Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October 30, 2019,~~May 3, 2020, the registrant had ~~19,740,296~~19,827,016 shares of common stock, no par value per share, outstanding.

~~This~~Certain matters discussed in this Quarterly Report on Form 10-Q ~~contains~~contain forward-looking statements that involve risks and uncertainties, such as statements related to future events, business strategy, future performance, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek,” “anticipate,” “plan,” “continue,” “estimate,” “expect,” “may,” “will,” “project,” “predict,” “potential,” “targeting,” “intend,” “could,” “might,” “should,” “believe” and similar expressions or their negative. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on management’s belief, based on currently available information, as to the outcome and timing of future events. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those expressed in such forward-looking statements. ~~We believe~~Mayville Engineering Company, Inc. (MEC, the Company, we, our, us or similar terms) believes the expectations reflected in the forward-looking statements contained in this Quarterly Report on Form 10-Q are reasonable, but no assurance can be given that these expectations will prove to be correct. Forward-looking statements should not be unduly relied upon.

Important factors that could cause actual results or events to differ materially from those expressed in forward-looking statements include, but are not limited to, those described in “Risk Factors” in Part ~~II,~~I, Item 1A of our ~~Quarterly~~Annual Report on Form ~~10-Q~~10-K for the ~~quarter~~year ended ~~June 30,~~December 31, 2019, filed with the Securities and Exchange Commission (the SEC) on ~~August 9, 2019,~~March 2, 2020, as such may be amended or supplemented in Part II, Item 1A of our subsequently filed Quarterly Reports on Form 10-Q (including this report), and the following:

These factors are not necessarily all of the important factors that could cause actual results or events to differ materially from those expressed in forward-looking statements. Other unknown or unpredictable factors could also cause actual results or events to differ materially from those expressed in the forward-looking statements. All forward-looking statements attributable to us are

qualified in their entirety by this cautionary statement. Forward-looking statements speak only as of the date hereof. We undertake no

obligation to update or revise any forward-looking statements after the date on which any such statement is made, whether as a result of new information, future events or otherwise, except as required by federal securities laws.

	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
ASSETS
Cash and cash equivalents	$	1		$	3,089		$	13,001		$	1
Receivables, net of allowances for doubtful accounts of $540 as of September 30, 2019 and $801 as of December 31, 2018		62,565			52,298
Receivables, net of allowances for doubtful accounts of $1,119 at March 31, 2020 and $526 at December 31, 2019								49,449			40,188
Inventories, net		50,653			53,405			45,824			45,692
Tooling in progress		1,493			2,318			3,118			1,589
Prepaid expenses and other current assets		3,282			1,649			2,392			3,007
Total current assets		117,994			112,759			113,784			90,477
Property, plant and equipment, net		128,098			123,883			121,696			125,063
Goodwill		70,922			69,437			71,535			71,535
Intangible assets-net		74,850			82,879			69,497			72,173
Capital lease, net		3,267			1,953			3,064			3,227
Other long-term assets		4,976			814			1,024			1,107
Total		400,107		$	391,725		$	380,600		$	363,582
LIABILITIES, TEMPORARY EQUITY, AND SHAREHOLDERS’ EQUITY
Accounts payable	$	42,494		$	45,992		$	33,433		$	32,173
Current portion of capital lease obligation		573			281			605			598
Current portion of long-term debt		83			8,606
Accrued liabilities:
Salaries, wages, and payroll taxes		8,136			7,548			7,530			5,752
Profit sharing and bonus		7,246			6,124			1,548			6,229
Other current liabilities		4,452			14,610			2,976			3,439
Total current liabilities		62,985			83,161			46,092			48,191
Bank revolving credit notes		87,000			59,629			87,793			72,572
Capital lease obligation, less current maturities		2,738			1,697			2,532			2,687
Other long-term debt, less current maturities		—			111,675
Deferred compensation and long-term incentive, less current portion		24,743			13,351			24,265			24,949
Deferred income taxes		20,324			19,123
Deferred income tax liability								14,895			14,188
Other long-term liabilities		100			100			100			100
Total liabilities		197,890			288,736			175,677			162,687
Commitments and contingencies (see Note 10)
Redeemable common shares, no par value, stated at redemption value of outstanding shares, 60,045,300 authorized, 38,623,806 shares issued at December 31, 2018		—			133,806
Retained earnings		—			26,842
Treasury shares at cost, 25,180,330 shares at December 31, 2018		—			(57,659	)
Total temporary equity		—			102,989
Common shares, no par value, 75,000,000 authorized, 20,845,693 shares issued at September 30, 2019.		—			—
Common shares, no par value, 75,000,000 authorized, 20,845,693 shares issued at March 31, 2020 and December 31, 2019								—			—
Additional paid-in-capital		182,336			—			187,643			183,687
Retained earnings		23,763			—			22,140			22,090
Treasury shares at cost, 1,105,397 shares at September 30, 2019		(3,882	)		—
Treasury shares at cost, 1,018,677 shares at March 31, 2020 and 1,213,482 at December 31, 2019								(4,860	)		(4,882	)
Total shareholders’ equity		202,217			—			204,923			200,895
Total	$	400,107		$	391,725		$	380,600		$	363,582

Share counts as of December 31, 2018 give effect to the issuance of a stock dividend of approximately 1,334.34-for-1 related to the Company’s May 2019 IPO. There were 45,000 shares authorized, 28,946 shares issued and 18,871 treasury shares at December 31, 2018.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Three Months Ended
September 30,

Nine Months Ended
September 30,

2019

2018

2019

2018

Net sales

$
128,511

$
84,338

$
417,373

$
263,095

Cost of sales

113,941

71,517

362,689

222,913

Amortization of intangibles

2,677

939

8,030

2,817

Profit sharing, bonuses, and deferred compensation

678

2,340

25,258

5,346

Employee Stock Ownership Plan expense

1,500

1,000

4,500

3,000

Other selling, general and administrative expenses

6,068

2,855

20,296

8,435

Contingent consideration revaluation

(9,598
)

—

(6,054
)

—

Income (loss) from operations

13,246

5,688

2,655

20,584

Interest expense

(987
)

(846
)

(5,811
)

(2,606
)
Loss on extinguishment of debt

—

—

(154
)

(588
)
Income (loss) before taxes

12,259

4,841

(3,310
)

17,390

Income tax expense (benefit)

2,512

17

(231
)

46

Net income (loss) and comprehensive income (loss)

$
9,746

$
4,824

$
(3,079
)

$
17,344

Earnings (loss) per share

Net income (loss) available to shareholders

$
9,746

$
4,824

$
(3,079
)

$
17,344

Basic and diluted earnings (loss) per share

$
0.49

$
0.36

$
(0.18
)

$
1.24

Basic and diluted weighted average shares outstanding

19,740,296

13,453,285

16,684,337

14,042,200

Tax-adjusted pro forma information

Net income (loss) available to shareholders

$
9,746

$
4,824

$
(3,079
)

$
17,344

Pro forma provision for income taxes

—

1,254

173

4,488

Pro forma net income (loss)

$
9,746

$
3,570

$
(3,252
)

$
12,856

Pro forma basic and diluted earnings (loss) per share

$
0.49

$
0.27

$
(0.19
)

$
0.92

Basic and diluted weighted average shares outstanding

19,740,296

13,453,285

16,684,337

14,042,200

	Three Months Ended March 31,
	2020			2019
Net sales	$	108,605		$	143,732
Cost of sales		96,762			124,153
Amortization of intangibles		2,677			2,677
Profit sharing, bonuses, and deferred compensation		1,325			1,750
Employee stock ownership plan expense		675			1,500
Other selling, general and administrative expenses		5,599			6,723
Contingent consideration revaluation		—			869
Income from operations		1,567			6,060
Interest expense		(826	)		(2,832	)
Income before taxes		741			3,228
Income tax expense		691			769
Net income and comprehensive income	$	50		$	2,459
Earnings per share
Net income available to shareholders	$	50		$	2,459
Basic and diluted earnings per share	$	0.00		$	0.18
Basic and diluted weighted average shares outstanding		19,533,533			13,443,484
Tax-adjusted pro forma information
Net income available to shareholders	$	50		$	2,459
Pro forma provision for income taxes		—			70
Pro forma net income	$	50		$	2,389
Pro forma basic and diluted earnings per share	$	0.00		$	0.18
Basic and diluted weighted average shares outstanding		19,533,533			13,443,484

Weighted average shares in 2019 give effect to the issuance of a stock dividend of approximately 1,334.34-for-1 related to the IPO, as if the IPO occurred at the beginning of ~~2018.~~2019.

Tax adjusted pro forma amounts reflect income tax adjustments as if the Company was a taxable entity as of the beginning of ~~2018~~2019 using a 26% effective tax rate.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

	Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(3,079	)	$	17,344
Net income							$	50		$	2,459
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		24,652			14,865
Depreciation								5,603			4,973
Amortization								2,677			2,677
Stock-based compensation expense		2,135			—			1,582			—
Allowance for doubtful accounts								594			(42	)
Inventory excess and obsolescence reserve								712			—
Costs recognized on step-up of acquired inventory		395			—			—			395
Contingent consideration revaluation		(6,054	)		—			—			869
Gain on disposal of property, plant and equipment		(74	)		(10	)		(82	)		(10	)
Deferred compensation and long-term incentive		11,392			190			(684	)		1,147
Loss (gain) on extinguishment or forgiveness of debt		(367	)		558
Non-cash adjustments		1,786			2,401
Other non-cash adjustments								85			96
Changes in operating assets and liabilities – net of effects of acquisition:
Accounts receivable		(9,524	)		(4,234	)		(9,855	)		(15,419	)
Inventories		3,700			(6,668	)		(844	)		(470	)
Tooling in progress		826			615			(1,529	)		(354	)
Prepaids and other current assets		(1,633	)		(897	)		615			(914	)
Accounts payable		(1,175	)		1,544			1,538			5,892
Other long-term assets		(4,266	)		—
Deferred income taxes								706			—
Accrued liabilities, excluding long-term incentive		(2,290	)		2,861			1,465			(2,799	)
Net cash provided by operating activities		16,424			28,570
Net cash provided by (used in) operating activities								2,633			(1,500	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment		(22,820	)		(13,329	)		(2,376	)		(8,151	)
Proceeds from sale of property, plant and equipment		76			10			104			9
Non cash adjustments		(1,656	)		—
Acquisitions, net of cash acquired		(2,368	)		—
Net cash used in investing activities		(26,768	)		(13,319	)		(2,272	)		(8,142	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank revolving credit notes		367,364			180,061			87,118			117,666
Payments on bank revolving credit notes		(339,993	)		(179,592	)		(71,897	)		(110,906	)
Proceeds from issuance of other long-term debt		—			42,053
Repayments of other long-term debt		(119,963	)		(45,226	)		—			(107	)
Deferred financing costs		—			(705	)
Proceeds from IPO, net		101,763			—
Purchase of treasury stock		(1,592	)		(11,833	)		(2,435	)		—
Payments on capital leases		(323	)		—			(147	)		(73	)
Net cash provided by (used in) financing activities		7,256			(15,242	)
Net cash provided by financing activities								12,639			6,580
Net increase (decrease) in cash and cash equivalents		(3,088	)		8			13,000			(3,061	)
Cash and cash equivalents at beginning of period		3,089			76			1			3,089
Cash and cash equivalents at end of period	$	1		$	84		$	13,001		$	28
Supplemental disclosure of cash flow information:
Cash paid for interest	$	6,288		$	2,349		$	1,596		$	2,966
Cash paid for taxes							$	15		$	140
Non-cash construction in progress in accounts payable							$	474		$	2,004

The accompanying notes are an integral part of these condensed consolidated financial statements.

Shareholder’s Equity

Additional
Paid-in-Capital

Treasury
Shares

Retained
Earnings

Total

Balance as of December 31, 2018

$
—

$
—

$
—

$
—

Balance as of March 31, 2019

$
—

$
—

$
—

$
—

Transfer from Temporary Equity (see Note 16)

133,806

(57,659
)

29,302

105,449

Net loss post IPO

(15,284
)

(15,284
)
Share issuance – IPO

101,763

101,763

Stock-based compensation

797

797

Share repurchases

(1,592
)

(1,592
)
Cancellation of Treasury Stock

(55,369
)

55,369

—

Balance as of June 30, 2019

$
180,998

$
(3,881
)

$
14,017

$
191,133

Net Income

9,746

9,746

Stock-based compensation

1,338

1,338

Balance as of September 30, 2019

$
182,336

$
(3,881
)

$
23,763

$
202,217

	Shareholder’s Equity
	Additional Paid-in-Capital		Treasury Shares			Retained Earnings		Total
Balance as of December 31, 2019	$	183,687	$	(4,882	)	$	22,090	$	200,895
Net Income		—		—			50		50
Purchase of treasury stock		—		(2,435	)		—		(2,435	)
ESOP contribution		2,374		2,457			—		4,831
Stock-based compensation		1,582		—			—		1,582
Balance as of March 31, 2020	$	187,643	$	(4,860	)	$	22,140	$	204,923

Note 17 includes information on Temporary Equity for the three months ended March 31, 2019.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

(in thousands except ~~shares and~~share amounts, per share ~~amounts)~~data, years and ratios)

The interim unaudited consolidated ~~unaudited~~ 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 and 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, ~~2018,~~2019, included in the Company’s ~~Prospectus.~~Annual Report on Form 10-K. A summary of the Company’s significant accounting policies is included in the Company’s ~~2018~~2019 financial statements in the ~~Prospectus.~~Annual Report on Form 10-K. The Company followed these policies in preparation of the interim unaudited Condensed Consolidated Financial Statements.

MEC is a leading U.S.-based value-added manufacturing partner that provides a broad range of prototyping and tooling, production fabrication, coating, assembly and aftermarket components. Our customers operate in diverse end markets, including heavy- and medium-duty commercial vehicles, construction, powersports, agriculture, military and other end markets. Along with process engineering and development services, MEC maintains an extensive manufacturing infrastructure with 20 facilities across eight states. These facilities make it possible to offer conventional and CNC stamping, shearing, fiber laser cutting, forming, drilling, tapping, grinding, tube bending, machining, welding, assembly and logistic services. MEC also possesses a broad range of finishing capabilities including shot blasting, e-coating, powder coating, wet spray and military grade chemical agent resistant coating (CARC) painting.

Our one operating segment focuses on producing metal components that are used in a broad range of heavy- and medium-duty commercial vehicles, construction, powersports, agricultural, military and other products.

On December 14, 2018, we acquired Defiance Metal Products Co., a leading U.S. based manufacturer of component parts for the heavy-and medium-duty commercial vehicles, construction, and agriculture and military markets.

In May 2019, we completed our initial public offering (IPO). In conjunction with the IPO, the Company’s legacy business converted from an S corporation to a C corporation. As a result, the consolidated business is subject to paying federal and state corporate income taxes on its taxable income from May 9, 2019 forward.

~~In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~, specific to the principles for recognizing revenue. This guidance replaces most existing revenue recognition guidance. It provides principles for recognizing revenue for the transfer of promised goods or services to customers with the consideration to which the entity expects to be entitled in exchange for those goods or services. As amended, this new revenue guidance will be effective for public companies for annual reporting periods beginning after December 15, 2017, including interim periods within those fiscal years. For as long as the Company remains an Emerging Growth Company (EGC), the new guidance is effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods beginning after December 15, 2019. Early adoption is permitted for annual periods beginning after December 15, 2016. The Company has elected to adopt the standard using a modified retrospective approach and has determined that the standard does not have a material impact on the consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases, creating Topic 842, which requires lessees to record the assets and liabilities arising from all leases in the statement of financial position. Under ASU 2016-02, lessees will recognize a liability for lease payments and a right-of-use asset. When measuring assets and liabilities, a lessee should include amounts related to option terms, such as the option of extending or terminating the lease or purchasing the underlying asset, that are reasonably certain to be exercised. For leases with a term of 12 months or less, lessees are permitted to make an accounting policy election to not recognize lease assets and liabilities. This guidance retains the distinction between finance leases and operating leases and the classification criteria remains similar to existing guidance. For financing leases, a lessee will recognize the interest on a lease liability separate from amortization of the right-of-use asset. In addition, repayments of principal will be presented within financing activities, and interest payments will be presented within operating activities in the statement of cash flows. For operating leases, a lessee will recognize a single lease cost on a straight-line basis and classify all cash payments within operating activities in the statement of cash flows. For public companies, this guidance will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. For as long as the Company remains an ~~EGC,~~“emerging growth company”, the new guidance is effective for annual reporting periods beginning after December 15, ~~2019,~~2020, and interim periods within fiscal years beginning after December 15, ~~2020.~~2021. Early adoption is permitted. The Company is evaluating the potential impact of this guidance on the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies the subsequent measurement of goodwill by removing the requirement to perform a hypothetical purchase price allocation to compute the implied fair value of goodwill to measure impairment. Instead, any goodwill impairment will equal the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Further, the guidance eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. For public companies, this guidance is effective for annual or any interim goodwill impairment test in annual reporting periods beginning after December 15, 2018. For as long as the Company remains an EGC, the new guidance is effective for any annual or interim goodwill impairment test in annual reporting periods beginning after December 15, 2021. During the period ended March 31, 2020, the Company elected to early adopt this guidance. This adoption had no impact on the financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes, creating Topic 740, which removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation, and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. For public companies, this guidance will be effective for fiscal years beginning after December 15, 2020. For as long as the Company remains an “emerging growth company”, the new guidance is effective for annual reporting periods beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is evaluating the potential impact of this guidance on the consolidated financial statements.

A summary of the Company’s evaluation of other recent accounting pronouncements is included in the Company’s ~~2018~~2019 financial statements in its Annual Report on Form 10-K for the ~~Prospectus.~~year ended December 31, 2019.

~~Our~~The IPO of shares of ~~our~~the Company’s common stock was completed in May 2019. In connection with the offering, wethe Company initially sold 6,250,000 shares of common stock at $17 per share generating proceeds of $99,344, net of underwriting discounts and commissions. Additional shares were also sold under an option granted to the underwriters that same month, resulting in a sale of an additional 152,209 shares of common stock at $17 per share, generating additional proceeds of $2,419, net of underwriting discounts and commissions. In conjunction with the IPO, the Company issued a stock dividend specific to pre-IPO shares, of approximately 1,334.34-for-1, resulting in the conversion of 10,075 shares in our Employee Stock Ownership Plan to 13,443,484 shares.

On December 14, 2018, the Company acquired Defiance Metal Products Co. (DMP), a full-service metal fabricator and contract manufacturer with two facilities in Defiance, OH, one in Heber Springs, AR, and one in Bedford, PA.

The Company acquired DMP for $117,068, net of cash received, plus contingent consideration of up to $10,000. The Company would pay DMP’s previous shareholders $7,500 if DMP generated $19,748 of earnings before interest expense, income taxes, depreciation and amortization (EBITDA) over the twelve-month period ended September 30, 2019. In addition, the Company would pay one dollar for each additional dollar of EBITDA in excess of $19,748 generated over this period; however, in no event shall the total payment exceed $10,000. Based on our calculations as of September 30, 2019, DMP’s EBITDA for the earnout period fell short of the $19,748 contingent consideration threshold; however, we have not received notification of agreement with the calculation from DMP’s previous shareholders.

The aggregate purchase price has been allocated to the assets acquired and liabilities assumed based on their fair values as of the acquisition date. The excess purchase price over the estimated fair value of net tangible assets acquired was allocated to identifiable intangible assets and goodwill. The Company engaged a reputable independent third party to assist with the identification and valuation of the intangible assets. Management made 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 15) not observable in the market.

~~The preliminary estimated fair values of assets acquired, and liabilities assumed are as follows:~~

In connection with the DMP acquisition, inventory was valued at its estimated fair value which is defined as expected sales price less costs to sell. The valuation resulted in an inventory fair value step-up of $978. This amount is amortized based on inventory turns, with the amortization resulting in a reduction of inventory and an expense reflected in cost of sales on the Condensed Consolidated Statement of Comprehensive Income (Loss). The Company amortized $395 and $583 of the inventory fair value step-up during the three months ended March 31, 2019 and the year ended December 31, 2018, respectively. The inventory fair value step-up was fully amortized as of March 31, 2019.

The Company recorded $14,780 of trade name intangible assets with an estimated useful life of 10 years, $44,550 of customer relationship intangible assets with an estimated useful life of 12 years, and $8,800 of non-compete agreements with an estimated useful life of 5 years. These intangibles are amortized on a straight-line basis. The Company believes that the estimated useful lives and the straight-line amortization methodology most appropriately reflect when and how the Company expects to benefit from the identifiable intangible assets. Amortization expense related to these intangible assets is reflected in amortization of intangible expenses on the Condensed Consolidated Statement of Comprehensive Income (Loss).

The Company also estimated and recorded the fair value of the contingent consideration payable to be $6,076 as of the acquisition date. The Company remeasured this liability utilizing a Monte Carlo valuation model through the conclusion of the earnout period, September 30, 2019, with the change in value resulting in income or expense and reflected in the Contingent Consideration Revaluation line item on the Condensed Consolidated Statement of Comprehensive Income (Loss). The primary inputs utilized in the Monte Carlo valuation model include actual and projected EBITDA along with a discount rate. Contingent consideration payable was revalued to $0, $9,598, $6,924 and $6,054 as of September 30, 2019, June 30, 2019, March 31, 2019 and December 31, 2018, respectively. The change between these balances resulted in (income)/expense of ($9,598), $2,674, $869, and ($21) for the three months ended September 30, 2019, June 30, 2019, March 31, 2019, and the year ended December 31, 2018, respectively.

Based on our calculations as of September 30, 2019, DMP’s EBITDA fell short of the $19,748 contingent consideration threshold. As a result, and in accordance with GAAP, the contingent consideration balance of $9,598 was reduced to zero and reflected as income in the Contingent Consideration Revaluation line item on the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended September 30, 2019. We have communicated the results of our DMP EBITDA calculation to DMP’s previous shareholders; however, we have not received notification of agreement with the calculation. If they disagree with our calculation, the matter will be subject to arbitration per the stock purchase agreement.

~~The purchase price of DMP 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 has recorded preliminary estimates for certain of the items noted above and will record adjustments, if any, to the preliminary amounts upon finalization of the respective valuations. 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. The Company is in the process of finalizing the fair value estimates for certain assets acquired and liabilities assumed including income tax balances. 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.

As of September 30, 2019, the Company has adjusted the fair value on the opening balance sheet by increasing deferred income taxes by $1,097, increasing inventory by $1,508 and increasing accounts receivable by $473. In addition, the Company finalized the net working capital adjustment during the three month period ended June 30, 2019, resulting in an additional payout of $2,368 by the Company to the seller, bringing the Company’s acquisition of DMP to $117,068 in total cash paid, net of cash acquired. The offsetting entries of these adjustments was to goodwill.

The DMP acquired entities accounted for $51,769 and $155,503 of net sales and $11,299 and $11,531 of net income for the three and nine months ended September 30, 2019, respectively. These net income amounts include the contingent consideration fair value adjustments previously discussed.

~~Pro Forma Financial Information (Unaudited):~~ In accordance with Accounting Standards Codification 805, the following unaudited pro forma combined results of operations have been prepared and presented to give effect to the DMP acquisition as if it had occurred on January 1, 2018, the beginning of the comparable period, applying certain assumptions and proforma adjustments. These proforma adjustments primarily relate to the depreciation expense on stepped-up fixed assets, amortization of identifiable intangible assets, costs of goods sold expense on the sale of stepped inventory, interest expense related to additional debt needed to fund the acquisition, and the tax impact of these adjustments. The unaudited pro forma consolidated results are provided for illustrative purposes only and are not indicative of the Company’s actual consolidated results of operations or consolidated financial position.

~~The unaudited pro forma results of operations do not reflect any operating efficiencies or potential cost savings which may result from the acquisition.~~

Inventories as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 consist of:

	September 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Finished goods and purchased parts	$	31,615	$	32,589	$	28,283	$	28,664
Raw materials		11,983		12,329		11,525		10,834
Work-in-process		7,055		8,487		6,016		6,194
Total	$	50,653	$	53,405	$	45,824	$	45,692

The change in inventory from $53,405 as of December 31, 2018 to $50,653 as of September 30, 2019 includes a $395 reduction related to the amortization of the DMP inventory fair value step-up. The DMP inventory fair value step-up was fully amortized as of March 31, 2019.

Property, plant and equipment as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 consist of:

	Useful Lives Years*	September 30, 2019		December 31, 2018		Useful Lives Years*	March 31, 2020		December 31, 2019
Land	Indefinite	$	1,264	$	1,264	Indefinite	$	1,264	$	1,264
Land improvements	15-39		3,051		3,169	15-39		3,169		3,169
Building and building improvements	15-39		57,021		55,269	15-39		58,373		58,021
Machinery, equipment and tooling	3-10		198,068		182,045	3-10		205,813		204,248
Vehicles	5		3,704		3,613	5		3,718		3,738
Office furniture and fixtures	3-7		15,177		14,253	3-7		15,763		15,469
Construction in progress	N/A		8,327		6,786	N/A		2,875		3,154
Total property, plant and equipment, gross			286,612		266,399			290,975		289,063
Less accumulated depreciation			158,514		142,516			169,279		164,000
Total property, plant and equipment, net		$	128,098	$	123,883		$	121,696	$	125,063

Changes in goodwill between December 31, ~~2018~~2019 and ~~September 30, 2019~~March 31, 2020 consist of:

The following is a listing of intangible assets, the useful lives in years (amortization period) and accumulated amortization as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018:~~2019:

	Useful Lives Years	September 30, 2019			December 31, 2018			Useful Lives Years	March 31, 2020			December 31, 2019
Amortizable intangible assets:
Customer relationships and contracts	9-12	$	78,340		$	78,340		9-12	$	78,340		$	78,340
Trade name	10		14,780			14,780		10		14,780			14,780
Non-compete agreements	5		8,800			8,800		5		8,800			8,800
Patents	19		24			24		19		24			24
Accumulated amortization			(30,905	)		(22,876	)			(36,259	)		(33,582	)
Total amortizable intangible assets, net			71,039			79,068				65,685			68,362
Non-amortizable brand name			3,811			3,811				3,811			3,811
Total intangible assets, net		$	74,850		$	82,879			$	69,497		$	72,173

Changes in intangible assets between December 31, ~~2018~~2019 and ~~September 30, 2019~~March 31, 2020 consist of:

Amortization expense was $2,677 and ~~$939~~$2,677 for each of the three months ended ~~September 30, 2019~~March 31, 2020 and ~~2018, respectively, and $8,029 and $2,817 for the nine months ended September 30, 2019 and 2018, respectively.~~2019.

On September 26, 2019, and as last amended as of December 31, 2019, we entered into an amended and restated credit agreement (A&R Credit Agreement) with certain lenders and Wells Fargo Bank, National Association, as administrative ~~agent (the Agent).~~agent. The A&R Credit Agreement provides for ~~$200 million~~a $200,000 revolving credit facility (the Revolving Loan), with a letter of credit sub-facility in an aggregate amount not to exceed ~~$5.0 million,~~$5,000, and a swingline facility in an aggregate amount of ~~$20.0 million.~~$20,000. The A&R Credit Agreement also provides for an additional ~~$100.0 million~~$100,000 of debt capacity through an accordion feature. All amounts borrowed under the A&R Credit Agreement mature on September 26, 2024.

~~Prior~~The A&R Credit Agreement contains usual and customary negative covenants for agreements of this type, including, but not limited to, ~~September 26, 2019,~~restrictions on our ability to, subject to certain exceptions, create, incur or assume indebtedness, create or incur liens, make certain investments, merge or consolidate with another entity, make certain asset dispositions, pay dividends or other distributions to shareholders, enter into transactions with affiliates, enter into sale leaseback transactions or make capital expenditures. The A&R 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, 2020, our interest coverage ratio was 9.21 to 1.00. The A&R Credit Agreement also requires us to maintain a consolidated total leverage ratio not to exceed 3.25 to 1.00, although such leverage ratio can be increased in connection with certain acquisitions. At March 31, 2020, our consolidated total leverage ratio was 1.84 to 1.00. Despite the strength and reputation of our lenders, the Company ~~maintained~~drew down $13,000 from the revolver and deposited it into a ~~credit~~money market account in March 2020 to ensure liquidity due to the uncertainty of the COVID-19 impact on the bank industry in the most extreme of circumstances. The need for this liquidity will continue to be evaluated and will be modified as the circumstances warrant. Had the $13,000 draw down on the revolver not occurred, our consolidated total leverage ratio would have been 1.58 to 1.00.

Under the agreement, ~~providing for $90 million borrowing capacity through a revolving credit note. Interest~~interest is payable monthly at the adjusted London Interbank Offered Rate (LIBOR) plus an applicable margin based on the current funded indebtedness to adjusted EBITDA ratio. The interest rate was ~~3.56%~~3.125% and ~~4.69%~~3.25% as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively. Additionally, the agreement has a fee on the average daily unused portion of the aggregate unused revolving commitments. This fee was 0.20% as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019.

The Company was in compliance with all financial covenants of its credit agreements as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019. The amount borrowed on the revolving credit notes was ~~$87,000~~$87,793 and ~~$59,629~~$72,572 as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively.

Prior to September 26, 2019, the Company maintained a facility financing package with borrowings of $95,000 and a maturity date of December 14, 2023 and a strategic capital loan with borrowings of $25,000 and a maturity date of June 14, 2024. As of September 26, 2019, all long-term debt was paid off in connection with entering into the Amended and Restated Credit Agreement.

~~Government loan balances include forgiveness clauses based upon capital spending and headcount increases at the noted manufacturing locations.~~

As previously disclosed, the Company completed its IPO in May 2019. Proceeds from the IPO were used to pay down debt including $43,000 pay down of the prior Term A loan and $25,000 pay-off of the prior strategic capital loan.

In June 2019, the Company received written notification that the $521 balance remaining of the Smyth County, Virginia loan was forgiven. Due to the nature of the requirements to obtain forgiveness, the gain associated with the forgiveness is reflected in cost of sales on the Condensed Consolidated Statement of Comprehensive Income (Loss).

On September 26, 2019, the Company entered into the Amended and Restated Credit Agreement resulting in the payoff of the real estate term loan and the Term A loan through the new revolving credit facility.

~~Other long-term debt as of September 30, 2019 and December 31, 2018 consisted of the following:~~

September 30, 2019

December 31, 2018

Interest
Rate

Balance

Interest
Rate

Balance

Term A loans – 2018 financing package

N/A

$
—

4.69
%

$
69,000

Real estate term loan – 2018 financing package

N/A

—

4.69
%

26,000

Strategic capital loan

N/A

—

11.78
%

25,000

Wisconsin Economic Development Corporate (Neillsville)

2.00
%

83

2.00
%

406

Smyth County, Virginia

N/A

—

0.00
%

700

Total principal outstanding

83

121,106

Less: Unamortized debt issuance costs

—

(825
)
Less: Current maturities

(83
)

(8,606
)
Long-term debt, less current maturities, net

$
—

$
111,675

~~The Company was in compliance with all financial covenants of its long-term debt agreements as of September 30, 2019.~~

Capital leases consist of equipment with a capitalized cost of ~~$3,707~~$3,825 at March 31, 2020 and December 31, 2019, and accumulated depreciation of ~~$440~~$761 and $598 at ~~September 30, 2019.~~March 31, 2020 and December 31, 2019, respectively. Depreciation of ~~$196~~$161 and ~~$342~~$73 was recognized on the capital lease assets during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019, respectively. ~~Capitalized costs of $2,051 and accumulated depreciation of $24 was recognized~~Non-cash capital lease transactions amounted to zero for the ~~three-~~three months ended March 31, 2020 and ~~nine-month periods ended September 30, 2018 respectively.~~2019. Future minimum lease payments required under the lease are as follows:

Year ending December 31,
2019 (remainder)	$	178
2020		712
2020 (remainder)			$	551
2021		712		734
2022		712		734
2023		712		734
2024				514
Thereafter		702		226
Total		3,728		3,493
Less payment amount allocated to interest		417		356
Present value of capital lease obligation	$	3,311	$	3,137
Current portion of capital lease obligation		573		605
Long-term portion of capital lease obligation		2,738		2,532
Total capital lease obligation	$	3,311	$	3,137

Operating leases relate to property, plant and equipment. Future minimum lease payments required under the leases are as follows:

The Company leases certain office space, warehousing facilities, equipment and vehicles under operating lease arrangements with third-party lessors. These lease arrangements expire at various time through December 2028. Total rent expense under the arrangements was approximately $1,061 and $1,130 for the three months ended March 31, 2020 and 2019, respectively.

Under the Mayville Engineering Company, Inc. Employee Stock Ownership Plan (the ESOP), the Company makes annual contributions to the trust for the benefit of eligible employees in the form of cash or shares of common stock of the Company. ~~The~~Prior to December 31, 2019, the annual contribution iswas discretionary except that it must behave been at least 3% of the compensation for all safe harbor participants for the plan year. Beginning on January 1, 2020, all contributions are discretionary. For the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ the Company’s ESOP expense amounted to ~~$1,500~~$675 and ~~$1,000, respectively. For the nine months ended September 30, 2019 and 2018, the Company’s ESOP expense amounted to $4,500 and $3,000,~~$1,500, respectively.

At various times following death, disability, retirement or termination of employment, 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. ~~Historically,~~Prior to the IPO, all distributions ~~have been~~were paid to participants in ~~cash, but that will not be the case following the Company’s May 2019 IPO.~~

~~During the three- and nine-month periods ended September 30, 2019 the ESOP did not acquire any shares from withdrawing participants.~~cash.

As of ~~September 30, 2019,~~March 31, 2020, and December 31, ~~2018,~~2019, the ESOP shares consisted of ~~13,443,484~~11,653,776 and 11,790,113 in allocated shares, ~~after giving effect to the issuance of a stock dividend of approximately 1,334.34-for-1 related to the Company’s May 2019 IPO.~~respectively. Prior to its IPO, the Company was obligated to repurchase shares in the trust that were not distributed to ESOP participants as determined by the ESOP trustees, and thus the shares were mandatorily redeemable. Based on the mandatory redemption of these shares, they represented temporary equity on the consolidated balance sheets for periods prior to the IPO. The total estimated fair value of all allocated shares subject to this repurchase obligation approximated $133,806 as of December 31, 2018. The estimated fair value as of December 31, 2018 was based on the most recent available appraisals of the common stock which was approximately $9.95 per share after giving effect to the issuance of a stock dividend of approximately 1,334.34-for-1 related to the Company’s May 2019 IPO. Subsequent to the IPO, ~~ESOP~~ shares are sold in the public market.

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 plan to the 401(k) Plan, subject to the limits of Section 401(k) of the Internal Revenue Code.

The 401(k) Plan also 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).

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~~For the three months ended March 31, 2020, income tax expense ~~(benefit)~~ was estimated at ~~$2,512 and ($231),~~$691 and the effective tax rate (ETR) from continuing operations was ~~19.60% and 3.50%~~27.69% for the three ~~and nine~~ months ended ~~September 30, 2019, respectively.~~March 31, 2020. The following items caused the quarterly ETR to be significantly different from our expected annual ETR at statutory tax rates:

~~The acquired DMP entities are subject to taxation in~~For the ~~United States~~three months ended March 31, 2019, income tax expense was estimated at $769 and ~~five state jurisdictions.~~ the ETR from continuing operations was 30.35%

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in these jurisdictions. Accounting Standards Codification (ASC) Topic 740, Income Taxes, states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of technical merits.

Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements as of ~~September 30,~~March 31, 2020 or December 31, 2019.

Prior to the Company’s IPO, the Company’s legacy business was an S Corporation, where substantially all taxes were passed to the shareholders and the Company did not pay federal or state corporate income taxes on its taxable income. In connection with the IPO, the Company’s legacy business converted to a C Corporation. As a result, the consolidated business is subject to paying federal and state corporate income taxes on its taxable income from May 9, 2019 forward. Upon the Company’s conversion from a non-taxable entity to a taxable entity, we established an opening deferred tax asset of $784 as a result of evaluating estimated temporary differences that existed on this date.

The Company’s policy for recording interest and penalties associated with potential income tax audits is to record such expense as a component of income tax expense. There were no amounts for penalties or interest recorded as of ~~September 30, 2019.~~March 31, 2020. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its positions.

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.

The Mayville Engineering 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 his or her 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.

Prior to the IPO, all deferrals were deemed to have been invested in the ~~Company~~Company’s common stock at a price equal to the share value on the date of deferral and the value of the account increased or decreased with the change in the value of the stock. Individual accounts are maintained for each participant. Each participant’s account is credited with the participant’s deferred compensation ~~the Company’s contributions,~~ and investment income or loss, reduced for charges, if any.

For the period subsequent to the IPO, deferrals are 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 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 months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ eligible employees elected to defer compensation of ~~$10~~$29 and ~~$16, respectively. During the nine months ended September 30, 2019 and 2018, eligible employees elected to defer compensation of $1,064 and $837,~~$1,147, respectively. As of ~~September 30, 2019,~~March 31, 2020, and December 31, ~~2018,~~2019, the total amount accrued for all benefit years under this plan was ~~$24,743~~$24,265 and ~~$13,351,~~$24,949, respectively, which is included within the deferred compensation and long-term incentive on the Condensed Consolidated Balance Sheets. These amounts include the initial deferral of compensation as adjusted for (a) subsequent changes in the share value of the Company stock pursuant to the IPO or (b) following the IPO in the investment options chosen by the participants. Total expense for the deferred compensation plan for the three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ amounted to ~~$141~~$(607) and ~~$16,~~$1,147, respectively. ~~Total expense for the deferred compensation plan for the nine months ended September 30, 2019 and 2018 amounted to $10,405 and $310.~~ These expenses are included in profit sharing, bonuses and deferred compensation on the Condensed Consolidated Statements of Comprehensive Income (Loss).

~~Historically,~~Prior to the IPO, the Company’s long-term incentive plan (LTIP) was available for any employee who had been designated to be eligible to participate by the Compensation Committee of the Board of Directors. Annually, the LTIP provided for long-term cash incentive awards to eligible participants based on the Company’s performance over a three-year performance period.

The LTIP was non-funded and each participant in the plan was considered a general unsecured creditor of the Company and each agreement constituted a promise by the Company to make benefit payments if the future conditions were met, or if discretion is exercised in favor of a benefit payment.

The qualifying conditions for each award granted under the plan included a minimum increase in the aggregate fair value of the Company of 12% during the three-year performance period and the eligible participants must have been employed by the Company on the date of the cash payment or have retired after attaining age 65, died or become disabled during the period from the beginning of the performance period to the date of payment. If the qualifying conditions were not attained, discretionary payments were made, up to a maximum amount specified in each award agreement. Discretionary payments were determined by the Compensation Committee of the Board of Directors (for payment to the Chief Executive Officer of the Company) and by the Chief Executive Officer (for payments to other participants in the plan).

If a participant was not employed throughout the performance period due to retirement, death or disability, their maximum benefit was prorated based on the number of days employed by the Company during the performance periods.

The LTIP was terminated in May 2019 in conjunction with the IPO, resulting in a total payout of $10,483. The total amount accrued for all grant years under this plan was $1,846 at December 31, 2018. This amount is included within profit sharing and bonus on the Condensed Consolidated Balance Sheets.IPO. Total expense for the long-term incentive plan for the three months ended ~~2018~~March 31, 2019 amounted to ~~$969. Total expense for the long-term incentive plan for the nine months ended September 30, 2019 and 2018 amounted to $10,000 and $1,191, respectively.~~$79. These expenses are included in profit sharing, bonuses and deferred compensation on the Condensed Consolidated Statements of Comprehensive Income (Loss).

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. ~~The~~As of March 31, 2020, the Company ~~purchases reinsurance~~has consolidated benefit plans with no specific stop loss and an aggregate stop loss to limit the annual risk associated with their multiple medical plans. Under one plan, the Company purchases reinsurance to limit the annual risk per participant to $225 with no aggregate stop loss. Under another plan, the Company purchases reinsurance to limit the annual risk per participant to $200 and to limit the annual aggregate riskrisk. Annual expense related to this contract ~~which~~ was approximately ~~$4,709~~$5,904 and ~~$4,393~~$5,163 for the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018, respectively and $14,875 and $14,775 for the nine months ended September 30, 2019 and 2018,~~ respectively. An estimated accrued liability of approximately ~~$1,349~~$1,492 and ~~$1,730~~$1,316 was recorded as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively, for estimated unpaid claims and is included within other current liabilities on the Condensed Consolidated Balance Sheets.

The Company applies the provisions of ASC Topic 280, Segment Reporting. An operating segment is defined as a component that engages in business activities whose operating results are reviewed by the chief operating decision maker ~~(CODM)~~ and for which discrete financial information is available. Based on the provisions of ASC 280, the Company has determined it has one operating segment.

The Company does not earn revenues or have long-lived ~~asset~~assets located in foreign countries. ~~In accordance with the enterprise-wide disclosure requirements of ASC 280, the Company’s net sales from external customers by main product lines are as follows:~~

Three Months Ended
September 30,

Nine Months Ended
September 30,

2019

2018

2019

2018

Outdoor sports

$
1,869

$
1,657

$
5,839

$
5,338

Fabrication

84,814

34,311

267,516

107,505

Performance structures

18,010

19,737

57,086

64,040

Tube

16,484

19,603

57,196

60,179

Tank

8,747

9,809

33,452

28,900

Total

129,923

85,117

421,089

265,963

Intercompany sales elimination

(1,412
)

(779
)

(3,716
)

(2,868
)
Total, net sales

$
128,511

$
84,338

$
417,373

$
263,095

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:

The following table lists the Company’s financial assets and liabilities accounted for at fair value by the fair value hierarchy:

~~Changes in liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) between December 31, 2018 and September 30, 2019 consist of:~~

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 financial statements at cost and approximate fair value.

Deferred compensation liabilities are recorded at amounts due to participants at the time of deferral. Prior to the IPO, deferrals were deemed to have been invested in the Company stock at a price equal to the share value on the deferral date. Considered Level 3 on the fair value hierarchy, the Company computed the fair value of its stock through the utilization of an independent third-party valuation specialist. For the period subsequent to the IPO, deferralsDeferrals are invested in an investment vehicle based on the options made available to the ~~participant.~~participant, considered to be Level 1 and Level 2 on the fair value hierarchy, with the majority of the balance as Level 2. The change in fair value is recorded in ~~deferred compensation and long-term incentive liabilities on~~ the ~~Condensed Consolidated Balance Sheets~~Profit sharing, bonuses, and deferred compensation ~~expense on the Condensed Consolidated Statements of Comprehensive Income (Loss).~~

On December 14, 2018, the Company acquired DMP for $117,100, net of cash received plus contingent consideration of up to $10,000. The Company would pay DMP’s previous shareholders an additional $7,500 if DMP generated $19,748 of EBITDA over the twelve-month period ended September 30, 2019. In addition, the Company would pay one dollar for each additional dollar of EBITDA in excess of $19,748 generated over this period; however, in no event shall the total payment exceed $10,000. The Company estimated and recorded the fair value of the contingent consideration payable of $6,076 as of the acquisition date. The Company remeasured this liability through the conclusion of the earnout period, September 30, 2019, with the change in value resulting in income or expense reflected in the Contingent Consideration Revaluation line item on the Condensed Consolidated Statement of Comprehensive Income (Loss). Contingent consideration payable was revalued to $0, $9,598, $6,924 and $6,054 as of September 30, 2019, June 30, 2019, March 31, 2019 and December 31, 2018, respectively. The change between these balances resulted in a (income)/expense of ($9,598), $2,674, $869, and ($21) for the three months ended September 30, 2019, June 30, 2019, March 31, 2019, and the year ended December 31, 2018, respectively.

Based on our calculations as of September 30, 2019, DMP’s EBITDA fell short of the $19,748 contingent consideration threshold. As a result, and in accordance with GAAP, the contingent consideration balance of $9,598 was reduced to zero and reflected as income in the Contingent Consideration line item on the Condensed Consolidated Statements of Comprehensive Income (Loss) ~~for~~. The balance due to participants is reflected on the ~~three months ended September 30, 2019. We have communicated~~Deferred compensation and long-term incentive line item on the results of our DMP EBITDA calculation to DMP’s previous shareholders; however, we have not received notification of agreement with the calculation. If they disagree with our calculation, the matter will be subject to arbitration.

~~The Company does not have any financial assets or liabilities at the Level 2 fair value hierarchy.~~Condensed Consolidated Balance Sheets.

The Company’s non-financial assets such as 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.

On May 13, 2019 the Company issued a stock dividend specific to pre-IPO shares, of approximately 1,334.34-for-1. The share dividend was accounted for as a 1,334.34-for-1 stock split and is retroactively reflected in these consolidated financial statements. All share redemption provisions were removed effective with the IPO.

Prior to our IPO in May 2019, our common stock was considered redeemable under GAAP because of certain repurchase obligations related to the Mayville Engineering Company, Inc. ESOP. As a result, all common shares were recorded as temporary equity (redeemable common shares) on the consolidated balance sheets at their redemption ~~value~~values as of the respective balance sheet dates. ~~Retained earnings on the consolidated balance sheet was adjusted for the changes during the period in the current redemption value of redeemable common shares.~~

All contractual redemption features were removed at the time of the IPO. As a consequence, all outstanding shares of common stock ceased to be considered temporary equity and were reclassified to Shareholders’ Equity, including the associated balances of

retained earnings. As the common shares have no par value, the amounts recorded in temporary equity for the share redemption value were recorded to additional paid-in capital within Shareholders’ Equity upon the transfer.

The following table shows all changes to temporary equity during the ~~nine~~three months ended ~~September 30, 2019, excluding net income for~~March 31, 2019.

The Company has contract assets and contract liabilities, which are included in other current assets and other current liabilities on the ~~period~~consolidated balance sheet, respectively. Contract assets include products where the Company has satisfied its performance obligation, but receipt of ~~April 1, 2019~~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 ~~date~~Product Part Approval Process (PPAP). At this time, the tool is placed into service and the cost to build the tooling is released from the balance sheet and included in cost of goods sold.

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 ~~IPO.~~changes in our contract assets and liabilities during the three months ended March 31, 2020.

Temporary Equity

Redeemable
Common
Shares

Treasury
Shares

Retained
Earnings

Balance as of January 1, 2019

$
133,806

$
(57,659
)

$
26,842

Net Income

—

—

2,459

Balance as of March 31, 2019

133,806

(57,659
)

29,301

Net income pre IPO

397

Transfer from temporary equity to common equity

(133,806
)

57,659

(29,698
)
Balance as of June 30, 2019

—

—

—

Net Income

—

—

—

Balance as of September 30, 2019

$
—

$
—

$
—

(in thousands)	Contract Assets		Contract Liabilities
As of January 1, 2020	$	1,589	$	914
Net Activity		1,529		328
As of March 31, 2020	$	3,118	$	1,242

~~On May 13, 2019 the Company issued~~The following table represents a ~~stock dividend specific to pre-IPO shares,~~disaggregation of approximately 1,334.34-for-1. The share dividend was accounted for as a 1,334.34-for-1 stock split and is retroactively reflected in these consolidated financial statements. All share redemption provisions mentioned in Note 16, ~~Temporary Equity, were removed effective with the IPO. Therefore, common shares were reclassified from temporary equity to permanent equity as of May 2019.~~revenue by product category:

~~As disclosed in Note 2,~~ ~~IPO, our IPO of common stock was effective in May 2019. In connection with the offering, we sold a total of 6,402,209 shares of additional shares of common stock.~~

~~On June 28, 2019, the Company cancelled 24,180,421 shares of common stock held in the Company’s treasury and returned those shares to the status of authorized but unissued shares of common stock.~~

The following customers accounted for 10% or greater of the Company’s recorded net sales and net trade receivables:

	Net Sales								Accounts Receivable				Net Sales				Accounts Receivable
	Three Months Ended September 30,				Nine Months Ended September 30,				As of		As of		Three Months Ended March 31,				As of		As of
	2019		2018		2019		2018		September 30, 2019		December 31, 2018		2020		2019		March 31, 2020		December 31, 2019
Customer
A	13.6	%	25.3	%	15.4	%	23.9	%	10.5	%	<10	%	16.2	%	17.0	%	13.5	%	<10	%
B	12.4	%	20.4	%	13.8	%	19.9	%	<10	%	<10	%	10.8	%	14.1	%	<10	%	<10	%
C	10.1	%	16.9	%	<10	%	17.8	%	<10	%	<10	%	10.2	%	<10	%	<10	%	<10	%
D	<10	%	<10	%	<10	%	<10	%	<10	%	12.6	%	11.8	%	11.6	%	<10	%	<10	%
E	13.9	%	19.8	%	12.7	%	<10	%	<10	%	<10	%	<10	%	<10	%	11.1	%	10.4	%
F	<10	%	15.4	%	<10	%	<10	%	14.4	%	<10	%	<10	%	<10	%	14.2	%	13.5	%

~~In May~~The Mayville Engineering Company, Inc. 2019 weOmnibus Incentive Plan provides the Company the ability to grant monetary payments based on the value of its common stock, up to two million shares.

The Company recognizes stock-based compensation using the fair value provisions prescribed by ASC Topic 718, Compensation – Stock Compensation. Accordingly, compensation costs for awards of stock-based compensation settled in shares are determined based on the fair value of the share-based instrument at the time of grant and are recognized as expense over the vesting period of the share-based instrument.

On February 27, 2020, the Company granted stock awards, including ~~stock options and~~ restricted stock units and options with a 2-year requisite service period to key ~~employees and outside directors. These~~employees. Stock awards were also granted on May 8, 2019. There were no stock awards granted prior to this. For units, fair value is equivalent to the stock price at the date of grant. The Black-Scholes option pricing model is utilized to determine fair value for options. Stock awards vest on ~~the~~their annual anniversary dates based on the passage of time. The related compensation expense for each award is recognized on a ~~straight line~~straight-line basis over the ~~appropriate vesting~~requisite service period.

The ~~fair value of each~~Company’s stock-based compensation expense by award type is summarized as follows:

Unrecognized stock-based compensation expense was $6,797 as of March 31, 2020. This amount will be expensed over the requisite service period from which individual award values relate, up to February 27, 2022.

Unrecognized stock-based compensation expense specific to the one-time IPO unit awards ~~is established on the date~~was $304 as of ~~grant. For grants~~March 31, 2020, which will be fully expensed as of ~~restricted stock units, the fair value is established based on the market price on the date of the grant.~~June 30, 2020.

For ~~grants of~~ options, we ~~use~~used the Black-Scholes option pricing model to estimate the fair value of ~~share-based payment~~stock option awards. The fair value of options granted on February 27, 2020 was $2.84. These options have a contractual life of 10 years and a requisite service period of 2-years with 50% vesting on the annual anniversary dates of grant. The determination of the fair value ~~of share-based awards~~ is affected by ~~stock price~~the following assumptions and inputs:

The Company does not have historical option exercise data to estimate the expected term. For the options granted on February 27, 2020, the Company utilized the simplified method prescribed by Staff Accounting Bulletin (SAB) Topic 14 to estimate the expected term, which is calculated as the average of the vesting term and the contractual term. The 2020 option grants have a contractual life of 10 years and a ~~number~~requisite service period, or vesting term, of ~~assumptions. Our assumptions included~~2 years with 50% vesting on the annual anniversary dates. Applying the simplified method, the Company calculated the expected ~~volatility~~terms of ~~21.3%,~~each tranche to be 5.5 years and 6.0 years resulting in an average expected ~~risk free rate~~term of ~~2.42%, exercise price of $17 per share, and a ten year period to exercise.~~

~~There were 331,436 restricted units granted in May 2019 at a fair value of $17/unit. The total fair value of~~5.75 years for these ~~award grants was $3,600 and $2,034, which vest over a 1- and 2-year period, respectively.~~

~~There were 287,895 options granted in May 2019 at a fair value of $6.07/option. The total fair value of these award grants was $1,748, which vest over a 2-year period.~~

awards. The Company ~~recognized $1,338~~will continue to employ the simplified method until more relevant detailed information becomes available from which to make this estimate.

No units or options were vested and ~~$2,135~~no options were exercisable as of ~~stock-based compensation expense~~March 31, 2020. The Company’s activity for ~~the three-~~restricted stock units and ~~nine months ended September 30, 2019, respectively.~~options is summarized as follows:

	Units				Options
	Number of Units		Weighted Average Grant Date Fair Value		Number of Options		Weighted Average Grant Date Fair Value		Weighted Average Exercise Price		Weighted Average Contractual Life Remaining
Nonvested, as of December 31, 2019		326,288	$	17.00		273,479	$	6.07	$	17.00		9.11
Grants		340,177	$	7.12		718,489	$	2.84	$	7.12		9.91
Forfeitures		—		—		—		—		—		—
Vested		—		—		—		—		—		—
Nonvested, as of March 31, 2020		666,465	$	11.96		991,968	$	3.73	$	9.84		9.69

~~On October 28, 2019,~~The company evaluated events and transactions for potential recognition or disclosure in the interim unaudited Condensed Consolidated Financial Statements through May 6, 2020, the date on which the interim unaudited Condensed Consolidated Financial Statements were available to be issued.

The coronavirus (COVID-19) pandemic has had, and will continue to have, a negative impact on the Company’s ~~Board~~business, financial condition, cash flows and results of ~~Directors approved~~operations, although the full extent is uncertain. The Company has taken cost reduction measures in response to the impact of the COVID-19 pandemic on its business including forced vacation, temporary layoffs, permanent layoffs, and other ad-hoc measures, however; nothing has been changed to an ~~increase in~~extent that would prevent the Company from continuing to adequately serve its customers. The Company is continuing to evaluate its cost structure and may implement additional cost reduction measures as necessary due to economic challenges resulting from the COVID-19 pandemic. As the pandemic continues to rapidly evolve, the extent of the impact on the Company’s ~~share repurchase program from $4 million to $25 million through 2021.~~business, financial condition, cash flows and results of operations will depend on future developments, all of which are highly uncertain and cannot be predicted at this time.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to assist in the understanding and assessing the trends and significant changes in our results of operations and financial condition. Historical results may not be indicative of future performance. This discussion includes forward-looking statements that reflect our plans, estimates and beliefs. Such statements involve risks and uncertainties. Our actual results may differ materially from those contemplated by these forward-looking statements as a result of various factors, including those set forth in “Risk Factors” in Part ~~II,~~I, Item 1A of our ~~Quarterly~~Annual Report on Form ~~10-Q~~10-K for the ~~quarter~~year ended ~~June 30,~~December 31, 2019 and “Cautionary Statement Regarding Forward-Looking Statements” ~~above.~~and “Risk Factors” in Part II Item 1A. of this Quarterly Report on Form 10-Q. This discussion should be read in conjunction with our audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the ~~Company’s Prospectus.~~year ended December 31, 2019 and our unaudited condensed consolidated financial statements and the notes thereto included in Part I, Item I of this Quarterly Report on Form 10-Q. In this discussion, we use certain non-GAAP financial measures. Explanation of these non-GAAP financial measures and reconciliation to the most directly comparable GAAP financial measures are included in this Management Discussion and Analysis of Financial Condition and Results of Operations. Investors should not consider non-GAAP financial measures in isolation or as substitutes for financial information presented in compliance with GAAP.

All amounts are presented in thousands except share amounts, per share data, years and ratios.

Our one operating segment focuses on producing metal components that are used in a broad range of heavy-and medium-duty commercial vehicles, construction, powersports, agricultural, military and other products.

On December 14, 2018, we acquired DMP, a leading U.S. based manufacturer of component parts for the heavy-and medium-duty commercial vehicles, construction, and agriculture and military markets. See Note 3 – Acquisition, in the Notes to the Condensed Consolidated Financial Statements for more specifics.

In May 2019, we completed our IPO. In conjunction with the IPO, the Company’s legacy business converted from an S corporation to a C corporation. As a result, the consolidated business is subject to paying federal and state corporate income taxes on its taxable income from May 9, 2019 forward.

Net Sales. Net sales reflect sales of our components and products net of allowances for returns and discounts. Several factors affect our net sales in any given period, including general economic conditions, weather, timing of acquisitions and the production schedules of our customers. Net sales are recognized at the time of shipment to the customer.

Manufacturing Margins. Manufacturing margins represents net sales less cost of sales. Cost of sales consists of all direct and indirect costs used in the manufacturing process, including raw materials, labor, equipment costs, depreciation, lease expenses, subcontract costs and other directly related overhead costs. Our cost of sales is directly affected by the fluctuations in commodity prices, primarily sheet steel and aluminum, but these changes are largely mitigated by contractual agreements with our customers that allow us to pass through these price changes based upon certain market indexes.

Depreciation and Amortization. We carry property, plant and equipment on our balance sheet at cost, net of accumulated depreciation and amortization. Depreciation on property, plant and equipment is computed on a straight-line basis over the estimated useful life of the asset. Amortization expense is the periodic expense related to leasehold improvements and intangible assets. Leasehold improvements are amortized over the lesser of the life of the underlying asset or the remaining lease term. Our intangible assets were recognized as a result of certain acquisitions and are generally amortized on a straight-line basis over the estimated useful lives of the assets.

Other Selling, General, and Administrative Expenses. Other selling, general and administrative expenses consist primarily of salaries and personnel costs for our sales and marketing, finance, human resources, information systems, administration and other certain managerial employees and certain corporate level administrative expenses such as incentive compensation, audit, accounting, legal and other consulting and professional services, travel, and insurance.

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.

Adjusted EBITDA represents EBITDA before transaction fees incurred in connection with the ~~DMP~~ acquisition of Defiance Metal Products Co., Inc. (DMP) in December 2018 and the IPO, ~~the loss on debt extinguishment relating to our December 2018 credit agreement,~~ non-cash purchase accounting charges including costs recognized on the step-up of acquired inventory and contingent consideration fair value adjustments, and ~~one-time increases in deferred~~stock-based compensation ~~and long term incentive plan expenses related to the IPO.~~expense. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of net sales for each period. 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 Adjusted EBITDA and Adjusted EBITDA Margin 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.

Beginning the quarter, we are excluding stock-based compensation expense from adjusted EBITDA. Management excludes this charge when evaluating the performance of the business because it is a non-cash charge, and the Company is able to fund vesting obligations through treasury shares. Further, the exclusion of these charges aligns with the calculation of adjusted EBITDA for purposes of our covenant calculations under the A&R Credit Agreement. And finally, revaluations of grant date fair values can vary significantly with the passage of time without any accounting impact. For example, the fair value of the stock-based compensation awards granted in May 2019 would have been less than one third of that value had they been granted at the end of this quarter.

Our calculation of EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin may not be comparable to the similarly named measures reported by other companies. Potential differences between our measures of EBITDA and Adjusted EBITDA compared to other similar companies’ measures of EBITDA and Adjusted EBITDA may include differences in capital structure and tax positions.

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

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
(in thousands)	2019			2018			2019			2018			2020			2019
Net income (loss)	$	9,746		$	4,824		$	(3,079	)	$	17,344
Net income													$	50		$	2,459
Interest expense		987		$	846			5,811			2,606			826			2,832
Provision (benefit) for income taxes		2,512		$	17			(231	)		46
Provision for income taxes														691			769
Depreciation and amortization		8,297		$	4,962			24,652			14,865			8,280			7,650
EBITDA		21,543			10,650			27,153			34,861			9,847			13,710
Loss on the extinguishment of debt		—			—			154			588
Costs recognized on step-up of acquired inventory		—			—			395			—			—			395
Contingent consideration revaluation		(9,598	)		—			(6,054	)		—			—			869
Deferred compensation expense specific to IPO		—			—			10,159			—
Long term incentive plan expense specific to IPO		—			—			9,921			—
Stock based compensation expense														857			—
IPO stock-based compensation expense														725			—
Other IPO and DMP acquisition related expenses		1,625			—			6,434			—			—			1,814
Adjusted EBITDA	$	13,570		$	10,650		$	48,161		$	35,449		$	11,429		$	16,788
Net sales	$	128,511		$	84,338		$	417,373		$	263,095		$	108,605		$	143,732
EBITDA Margin		16.8	%		12.6	%		6.5	%		13.3	%		9.1	%		9.5	%
Adjusted EBITDA Margin		10.6	%		12.6	%		11.5	%		13.5	%		10.5	%		11.7	%

Three Months Ended ~~September 30, 2019~~March 31, 2020 Compared to Three Months Ended ~~September 30, 2018~~March 31, 2019

	Three Months Ended September 30,																		Three Months Ended March 31,
	2019						2018						Increase (Decrease)						2020						2019						Increase (Decrease)
(in thousands)	Amount			% of Net Sales			Amount			% of Net Sales			Amount Change			% Change			Amount			% of Net Sales			Amount			% of Net Sales			Amount Change			% Change
Net sales	$	128,511			100.0	%	$	84,338			100.0	%	$	44,173			52.4	%	$	108,605			100.0	%	$	143,732			100.0	%	$	(35,127	)		-24.4	%
Cost of sales		113,941			88.7	%		71,517			84.8	%		42,424			59.3	%		96,762			89.1	%		124,153			86.4	%		(27,391	)		-22.1	%
Manufacturing margins		14,570			11.3	%		12,821			15.2	%		1,749			13.6	%		11,843			10.9	%		19,579			13.6	%		(7,736	)		-39.5	%
Amortization of intangibles		2,677			2.1	%		939			1.1	%		1,738			185.1	%		2,677			2.5	%		2,677			1.9	%		—			—
Profit sharing, bonuses and deferred compensation		678			0.5	%		2,340			2.8	%		(1,662	)		-71.0	%		1,325			1.2	%		1,750			1.2	%		(425	)		-24.3	%
Employee stock ownership plan expense		1,500			1.2	%		1,000			1.2	%		500			50.0	%		675			0.6	%		1,500			1.0	%		(825	)		-55.0	%
Other selling, general and administrative expenses		6,068			4.7	%		2,855			3.4	%		3,213			112.6	%		5,599			5.2	%		6,723			4.7	%		(1,124	)		-16.7	%
Contingent consideration revaluation		(9,598	)		-7.5	%		—			0.0	%		(9,598	)	N/A				—			0.0	%		869			(0.6	)%		(869	)		-100.0	%
Income (loss) from operations		13,246			10.3	%		5,688			6.7	%		7,558			132.9	%		1,567			1.4	%		6,060			4.2	%		(4,493	)		-74.1	%
Interest expense		(987	)		0.8	%		(846	)		1.0	%		140			16.6	%		(826	)		0.8	%		(2,832	)		2.0	%		(2,006	)		-70.8	%
Loss on the extinguishment of debt		—			0.0	%		—			0.0	%		—		0.0%
Provision (benefit) for income taxes		2,512			2.0	%		17			0.0	%		2,495			14,339.6	%		691			0.6	%		769			0.5	%		(78	)		-10.1	%
Net income and comprehensive income	$	9,746			7.6	%	$	4,824			5.7	%	$	4,923			102.0	%	$	50			0.0	%	$	2,459			1.7	%	$	(2,409	)		-98.0	%
EBITDA	$	21,543			16.8	%	$	10,650			12.6	%	$	10,893			102.3	%	$	9,847			9.1	%	$	13,710			9.5	%	$	(3,863	)		-28.2	%
Adjusted EBITDA	$	13,570			10.6	%	$	10,650			12.6	%	$	2,920			27.4	%	$	11,429			10.5	%	$	16,788			11.7	%	$	(5,359	)		-31.9	%

Net Sales. Net sales were ~~$128,511~~$108,605 for the three months ended ~~September 30, 2019~~March 31, 2020 as compared to ~~$84,338~~$143,732 for the three months ended ~~September 30, 2018. The DMP acquisition accounted for $51,769~~March 31, 2019, a decrease of $35,127, or 24.4%. This change is primarily attributed to the continued impact of market demand changes and related destocking activities that adversely impacted the latter part of 2019. As expected, these declines were most apparent in the Commercial Vehicle, Agricultural and Construction end markets served. In addition, net sales ~~for the quarter. Both the legacy MEC business and DMP~~ were adversely impacted ~~by recent declines in market demand, particularly~~ in the ~~agricultural, construction and medium duty truck markets. The demand changes stem from~~latter half of March by approximately $5,000 due to select customer ~~decisions to delay and/or curtail near-term production schedules, reduce dealer inventory levels, and ongoing labor issues in the heavy and medium duty truck markets.~~plant shutdowns caused by COVID-19.

Manufacturing Margins. Manufacturing margins were ~~$14,570~~$11,843 for the three months ended ~~September 30, 2019~~March 31, 2020 as compared to ~~$12,821~~$19,579 for the three months ended ~~September 30, 2018, an increase~~March 31, 2019, a decrease of ~~$1,749,~~$7,736, or ~~13.6%~~39.5%. The ~~acquisition~~decline was mainly driven by lower sales volumes due to the aforementioned market demand changes that began in the later part of ~~DMP account~~2019, the impact of customer shutdowns in March due to COVID-19, along with approximately $900 of inventory obsolescence and health care accruals specific to the estimated potential impacts of COVID-19. These factors were slightly offset by strong labor productivity.

Our traditional methods of determining inventory obsolescence and health care accruals significantly rely upon historical data. When estimating the COVID-19 impact, we had neither historical information, nor much other data from which to compute an estimated impact for ~~$5,825~~this type of event. Notwithstanding, the Company believed the obvious risk posed by the pandemic would have a financial impact in the current period in these areas. This charge for these COVID-19 specific accruals represents our best good faith estimate of the potential financial impact to the Company based on information available to us.

Manufacturing margin percentages were 10.9% for the three months ended March 31, 2020, as compared to 13.6% of net sales for the three months ended March 31, 2019, a decline of 270 basis points. This decline was mostly attributable to lower sales volumes resulting in less overhead absorption, slightly offset by strong labor productivity driven by efficiency gains through our investments in new technology and automation. Sequentially, manufacturing margin ~~during~~percentage increased by 700 basis points for the ~~quarter. Manufacturing margins for both~~three months ended March 31, 2020 when compared to the ~~legacy MEC and DMP businesses were impacted by~~three months ended December 31, 2019. The significant increase is attributable to improved sales demand in the ~~aforementioned declines~~current quarter compared to the rapid declining volumes experienced in ~~market demand.~~the fourth quarter of 2019, coupled with the company’s effective cost reduction actions taken in late 2019.

Amortization of Intangibles Expense. Amortization of intangibles expense was $2,677 for the three months ended September 30, 2019 as compared to $939 for the three months ended September 30, 2018. The increase of $1,738, or 185.1%, was solely due to the amortization expense associated with the identifiable intangible assets from the DMP acquisition. Please see Note 3 – Acquisition, of the Condensed Consolidated Financial Statements for more information related to these identifiable intangible assets.March 31, 2020 and 2019.

Profit Sharing, Bonuses and Deferred Compensation Expenses. Profit sharing, bonuses, and deferred compensation expenses were ~~$678~~$1,325 for the three months ended ~~September 30, 2019~~March 31, 2020 as compared to ~~$2,340~~$1,750 for the three months ended ~~September 30, 2018. The~~March 31, 2019, a decrease of ~~$1,662~~$425, or 24.3%. This change was primarily driven by ~~year-to-date adjustments to incentive~~lower bonus accruals and modest declines in deferred compensation ~~programs related to performance.~~liabilitiesas a result of changes in market valuations of investment vehicles that deferred compensation balances are invested in.

Employee Stock Ownership Plan Expense. Employee stock ownership plan expense was $675 for the three months ended March 31, 2020 as compared to $1,500 for the three months ended ~~September 30,~~March 31, 2019, ~~as compared~~a decrease of $825, or 55.0%. The change is

mostly attributable to ~~$1,000~~a decrease in headcount. Prior to December 31, 2019, the annual ESOP contribution was discretionary except that it must be at least 3% of the compensation for all safe harbor participants for the ~~three months ended September 30, 2018.The increase of $500, or 50.0%, was primarily due to the addition of~~ plan ~~participants as a result of the DMP acquisition.~~year. Beginning in 2020, all contributions are discretionary.

Other Selling, General and Administrative Expenses. Other selling, general and administrative expenses were ~~$6,068~~$5,599 for the three months ended ~~September 30, 2019~~March 31, 2020 as compared to ~~$2,855~~$6,723 for the three months ended ~~September 30, 2018.~~March 31, 2019, a decrease of $1,124, or 16.7%. The ~~increase of $3,213, or 112.6%, was driven by $1,625~~prior year period includes an additional $1,790 of one-time other IPO and DMP acquisition related expenses ~~related~~as compared to the ~~IPO,~~current period. Excluding these one-time costs, other selling, general and administrative expenses ~~from the DMP acquired business, plus additional~~increased approximately $700 due to costs associated with being a publicly traded ~~company.~~company, slightly offset by the aforementioned initiatives to adjust our cost structure to align with sales due to market demand changes, in conjunction with synergies achieved through the integration of DMP.

Contingent Consideration Revaluation. The DMP purchase agreement ~~provides~~provided for a payout to the previous shareholders of DMP of $7,500, but not more than $10,000 if a certain level of EBITDA was generated during the twelve-month period ended September 30, 2019. ~~In accordance with GAAP, we~~We estimated the fair value of the contingent consideration payable balance of $6,076 as of the acquisition ~~date.~~date of December 14, 2018. We then remeasured the fair value each quarter through September 30, 2019, with the change recorded as ~~income or expense. Based on our calculations in accordance with~~a contingent consideration revaluation adjustment. For the ~~purchase agreement, DMP’s EBITDA fell slightly short of the payout threshold and as a result,~~three months ended March 31, 2019, the contingent consideration payable ~~balance of $9,598~~ was ~~adjusted~~revalued to ~~zero,~~$6,924, resulting in ~~income~~$869 of ~~this amount during the quarter.~~

~~Interest Expense.~~ ~~Interest expense was $987~~a revaluation adjustment for the three months ended ~~September 30, 2019 as compared to $846~~March 31, 2019.

Interest Expense. Interest expense was $826 for the three months ended ~~September 30, 2018~~March 31, 2020 as compared to $2,832 for the three months ended March 31, 2019, a decrease of $2,006, or 70.8%. The ~~increase of $140, or 16.6%,~~ changeis due to ~~additional debt used~~lower borrowings during the first quarter 2020 as compared to ~~fund~~ the ~~DMP acquisition offset by the substantial paydown of debt with the IPO proceeds in the second~~first quarter of ~~2019.~~2019 and lower interest rates attributable to the more favorable terms afforded under the A&R Credit Agreement.

Provision ~~(Benefit)~~ for Income Taxes. Income tax expenses were ~~$2,512~~$691 for the three months ended ~~September 30, 2019~~March 31, 2020 as compared to ~~$17~~$769 for the three months ended ~~September 30, 2018. The current period expense~~March 31, 2019. Federal income tax expenses will be offset against our federal net operating loss carryforward of approximately $13.8 million until it is the result of the Company’s legacy business converting to a C Corporation in May 2019. Prior to the Company’s IPO, the Company’s legacy business was an S Corporation, where substantially all taxes were passed to the shareholders and the Company did not pay federal or state corporate income taxes on its taxable income. The DMP entities have been taxable under the provisions of the Internal Revenue Code and certain state statutes since being acquired. The consolidated business is subject to paying federal and state corporate income taxes on its taxable income from May 9, 2019 forward.fully utilized.

Net Income and Comprehensive Income. Net income and comprehensive income was ~~$9,746~~$50 for the three months ended ~~September 30, 2019~~March 31, 2020 as compared to net income and comprehensive income of ~~$4,824~~$2,459 for the three months ended ~~September 30, 2018.~~March 31, 2019. The ~~increase~~decrease of ~~$4,923~~$2,409 was due to the previously discussed ~~items, most notably the $9,598 gain recorded from the contingent consideration payable fair value adjustment.~~items.

EBITDA and EBITDA Margin. EBITDA and EBITDA Margin ~~percent~~ were ~~$21,543~~$9,847 and ~~16.8%~~9.1%, respectively, for the three months ended ~~September 30, 2019~~March 31, 2020 as compared to ~~$10,650~~$13,710 and ~~12.6%~~9.5%, respectively, for the three months ended ~~September 30, 2018.~~March 31, 2019. The ~~$10,893 increase~~$3,863 decrease in EBITDA was primarily due to the ~~$9,598 revaluation for~~decline in net sales caused by the ~~contingent consideration fair value adjustment and the addition of DMP.~~aforementioned decline in market demand.

Adjusted EBITDA and Adjusted EBITDA Margin. Adjusted EBITDA and Adjusted EBITDA Margin ~~percent~~ were ~~$13,570~~$11,429 and ~~10.6%~~10.5%, respectively, for the three months ended ~~September 30, 2019,~~March 31, 2020, as compared to ~~$10,650~~$16,788 and ~~12.6%~~11.7%, respectively, for the three months ended ~~September 30, 2018.~~March 31, 2019. The ~~increase~~decrease in Adjusted EBITDA of ~~$2,920 was primarily driven by our recent acquisition of DMP, while the decrease in Adjusted EBITDA Margin percent was driven by the aforementioned recent declines in market demand.~~

~~Nine Months Ended September 30, 2019 Compared to Nine Months Ended September 30, 2018~~

Nine Months Ended September 30,

2019

2018

Increase (Decrease)

(in thousands)

Amount

% of Net
Sales

Amount

% of Net
Sales

Amount
Change

% Change

Net sales

$
417,373

100.0
%

$
263,095

100.0
%

$
154,279

58.6
%
Cost of sales

362,689

86.9
%

222,913

84.7
%

139,776

62.7
%
Manufacturing margins

54,684

13.1
%

40,181

15.3
%

14,503

36.1
%
Amortization of intangibles

8,030

1.9
%

2,817

1.1
%

5,213

185.1
%
Profit sharing, bonuses and deferred compensation

25,258

6.1
%

5,346

2.0
%

19,913

372.5
%
Employee stock ownership plan expense

4,500

1.1
%

3,000

1.1
%

1,500

50.0
%
Other selling, general and administrative expenses

20,296

4.9
%

8,435

3.2
%

11,861

140.6
%
Contingent consideration revaluation

(6,054
)

-1.5
%

—

0.0
%

(6,054
)

N/A

Income (loss) from operations

2,655

0.6
%

20,584

7.8
%

(17,930
)

-87.1
%
Interest expense

(5,811
)

1.4
%

(2,606
)

1.0
%

3,205

123.0
%
Loss on extinguishment of debt

(154
)

0.0
%

(588
)

0.2
%

(434
)

-73.8
%
Provision (benefit) for income taxes

(231
)

-0.1
%

46

0.0
%

(277
)

-603.2
%
Net income (loss) and comprehensive income
(loss)

$
(3,079
)

-0.7
%

$
17,344

6.6
%

$
(20,424
)

-117.8
%
EBITDA

$
27,153

6.5
%

$
34,861

13.3
%

$
(7,709
)

-22.1
%
Adjusted EBITDA

$
48,161

11.5
%

$
35,449

13.5
%

$
12,712

35.9
%

~~Net Sales.~~ Net sales were $417,373 for the nine months ended September 30, 2019 as compared to $263,095 for the nine months ended September 30, 2018 for an increase of $154,279, or 58.6%. The acquired DMP business contributed $155,504 of the change.

~~Manufacturing Margins.~~ Manufacturing margins were $54,684 for the nine months ended September 30, 2019 as compared to $40,181 for the nine months ended September 30, 2018, an increase of $14,503, or 36.1%. The acquired DMP business contributed $18,636 of the change. Manufacturing margin percentage was 13.1% for the nine months ended September 30, 2019 as compared to

~~15.3% for the nine months ended September 30, 2018. The decrease is mostly attributed to the aforementioned market demand challenges experienced during the third quarter of 2019.~~

~~Amortization of Intangibles Expense.~~ Amortization of intangibles expense was $8,030 for the nine months ended September 30, 2019 as compared to $2,817 for the nine months ended September 30, 2018. The increase of $5,213, or 185.1%, was solely due to the amortization expense associated with the identifiable intangible assets from the DMP acquisition. Please see Note 3 – Acquisition of the Condensed Consolidated Financial Statements for more information related to these identifiable intangible assets.

~~Profit Sharing, Bonuses and Deferred Compensation Expenses.~~ Profit sharing, bonuses, and deferred compensation expenses were $25,258 for the nine months ended September 30, 2019 as compared to $5,346 for the nine months ended September 30, 2018. The increase of $19,913 was primarily driven by a one-time $10.2 million increase in deferred compensation plan expense and a one-time $9.9 million increase in long term incentive plan (LTIP) expense, both of which relate to the IPO.

~~Employee Stock Ownership Plan Expense.~~ ~~Employee stock ownership plan expense was $4,500 for the nine months ended September 30, 2019 as compared to $3,000 for the nine months ended September 30, 2018. The increase of $1,500, or 50.0%,~~$5,359 was primarily due to the ~~addition of plan participants as a result of the DMP acquisition.~~

~~Other Selling, General and Administrative Expenses.~~ Other selling, general and administrative expenses were $20,296 for the nine months ended September 30, 2019 as compared to $8,435 for the nine months ended September 30, 2018. The increase of $11,861, or 140.6%, was driven by $6,434 of one-time IPO and DMP acquisition expenses, along with expenses from the acquired DMP business and additional costs associated with being a publicly traded company.

~~Contingent Consideration Revaluation.~~ The DMP purchase agreement provides for a payout to the previous shareholders of DMP of $7,500, but not more than $10,000 if a certain level of EBITDA was generated during the twelve-month period ended September 30, 2019. In accordance with GAAP, we estimated the fair value of the contingent consideration payable balance as of the acquisition date. We then remeasured the fair value each quarter with the changed recorded as income or expense. Based on our calculationsdecline in accordance with the purchase agreement, DMP’s EBITDA fell slightly short of the payout threshold and as a result, the contingent consideration payable balance was adjusted to zero, resulting in income of $6,054 for the nine months ended September 30, 2019.

~~Interest Expense.~~ Interest expense was $5,811 for the nine months ended September 30, 2019 as compared to $2,606 for the nine months ended September 30, 2018. The increase of $3,205, or 123.0%, is due to additional debt used to fund the DMP acquisition offsetnet sales caused by the ~~substantial paydown of our debt from the IPO proceeds.~~aforementioned declined market demand.

~~Provision (Benefit) for Income Taxes.~~ Income tax benefits were $231 for the nine months ended September 30, 2019 as compared to $46 provision for the nine months ended September 30, 2018. The current period benefit is the result of the Company’s legacy business converting to a C Corporation in May 2019 and the one-time IPO expenses incurred during the second quarter of 2019, which are deductible, causing the benefit. Prior to the Company’s IPO, the Company’s legacy business was an S Corporation, where substantially all taxes were passed to the shareholders and the Company did not pay federal or state corporate income taxes on its taxable income. The DMP entities have been taxable under the provisions of the Internal Revenue Code and certain state statutes since being acquired. The consolidated business is subject to paying federal and state corporate income taxes on its taxable income from May 9, 2019 forward.

~~Net Income (Loss) and Comprehensive Income (Loss).~~ Net loss and comprehensive loss was $3,079 for the nine months ended September 30, 2019 as compared to net income and comprehensive income of $17,344 for the nine months ended September 30, 2018. The decrease of $20,424 was due to the previously discussed expense increases, most notably the one-time LTIP and deferred compensation plan expenses related to the IPO, other one-time IPO and DMP acquisition related expenses, slightly offset by the contingent consideration fair value adjustment and net income generated by DMP.

~~EBITDA and EBITDA Margin.~~ EBITDA and EBITDA Margin percent were $27,153 and 6.5%, respectively, for the nine months ended September 30, 2019, as compared to $34,861 and 13.3%, respectively, for the nine months ended September 30, 2018. The $7,709 decline in EBITDA was due to the previously mentioned increase in LTIP and deferred compensation plan expenses related to the IPO, and one-time IPO expenses. These one-time expenses and charges were slightly offset by the gain recorded for the DMP contingent consideration fair value adjustment and the addition of DMP.

~~Adjusted EBITDA and Adjusted EBITDA Margin.~~ Adjusted EBITDA and Adjusted EBITDA Margin percent were $48,161 and 11.5%, respectively, for the nine months ended September 30, 2019, as compared to $35,449 and 13.5%, respectively, for the nine months ended September 30, 2018. The increase in Adjusted EBITDA of $12,712 was primarily driven by our recent acquisition of DMP.

	Nine Months Ended September 30,						Increase (Decrease)						Three Months Ended March 31,						Increase (Decrease)
(in thousands)	2019			2018			$Change			% Change			2020			2019			$Change		% Change
Net cash provided by operating activities	$	16,424		$	28,570			(12,145	)		-42.5	%
Net cash provided by (used in) operating activities													$	2,633		$	(1,500	)		4,133		275.5	%
Net cash used in investing activities		(26,768	)		(13,319	)		(13,449	)		101.0	%		(2,272	)		(8,142	)		5,870		-72.1	%
Net cash provided by (used in) financing activities		7,256			(15,242	)		22,498			-147.6	%
Net cash provided by financing activities														12,639			6,580			6,059		92.1	%
Net change in cash	$	(3,088	)	$	8		$	(3,096	)		-39,424	%	$	13,000		$	(3,061	)	$	16,062		524.7	%

Operating Activities. Cash provided by operating activities was ~~$16,424~~$2,633 for the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, as compared to ~~$28,570~~cash used in operating activities of $1,500 for the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019. The ~~$12,145,~~$4,133, or ~~42.5% decline~~275.5% increase in operating cash flows was primarily due to ~~changes in net working capital items, most notably the $9,524~~a smaller increase in accounts receivable ~~changes primarily due~~this quarter as compared to ~~DMP (whose customers have longer payment terms than those of~~ the ~~legacy MEC business).~~prior quarter, slightly offset by a smaller increase in accounts payable this quarter as compared to the prior quarter. Changes to pricing, payment terms and credit terms did not have a significant impact on changes to working capital items, or any other element of the operating cash flow activities, for the periods presented.

Investing Activities. Cash used in investing activities was ~~$26,768~~$2,272 for the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, as compared to ~~$13,319~~$8,142 for the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019. The ~~$13,449,~~$5,870, or ~~101.0% increase~~72.1% decrease in cash used in investing activities was ~~primarily~~ driven by lower capital expenditures as a result of the ~~continued investment in automation and~~timing of certain new technology ~~along with a $2,368 payment related to~~and automation investments originally planned for early 2020 that occurred in the ~~DMP net working capital true-up.~~fourth quarter of 2019.

Financing Activities. Cash provided by financing activities was ~~$7,256~~$12,639 for the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, as compared to ~~cash used in financing activities of $15,242~~$6,580 for the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019. The ~~$22,498~~$6,059 change was ~~primarily~~driven by the Company’s decision to draw down $13,000 from the revolver.Despite the strength and reputation of our lenders, the Company drew down $13,000 from the revolver and deposited it into a money market account in March 2020 to ensure liquidity due to the ~~IPO proceeds received~~uncertainty of the COVID-19 impact on the bank industry in ~~May 2019, net~~the most extreme of ~~debt repayments.~~circumstances. The need for this liquidity position will continue to be evaluated and will be modified as circumstances warrant.

On September 26, 2019, and as last amended as of December 31, 2019, we entered into ~~an amended and restated credit agreement (the~~the A&R Credit ~~Agreement)~~Agreement with certain lenders and Wells Fargo Bank, National Association, as administrative agent (the Agent). The A&R Credit Agreement provides for a ~~$200.0 million revolving credit facility (the~~$200,000 Revolving ~~Loan),~~Loan, with a letter of credit sub-facility in an aggregate amount not to exceed ~~$5.0 million,~~$5,000, and a swingline facility in an aggregate amount of ~~$20.0 million.~~$20,000. The A&R Credit Agreement also provides for an additional ~~$100.0 million~~$100,000 of capacity through an accordion feature. All amounts borrowed under the A&R Credit Agreement mature on September 26, 2024.

Our obligations under the A&R Credit Agreement are secured by first priority security interests in substantially all of our personal property and guaranteed by, and secured by first priority security interests in, substantially all of the personal property of, our direct and indirect subsidiaries: Center Manufacturing, Inc., Center Manufacturing Holdings, Inc., Center—Moeller Products LLC, Defiance Metal Products Co., Defiance Metal Products of Arkansas, Inc., Defiance Metal Products of PA., Inc. and Defiance Metal Products of WI, Inc.

Borrowings under the A&R Credit Agreement bear interest at a fluctuating LIBOR (which may be adjusted for certain reserve requirements), plus 1.00-2.00% depending on the current Consolidated Total Leverage Ratio (as defined in the A&R Credit Agreement). Under certain circumstances, we may not be able to pay interest based on LIBOR. 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) and (ii) the Federal Funds Rate plus 0.50%, plus (b) 0.00% to 1.00%, depending on the current Total Consolidated Leverage Ratio. The A&R Credit Agreement also includes provisions for determining a replacement rate when LIBOR is no longer available.

At ~~September 30, 2019,~~March 31, 2020, the interest rate on outstanding borrowings under the Revolving Loan was ~~3.56%~~3.125%. At ~~September 30, 2019,~~March 31, 2020, we had availability of ~~$87.0~~$112.2 million under the Revolving Loan.

We must pay a commitment fee at a rate of 0.20% per annum on the average daily unused portion of the aggregate unused revolving commitments under the A&R Credit Agreement. We must also pay fees as specified in the Fee Letter (as defined in the A&R Credit Agreement) and with respect to any letters of credit issued under the A&R Credit Agreement.

The A&R 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 or incur liens, make

certain investments, merge or consolidate with another entity, make certain asset dispositions, pay dividends or other distributions to shareholders, enter into transactions with affiliates, enter into sale leaseback transactions or make capital expenditures. The A&R Credit Agreement also requires us to satisfy certain financial covenants, including a minimum interest coverage ratio of 3.00 to 1.00. At ~~September 30, 2019,~~March 31, 2020, our interest coverage ratio was ~~7.77~~9.21 to 1.00. The A&R Credit Agreement also requires us to maintain a consolidated total leverage ratio not to exceed 3.25 to 1.00, although such leverage ratio can be increased in connection with certain acquisitions. At ~~September 30, 2019,~~March 31, 2020, our consolidated total leverage ratio was ~~1.30~~1.84 to 1.00. As noted above, the Company drew down $13,000 from the revolver and deposited it into a money market account in March 2020 to ensure liquidity due to the uncertainty of the COVID-19 impact on the bank industry in the most extreme of circumstances. The need for this liquidity position will continue to be evaluated and will be modified as circumstances warrant. Had the $13,000 draw down on the revolver not occurred, our consolidated total leverage ratio would have been 1.58 to 1.00.

The A&R Credit Agreement includes customary events of default, including, among other things, payment default, covenant default, breach of representation or warranty, bankruptcy, cross-default, material ERISA events, material money judgments, failure to maintain subsidiary guarantees and a change in control, which will be deemed to occur if any person or group other than the ESOP or the 401(k) Plan owns or controls more than 35% of our equity interests, or our board of directors is not composed of a majority of our continuing directors (i.e., our directors as of September 26, 2019, and any additional or replacement directors that have been approved by at least 51% of the directors then in office)~~, or the ESOP fails to own more than 50% of our voting stock.~~. If an event of default occurs, the Agent will be entitled to take various actions,

including the acceleration of amounts due under the A&R Credit Agreement, termination of the credit facility, and all other actions permitted to be taken by a secured creditor.

At ~~September 30, 2019,~~March 31, 2020, we were in compliance with all covenants under the A&R Credit Agreement.

During the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ our capital expenditures were approximately ~~$22.8 million~~$2,400 and ~~$13.3,~~$8,200, respectively. The ~~increase~~decrease of ~~$9.5 million~~approximately $5,800 was primarily driven by ~~our continued investment in automation and new technology, the addition~~lower capital expenditures as a result of ~~DMP, and~~ the timing of ~~purchases~~certain new technology and automation investments originally planned for early 2020 that occurred in ~~2019 as compared to~~ the ~~prior year. Budgeted capital~~fourth quarter of 2019. Capital expenditures for the full year ~~2019~~2020 are expected to be approximately ~~$27 million.~~

~~Historically,~~$12,000 to $15,000. The greater the adverse impact COVID-19 has on the business, the closer we ~~have had significant cash requirements in order~~expect to ~~organically expand our business to meet~~be on the ~~market related needs~~lower end of our customers, continue our investment in new technologies and automation, as well as fund new projects. Additionally, prior to the Company’s IPO, we were required to use cash to repurchase shares of our common stock from the ESOP in connection with legally required diversification and other distributions to eligible ESOP participants. Following the consummation of the Company’s IPO, this requirement terminated, which allows us to direct this previously allocated cash to operating- and growth-related purposes. Our cash requirements include costs related to capital expenditures, purchase of materials and production of materials and cash to fund these needs. Our working capital needs are driven by the growth of our business, with our cash requirements greater in periods of growth. Additional cash requirements resulting from our growth include the costs of additional personnel, production and distribution facilities, enhancing our information systems and, our integration of DMP and any future acquisitions and, our compliance with laws and rules applicable to being a public company. Following the completion of the Company’s IPO, our primary uses of cash are investing in flexible, re-deployable automation used to provide our components and products and funding organic and acquisitive growth initiatives.range.

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 ~~September 30, 2019,~~March 31, 2020, we had immediate availability of ~~$113.0 million~~approximately $112,200 through our Revolving Loan and another $100,000 through an accordion feature under our A&R 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 A&R Credit Agreement as long as we remain compliant with the financial covenants. Based on our estimates of the impact of COVID-19 at this time, we expect to be in compliance with these financial covenants through 2020 and beyond.

We believe that our operating cash flow and available borrowings under the A&R Credit Agreement are sufficient to fund our operations for ~~2019.~~2020 when taking into consideration the estimated impacts of COVID-19 based on the information we have available at this time. However, future cash flows are subject to a number of variables, and additional capital expenditures will be required to conduct our operations. There can be no assurance that operations and other capital resources will provide cash in sufficient amounts to maintain planned or future levels of capital expenditures. In the event we make one or more acquisitions and the amount of capital required is greater than the amount we have available for acquisitions at that time, we could be required to reduce the expected level of capital expenditures and/or seek additional capital. If we seek additional capital, we may do so through borrowings under the A&R Credit Agreement, joint ventures, asset sales, offerings of debt or equity securities or other means. We cannot guarantee that this additional capital will be available on acceptable terms or at all. If we are unable to obtain the funds we need, we may not be able to complete acquisitions that may be favorable to us or finance the capital expenditures necessary to conduct our operations.

The following table presents our obligations and commitments to make future payments under contracts and contingent commitments at ~~September 30, 2019:~~March 31, 2020:

Payments Due by Period

(in thousands)

Total

2019
(Remainder)

2020 – 2021

2022 – 2023

Thereafter

Long-term debt principal payment obligations ⁽¹⁾

$
87,083

$
83

$
—

$
—

87,000

Forecasted interest on debt payment obligations ⁽²⁾

16,585

816

6,525

6,525

2,719

Capital lease obligations

3,728

178

1,424

1,424

702

Operating lease obligations

12,076

875

5,284

3,094

2,823

Purchase obligations

—

—

—

—

—

Other

—

—

—

—

—

Total

$
119,472

$
1,952

$
13,233

$
11,043

$
93,244

~~The Company had $1 thousand of cash~~We are exposed to market risk from changes in customer forecasts, interest rates, and, ~~cash equivalents as of September 30, 2019. The entirety of this balance was in demand accounts with~~to a lesser extent, commodities. To reduce such risks, we selectively use financial ~~institutions. The primary market risks associated with this balance is liquidity risk.~~instruments and other proactive management techniques.

The ~~Company is party~~use and consumption of our components, products and services fluctuates depending on order forecasts we receive from our customers. These order forecasts can change dramatically from quarter to ~~a bank revolving credit facility.~~ quarter dependent upon the respective markets that our customers provide products in.

We are exposed to interest rate risk on certain of our short- and long-term debt obligations used to finance our operations and acquisitions. We have LIBOR-based floating rate borrowings under the A&R Credit Agreement, which exposes us to variability in interest payments due to changes in the referenced interest rates.

The amount borrowed under the ~~revolving credit facility~~Revolver Loan under the A&R Credit Agreement was ~~$87.0~~$87.8 million as of ~~September 30, 2019.~~March 31, 2020. The interest rate was ~~3.56%~~3.125% as of ~~September 30, 2019.~~March 31, 2020. Please see ~~“Amended~~“Liquidity and Capital Resources - Amended and Restated Credit Agreement” ~~above~~in Part I, Item 2 of this Quarterly Report on Form 10-Q and Note 54 in the Notes to the Unaudited Condensed Consolidated Financial Statements for more specifics.

A hypothetical 100-basis-point increase in interest rates would have resulted in an additional ~~$0.5~~$0.2 million of interest expense ~~for the nine months ended September 30, 2019. The Company does~~based on our variable rate debt at March 31, 2020. We do not use derivative financial instruments to manage interest risk or to speculate on future changes in interest rates. A rise in interest rates could negatively affect ~~the Company’s~~our cash flow.

We source a wide variety of materials and components from a network of suppliers. While such materials are generally available from numerous suppliers, commodity raw materials, such as steel, aluminum, copper, paint and paint chemicals, and other production costs are subject to price fluctuations, which could have a negative impact on our results. We strive to pass along such commodity price increases to customers to avoid profit margin erosion and in many cases utilize contracts with those customers to mitigate the impact of commodity raw material price fluctuations. As of March 31, 2020, we did not have any commodity hedging instruments in place.

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. In designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired objectives.

Our management, under the supervision of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on ~~Form-10-Q.~~Form 10-Q. As a result of the material ~~weaknesses~~weakness described below, ~~and previously disclosed in our Prospectus,~~ our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on ~~Form-10-Q,~~Form 10-Q, our disclosure controls and procedures were not effective at the reasonable assurance level.

As a newly public company, neither we nor our independent registered public accounting firm are required at this time to perform an evaluation of our internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act, and neither we nor our independent registered public accounting firm have performed such an evaluation.

InDuring the course of ~~preparing financial statements for~~ the ~~fiscal years ended December 31, 2018~~quarterly and ~~2017, our management~~year-end processes in 2019, we identified a material ~~weaknesses~~weakness in the design and operation of our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, ~~which related to: (i) information technology general controls specific~~such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness relates to ~~segregation of duties, systems access and change management processes and (ii)~~ a lack of consistently documented accounting policies and procedures and a lack of formalized controls over the accounting and recording of complex and significant unusual transactions which, in the aggregate, constitute a material weakness.

We have taken numerous steps to enhance our internal control environment during 2019 and to date in 2020. While preparing for our initial public offering, as of December 31, 2018, we had identified two material weaknesses in the design and operation of our internal control over financial reporting. As of December 31, 2019, we have concluded that one of the previously identified material weaknesses has been remediated and the other has been partially remediated. The previously identified deficiencies, that represented the two material weaknesses, included the preparation and review of journal entries, ~~and~~ a limited number of personnel with a level of GAAP accounting knowledge commensurate with our financial reporting ~~requirements. The nature of these material weaknesses~~requirements and ~~our remediation actions are more fully described in the Prospectus.~~

We continue to implement actions to remediate these material weaknesses, including: (i) in January 2019, we hired additional accounting and finance staff members, including a senior accounting officer with public company reporting experience, to augment our current staff and to improve the effectiveness of our closing and financial reporting processes; (ii) we commenced an internal assessment ofcertain information technology general controls specific to segregation of duties, systems access and change management ~~processes and (iii) we engaged~~processes. However, deficiencies in our control environment, specifically deficiencies related to a ~~reputable third party to assist us with formalizing our business processes,~~lack of consistently documented accounting policies and procedures and a lack of formalized controls over the accounting and recording of complex and significant unusual transactions, which we have collectively determined aggregate to a material weakness, remained as of March 31, 2020. We are currently evaluating a number of steps to enhance our control over financial reporting and address this material weakness, including: enhancing our internal review procedures

during the financial statement close process, and designing and implementing consistent policies throughout the Company; however, our current efforts to design and implement effective controls ~~documentation, enhancing related internal controls and strengthening supervisory reviews by our management. Other than ongoing remediation actions~~may not be sufficient to remediate the material weakness described above ~~there were no changes~~or prevent future material weaknesses or other deficiencies from occurring. Despite these actions, we may identify additional material weaknesses in our internal control over financial reporting ~~(as defined~~ in ~~Rules 13a-15(e) and 15d-15(e) under~~ the ~~Exchange Act) during the three months ended September 30, 2019 that have materially affected, or are reasonably likely~~future.

If we fail to ~~materially affect,~~effectively remediate this material weakness in our internal control over financial ~~reporting.~~reporting, if we identify future material weaknesses in our internal control over financial reporting or if we are unable to comply with the demands that will be placed upon us as a public company, including the requirements of Section 404 of the Sarbanes-Oxley Act, in a timely manner, we may be unable to accurately report our financial results, or report them within the timeframes required by the SEC. In addition, if we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, when required, investors may lose confidence in the accuracy and completeness of our financial reports, we may face restricted access to the capital markets and our stock price may be adversely affected.

30Commencing with our Annual Report on Form 10-K for the year ending December 31, 2020 we must perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting in our Form 10-K filing for that year, as required by Section 404 of the Sarbanes Oxley Act. We expect to expend significant resources in developing the necessary documentation and testing procedures required by Section 404. If we fail to implement the requirements of Section 404 in a timely manner, regulatory authorities such as the SEC or the Pubic Company Accounting Oversight Board, might subject us to sanctions or investigation. We cannot be certain that the actions we will be taking to improve our internal controls over financial reporting will be sufficient, or that we will be able to implement our planned processes and procedures in a timely manner.

We are not currently a party to any material litigation proceedings. From time to time, however, we may be a party to litigation and subject to claims incident to the ordinary course of business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

There have been no material changes to the risk factors ~~relating to the Company set forth in “Risk Factors”~~previously disclosed in Part ~~II,~~I, Item 1A, ~~of the Company’s Quarterly~~“Risk Factors,” in our Annual Report on Form ~~10-Q~~10-K for the ~~quarter~~year ended ~~June 30,~~December 31, 2019, which was filed with the SEC on ~~August 9, 2019.~~March 2, 2020 other than the following:

The coronavirus (COVID-19) pandemic will have a negative impact on our business, financial condition, cash flows and results of operations.

The COVID-19 pandemic has resulted in national, state and local government authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, border closings, restrictions on public gatherings, quarantining of people who may have been exposed to the virus, shelter-in-place restrictions, and limitations or shutdowns of business operations. These measures have impacted and may further impact our workforce and operations, including disruptions at some of our manufacturing operations and facilities, as well as the operations of our customers, and those of our suppliers. There is considerable uncertainty regarding the impact, and expected duration, of such measures and potential future measures, and restrictions on our access to our facilities or on our support operations or workforce, or similar limitations for our suppliers. There is no certainty that measures taken by governmental authorities will be sufficient to mitigate the risks posed by the virus, and our ability to perform critical functions could be harmed.

The COVID-19 pandemic has significantly increased economic and demand uncertainty. The pandemic has caused an economic slowdown that is likely to continue, and it is possible that it could cause an extended global recession.

The COVID-19 pandemic has weakened demand for our components, products and services, which has resulted in a decline in sales activities and customer orders, and it remains uncertain what impact this weakened demand will have on future sales activities and customer orders once conditions begin to improve. The pandemic could also disrupt our supply chain.

In recent weeks, the spread of COVID-19 has led to disruption and volatility in the global capital markets, which may adversely affect our and our customers’ and suppliers’ liquidity, cost of capital and ability to access the capital markets. As a result, the continued spread of COVID-19 could adversely affect the ability of our customers to perform, including in making timely payments to us, which could further adversely impact our business, financial condition, cash flows and results of operations.

The COVID-19 pandemic has had, and will continue to have, a negative impact on our business, financial condition, cash flows and results of operations, although the full extent is uncertain. As the pandemic continues to rapidly evolve, the extent of the impact on our business, financial condition, cash flows and results of operations will depend on future developments, including, but not limited to, the duration and spread of the pandemic (including any relapses), its severity, the actions to contain the virus and/or treat its impact, related restrictions on travel, the duration, timing and severity of the impact on customer spending (including any recession resulting from the pandemic), and how quickly and to what extent normal economic and operating conditions can resume, all of which are highly uncertain and cannot be predicted.

In addition, the COVID-19 pandemic will or may have additional impacts on the following risk factors previously disclosed in Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on March 2, 2020: “Most of our customers do not commit to long-term production schedules, which makes it difficult for us to schedule production accurately and achieve maximum efficiency of our manufacturing capacity;” “We may incur additional expenses and delays due to technical problems or other interruptions at our manufacturing facilities;” “Political and economic developments could adversely affect our business;” “Our manufacturing operations are dependent upon third-party suppliers, making us vulnerable to supply shortages;” “The impact of foreign trade relations and associated tariffs could adversely impact our business;” “Increases in the cost of employee benefits could impact our financial results and cash flows;” “Volatility in the prices of raw materials and energy prices and our ability to pass along increased costs to our customers could adversely affect our results of operations;” “The market price of our common stock may be volatile, and you could lose all or part of your investment;” “We are affected by developments in the industries in which our customers operate;” and “We depend on our key executive officers, managers, and trade-skilled personnel and may have difficulty retaining and recruiting qualified employees. Moreover, we operate in competitive labor markets, which may also impact our ability to hire and retain employees at our facilities.”

Item 2. Unregistered ~~Sales~~Sales of ~~Equity~~Equity Securities and Use of Proceeds.

The table below sets forth information with respect to purchases we made of shares of our common stock during the quarter ended ~~September 30, 2019:~~March 31, 2020:

Period

Total
Number
of Shares
Purchased

Average Price
Paid per Share

Total Number
of Shares
Purchased as
Part of Publicly
Announced Plans
or Programs (1)

Dollar Value of
Shares that
May Yet Be
Purchased
Under the Plans
or Programs (1)

April 1-30, 2019

—

$
—

—

$
—

May 1-31, 2019

—

—

—

—

June 1-30, 2019

105,397

$
15.10

105,397

$
2,408,338

July 1-31, 2019

—

—

—

—

August 1-31, 2019

—

—

—

—

September 1-30, 2019

—

—

—

—

Total

105,397

105,397

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)		Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
January 1-31, 2020		—		—		—	$	22,406,533
February 1-29, 2020		283,174	$	7.65		283,174	$	20,239,122
March 1-31, 2020		37,071	$	7.22		37,071	$	19,971,545
Total		320,245				320,245

The exhibits listed in the Exhibit Index below are filed as part of this Quarterly Report on Form 10-Q.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Wisconsin	39-0944729
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

715 South Street Mayville, Wisconsin	53050
(Address of principal executive offices)	(Zip Code)



		Page

PART I.	FINANCIAL INFORMATION	5

Item 1.	Financial Statements (Unaudited)	5

	Condensed Consolidated Balance Sheets	5

	Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~	6

	Condensed Consolidated Statements of Cash Flows	7

	Condensed Consolidated Statements of Shareholders Equity	8

	Notes to Unaudited Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2221

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2926

Item 4.	Controls and Procedures	2927

PART II.	OTHER INFORMATION	3129

Item 1.	Legal Proceedings	3129

Items 1A.	Risk Factors	31 29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3130

Item 6.	Exhibits	3231

Signatures		3332

	Preliminary Opening Balance Sheet Allocation
Cash consideration at acquisition date, net of cash received	$	114,700
Cash consideration for net working capital adjustment		2,368
Contingent consideration fair value as of acquisition date		6,076
Total purchase price	$	123,144
Accounts receivable, net	$	27,373
Tooling in progress		1,318
Inventory, net		13,237
Property, plant and equipment, net		30,053
Other assets, net of cash		416
Intangible assets
Trade name		14,780
Customer relationships		44,550
Non-compete		8,800
Goodwill		30,720
Total assets acquired		171,247
Deferred income taxes		20,221
Other liabilities		27,882
Net assets acquired	$	123,144

			Fair Value Measurements at Report Date Using
	Balance at March 31, 2020		(Level 1)		(Level 2)		(Level 3)
Deferred compensation	$	24,265	$	3,691	$	20,574	$	—
Total	$	24,265	$	3,691	$	20,574	$	—

			Fair Value Measurements at Report Date Using
	Balance at December 31, 2019		(Level 1)		(Level 2)		(Level 3)
Deferred compensation	$	24,949	$	2,470	$	22,479	$	—
Total	$	24,949	$	2,470	$	22,479	$	—

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☐

Emerging growth company	☒

Balance as of December 31, 2018	$	69,437
DMP purchase accounting adjustments, net		(883	)
DMP net working capital true-up		2,368
Impairment		—
Balance as of September 30, 2019	$	70,922

Balance as of December 31, 2018	$	82,879
Amortization expense		(8,029	)
Balance as of September 30, 2019	$	74,850

Year ending December 31,
2020	$	10,706
2021	$	10,706
2022	$	6,952
2023	$	6,866
2024	$	5,192

	September 30, 2019						December 31, 2018
	Interest Rate			Balance			Interest Rate			Balance
Term A loans – 2018 financing package	N/A			$	—			4.69	%	$	69,000
Real estate term loan – 2018 financing package	N/A				—			4.69	%		26,000
Strategic capital loan	N/A				—			11.78	%		25,000
Wisconsin Economic Development Corporate (Neillsville)		2.00	%		83			2.00	%		406
Smyth County, Virginia	N/A				—			0.00	%		700
Total principal outstanding					83						121,106
Less: Unamortized debt issuance costs					—						(825	)
Less: Current maturities					(83	)					(8,606	)
Long-term debt, less current maturities, net				$	—					$	111,675

Year ending December 31,
2020 (remainder)	$	2,299
2021		2,507
2022		1,704
2023		1,560
2024		757
Thereafter		2,094
Total	$	10,921

			Fair Value Measurements at Report Date Using
	Balance at September 30, 2019		(Level 1)		(Level 2)		(Level 3)
Deferred compensation	$	24,743	$	—	$	—	$	24,743
Contingent consideration payable		—		—		—		—
Total	$	24,743	$	—	$	—	$	24,743

			Fair Value Measurements at Report Date Using
	Balance at December 31, 2018		(Level 1)		(Level 2)		(Level 3)
Deferred compensation	$	13,351	$	—	$	—	$	13,351
Contingent consideration payable		6,054		—		—		6,054
Total	$	19,405	$	—	$	—	$	19,405

	Temporary Equity
	Redeemable Common Shares		Treasury Shares			Retained Earnings
As of January 1, 2019	$	133,806	$	(57,659	)	$	26,842
Net Income		—		—			2,459
As of March 31, 2019	$	133,806	$	(57,659	)	$	29,301

	Temporary Equity
	Redeemable Common Shares		Treasury Shares			Retained Earnings
Balance as of January 1, 2018	$	125,042	$	(49,826	)	$	17,671
Net Income							4,430
Balance as of March 31, 2018		125,042		(49,826	)		22,101
Net Income							8,091
Purchase of treasury shares				(753	)
Balance as of June 30, 2018		125,042		(50,579	)		30,192
Net Income							4,824
Purchase of treasury shares				(11,080	)
Balance as of September 30, 2018	$	125,042	$	(61,659	)	$	35,016

Assumptions	Input
Stock price at date of grant/exercise price	$	7.12
Expected term (in years)		5.75
Estimated volatility		41.2	%
Estimated risk-free rate of return		1.2	%
Expected dividend yield	0.0		%

	Nine Months Ended September 30,
	2019						2018						Increase (Decrease)
(in thousands)	Amount			% of Net Sales			Amount			% of Net Sales			Amount Change			% Change
Net sales	$	417,373			100.0	%	$	263,095			100.0	%	$	154,279			58.6	%
Cost of sales		362,689			86.9	%		222,913			84.7	%		139,776			62.7	%
Manufacturing margins		54,684			13.1	%		40,181			15.3	%		14,503			36.1	%
Amortization of intangibles		8,030			1.9	%		2,817			1.1	%		5,213			185.1	%
Profit sharing, bonuses and deferred compensation		25,258			6.1	%		5,346			2.0	%		19,913			372.5	%
Employee stock ownership plan expense		4,500			1.1	%		3,000			1.1	%		1,500			50.0	%
Other selling, general and administrative expenses		20,296			4.9	%		8,435			3.2	%		11,861			140.6	%
Contingent consideration revaluation		(6,054	)		-1.5	%		—			0.0	%		(6,054	)	N/A
Income (loss) from operations		2,655			0.6	%		20,584			7.8	%		(17,930	)		-87.1	%
Interest expense		(5,811	)		1.4	%		(2,606	)		1.0	%		3,205			123.0	%
Loss on extinguishment of debt		(154	)		0.0	%		(588	)		0.2	%		(434	)		-73.8	%
Provision (benefit) for income taxes		(231	)		-0.1	%		46			0.0	%		(277	)		-603.2	%
Net income (loss) and comprehensive income (loss)	$	(3,079	)		-0.7	%	$	17,344			6.6	%	$	(20,424	)		-117.8	%
EBITDA	$	27,153			6.5	%	$	34,861			13.3	%	$	(7,709	)		-22.1	%
Adjusted EBITDA	$	48,161			11.5	%	$	35,449			13.5	%	$	12,712			35.9	%

			Payments Due by Period
(in thousands)	Total		2019 (Remainder)		2020 – 2021		2022 – 2023		Thereafter
Long-term debt principal payment obligations ⁽¹⁾	$	87,083	$	83	$	—	$	—		87,000
Forecasted interest on debt payment obligations ⁽²⁾		16,585		816		6,525		6,525		2,719
Capital lease obligations		3,728		178		1,424		1,424		702
Operating lease obligations		12,076		875		5,284		3,094		2,823
Purchase obligations		—		—		—		—		—
Other		—		—		—		—		—
Total	$	119,472	$	1,952	$	13,233	$	11,043	$	93,244

Exhibit Number		Description

103		~~Amended and Restated Credit Agreement, dated as~~Bylaws of ~~September 26, 2019, by and among~~ Mayville Engineering Company, Inc., ~~the lenders from time to time party thereto, Wells Fargo Bank, National Association,~~ as ~~Administrative Agent for the lenders, and Wells Fargo Securities, LLC, as Sole Lead Arranger and Sole Bookrunner~~amended through March 30, 2020 (incorporated by reference to Exhibit 103.2 to the Company’s Current Report on Form 8-K (File No. 001-38894) filed on ~~October~~April 2, ~~2019)~~2020).

31.1		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document


	Mayville Engineering Company, Inc.

Date: ~~October 31, 2019~~May 6, 2020	By:	/s/ Robert D. Kamphuis
		Robert D. Kamphuis
		Chairman, President & Chief Executive Officer

	By:	/s/ Todd M. Butz
		Todd M. Butz
		Chief Financial Officer