Mayville Engineering Company, Inc.

Previous wording

Over the past few years, the broader market dynamics, combined with recent geopolitical and economic developments, including foreign trade relations and associated tariffs, have resulted in impacts to the Company. These influences have contributed to elevated interest rates, inconsistent customer demand, material cost inflation and labor availability. The Company expects some of these dynamics to continue through 2025 and could continue to have an impact on demand, material costs and labor.

Current wording

Over the past few years, the broader market dynamics, combined with recent geopolitical and economic developments, including foreign trade relations and associated, threatened and implemented tariffs, have resulted in impacts to the Company. These influences have contributed to elevated interest rates, inconsistent customer demand, material cost inflation and labor availability. The Company expects some of these dynamics to continue through 2025 and could continue to have an impact on demand, material costs and labor.

Previous wording

EBITDA represents net income before interest expense, provision (benefit) for income taxes, depreciation and amortization. EBITDA Margin represents EBITDA as a percentage of net sales for each period.

Current wording

EBITDA represents net income (loss) before interest expense, provision (benefit) for income taxes, depreciation and amortization. EBITDA Margin represents EBITDA as a percentage of net sales for each period.

Previous wording

Adjusted EBITDA represents EBITDA before stock-based compensation expense and legal costs due to former fitness customer. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of net sales for each period.

Current wording

Adjusted EBITDA represents EBITDA before stock-based compensation expense, legal costs due to former fitness customer, Chief Financial Officer (CFO) transition costs, natural disaster costs and acquisition related costs. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of net sales for each period.

Previous wording

These metrics are supplemental measures of our operating performance that are neither required by, nor presented in accordance with, GAAP. These measures should not be considered as an alternative to net income or any other performance measure derived in accordance with GAAP as an indicator of our operating performance. We present EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow as management uses these measures as key performance indicators, and we believe they are measures frequently used by securities analysts, investors and other parties to evaluate companies in our industry. These measures have limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP.

Current wording

These metrics are supplemental measures of our operating performance that are neither required by, nor presented in accordance with, GAAP. These measures should not be considered as an alternative to net income (loss) or any other performance measure derived in accordance with GAAP as an indicator of our operating performance. We present EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow as management uses these measures as key performance indicators, and we believe they are measures frequently used by securities analysts, investors and other parties to evaluate companies in our industry. These measures have limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP.

Previous wording

The following table presents a reconciliation of net income and comprehensive income, the most directly comparable measure calculated in accordance with GAAP, to EBITDA and Adjusted EBITDA, and the calculation of EBITDA Margin and Adjusted EBITDA Margin for each of the periods presented.

Current wording

The following table presents a reconciliation of net income (loss) and comprehensive income (loss), the most directly comparable measure calculated in accordance with GAAP, to EBITDA and Adjusted EBITDA, and the calculation of EBITDA Margin and Adjusted EBITDA Margin for each of the periods presented.

Previous wording

Free cash flow for the three months ended March 31, 2025 was $5,371 as compared to $7,850 for the three months ended March 31, 2024, a decrease of $2,479 or 31.6%. The decrease in free cash flow was primarily due to a decrease in cash provided by operating activities. Please see the “Liquidity and Capital Resources” section below for further information.

Current wording

Free cash flow for the six months ended June 30, 2025 was $17,899 as compared to $27,026 for the six months ended June 30, 2024, a decrease of $9,127 or 33.8%. The decrease in free cash flow was due to a decrease in cash provided by operating activities, offset by lower capital expenditures. Please see the “Liquidity and Capital Resources” section below for further information.

Previous wording

Net Sales. Net sales were $135,579 for the three months ended March 31, 2025 as compared to $161,269 for the three months ended March 31, 2024, a decrease of $25,690, or 15.9%. This decrease was driven by lower customer demand across the majority of the Company’s key end markets and customer de-stocking channel inventory. This was partially offset by volume from new projects in our Other end market and increased after-market demand in our Military end market.

Current wording

Net Sales. Net sales were $132,328 for the three months ended June 30, 2025 as compared to $163,636 for the three months ended June 30, 2024, a decrease of $31,308, or 19.1%. This decrease was driven by lower customer demand across the majority of the Company’s key end markets and customer de-stocking channel inventory. This was partially offset by volume from new projects in our Other end market and increased after-market demand in our Military end market.

Previous wording

Manufacturing Margins. Manufacturing margins were $15,324 for the three months ended March 31, 2025 as compared to $20,933 for the three months ended March 31, 2024, a decrease of $5,609, or 26.8%. The decrease was primarily driven by the lower customer demand, partially offset by cost reduction actions.

Current wording

Manufacturing Margins. Manufacturing margins were $13,624 for the three months ended June 30, 2025 as compared to $22,277 for the three months ended June 30, 2024, a decrease of $8,653, or 38.8%. The decrease was primarily driven by the lower customer demand, partially offset by cost reduction actions.

Previous wording

Manufacturing margin percentages were 11.3% for the three months ended March 31, 2025, as compared to 13.0% for the three months ended March 31, 2024, a decrease of 1.7%. The decrease was attributable to less of an ability to absorb fixed costs as a result of lower sales and the items discussed in the preceding paragraph.

Current wording

Manufacturing margin percentages were 10.3% for the three months ended June 30, 2025, as compared to 13.6% for the three months ended June 30, 2024, a decrease of 330 basis points. The decrease was attributable to reduced absorption of fixed costs as a result of lower sales and the items discussed in the preceding paragraph.

Previous wording

Bonuses and Deferred Compensation Expenses. Bonuses and deferred compensation expenses were $3,325 for the three months ended March 31, 2025 as compared to $3,800 for the three months ended March 31, 2024, a decrease of $475, or 12.5%. The decrease was primarily driven by deferred compensation income during the current year period versus deferred compensation expense during the prior year period due to fluctuations in the financial markets.

Current wording

Bonuses and Deferred Compensation Expenses. Bonuses and deferred compensation expenses were $1,525 for the three months ended June 30, 2025, as compared to $4,133 for the three months ended June 30, 2024, a decrease of $2,608, or 63.1%. The decrease was primarily driven by lower bonus accruals aligning with the Company financial performance.

Previous wording

Other Selling, General and Administrative Expenses. Other selling, general and administrative expenses were $8,689 for the three months ended March 31, 2025 as compared to $7,769 for the three months ended March 31, 2024, an increase of $920, or 11.8%. The increase was predominantly attributable to normal wage inflation, and higher costs related to compliance requirements, market analysis studies and other consulting fees.

Current wording

Other Selling, General and Administrative Expenses. Other selling, general and administrative expenses were $10,290 for the three months ended June 30, 2025 as compared to $8,261 for the three months ended June 30, 2024, an increase of $2,029, or 24.6%. The increase was attributable to non-recurring costs related to the Accu-Fab acquisition and CFO transition.

Previous wording

Interest Expense. Interest expense was $1,567 for the three months ended March 31, 2025 as compared to $3,356 for the three months ended March 31, 2024, a decrease of $1,789, or 53.3%. The decrease is due to a decrease in borrowings and lower interest rates relative to the prior year period.

Current wording

Interest Expense. Interest expense was $1,398 for the three months ended June 30, 2025 as compared to $2,969 for the three months ended June 30, 2024, a decrease of $1,571, or 52.9%. The decrease is due to a decrease in borrowings and lower interest rates relative to the prior year period.

Previous wording

Provision (Benefit) for Income Taxes. Income tax expense (benefit) was ($10) for the three months ended March 31, 2025 as compared to $1,034 for the three months ended March 31, 2024. The decrease of $1,044 is primarily due to lower income before taxes in the current year period. Refer to Note 7 – Income Taxes of the Condensed Consolidated Financial Statements for further details.

Current wording

Provision (Benefit) for Income Taxes. Income tax benefit was $225 for the three months ended June 30, 2025 as compared to income tax expense of $1,399 for the three months ended June 30, 2024. The decrease of $1,624 is primarily due to a pre-tax loss in the current year period compared to pre-tax income in the prior year period. Refer to Note 7 – Income Taxes of the Condensed Consolidated Financial Statements for further details.

Previous wording

Due to the factors described in the preceding paragraphs, net income and comprehensive income, EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin decreased during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

Current wording

Due to the factors described in the preceding paragraphs, net income (loss) and comprehensive income (loss), EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin decreased during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

Previous wording

Operating Activities. Cash provided by operating activities was $8,333 for the three months ended March 31, 2025, as compared to $10,625 for the three months ended March 31, 2024. The decrease of $2,292 in cash provided by operating activities was primarily due to lower net income adjusted for reconciling items and a higher use of cash driven by a decrease in accrued liabilities. This was partially offset by a decrease in cash used for accounts receivable as a result of lower sales and a decrease in cash used for accounts payable due to the timing of supplier payments.

Current wording

Operating Activities. Cash provided by operating activities was $23,307 for the six months ended June 30, 2025, as compared to $33,900 for the six months ended June 30, 2024. The decrease of $10,593 in cash provided by operating activities was due to lower net income (loss) adjusted for reconciling items and a higher use of cash driven by a decrease in accrued liabilities and a less of a decline in inventory as a result of continued lean inventory initiatives. This was partially offset by a decrease in cash used for accounts receivable as a result of higher sales in the prior year period.

Previous wording

Investing Activities. Cash used in investing activities was $2,959 for the three months ended March 31, 2025, as compared to $2,668 for the three months ended March 31, 2024. The $291 increase in cash used in investing activities was driven by a slight increase in capital expenditures prioritizing investments in high-return, capital-light growth and automation.

Current wording

Investing Activities. Cash used in investing activities was $5,402 for the six months ended June 30, 2025, as compared to $6,767 for the six months ended June 30, 2024. The $1,365 decrease in cash used in investing activities was driven by a decrease in capital expenditures as the Company focuses on leveraging recent investments and controlling spend in 2025 while continuing to prioritize investments in high-return, capital-light growth and automation.

Previous wording

Financing Activities. Cash used in financing activities was $5,397 for the three months ended March 31, 2025, as compared to $8,315 for the three months ended March 31, 2024. The $2,918 decrease was mainly due to lower debt repayments in excess of borrowings during the current year period in relation to the Company’s revolving credit facility. Additionally, under the share repurchase plan, the Company purchased $1,747 of common stock in the first three months of 2025 as compared to $0 in the prior year period. The Company’s decision to repurchase additional shares in 2025 will depend on business conditions, free cash flow generation, other cash requirements and stock price. Refer to Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds for additional information regarding share repurchases.

Current wording

Financing Activities. Cash used in financing activities was $17,905 for the six months ended June 30, 2025, as compared to $27,491 for the six months ended June 30, 2024. The $9,586 decrease in cash used in financing activities was mainly due to lower debt repayments in excess of borrowings during the current year period in relation to the Company’s revolving credit facility and financing costs associated with executing the First Amendment to the Credit Agreement. Additionally, under the share repurchase plan, the Company purchased $4,607 of common stock in the first six months of 2025 as compared to $998 in the prior year period. The Company’s decision to repurchase additional shares in 2025 will depend on business conditions, free cash flow generation, other cash requirements and stock price. Refer to Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds for additional information regarding share repurchases.

Previous wording

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, 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 for 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.

Current wording

On June 28, 2023, and as last amended on June 26, 2025, 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 $350,000 revolving credit facility, with a letter of credit sub-facility, and a swingline facility in an aggregate amount of $25,000. All amounts borrowed under the credit agreement mature on June 28, 2028.

Previous wording

Borrowings under the Credit Agreement bear interest at a fluctuating secured overnight financing rate (SOFR) plus an applicable margin based on the current consolidated total leverage ratio (which may be adjusted for certain reserve requirements), plus 1.25% to 2.75% depending on the current Consolidated Total Leverage Ratio (as defined in the Credit Agreement). Under certain circumstances, we may not be able to pay interest based on SOFR. If that happens, we will be required to pay interest at the Base Rate, which is the sum of (a) the higher of (i) the Prime Rate (as publicly announced by the Agent from time to time), (ii) the Federal Funds Rate plus 0.50%, and (iii) Adjusted Term SOFR for a one-month tenor in effect on such day plus 1.00%. The Credit Agreement also includes provisions for determining a replacement rate when SOFR is no longer available.

Current wording

Borrowings under the Credit Agreement bear interest at a fluctuating secured overnight financing rate (SOFR) plus an applicable margin based on the current consolidated total leverage ratio (which may be adjusted for certain reserve requirements), plus 1.25% to 2.75% depending on the current Consolidated Total Leverage Ratio (as defined in the Credit Agreement). Under certain circumstances, we may not be able to pay interest based on SOFR. If that happens, we will be required to pay interest at the Base Rate, which is the sum of the higher of (i) the Prime Rate (as publicly announced by the Agent from time to time), (ii) the Federal Funds Rate plus 0.50%, and (iii) Adjusted Term SOFR for a one-month tenor in effect on such day plus 1.00%.

Previous wording

At March 31, 2025, the interest rate on outstanding borrowings under the Revolving Loan was 5.67%. We had availability of $172,521 under the revolving credit facility at March 31, 2025.

Current wording

At June 30, 2025, the interest rate on outstanding borrowings under the Revolving Loan was 5.66%. We had availability of $280,720 under the revolving credit facility at June 30, 2025. Based on the covenants of the Credit Agreement, this amount is reduced to $115,923 as of June 30, 2025, prior to the acquisition of Accu-Fab.

Previous wording

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 interest coverage ratio of 3.00 to 1.00. At March 31, 2025, our interest coverage ratio was 4.93 to 1.00. The Credit Agreement also requires us to maintain a consolidated total leverage ratio not to exceed 3.50 to 1.00. As of March 31, 2025, our consolidated total leverage ratio was 1.39 to 1.00.

Current wording

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 interest coverage ratio of 3.00 to 1.00. At June 30, 2025, our interest coverage ratio was 5.59 to 1.00. The Credit Agreement also requires us to maintain a consolidated total leverage ratio not to exceed 3.50 to 1.00. As of June 30, 2025, our consolidated total leverage ratio was 1.36 to 1.00.

Previous wording

During the three months ended March 31, 2025 and 2024, our capital expenditures were $2,962 and $2,775 respectively. The marginal increase of $187 was driven by investments in high return, capital-light growth and automation. Capital expenditures for the full year 2025 are expected to be between $13,000 and $17,000.

Current wording

During the six months ended June 30, 2025 and 2024, our capital expenditures were $5,408 and $6,874 respectively. The decrease of $1,466 was driven by the Company’s focus on leveraging recent investments and controlling spend during 2025. Capital expenditures for the full year 2025 are expected to be between $13,000 and $17,000.

Previous wording

We have historically relied upon cash available through credit facilities, in addition to cash from operations, to finance our working capital requirements and to support our growth. At March 31, 2025, we had immediate availability of $172,521 through our revolving credit facility and 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 under our Credit Agreement, subject to the covenants under the Credit Agreement. We regularly monitor potential capital sources, including equity and debt financings, in an effort to meet our planned capital expenditures and liquidity requirements. Our future success will be highly dependent on our ability to access outside sources of capital. We will continue to have access to the availability currently provided under the Credit Agreement as long as we remain compliant with the financial covenants. Based on our estimates at this time, we expect to be in compliance with these financial covenants through 2025 and the foreseeable future.

Current wording

We regularly monitor potential capital sources, including equity and debt financings, in an effort to meet our planned capital expenditures and liquidity requirements. Our future success will be highly dependent on our ability to access outside sources of capital. We will continue to have access to the availability currently provided under the Credit Agreement as long as we remain compliant with the financial covenants. Based on our estimates at this time, we expect to be in compliance with these financial covenants through 2025 and the foreseeable future.