt Bank Revolving Credit Notes On June 28, 2023, we entered into an amended and restated credit agreement (the Credit Agreement) with certain lenders and Wells Fargo Bank, National Association, as administrative agent (the Agent). The Credit Agreement provides for a $250,000 revolving credit facility, with a letter of credit sub-facility, and a swingline facility in an aggregate amount of $25,000. The Credit Agreement also provides the availability of incremental facilities to the greater of $100,000 and 125% of the Company’s twelve month trailing Consolidated EBITDA through an accordion feature. All amounts borrowed under the credit agreement mature on June 28, 2028. The Credit Agreement contains usual and customary negative covenants for agreements of this type, including, but not limited to, restrictions on our ability to, subject to certain exceptions, create, incur or assume indebtedness; create, incur, assume or suffer to exist liens; make certain investments; allow our subsidiaries to merge or consolidate with another entity; make certain asset dispositions; pay certain dividends or other distributions to shareholders; enter into transactions with affiliates; enter into sale leaseback transactions; and exceed the limits on annual capital expenditures. The Credit Agreement also requires us to satisfy certain financial covenants, including a minimum consolidated interest coverage ratio of 3.00 to 1.00 as well as a consolidated total leverage ratio not to exceed 4.00 to 1.00 (which was increased as of July 1, 2023 from 3.50 to 1.00 in connection with the acquisition of MSA). The Company incurred deferred financing costs of $1,248 associated with executing the Credit Agreement, which has been recorded as an other long-term asset in the Condensed Consolidated Balance Sheets and will be amortized over the duration of the agreement. At September 30, 2023 our consolidated interest coverage ratio was 6.11 to 1.00 as compared to a covenant minimum of 3.00 to 1.00 under the Credit Agreement. At September 30, 2023, our consolidated total leverage ratio was 2.46 as compared to a covenant maximum of 4.00 to 1.00 under the Credit Agreement. Under the Credit Agreement, interest is payable quarterly at the adjusted secured overnight financing rate (SOFR) plus an applicable margin based on the current consolidated total leverage ratio. The interest rate was 7.92% and 5.69% as of September 30, 2023 and December 31, 2022, respectively. Additionally, the agreement has a fee on the average daily unused portion of the aggregate unused revolving commitments. This fee was 0.30% and 0.25% as of September 30, 2023 and December 31, 2022, respectively. Prior to June 28, 2023, the Company maintained a credit agreement (Former Credit Agreement) with certain lenders and the Agent. The Former Credit Agreement provided for a $200,000 revolving credit facility, with a letter of credit sub-facility in an aggregate amount not to exceed $5,000, and a swingline facility in an aggregate amount of $20,000. The Former Credit Agreement also provided for an additional $100,000 of debt capacity through an accordion feature. The Company was in compliance with all financial covenants of its credit agreements as of September 30, 2023 and December 31, 2022. The amount borrowed on the revolving credit notes was $168,412 and $72,236 as of September 30, 2023 and December 31, 2022, respectively. Other Debt With the consummation of the MSA acquisition, the Company assumed a Small Business Administration (SBA) loan and a Fond du Lac County and Fond du Lac Economic Development Corporation term note (Fond du Lac Term Note) in the amounts of $5,009 and $2,875, respectively. The SBA loan is secured by specific equipment, payable in monthly installments of $27, including interest at 1.17% and due in full in September 2045. Due to the nature of the SBA loan, the Company did not meet the necessary criteria to qualify for this type of loan, so the Company paid off the full loan amount of $5,009 during the current period. The Fond du Lac Term Note is secured by a security agreement, payable in annual installments of $500 plus interest at 2.00% and is due in full in December 2028. The short-term and long-term balance of $500 and $2,375, respectively, are recorded in other current liabilities and other long-term liabilities in the Condensed Consolidated Balance Sheets. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2023 | |
Leases | |
Leases | Note 5. Leases The Company has real property operating leases for office and light manufacturing space. Operating leases for the Company’s personal property consist of leases for office equipment, vehicles, forklifts and storage tanks for bulk gases. The Company recognizes a right-of-use (ROU) asset and a lease liability for operating leases based on the net present value of future minimum lease payments. Lease expense for the Company’s operating leases is recognized on a straight-line basis over the lease term, including renewal periods that are considered reasonably certain. The Company has finance leases for two laser cutting systems and three vehicles. The Company recognizes an ROU asset and a lease liability for finance leases based on the net present value of future minimum lease payments. Lease expense for the Company’s finance leases is comprised of the amortization of the ROU asset and interest expense recognized based on the effective interest method. Variable lease expense is related to certain of the Company’s real property leases and personal property leases, and it generally consists of property tax and insurance components that are for the benefit of the lessor (real property leases) and variable overage fees (personal property leases) that are remitted as part of the Company’s lease payments. The components of lease expense were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Finance lease cost: Amortization of finance lease assets $ 122 $ 79 $ 310 $ 236 Interest on finance lease liabilities 14 10 35 32 Total finance lease expense 136 89 345 268 Operating lease expense 1,310 1,512 3,917 4,546 Short-term lease expense 169 198 439 516 Variable lease expense 22 62 139 170 Sublease income (1) (513) (507) (1,548) (653) Total lease expense $ 1,124 $ 1,354 $ 3,292 $ 4,847 (1) The Company subleased a portion of its Hazel Park, MI facility starting in June 2022. Lease related supplemental cash flow information: Nine Months Ended September 30, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities for finance leases: Operating cash flows $ 35 $ 32 Financing cash flows $ 296 $ 237 Cash paid for amounts included in the measurement of lease liabilities for operating leases: Operating cash flows $ 4,348 $ 4,247 Right-of-use assets obtained in exchange for recorded lease obligations: Operating leases $ 455 $ 1,239 Finance leases $ 2 $ — |
Employee stock ownership plan
Employee stock ownership plan | 9 Months Ended |
Sep. 30, 2023 | |
Employee stock ownership plan | |
Employee stock ownership plan | Note 6. Employee stock ownership plan Under the Mayville Engineering Company, Inc. Employee Stock Ownership Plan (the ESOP), the Company can make annual discretionary contributions to the trust for the benefit of eligible employees in the form of cash or shares of common stock of the Company subject to the Board of Directors’ approval. For the three months ended September 30, 2023 and 2022, the Company’s estimated ESOP (income) expense was $0 and ($152) , respectively. For the nine months ended September 30, 2023 and 2022 the Company’s estimated ESOP expense was As of January 1, 2023, the Company amended the plan reducing the distribution period from five years to three years. At various times following death, disability, retirement, termination of employment or the exercise of diversification rights, an ESOP participant is entitled to receive their ESOP account balance in accordance with various distribution methods as permitted under the policies adopted by the ESOP. As of September 30, 2023 and December 31, 2022, the ESOP shares consisted of 4,062,583 and 5,684,879 in allocated shares, respectively. |
Retirement plans
Retirement plans | 9 Months Ended |
Sep. 30, 2023 | |
Retirement plans | |
Retirement Plans | Note 7. Retirement plans The Mayville Engineering Company Inc. 401(k) Plan (the 401(k) Plan) covers substantially all employees meeting certain eligibility requirements. The 401(k) Plan is a defined contribution plan and is intended for eligible employees to defer tax-free contributions to save for retirement. Employees may contribute up to 50% of their eligible compensation to the 401(k) Plan, subject to the limits of Section 401(k) of the Internal Revenue Code. As of January 1, 2023, the Company implemented an employer match program to the 401(k) Plan. The Company now provides a 50% match for employee contributions, up to 6%. For the three and nine months ended September 30, 2023, the Company’s employer match expense was $933 and $2,577, respectively. Additionally, the 401(k) Plan provides for employer discretionary profit-sharing contributions and the Board of Directors may authorize discretionary profit-sharing contributions (which are usually approved at the end of each calendar year). For the three months ended September 30, 2023 and 2022, the Company’s estimated discretionary profit-sharing expense (credit) was $0 and ($123), respectively. For the nine months ended September 30, 2023 and 2022, the Company’s estimated discretionary profit-sharing expense was $0 and $1,351, respectively. |
Income taxes
Income taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income taxes | |
Income taxes | Note 8. Income taxes On a quarterly basis, the Company estimates its effective tax rate for the full fiscal year and records a quarterly income tax provision based on the anticipated rate. As the year progresses, the Company will refine its estimate based on facts and circumstances by each tax jurisdiction. Income tax expense was $554 and $1,471, and the effective tax rate (ETR) was 27.94% and 20.76% for the three and nine months ended September 30, 2023, respectively. Our ETR is different from the expected tax rate due to state taxes, non-deductible items, research and development credits and benefit from excess tax deductions related to share based compensation items. For the three and nine months ended September 30, 2022, income tax expense was estimated at $1,490 and $4,464 the ETR was 18.43% and 21.45%, respectively. Uncertain Tax Positions Based on the Company’s evaluation, it has been concluded that there is one tax position related to the research and development tax credit requiring recognition in the Company’s financial statements as of September 30, 2023. The Company does not anticipate that there will be a material change in the balance of the unrecognized tax benefits in the next 12 months. Any interest and penalties related to uncertain tax positions are recorded in income tax expense. No amounts have been recorded as tax expense for interest and penalties for the three and nine months ended September 30, 2023, as the amount for the utilized portion for the research and development credit on the Wisconsin return is considered to be immaterial. At September 30, 2023 and December 31, 2022, a total of $652 and $384, respectively, of unrecognized tax benefits would, if recognized, impact the Company’s ETR. The Company files income tax returns in the United States federal jurisdiction and in various state and local jurisdictions. Federal tax returns for tax years beginning January 1, 2019, and state tax returns beginning January 1, 2018, are open for examination. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Contingencies | |
Contingencies | Note 9. Contingencies On August 4, 2022, the Company filed a lawsuit against Peloton Interactive, Inc. (“Peloton”) in the Supreme Court of the State of New York, New York County. The lawsuit arises from a March 2021 “Supply Agreement” between the parties, pursuant to which MEC was to manufacture and supply custom component parts for Peloton’s exercise bikes (the “Manufacturing Project”). In the lawsuit, the Company originally asserted two claims (1) breach and anticipatory repudiation of contract and (2) breach of the duty of good faith and fair dealing (pleaded in the alternative). In January 2023, in response to Peloton’s motion to dismiss, the court allowed the first claim to proceed and dismissed the alternative claim. In the remaining claim, MEC asserts that Peloton breached and anticipatorily repudiated the Supply Agreement by unilaterally cancelling the Manufacturing Project and refusing to pay MEC certain monthly fixed revenue payments owed under the terms of the Supply Agreement. The total amount for damages claimed is substantial but the amount and timing of the ultimate recovery is uncertain. As a result, any recovery from this litigation or settlement of this claim is a contingent gain and will be recognized if, and when, realized or realizable. From time to time, the Company may be involved in various claims and lawsuits, both for and against the Company, arising in the normal course of business. Although the results of litigation and claims cannot be predicted with certainty, in management’s opinion, either the likelihood of loss is remote, or any reasonably possible loss associated with the resolution of such proceedings is not expected to have a material adverse impact on the consolidated financial statements. |
Deferred compensation
Deferred compensation | 9 Months Ended |
Sep. 30, 2023 | |
Deferred compensation | |
Deferred compensation | Note 10. Deferred compensation The Mayville Engineering Company Deferred Compensation Plan is available for certain employees designated to be eligible to participate by the Company and approved by the Board of Directors. Eligible employees may elect to defer a portion of their compensation for any plan year and the deferral cannot exceed 50% of the participant’s base salary and may include the participant’s annual short-term cash incentive up to 100%. The participant’s election must be made prior to the first day of the plan year. An employer contribution will be made for each participant to reflect the amount of any reduced allocations to the ESOP and/or 401(k) employer contributions due solely to the participant’s deferral amounts, as applicable. In addition, a discretionary amount may be awarded to a participant by the Company. Deferrals are assumed to be invested in an investment vehicle based on the options made available to the participant (which does not include Company stock). The deferred compensation plan provides benefits payable upon separation of service or death. Payments are to be made 30 or 180 days after date of separation from service, either in a lump-sum payment or up to five annual installments as elected by the participant when the participant first elects to defer compensation. The deferred compensation plan is non-funded, and all future contributions are unsecured in that the employees have the status of a general unsecured creditor of the Company and the agreements constitute a promise by the Company to make benefit payments in the future. During the three and nine months ended September 30, 2023, eligible employees elected to defer compensation of $94 and $410, respectively. Eligible employees elected to defer compensation of $39 for the three and nine months ended September 30, 2022. As of September 30, 2023 and December 31, 2022, the short-term portion accrued for all benefit years less than 12 months under this plan was $266 and $18,062, respectively. As of September 30, 2023 and December 31, 2022, the long-term portion accrued for all benefit years greater than 12 months under this plan was $3,495 and $3,132. These amounts include the initial deferral of compensation and were adjusted for changes in the value of investment options chosen by the participants. Total credit for the deferred compensation plan for the three months ended September 30, 2023 and 2022 was $52 and $771, respectively. Total expense (credit) for the deferred compensation plan for the nine months ended September 30, 2023 and 2022 was $677 and ($4,360), respectively. These expenses (credits) are included in profit-sharing, bonuses and deferred compensation on the Condensed Consolidated Statements of Comprehensive Income. Additionally, the Company made cash distributions of $18,520 and $1,048 for the nine months ended September 30, 2023 and 2022, respectively. |
Self-Funded insurance
Self-Funded insurance | 9 Months Ended |
Sep. 30, 2023 | |
Self-Funded insurance | |
Self-Funded insurance | Note 11. Self-Funded insurance The Company is self-funded for the medical benefits provided to its employees and their dependents. Healthcare costs are expensed as incurred and are based upon actual claims paid, reinsurance premiums, administration fees, and estimated unpaid claims. Since March 31, 2020, the Company has an aggregate stop loss limit to mitigate risk. Expenses related to this were $5,741 and $3,976 for the three months ended September 30, 2023 and 2022, respectively, and $15,508 and $12,124 for the nine months ended September 30, 2023 and 2022, respectively. An estimated accrued liability of $1,522 and $900 was recorded as of September 30, 2023 and December 31, 2022, respectively, for estimated unpaid claims and is included within other current liabilities on the Condensed Consolidated Balance Sheets. |
Segments
Segments | 9 Months Ended |
Sep. 30, 2023 | |
Segments | |
Segments | Note 12. Segments The Company applies the provisions of ASC 280, Segment Reporting |
Fair value of financial instrum
Fair value of financial instruments | 9 Months Ended |
Sep. 30, 2023 | |
Fair value of financial instruments | |
Fair value of financial instruments | Note 13. Fair value of financial instruments Fair value provides information on what the Company may realize if certain assets were sold or might pay to transfer certain liabilities based upon an exit price. Financial assets and liabilities that are measured and reported at fair value are classified into a three-level hierarchy that prioritizes the inputs used in the valuation process. A financial instrument’s categorization within the valuation hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The hierarchy is based on the observability and objectivity of the pricing inputs as follows: ● Level 1 – Quoted prices in active markets for identical assets or liabilities. ● Level 2 – Significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities or (iii) information derived from or corroborated by observable market data. Long-term debt is classified as a Level 2 fair value input. ● Level 3 – Prices or valuation techniques that require significant unobservable data inputs. These inputs would normally be the Company’s own data and judgements about assumptions that market participants would use in pricing the asset or liability. The following table lists the Company’s financial assets and liabilities accounted for at fair value by the fair value hierarchy: Balance at Fair Value Measurements at September 30, Report Date Using 2023 (Level 1) (Level 2) (Level 3) Deferred compensation liability $ 3,761 $ 3,761 $ — $ — Total $ 3,761 $ 3,761 $ — $ — Balance at Fair Value Measurements at December 31, Report Date Using 2022 (Level 1) (Level 2) (Level 3) Deferred compensation liability $ 21,194 $ 21,194 $ — $ — Total $ 21,194 $ 21,194 $ — $ — Fair value measurements for the Company’s cash and cash equivalents are classified based upon Level 1 measurements because such measurements are based upon quoted market prices in active markets for identical assets. Accounts receivable, accounts payable, long-term debt and accrued liabilities are recorded in the Condensed Consolidated Balance Sheets at cost and approximate fair value. Deferred compensation liabilities are recorded at amounts due to participants at the time of deferral. Deferrals are invested in an investment vehicle based on the options made available to the participant, considered to be Level 1 and Level 2 on the fair value hierarchy, with the current balance all as Level 1. The change in fair value is recorded in the profit-sharing, bonuses, and deferred compensation line item on the Condensed Consolidated Statements of Comprehensive Income. The short-term and long-term balances due to participants are reflected on the current portion of deferred compensation and deferred compensation, less current portion, line items, respectively, on the Condensed Consolidated Balance Sheets. The Company’s non-financial assets such as goodwill, intangible assets and property, plant, and equipment are re-measured at fair value when there is an indication of impairment and adjusted only when an impairment charge is recognized. |
Earnings per share
Earnings per share | 9 Months Ended |
Sep. 30, 2023 | |
Earnings per share | |
Earnings per share | Note 14. Earnings Per Share The Company computes earnings per share in accordance with ASC Topic 260, Earnings per Share A reconciliation of basic and diluted net income per share attributable to the Company were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Net income attributable to MEC $ 1,432 $ 6,596 $ 5,617 $ 16,346 Average shares outstanding 20,439,602 20,390,221 20,416,914 20,457,001 Basic income per share $ 0.07 $ 0.32 $ 0.28 $ 0.80 Average shares outstanding 20,439,602 20,390,221 20,416,914 20,457,001 Effect of dilutive share-based compensation 183,262 4,165 228,001 88,982 Total potential shares outstanding 20,622,864 20,394,386 20,644,915 20,545,983 Diluted income per share $ 0.07 $ 0.32 $ 0.27 $ 0.80 There were no options in the money that were excluded in the computation of diluted earnings per share for the three and nine months ended September 30, 2023 and 2022 because they would have had an anti-dilutive impact on earnings per share. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2023 | |
Revenue Recognition | |
Revenue Recognition | Note 15. Revenue Recognition Contract Assets and Contract Liabilities The Company has contract assets and contract liabilities, which are included in tooling in progress and other current liabilities on the Condensed Consolidated Balance Sheets, respectively. Contract assets include products where the Company has satisfied its performance obligation, but receipt of payment is contingent upon delivery. Contract liabilities include deferred tooling revenue, where the performance obligation was not met. The performance obligation is satisfied when the tooling is completed and the customer signs off through the Product Part Approval Process or other documented customer acceptance. Cost of goods sold is recognized and released from the balance sheet when control of the tooling promised under contract is transferred to the customer. The Company’s contracts with customers are short-term in nature; therefore, revenue is typically recognized, billed and collected within a 12-month period. The following table reflects the changes in our contract assets and liabilities during the nine months ended September 30, 2023: Contract Contract Assets Liabilities As of December 31, 2022 $ 7,938 $ 6,141 Net activity (2,274) (1,075) As of September 30, 2023 $ 5,664 $ 5,066 Disaggregated Revenue The following tables represent a disaggregation of revenue by product category and end market: Three Months Ended Nine Months Ended September 30, September 30, Product Category 2023 2022 2023 2022 Outdoor sports $ 2,155 $ 2,369 $ 6,839 $ 7,418 Fabrication 89,372 81,742 260,545 247,014 Performance structures 41,541 29,328 95,063 86,484 Tube 19,096 17,916 58,916 55,713 Tank 11,660 9,761 33,849 27,225 Total 163,824 141,116 455,212 423,854 Intercompany sales elimination (5,607) (4,840) (15,369) (12,989) Total, net sales $ 158,217 $ 136,276 $ 439,843 $ 410,865 Three Months Ended Nine Months Ended September 30, September 30, End Market 2023 2022 2023 2022 Commercial vehicle $ 57,264 $ 53,714 $ 172,494 $ 159,710 Construction & access 26,296 26,918 79,326 86,049 Powersports 25,143 23,344 73,236 68,298 Agriculture 15,029 14,373 42,924 44,989 Military 10,960 6,436 28,439 16,970 Other 23,525 11,490 43,424 34,850 Total, net sales $ 158,217 $ 136,276 $ 439,843 $ 410,865 |
Concentration of major customer
Concentration of major customers | 9 Months Ended |
Sep. 30, 2023 | |
Concentration of major customers | |
Concentration of major customers | Note 16. Concentration of major customers The following customers accounted for 10% or greater of the Company’s recorded net sales or net trade receivables: Net Sales Net Sales Accounts Receivable Three Months Ended Nine Months Ended As of As of September 30, September 30, September 30, December 31, 2023 2022 2023 2022 2023 2022 Customer A 14.3 % 15.8 % 15.1 % 15.9 % 11.3 % <10 % B 13.4 % 16.5 % 14.8 % 17.7 % 12.9 % 11.0 % C 10.1 % 11.8 % 11.2 % 11.6 % <10 % <10 % D <10 % <10 % <10 % <10 % 10.5 % 12.6 % |
Stock based compensation
Stock based compensation | 9 Months Ended |
Sep. 30, 2023 | |
Stock based compensation | |
Stock based compensation | Note 17. Stock based compensation The Mayville Engineering Company, Inc. 2019 Omnibus Incentive Plan provides the Company the ability to grant monetary payments based on the value of its common stock, up to 2,000,000 shares. On April 20, 2021, shareholders of the Company approved an amendment to the 2019 Omnibus Incentive Plan increasing the number of shares of common stock authorized for issuance by 2,500,000 shares. The Company recognizes stock-based compensation using the fair value provisions prescribed by ASC 718, Compensation – Stock Compensation Cancellations and forfeitures are accounted for as incurred. Stock awards were granted on September 18, 2023, June 26, 2023, April 18, 2023, March 13, 2023, February 28, 2023, January 25, 2023, July 19, 2022, April 19, 2022 and February 28, 2022. During the nine months ended September 30, 2023, 254,169 units vested. For the same period, 195,264 options vested with a weighted average strike price of $11.67. During the nine months ended September 30, 2022, 271,992 units vested. For the same period, 512,927 options vested with a strike price of $9.18. As of September 30, 2023, 1,299,713 options remained outstanding with a weighted average strike price of $10.51 and a weighted average contractual life of 6.71 years remaining. The Company’s stock-based compensation expense by award type is summarized as follows: Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Unit awards $ 856 $ 247 $ 2,445 $ 1,873 Option awards 480 (106) 1,311 982 Stock based compensation expense, net of tax $ 1,336 $ 141 $ 3,756 $ 2,855 A roll-forward of unrecognized stock-based compensation expense is displayed in the table below. Unrecognized stock-based compensation expense as of September 30, 2023 will be expensed over the remaining requisite service period from which individual award values relate, up to July 19, 2025. 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 Grants 785 — 785 Forfeitures (48) — (48) Expense (874) (480) (1,354) Balance as of June 30, 2023 $ 4,236 $ 2,721 $ 6,957 Grants 20 — 20 Forfeitures (50) — (50) Expense (856) (480) (1,336) Balance as of September 30, 2023 $ 3,350 $ 2,241 $ 5,591 |
Common Equity
Common Equity | 9 Months Ended |
Sep. 30, 2023 | |
Common Equity. | |
Common equity | Note 18. Common Equity At September 30, 2023 the authorized stock of the Company consisted of 75,000,000 shares of common stock without par value. Changes in outstanding common shares are summarized as follows: Shares Outstanding Shares as of December 31, 2021 20,335,934 Treasury stock purchases (559,945) Common stock issued (including share-based compensation impact) 396,757 Balance as of September 30, 2022 20,172,746 Shares Outstanding Balance as of December 31, 2022 20,172,746 Treasury stock purchases (184,964) Common stock issued (including share-based compensation impact) 320,574 Balance as of September 30, 2023 20,308,356 |
Subsequent events
Subsequent events | 9 Months Ended |
Sep. 30, 2023 | |
Subsequent events | |
Subsequent events | Note 19. Subsequent events The Company has evaluated subsequent events since September 30, 2023, the date of these financial statements. There were no material events or transactions discovered during this evaluation that requires recognition or disclosure in the financial statements. |
Basis of presentation (Policies
Basis of presentation (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Basis Of presentation | |
Nature of Operations | Nature of Operations MEC is a leading U.S.-based, vertically-integrated, value-added manufacturing partner providing a full suite of manufacturing solutions from concept to production, including design, prototyping and tooling, fabrication, aluminum extrusion, coating, assembly and aftermarket components. Our customers operate in diverse end markets, including heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, agriculture, military and other end markets. Founded in 1945 and headquartered in Mayville, Wisconsin, we are a leading Tier I U.S. supplier of highly engineered components to original equipment manufacturer (OEM) customers with leading positions in their respective markets. The Company operates 22 facilities located in Arkansas, Michigan, Mississippi, Ohio, Pennsylvania, Virginia, and Wisconsin. Our engineering expertise and technical know-how allow us to add value through every product redevelopment cycle (generally every three to five years for our customers). Our one operating segment focuses on producing metal components that are used in a broad range of heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, agricultural, military and other products. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Measurement of Credit Losses on Financial Instruments Financial Instruments – Credit Losses |
Business combinations | Business Combinations The Company accounts for all business combinations in accordance with FASB ASC 805, Business Combinations |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Business Acquisition [Line Items] | |
Schedule of Pro Forma Financial Information | Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Net sales $ 158,217 $ 156,683 $ 470,799 $ 479,490 Net income $ 2,371 $ 6,874 $ 4,052 $ 18,716 |
Mid-States Aluminum [Member] | |
Business Acquisition [Line Items] | |
Schedule of assets acquired, liabilities assumed and net cash consideration paid | The following table is a summary of the assets acquired, liabilities assumed and net cash consideration paid for MSA during 2023: Preliminary Estimated Opening Balance Useful Sheet Allocation Life Cash $ 324 Accounts receivable, net 7,381 Inventory 9,698 Property, plant and equipment 41,271 Other assets 291 Intangible assets Developed technology 4,900 7 Years Customer relationships 17,700 17 Years Goodwill 21,115 Indefinite Total assets acquired 102,680 Accounts payable (2,386) Accrued expenses (1,509) Other liabilities (1,984) Debt (7,884) Total consideration $ 88,917 |
Select balance sheet data (Tabl
Select balance sheet data (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Select balance sheet data | |
Schedule of Inventories | September 30, December 31, 2023 2022 Finished goods and purchased parts $ 32,413 $ 44,728 Raw materials 29,053 17,003 Work-in-process 11,845 9,977 Total $ 73,311 $ 71,708 |
Schedule of Property, Plant and Equipment | Useful Lives September 30, December 31, Years 2023 2022 Land Indefinite $ 1,030 $ 1,030 Land improvements 15-39 5,988 3,169 Building and building improvements 15-39 79,573 59,664 Machinery, equipment and tooling 3-10 294,052 250,110 Vehicles 5 4,659 4,359 Office furniture and fixtures 3-7 21,132 19,585 Construction in progress N/A 8,003 26,435 Total property, plant and equipment, gross 414,437 364,352 Less accumulated depreciation 236,423 218,581 Total property, plant and equipment, net $ 178,014 $ 145,771 |
Schedule of Changes In Goodwill | Balance as of December 31, 2022 $ 71,535 Acquisition 21,115 Balance as of September 30, 2023 $ 92,650 |
Schedule of Listing of Intangible Assets | Useful Lives September 30, December 31, Years 2023 2022 Amortizable intangible assets: Customer relationships and contracts 9-17 $ 96,040 $ 78,340 Trade name 10 14,780 14,780 Non-compete agreements 5 8,800 8,800 Developed technology 7 4,900 — Patents 19 24 24 Accumulated amortization (67,595) (61,946) Total amortizable intangible assets, net 56,949 39,998 Non-amortizable brand name 3,811 3,811 Total intangible assets, net $ 60,760 $ 43,809 |
Schedule of Changes In Intangible Assets | Balance as of December 31, 2022 $ 43,809 Amortization expense (5,649) Acquisition (see Note 2) 22,600 Balance as of September 30, 2023 $ 60,760 |
Schedule of Future Amortization Expense | Year ending December 31, 2023 (remainder) $ 2,087 2024 $ 6,933 2025 $ 6,933 2026 $ 6,933 2027 $ 6,933 Thereafter $ 27,130 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases | |
Summary of components of lease expense | Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Finance lease cost: Amortization of finance lease assets $ 122 $ 79 $ 310 $ 236 Interest on finance lease liabilities 14 10 35 32 Total finance lease expense 136 89 345 268 Operating lease expense 1,310 1,512 3,917 4,546 Short-term lease expense 169 198 439 516 Variable lease expense 22 62 139 170 Sublease income (1) (513) (507) (1,548) (653) Total lease expense $ 1,124 $ 1,354 $ 3,292 $ 4,847 (1) The Company subleased a portion of its Hazel Park, MI facility starting in June 2022. |
Schedule of Supplemental cash flow information | Nine Months Ended September 30, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities for finance leases: Operating cash flows $ 35 $ 32 Financing cash flows $ 296 $ 237 Cash paid for amounts included in the measurement of lease liabilities for operating leases: Operating cash flows $ 4,348 $ 4,247 Right-of-use assets obtained in exchange for recorded lease obligations: Operating leases $ 455 $ 1,239 Finance leases $ 2 $ — |
Fair value of financial instr_2
Fair value of financial instruments (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair value of financial instruments | |
Schedule of Financial Assets and Liabilities Accounted for at Fair Value by Fair Value Hierarchy | The following table lists the Company’s financial assets and liabilities accounted for at fair value by the fair value hierarchy: Balance at Fair Value Measurements at September 30, Report Date Using 2023 (Level 1) (Level 2) (Level 3) Deferred compensation liability $ 3,761 $ 3,761 $ — $ — Total $ 3,761 $ 3,761 $ — $ — Balance at Fair Value Measurements at December 31, Report Date Using 2022 (Level 1) (Level 2) (Level 3) Deferred compensation liability $ 21,194 $ 21,194 $ — $ — Total $ 21,194 $ 21,194 $ — $ — |
Earnings per share (Tables)
Earnings per share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings per share | |
Schedule of earnings per share | Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Net income attributable to MEC $ 1,432 $ 6,596 $ 5,617 $ 16,346 Average shares outstanding 20,439,602 20,390,221 20,416,914 20,457,001 Basic income per share $ 0.07 $ 0.32 $ 0.28 $ 0.80 Average shares outstanding 20,439,602 20,390,221 20,416,914 20,457,001 Effect of dilutive share-based compensation 183,262 4,165 228,001 88,982 Total potential shares outstanding 20,622,864 20,394,386 20,644,915 20,545,983 Diluted income per share $ 0.07 $ 0.32 $ 0.27 $ 0.80 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue Recognition | |
Schedule of Changes in Contract Assets and Liabilities | The following table reflects the changes in our contract assets and liabilities during the nine months ended September 30, 2023: Contract Contract Assets Liabilities As of December 31, 2022 $ 7,938 $ 6,141 Net activity (2,274) (1,075) As of September 30, 2023 $ 5,664 $ 5,066 |
Schedule of Disaggregation of Revenue by Product Category and End Market | The following tables represent a disaggregation of revenue by product category and end market: Three Months Ended Nine Months Ended September 30, September 30, Product Category 2023 2022 2023 2022 Outdoor sports $ 2,155 $ 2,369 $ 6,839 $ 7,418 Fabrication 89,372 81,742 260,545 247,014 Performance structures 41,541 29,328 95,063 86,484 Tube 19,096 17,916 58,916 55,713 Tank 11,660 9,761 33,849 27,225 Total 163,824 141,116 455,212 423,854 Intercompany sales elimination (5,607) (4,840) (15,369) (12,989) Total, net sales $ 158,217 $ 136,276 $ 439,843 $ 410,865 Three Months Ended Nine Months Ended September 30, September 30, End Market 2023 2022 2023 2022 Commercial vehicle $ 57,264 $ 53,714 $ 172,494 $ 159,710 Construction & access 26,296 26,918 79,326 86,049 Powersports 25,143 23,344 73,236 68,298 Agriculture 15,029 14,373 42,924 44,989 Military 10,960 6,436 28,439 16,970 Other 23,525 11,490 43,424 34,850 Total, net sales $ 158,217 $ 136,276 $ 439,843 $ 410,865 |
Concentration of major custom_2
Concentration of major customers (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Concentration of major customers | |
Schedules of Major Customer Concentrations | Net Sales Net Sales Accounts Receivable Three Months Ended Nine Months Ended As of As of September 30, September 30, September 30, December 31, 2023 2022 2023 2022 2023 2022 Customer A 14.3 % 15.8 % 15.1 % 15.9 % 11.3 % <10 % B 13.4 % 16.5 % 14.8 % 17.7 % 12.9 % 11.0 % C 10.1 % 11.8 % 11.2 % 11.6 % <10 % <10 % D <10 % <10 % <10 % <10 % 10.5 % 12.6 % |
Stock based compensation (Table
Stock based compensation (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Stock based compensation | |
Summary of Stock-based Compensation Expenses | Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Unit awards $ 856 $ 247 $ 2,445 $ 1,873 Option awards 480 (106) 1,311 982 Stock based compensation expense, net of tax $ 1,336 $ 141 $ 3,756 $ 2,855 |
Schedule of Unrecognized Stock-based Compensation Expense | 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 Grants 785 — 785 Forfeitures (48) — (48) Expense (874) (480) (1,354) Balance as of June 30, 2023 $ 4,236 $ 2,721 $ 6,957 Grants 20 — 20 Forfeitures (50) — (50) Expense (856) (480) (1,336) Balance as of September 30, 2023 $ 3,350 $ 2,241 $ 5,591 |
Common Equity (Tables)
Common Equity (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Common Equity. | |
Schedule of Common Stock Outstanding Roll Forward [Table Text Block] | Shares Outstanding Shares as of December 31, 2021 20,335,934 Treasury stock purchases (559,945) Common stock issued (including share-based compensation impact) 396,757 Balance as of September 30, 2022 20,172,746 Shares Outstanding Balance as of December 31, 2022 20,172,746 Treasury stock purchases (184,964) Common stock issued (including share-based compensation impact) 320,574 Balance as of September 30, 2023 20,308,356 |
Basis of presentation (Details)
Basis of presentation (Details) | 9 Months Ended |
Sep. 30, 2023 facility segment | |
Basis Of presentation | |
Number of facilities operated | facility | 22 |
Number Of Operating Segments | segment | 1 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Jul. 01, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Business Acquisition [Line Items] | |||||
Net sales | $ 158,217 | $ 136,276 | $ 439,843 | $ 410,865 | |
Operating income | 5,893 | $ 8,916 | 14,837 | $ 22,973 | |
Mid-States Aluminum [Member] | |||||
Business Acquisition [Line Items] | |||||
Net consideration paid | $ 95,945 | ||||
Transaction costs | 499 | 1,398 | |||
Net sales | $ 13,491 | ||||
Operating income | $ 998 |
Acquisitions - Assets acquired,
Acquisitions - Assets acquired, liabilities assumed (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Jul. 01, 2023 | Jun. 19, 2023 | Dec. 31, 2022 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 92,650 | $ 71,535 | ||
Developed Technology Rights [Member] | ||||
Business Acquisition [Line Items] | ||||
Estimated useful life | 7 years | 7 years | ||
Customer Relationships [Member] | ||||
Business Acquisition [Line Items] | ||||
Estimated useful life | 17 years | |||
Mid-States Aluminum [Member] | ||||
Business Acquisition [Line Items] | ||||
Cash | $ 324 | |||
Accounts receivable, net | 7,381 | |||
Inventory | 9,698 | |||
Property, plant and equipment | 41,271 | |||
Other assets | 291 | |||
Goodwill | 21,115 | |||
Total assets acquired | 102,680 | |||
Accounts payable | (2,386) | |||
Accrued expenses | (1,509) | |||
Other liabilities | (1,984) | |||
Debt | (7,884) | |||
Total consideration | 88,917 | $ 90,002 | ||
Mid-States Aluminum [Member] | Developed Technology Rights [Member] | ||||
Business Acquisition [Line Items] | ||||
Intangibles | $ 4,900 | |||
Estimated useful life | 7 years | |||
Mid-States Aluminum [Member] | Customer Relationships [Member] | ||||
Business Acquisition [Line Items] | ||||
Intangibles | $ 17,700 | |||
Estimated useful life | 17 years |
Acquisitions - Assets (Details)
Acquisitions - Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Jul. 01, 2023 | Sep. 30, 2023 | Sep. 30, 2023 | |
Business Acquisition [Line Items] | |||
Inventory fair value step-up | $ 891 | ||
Developed Technology Rights [Member] | |||
Business Acquisition [Line Items] | |||
Estimated useful life | 7 years | 7 years | 7 years |
Customer Relationships [Member] | |||
Business Acquisition [Line Items] | |||
Estimated useful life | 17 years | ||
Mid-States Aluminum [Member] | |||
Business Acquisition [Line Items] | |||
Inventory fair value step-up | $ 891 | ||
Property, plant and equipment fair value step-up | 21,157 | ||
Purchase price | $ (1,084) | ||
Mid-States Aluminum [Member] | Developed Technology Rights [Member] | |||
Business Acquisition [Line Items] | |||
Intangibles | $ 4,900 | ||
Estimated useful life | 7 years | ||
Mid-States Aluminum [Member] | Customer Relationships [Member] | |||
Business Acquisition [Line Items] | |||
Intangibles | $ 17,700 | ||
Estimated useful life | 17 years |
Acquisitions - Pro Forma Financ
Acquisitions - Pro Forma Financial Information (Details) - Mid-States Aluminum [Member] - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Business Acquisition [Line Items] | ||||
Net sales | $ 158,217 | $ 156,683 | $ 470,799 | $ 479,490 |
Net income | $ 2,371 | $ 6,874 | $ 4,052 | $ 18,716 |
Select balance sheet data - Sch
Select balance sheet data - Schedule of Inventories (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Select balance sheet data | ||
Finished goods and purchased parts | $ 32,413 | $ 44,728 |
Raw materials | 29,053 | 17,003 |
Work-in-process | 11,845 | 9,977 |
Total | 73,311 | $ 71,708 |
Inventory fair value step-up | $ 891 |
Select balance sheet data - S_2
Select balance sheet data - Schedule of Property, Plant and Equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment, gross | $ 414,437 | $ 364,352 |
Less accumulated depreciation | 236,423 | 218,581 |
Total property, plant and equipment, net | 178,014 | 145,771 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment, gross | 1,030 | 1,030 |
Land Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment, gross | $ 5,988 | 3,169 |
Land Improvements [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment useful lives | 15 years | |
Land Improvements [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment useful lives | 39 years | |
Building and Building Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment, gross | $ 79,573 | 59,664 |
Building and Building Improvements [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment useful lives | 15 years | |
Building and Building Improvements [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment useful lives | 39 years | |
Machinery, Equipment and Tooling [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment, gross | $ 294,052 | 250,110 |
Machinery, Equipment and Tooling [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment useful lives | 3 years | |
Machinery, Equipment and Tooling [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment useful lives | 10 years | |
Vehicle Leases | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment, gross | $ 4,659 | 4,359 |
Property, plant and equipment useful lives | 5 years | |
Office Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment, gross | $ 21,132 | 19,585 |
Office Furniture and Fixtures [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment useful lives | 3 years | |
Office Furniture and Fixtures [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment useful lives | 7 years | |
Construction in Progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment, gross | $ 8,003 | $ 26,435 |
Select balance sheet data - Add
Select balance sheet data - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | |
Select Balance Sheet Data [Line Items] | ||||||
Depreciation | $ 7,434 | $ 5,367 | $ 19,849 | $ 16,342 | ||
Purchase commitments for property, plant and equipment canceled | 168 | 2,257 | ||||
Finance leases right of use assets | $ 958 | $ 958 | $ 1,103 | |||
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Property Plant And Equipment Net | Property Plant And Equipment Net | Property Plant And Equipment Net | |||
Property, plant and equipment reclassified as held for sale. | $ 81 | $ 81 | $ 83 | |||
Amortization expense | $ 2,173 | 1,738 | 5,649 | 5,214 | ||
Property, Plant and Equipment, Sale | 126 | 5,097 | ||||
Gain on sale of assets | $ 342 | (11) | ||||
Former Customer [Member] | ||||||
Select Balance Sheet Data [Line Items] | ||||||
Impairment of long-lived asset | $ 12,875 | |||||
Impairment, Long-Lived Asset, Held-for-Use, Statement of Income or Comprehensive Income [Extensible Enumeration] | Impairment Of Long Lived Assets And Gain Loss On Contracts To Be Disposed Of | |||||
Machinery and Equipment [Member] | ||||||
Select Balance Sheet Data [Line Items] | ||||||
Gain on sale of assets | $ 1,569 | $ 2,089 |
Select balance sheet data - S_3
Select balance sheet data - Schedule of Changes In Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Select balance sheet data | |
Balance (beginning) | $ 71,535 |
Acquisition | 21,115 |
Balance (ending) | 92,650 |
Change in goodwill carrying amount | $ 21,115 |
Select balance sheet data - S_4
Select balance sheet data - Schedule of Listing of Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Jul. 01, 2023 | Dec. 31, 2022 |
Amortizable intangible assets [Abstract] | |||
Accumulated amortization | $ (67,595) | $ (61,946) | |
Total amortizable intangible assets, net | 56,949 | 39,998 | |
Total intangible assets, net | 60,760 | 43,809 | |
Customer relationships and contracts [Member] | |||
Amortizable intangible assets [Abstract] | |||
Amortizable intangible assets, gross | $ 96,040 | 78,340 | |
Trade name [Member] | |||
Amortizable intangible assets [Abstract] | |||
Intangible assets useful Lives | 10 years | ||
Amortizable intangible assets, gross | $ 14,780 | 14,780 | |
Non-compete agreements [Member] | |||
Amortizable intangible assets [Abstract] | |||
Intangible assets useful Lives | 5 years | ||
Amortizable intangible assets, gross | $ 8,800 | 8,800 | |
Developed technology [Member] | |||
Amortizable intangible assets [Abstract] | |||
Intangible assets useful Lives | 7 years | 7 years | |
Amortizable intangible assets, gross | $ 4,900 | ||
Patents [Member] | |||
Amortizable intangible assets [Abstract] | |||
Intangible assets useful Lives | 19 years | ||
Amortizable intangible assets, gross | $ 24 | 24 | |
Non-amortizable Brand Name [Member] | |||
Amortizable intangible assets [Abstract] | |||
Total intangible assets, net | $ 3,811 | $ 3,811 | |
Minimum [Member] | Customer relationships and contracts [Member] | |||
Amortizable intangible assets [Abstract] | |||
Intangible assets useful Lives | 9 years | ||
Maximum [Member] | Customer relationships and contracts [Member] | |||
Amortizable intangible assets [Abstract] | |||
Intangible assets useful Lives | 17 years |
Select balance sheet data - S_5
Select balance sheet data - Schedule of Changes In Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Select balance sheet data | ||||
Balance | $ 43,809 | |||
Amortization expense | $ (2,173) | $ (1,738) | (5,649) | $ (5,214) |
Acquisition (see Note 2) | 22,600 | |||
Balance | $ 60,760 | $ 60,760 |
Select balance sheet data - S_6
Select balance sheet data - Schedule of Future Amortization Expense (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Select balance sheet data | |
2023 (remainder) | $ 2,087 |
2024 | 6,933 |
2025 | 6,933 |
2026 | 6,933 |
2027 | 6,933 |
Thereafter | $ 27,130 |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||||
Jul. 01, 2023 | Jun. 30, 2023 | Jun. 28, 2023 | Sep. 30, 2023 | Dec. 31, 2022 | Jun. 27, 2023 | |
Line Of Credit Facility [Line Items] | ||||||
Revolving credit notes | $ 168,412 | $ 72,236 | ||||
A&R Credit Agreement [Member] | ||||||
Line Of Credit Facility [Line Items] | ||||||
Minimum interest coverage ratio | 3% | 3% | ||||
Maximum Consolidated Leverage Ratio | 3.50% | 4% | 4% | |||
Deferred financing costs | $ 1,248 | |||||
Interest Coverage Ratios | 6.11% | |||||
Consolidated leverage ratio | 2.46% | |||||
A&R Credit Agreement [Member] | The Agent [Member] | ||||||
Line Of Credit Facility [Line Items] | ||||||
Credit agreement additional borrowing capacity through accordion feature | $ 100,000 | $ 100,000 | ||||
Line of credit facility additional borrowing capacity percentage through accordion feature | 125% | |||||
Line of credit facility additional borrowing capacity period through accordion feature | 12 months | |||||
Credit agreement maturity date | Jun. 28, 2028 | |||||
MSA Acquisition | SBA loan | ||||||
Line Of Credit Facility [Line Items] | ||||||
Principal amount | $ 5,009 | |||||
Monthly installment | $ 27 | |||||
Interest rate (as a percent) | 1.17% | |||||
Repayment | $ 5,009 | |||||
MSA Acquisition | Fond du Lac Term Note | ||||||
Line Of Credit Facility [Line Items] | ||||||
Principal amount | 2,875 | |||||
Monthly installment | $ 500 | |||||
Interest rate (as a percent) | 2% | |||||
MSA Acquisition | Other liabilities current [Member] | Fond du Lac Term Note | ||||||
Line Of Credit Facility [Line Items] | ||||||
Short-term balance | $ 500 | |||||
MSA Acquisition | Other liabilities non-current [Member] | Fond du Lac Term Note | ||||||
Line Of Credit Facility [Line Items] | ||||||
Long-term balance | 2,375 | |||||
Revolving Credit Facility [Member] | ||||||
Line Of Credit Facility [Line Items] | ||||||
Revolving credit notes | $ 168,412 | $ 72,236 | ||||
Revolving commitments fee percentage | 0.30% | 0.25% | ||||
Interest rate | 7.92% | 5.69% | ||||
Revolving Credit Facility [Member] | A&R Credit Agreement [Member] | The Agent [Member] | ||||||
Line Of Credit Facility [Line Items] | ||||||
Credit agreement borrowing capacity | $ 250,000 | 200,000 | ||||
Letter of Credit Sub-facility [Member] | A&R Credit Agreement [Member] | The Agent [Member] | ||||||
Line Of Credit Facility [Line Items] | ||||||
Credit agreement borrowing capacity | 5,000 | |||||
Swingline Facility [Member] | A&R Credit Agreement [Member] | The Agent [Member] | ||||||
Line Of Credit Facility [Line Items] | ||||||
Credit agreement borrowing capacity | $ 25,000 | $ 20,000 |
Leases - Components of lease ex
Leases - Components of lease expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Leases | ||||
Amortization of finance lease assets | $ 122 | $ 79 | $ 310 | $ 236 |
Interest on finance lease liabilities | 14 | 10 | 35 | 32 |
Total finance lease expense | 136 | 89 | 345 | 268 |
Operating lease expense | 1,310 | 1,512 | 3,917 | 4,546 |
Short-term lease expense | 169 | 198 | 439 | 516 |
Variable lease expense | 22 | 62 | 139 | 170 |
Sublease income | (513) | (507) | (1,548) | (653) |
Total lease expense | $ 1,124 | $ 1,354 | $ 3,292 | $ 4,847 |
Leases - Supplemental cash flow
Leases - Supplemental cash flow information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Leases | ||
Cash paid for amounts included in the measurement of lease liabilities for finance leases: Operating cash flows | $ 35 | $ 32 |
Cash paid for amounts included in the measurement of lease liabilities for finance leases: Financing cash flows | 296 | 237 |
Cash paid for amounts included in the measurement of lease liabilities for operating leases: Operating cash flows | 4,348 | 4,247 |
Right-of-use assets obtained in exchange for recorded lease obligations: Operating leases | 455 | $ 1,239 |
Right-of-use assets obtained in exchange for recorded lease obligations: Finance leases | $ 2 |
Employee stock ownership plan -
Employee stock ownership plan - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Jan. 01, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items] | ||||||
Employee stock ownership plan (ESOP), (income) expense | $ (152) | $ 1,668 | ||||
Distribution period | 3 years | 5 years | ||||
Shares in ESOP | 4,062,583 | 4,062,583 | 5,684,879 | |||
Employee Stock Option [Member] | ||||||
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items] | ||||||
Employee stock ownership plan (ESOP), (income) expense | $ 0 | $ (152) | $ 0 | $ 1,668 |
Retirement plans - Additional I
Retirement plans - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Retirement plans | ||||
Percentage of employee contribution of eligible compensation plan | 50% | |||
Employer match percentage | 50% | |||
Percent of employee contributions eligible for employer match | 6% | |||
Employer match expense | $ 933 | $ 2,577 | ||
Defined contribution plan, employer discretionary contribution amount | $ 0 | $ 0 | $ 1,351 | |
Defined contribution plan, employer discretionary reversal of contribution | $ (123) |
Income taxes - Additional Infor
Income taxes - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Income taxes | |||||
Income tax expense | $ 554 | $ 1,490 | $ 1,471 | $ 4,464 | |
Effective income tax rate | 27.94% | 18.43% | 20.76% | 21.45% | |
Tax expense for interest and penalties | $ 0 | $ 0 | |||
Unrecognized tax benefits that would impact effective tax rate | $ 652 | $ 652 | $ 384 |
Contingencies (Details)
Contingencies (Details) | Aug. 04, 2022 claim |
Contingencies | |
Number of claims | 2 |
Deferred compensation - Additio
Deferred compensation - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Deferred Compensation Arrangement With Individual Excluding Share Based Payments And Postretirement Benefits [Line Items] | |||||
Description of deferred compensation arrangements | The Mayville Engineering Company Deferred Compensation Plan is available for certain employees designated to be eligible to participate by the Company and approved by the Board of Directors. | ||||
Deferred compensation plan (Income) expense | $ 2,346 | $ 166 | $ 8,037 | $ 3,921 | |
Deferred compensation cash-based arrangements liability, Current | 266 | 266 | $ 18,062 | ||
Deferred compensation cash-based arrangements liability, Non current | 3,495 | 3,495 | $ 3,132 | ||
Deferred compensation, distributions paid | 18,520 | 1,048 | |||
Deferred Profit Sharing [Member] | |||||
Deferred Compensation Arrangement With Individual Excluding Share Based Payments And Postretirement Benefits [Line Items] | |||||
Deferred compensation plan (Income) expense | 52 | 771 | 677 | (4,360) | |
Employees [Member] | |||||
Deferred Compensation Arrangement With Individual Excluding Share Based Payments And Postretirement Benefits [Line Items] | |||||
Deferred compensation plan (Income) expense | $ 94 | $ 39 | $ 410 | $ 39 | |
Maximum [Member] | |||||
Deferred Compensation Arrangement With Individual Excluding Share Based Payments And Postretirement Benefits [Line Items] | |||||
Deferred compensation arrangements | 50% | ||||
Annual short term cash incentive | 100% |
Self-Funded insurance - Additio
Self-Funded insurance - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Self-Funded insurance | |||||
Healthcare plan costs | $ 5,741 | $ 3,976 | $ 15,508 | $ 12,124 | |
Estimated accrued liability | $ 1,522 | $ 1,522 | $ 900 |
Segments - Additional Informati
Segments - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2023 segment | |
Segments | |
Number of operating segments | 1 |
Fair value of financial instr_3
Fair value of financial instruments - Schedule of Financial Assets and Liabilities Accounted for at Fair Value by Fair Value Hierarchy (Details) - Fair Value, measurements, recurring - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total | $ 3,761 | $ 21,194 |
Fair Value, Inputs, Level 1 | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total | 3,761 | 21,194 |
Deferred compensation liability | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total | 3,761 | 21,194 |
Deferred compensation liability | Fair Value, Inputs, Level 1 | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total | $ 3,761 | $ 21,194 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Earnings Per Share, Basic [Abstract] | ||||||||
Net income attributable to MEC | $ 1,432 | $ 1,614 | $ 2,571 | $ 6,596 | $ 5,929 | $ 3,822 | $ 5,617 | $ 16,346 |
Average shares outstanding | 20,439,602 | 20,390,221 | 20,416,914 | 20,457,001 | ||||
Basic income per share | $ 0.07 | $ 0.32 | $ 0.28 | $ 0.80 | ||||
Earnings Per Share, Diluted, Other Disclosures [Abstract] | ||||||||
Average shares outstanding | 20,439,602 | 20,390,221 | 20,416,914 | 20,457,001 | ||||
Effect of dilutive share-based compensation | 183,262 | 4,165 | 228,001 | 88,982 | ||||
Total potential shares outstanding | 20,622,864 | 20,394,386 | 20,644,915 | 20,545,983 | ||||
Diluted income per share | $ 0.07 | $ 0.32 | $ 0.27 | $ 0.80 |
Earnings per share - Schedule o
Earnings per share - Schedule of Antidilutive Securities Excluded from Computation of Diluted Earnings Per Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Stock Options [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of diluted earnings per share | 0 | 0 | 0 | 0 |
Revenue Recognition - Schedule
Revenue Recognition - Schedule of Changes in Contract Assets and Liabilities (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Revenue Recognition | |
Contract asset, beginning balance | $ 7,938 |
Net activity | (2,274) |
Contract asset, ending balance | 5,664 |
Contract liability, beginning balance | 6,141 |
Net activity | (1,075) |
Contract liability, ending balance | $ 5,066 |
Revenue Recognition - Schedul_2
Revenue Recognition - Schedule of Disaggregation of Revenue by Product Category (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation Of Revenue [Line Items] | ||||
Total, net sales | $ 158,217 | $ 136,276 | $ 439,843 | $ 410,865 |
Operating Segments | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total, net sales | 163,824 | 141,116 | 455,212 | 423,854 |
Intercompany sales elimination | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total, net sales | (5,607) | (4,840) | (15,369) | (12,989) |
Outdoor sports | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total, net sales | 2,155 | 2,369 | 6,839 | 7,418 |
Fabrication | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total, net sales | 89,372 | 81,742 | 260,545 | 247,014 |
Performance structures | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total, net sales | 41,541 | 29,328 | 95,063 | 86,484 |
Tube | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total, net sales | 19,096 | 17,916 | 58,916 | 55,713 |
Tank | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total, net sales | $ 11,660 | $ 9,761 | $ 33,849 | $ 27,225 |
Revenue Recognition - Schedul_3
Revenue Recognition - Schedule of Disaggregation of Revenue by End Market (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation Of Revenue [Line Items] | ||||
Total, net sales | $ 158,217 | $ 136,276 | $ 439,843 | $ 410,865 |
Commercial Vehicle [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total, net sales | 57,264 | 53,714 | 172,494 | 159,710 |
Construction And Access [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total, net sales | 26,296 | 26,918 | 79,326 | 86,049 |
Powersports [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total, net sales | 25,143 | 23,344 | 73,236 | 68,298 |
Agriculture [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total, net sales | 15,029 | 14,373 | 42,924 | 44,989 |
Military [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total, net sales | 10,960 | 6,436 | 28,439 | 16,970 |
Other Market [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total, net sales | $ 23,525 | $ 11,490 | $ 43,424 | $ 34,850 |
Concentration of major custom_3
Concentration of major customers - Schedule of Major Customer Concentrations (Details) - Customer Concentration Risk [Member] | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Customer A [Member] | Net Sales [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 14.30% | 15.80% | 15.10% | 15.90% | |
Customer A [Member] | Accounts Receivable [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 11.30% | ||||
Concentration risk percentage | <10 | ||||
Customer B [Member] | Net Sales [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 13.40% | 16.50% | 14.80% | 17.70% | |
Customer B [Member] | Accounts Receivable [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 12.90% | 11% | |||
Customer C [Member] | Net Sales [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 10.10% | 11.80% | 11.20% | 11.60% | |
Customer C [Member] | Accounts Receivable [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | <10 | <10 | |||
Customer D [Member] | Net Sales [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | <10 | <10 | <10 | <10 | |
Customer D [Member] | Accounts Receivable [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 10.50% | 12.60% |
Stock based compensation - Summ
Stock based compensation - Summary of Stock-based Compensation Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock based compensation expense, net of tax | $ 1,336 | $ 141 | $ 3,756 | $ 2,855 |
Unit awards [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock based compensation expense, net of tax | 856 | 247 | 2,445 | 1,873 |
Option awards [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock based compensation expense, net of tax | $ 480 | $ (106) | $ 1,311 | $ 982 |
Stock based compensation - Sche
Stock based compensation - Schedule of Unrecognized Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Beginning Balance | $ 6,957 | $ 7,574 | $ 2,789 |
Grants | 20 | 785 | 6,145 |
Forfeitures | (50) | (48) | (294) |
Expense | (1,336) | (1,354) | (1,066) |
Ending Balance | 5,591 | 6,957 | 7,574 |
Units [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Beginning Balance | 4,236 | 4,373 | 1,739 |
Grants | 20 | 785 | 3,560 |
Forfeitures | (50) | (48) | (211) |
Expense | (856) | (874) | (715) |
Ending Balance | 3,350 | 4,236 | 4,373 |
Stock Options [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Beginning Balance | 2,721 | 3,201 | 1,050 |
Grants | 2,585 | ||
Forfeitures | (83) | ||
Expense | (480) | (480) | (351) |
Ending Balance | $ 2,241 | $ 2,721 | $ 3,201 |
Stock based compensation - Addi
Stock based compensation - Additional Information (Details) - $ / shares | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Apr. 20, 2021 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Options, outstanding number | 1,299,713 | ||
Weighted average exercise price | $ 10.51 | ||
Weighted average contractual life remaining | 6 years 8 months 15 days | ||
Unrecognized stock-based compensation recognition period | Jul. 19, 2025 | ||
2019 Omnibus Incentive Plan [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Payments based on the value of its common stock | 2,000,000 | ||
Number of shares authorized | 2,500,000 | ||
Restricted Stock Units [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Number of units, vested | 254,169 | 271,992 | |
Employee Stock Option [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Number of units, vested | 195,264 | 512,927 | |
Weighted average strike price | $ 11.67 | $ 9.18 |
Common Equity (Details)
Common Equity (Details) - shares | Sep. 30, 2023 | Dec. 31, 2022 |
Common Equity. | ||
Common Stock, Shares Authorized | 75,000,000 | 75,000,000 |
Common Equity - Changes in outs
Common Equity - Changes in outstanding common shares (Details) - Common Stock [Member] - shares | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Beginning balance | 20,172,746 | 20,335,934 |
Treasury stock purchases | (184,964) | (559,945) |
Common stock issued (including share-based compensation impact) | 320,574 | 396,757 |
Ending balance | 20,308,356 | 20,172,746 |