Q4 2023 Mayville Engineering Company Inc Earnings Call

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Hello, everyone and welcome to the Mayville engineering, the fourth quarter and full year 2023 without cockpits cool.

My name is not yeah, it'll be coordinating the call today.

If you would like to ask a question. Please press star followed by one on your telephone keypad.

I will now hand over to hoist Stefan Neely at Vallum advisors to begin the fan. Please go ahead.

Thank you operator on behalf of our entire team I'd like to welcome you to our fourth quarter and full year 2023 results conference call, leading the call today is <unk>, President and CEO, Jack ready and Todd Butz, Chief Financial Officer. Today's discussion contains forward looking statements about future business and finance.

Expectations.

Actual results may differ significantly from those projected in today's forward looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the Securities and Exchange Commission, except as required by law, we undertake no obligation to update our forward looking statements.

Further this call will include the discussion of certain non-GAAP financial measures reconciliation of these measures to the closest GAAP financial measure is included in our quarterly earnings press release, which is available at Mec, Inc. Dot com. Following our prepared remarks, we will open the line for questions with that I would like to turn the call over to Jack.

Thank you Stephanie and welcome to those joining us on the call and webcast 2023 with a year of significant progress for the entire micro organization as we continue to advance a multiyear business transformation journey.

<unk> team came together under a one Mac one may shouldnt mindset that emphasizes performance excellence and a collaborator customer first approach last year, we sharpened our commercial focus expanding within higher value market adjacencies, while improving our operational discipline.

Leveraging automation and process efficiencies.

We introduced a balanced capital allocation strategy investing in innovation and robotics prioritizing high return capital light advancements with payback periods up less than 18 months and inorganic growth, while returning capital to shareholders through $2 million worth of opportune.

<unk> open market share repurchases.

Our fourth quarter performance was a solid finish to the year one highlighted by continued organic revenue growth substantial year over year margin expansion.

The profitability and the second consecutive quarter of record free cash flow generation.

During the fourth quarter demand conditions were generally favorable primarily driven by new project launches in our power sports commercial vehicle and other end markets continued strength in our military end market, coupled with tailwind from public infrastructure driven demand in our.

Struction and access market.

Importantly, our operational and commercial self help initiatives are continuing to deliver improved profitability and cash generation through improved cost absorption value based pricing and enhanced working capital efficiency.

As expected and as previously communicated on our fourth quarter results were impacted by the UAW strikes that were resolved in November together with the ongoing ramp up of production at our <unk> facility.

In combination these factors impacted fourth quarter, adjusted EBITDA by $2 9 million.

During the fourth quarter, we generated its second consecutive quarterly record.

$19 9 million of free cash flow.

Consistent with our capital allocation priorities, we reduced our outstanding borrowings by more than $21 million in the fourth quarter, bringing our ratio of net debt to trailing 12 months adjusted EBITDA to two one times.

As we have stated in the past our goal is to reduce our leverage to be between one five times and two times by the end of 2024, and we are well on track to do so.

Our press release issued after market close yesterday.