Earnings call transcript Q1 2023

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Operator

Good morning. And a warm welcome to the Mayville Engineering Company First Quarter 2023 Earnings Call. My name is Candid, and I will be your coordinator for today’s call. All lines have been placed on mute during the presentation portion of the call with an opportunity for question-and-answer at the end. [Operator Instructions]

to Ryan conference with like our over now Noel host, Vallum. would hand call the to I Please go ahead.

Noel Ryan

first conference Thank you, is Todd to our Butz, like entire MEC’s team, XXXX Operator. On Jag Officer. behalf welcome of President and Chief you Reddy; call Financial Leading the call. the CEO, I’d quarter today results and to

uncertainties, in and Today’s no including with various differ significantly may our expectations. Actual discussion contains results in to forward-looking described forward-looking risks statements. the we update Except due statements those the about required today’s projected our future risks filed undertake statements by law, to and business Exchange and financial reports as forward-looking from obligation periodic Commission. Securities

Reconciliations measure Further, closest is to this call included include is available discussion will earnings measures. these GAAP at of the the release, financial of our financial in quarterly measures which mecinc.com. non-GAAP certain

Following our will we the questions. for open line prepared remarks,

I that, with would call turn the And to to Jag. like over

Jag Reddy

and joining Noel, to you, those the us call webcast. welcome Thank and on

Our our actions commercial and continued growth drive to over and progress margin profitable incremental on first position us priorities, the that operational long-term. demonstrated quarter results expansion

solid in by momentum and driven our growth first quarter, continued in military with organic powersports commercial delivered vehicles, year-over-year together sales within markets growth the margin. We manufacturing

year-over-year increased markets. driven Net our X.X% by military a sales powersports and commercial basis, on by solid vehicle, demand in

revenues for market our our with historical consistent quarter. of commitment to report business each quarter, quarterly began markets Last provided this we and transparency, end data relevant have to

EBITDA absorption Park supply cost were margin first near-term disruptions chain and facility and at in rate. EBITDA new under the our conditions demand adjusted Hazel stable impacted adjusted While fixed quarter,

million points. Park under by absorption the XXX at basis Fixed and impacted quarter alone cost of Hazel first $X.X

increased the XX points of basis XX.X%. by has normalized Park EBITDA Hazel our Excluding to ramp-up, adjusted impact the

five end Turning to a our markets. of across conditions review primary now market

XX-month our X.X% Let’s of represents trailing begin commercial with our vehicle revenues. which market,

year-over-year a strong and XX% commercial revenues demand quarter, vehicle first basis the elevated driven build increased on During rates. by

the the indicate demand of activity. changes, industry by requirements to slowing as Customer general economic slowing a continue the a of the half into strong through in as year XXXX in and navigates regulatory the year, well as followed middle demand second

X in forecast to Class XXX,XXX to decline X% ACT Currently, vehicle Research production the XXXX year-over-year units.

While chain we vehicle as move impact continued constraints we to have supply see year. to the customers, improve our through expect this commercial

we back year, while schedules Importantly, current supported a continue current discount which of the by production schedules expectations broader these half contemplated diverse OEMs, of Tier is within guidance. the a into slowing are space for our given X to macro financial

demand further arise. this cost we should Given structure fixed need to with backdrop, are shifting conditions our prepared align the

represented given is on market, quarter which basis continues declined the construction to year-over-year of be our access trailing market, within XX.X% residential a and Next and XX% Construction by fundamentals interest environment. weaker revenue rate access the revenues. elevated first the in the XX-month which impacted housing

demand offset trend this be growth across markets. infrastructure and by new year expect our volume the will construction residential to We through partially energy as continue

XX-month first spending. trailing partially were customer by a in by our benefit basis revenues year-over-year quarter. in offset of X% XX.X% represented consumer accruing the new programs and share market market powersports The includes which of discretionary increased gains, The on

opportunity year. in powersports current incremental Given of the in the share see current the over market will of the and conditions, market. through course we we growth positioning to us incentives On bolster rebates our sales balance, anticipate grow seek current to to customers demand year, the drive wallet

and decline driven quarter. tight expectations slow. our This ag machinery demand, The both held stocks demand by elevated, used quarter decrease XX.X% crop year-over-year primarily inventory prices while equipment trend as agricultural trailing the market Our remains remain is X% small represented the in was ag XX-month with revenues large basis in line during a global and a of firm. new decreased remain on while during first of food and

supporting ag large in mitigate demand, softness should Given elevated the increase equipment believe prices, demand. demand crop we small will ag which in further producer XXXX,

revenues market program XX% represented of and military on driven quarter, increases. the rate basis build Our X.X% in trailing year-over-year by and XX-month increased first new a wins

Our we new related customers see Government with based the and and to volumes on have solid programs. introductions U.S. contractual backlogs vehicle continue good

though, of the the broader quarter, potential of in of customer our for indications pace first the softening this rates outlook we end time, activity strong, we macroeconomic later of the mindful order coating and no year. see Through slowing customer’s At remained in remain this activity.

first At the production of represented total X,XXX sales expense related FTEs. with of our end cost approximately quarter, labor the XX% of our

due markets, some within and temporary have utilizing our customer demand time labor constraints Importantly, over cases, we met by to workers. in

our Given manage to our the broader markets, of both to cyclicality our have agility. end business continued financial optimize and operational we further

to we comes it our cost the move a to scale, demand have are quickly we business with Although, ability of aligning environment. changing fixed a when

declining we increased While and flexibility will multiple workforce choice the levers maintain its we providing ensure temporary demand, environment. building contract workforce, an which us, a in was to while to labor skilled obvious reduction cost of have economic us with event available meet a near-term

year eliminating worker to the decline, employing. to we through volumes volumes. that approximately the For labor the costs pressure higher be context, we alleviate temporary extent some prior currently quickly To were see are of XX% we our premium margin similar pandemic overtime will despite and than last able

update our initiative. Shifting MBX now to an on

first I achieve fall last to to the of we track we continued initiative. that value we During on are objectives announced laid MBX to framework. first we out pleased the advance implementation when the report quarter, our MBX am creation

focus for major team, a and consistent throughout outsourcing on our megatrends achieve capitalize of multiyear position we market represents and among strategic key to cycle MBX the area MEC as OEMs. performance above reshoring

energy growth together higher growing commercial focus integrated and including solution on in targeted transition. adjacent At customer value, both suite with our level, existing markets the remains our expanding clean tech within accounts

of commercial during to we the quarter. milestones the some achieved Allow share me first

as During the grow they battery quarter, continued thermal battery focus electric and our first vehicle expanding with their on we products, enclosures. customer our management our systems relationship

Leveraging growth market parts we share supporting, significant in the products market for on we had the driving powersports new further we received are gains. in orders additional that XXXX, the

the growth vehicle impending wallet, regulations new additional position vehicle emissions slated to occur next to share With current changes on believe into we MEC We beginning that going XXXX, vehicle work these with launches supporting catalyst. gain representing organic important year. in to are projects multiple an to customers of continue commercial updates

offerings. continuing their vehicle commercial our develop are to of Many customers electric battery vehicle

components expand be battery battery on we vehicles, parts to will used vehicle our and specific share of starting are on electric market volumes. working customers many structural build their to While current look as electric our are

other The focus various in production our improved processes, to of execution, leads chain. our of is which achieve excellence MBX is to standardization, increased productivity operational of value reduction automation and our pillar turn lean across the better and where manufacturing costs

that Additionally, leverage our in and sales, other purchasing as such areas we to operations support plan MBX finance.

Kaizens, continued have and We Kaizens. excellence our around by President’s centered approach commercial our supplemented rigorous operational monthly implementation quarterly

improvements is expectations. underpin we processes of tracking for During finalized uniform target that financial first company-wide team improvement. our and and targets KPI quarter, our Overall, to continuous rollout XXXX KPI the savings full the the

our Later Hazel our late provide XXXX Investor this to at Park, intend year, at facility. first performance ever in MBX Day we Michigan led multiyear targets

this details the will provide Our more IR coming team over on event months.

of Chief Another performance high development strategy key Human as is Ms. we Officer. end, our that pillar To MBX March, Resources business the our appointed of in Lehr culture. Rachele

talent part of as Rachel have on growth. to she excited as will strategy that our key role key our that in very our are play initiatives We support and focus the we organization long-term will

macro delivered period quarter in first we summary, line during were laser-focused our results We remain market that growth uncertainty. In driving other with expectations. on a of generally

structure, take full XXXX our we Our our should are around to exceed expectations. ready softness unchanged, we current remains demand cautious although, year action see cost outlook

capital allocation investments accretive in return growth. our a priorities bolt-on and high quick assets of organic From top hit acquisitions immediately include complementary perspective,

expand focus plastics and growth lightweight as assets towards composites. to next-generation continues such aluminum, inorganic fabrication capabilities Our lean materials within that our

the to spending spending does million Notably, continue our flex pace was total to our required. expect our our the highlight CapEx be capital quarter first year light, will as to quarter our $XX discretionary of While CapEx ability in range. for million $XX first in we that the

that, results. With financial now I our will turn over to the review to Todd call

Todd Butz

quarter I by Jag. will combination continued our discipline. of remarks begin million, you, my update an on sheet to first $XXX.X driven X.X% year-over-year with and Thank a a followed balance sales increased an price overview sales and volumes performance, improved the by of prepared quarter for our financial liquidity. Total basis on first

by of income. driven million $XX.X first prior costs, a manufacturing increase absorption overhead and offset as same margin was $XX.X The decline in pricing demand, to Our the year better quarter, was scrap in in the $XXX,XXX increased commercial period. million compared by manufacturing improved

was first discussed. margin to XX.X% rate Our XX.X% was the to reasons of XXXX, as basis due for just prior the approximately increase period. year manufacturing XX The the compared quarter for points of

expenses of the XXXX, similar bonus for quarter sharing to compensation which and deferred first Profit million $X were was prior the year.

no of The increase XXXX longer basis million and professional as were Other XXX the to available. X.X% related Due expenses compared for to be year recruiting to selling, preparing for wages reasons, go-forward Section XXXX, feel benefits, higher period. expenses general X.X% increasing the of as to company will and will first approximately sales. was emerging growth we fees the be be that to administrative same $X $X.X quarter Sarbanes-Oxley status and the a on million prior salaries, for fees these to SG&A attributable company Act compliant

$X.X the compared at on prior $XXX,XXX remain stable, primarily balance. debt anticipate interest Interest the expense should due interest We to interest period, rates, of that rates. expense higher relatively depending million to quarter was as our XXXX, current in year first for

as basis period. for to year decreased prior $XX.X year million the in the quarter, declined the by versus for XX.X% Adjusted $XX.X Adjusted same EBITDA percent same XXX to margin compared points X.X% to prior current EBITDA million period.

it of base all EBITDA to $XX.X $XX.X of SG&A appears actually in when you in current declined, million business While costs. factor increased Hazel our Park, even the the quarter $X.X added impact business our prior EBITDA that million million base but from with on its year, face, the

in would XX.X% versus been current year percentage same prior period. in the EBITDA quarter the have Our X.X%

flows use Cash in first flows the $XXX,XXX period. now sheet. $X used to the a cash of balance by Turning and our statement quarter prior during activities compared million, operating year as XXXX to of was of cash

flows decrease a used decrease expected offset The relates in spending, which cash from payments it as payable partially the by was capital to of due clearing in XXXX to a our operating heavy was increase primarily accounts inventory. timing in

the improve expect will the normal business. half We second our generation the during cash seasonal on that continue of to based of cadence year

were XXXX facility, to of in $XX XXXX. the the quarter of million, The quarter Capital Park, Hazel investment result of Michigan expenditures half the a capital expenditures of which initial first for in $X.X the as completion first the finished decrease the of in second was million capital during compared XXXX. is

or includes completion As net The which capital debt XXXX, at finance agreements the in of below as times, X.X the net XXst, our total XXXX, $XX.X quarter bank due the our of Furthermore, to first our relates obligations long-term first debt, the at quarter leverage debt, March XXXX. was outstanding was the expenditures end as of million, financing times. of the is facility. of of ratio Hazel primarily compared $XX.X below to lower decrease Park of the of in in which investment target end first million of the X.X leverage to lease quarter and

for Today, we are guidance reiterating year full the our financial XXXX.

between XXXX, expenditures $XXX expect continue $XXX million $XX full between to million. between million year sales million; $XX of million we $XX of and the and following; capital the and $XX adjusted For and million; EBITDA of net

of half a year. view for In calendar financial our year, stability of assumes general some the in which to current macro we also the end into market reaffirming considers the the take guidance, our continue but risk back potential demand, softening adjusted

employees the release Finally, ESOP. In a action the diversify shares taken to and to with liquidity market. we improving of within our the accelerate quarters, goal of word recent have on

We free improve which float, has ownership. have to taken ESOP within this the available historically action been shares constrained our high by

distributed shares. we total X.X of shares approximately to employees, thereby reducing XXXX, ESOP to of our April XX% In million outstanding approximately ownership

to is to XX% our strong XX% interest the ownership, shareholders. keeps alignment of add long-term with Our of employees which employee goal between

the session. open concludes said, question-and-answer that remarks. questions we begin that With as Operator, our Please prepared line our for

Operator

Dobre you. question of the Instructions] Thank Our [Operator comes first from line of Mig Baird.

is now line Please Your open. ahead. go

Mig Dobre

you that additional Good slide appreciate you. everyone in Thank deck. really your disclosures morning, all provided and here the

guess I that. for my you first thank question demand So the is side. on

case, a a on of construction some have about nice guys have the talking I we understand different what has comment are for and bit residential. what You highlighted growth guess, XXXX. production think bit very first in vertical everyone I seeing the and the is some contraction the their But in seen I seen OEMs you you, than reported is increase half quite of little

in I categories specific kind why equipment to seeing there of maybe are are trends experiencing and am that different So any curious you as that more than others? are vertical pull back you

Jag Reddy

Good morning, the construction, non-residential the when right? Particularly seen Mig. have and general the infrastructure call to around markets. commentary Thanks and residential are for question. We referring we and

supply us product they lines, chain to you lower our revenues approximately right? that, aware, As in in resulted convey particular some XX% that QX pull-through disruptions to customer that beyond But of our plans. had from are particular that would access, come access

Mig Dobre

recovery And in It way described line? the as temporary the sounds do you you it. view temporary just down this

Jag Reddy

We other up just the are other hopeful and temporary. point, pick in conditions non-residential pause remaining quarters hope pace of that then in it their residential and the a But the that it at QX can cautiously macro this is was optimistic we given we year. are in customer construction,

Mig Dobre

look progressing ago? when broadly, now schedules certain than material you within changes you shared Have with either and markets you the I customers look Maybe are three your or that at up if outlook, wondering there reiterating more outlook, being you understand versus sort you at of down? months by months three differently end are I you ago? expected but am been any where production that are are

Jag Reddy

Outside what website. presentation provided our have deck, post Investor we of our in right, the on

exactly reduction to publicly not or and customers Most have out highlight no companies. seeing publicly demand point. us. then in have communicated are significant indicated They traded they their We what at that’s of are call anything to this our

Todd Butz

you The a pass-through, point. about price meaning look level, had of versus high at prices other year, at When right? comment QX impact negative may of year get we material million $XX I would this make, QX steel at this a down came last of

out, level, it’s at topline but XX% So out, macro of sales stripped you when that factor to show the really growth X.X% closer our year-over-year. that

So seen have across an the in we uptake demand board.

Mig Dobre

backlog companies Jag, of along we actually of finally for kind guidance, with really, of negative many question to right? are I appreciate No. to seeing are have increased that. nature way Like but convert your lot starting not They And tilt XXXX. customers more was able the of they my guess, are the outlook I the of a raise to you maybe their a lines framed and backlog. the, revenue

my at to So least thinking…

Jag Reddy

Yeah. Yeah. That’s…

Mig Dobre

incremental for you? … that an business would translate

Jag Reddy

That’s a Mig. fair question,

powersports QX. in Todd our up did As a we indicated, pickup in pick right, volumes gains actual We share in see we did indicated. as

large in see continue ag. strength good to We

what dealer was can if small they really they lack So actually, on lot, increase Small are constrained, inventory small market our their in they share. we lots, to is ag, products hey, said, indicated right? on more heavy talking of were we the have pretty customer to their ag, ad who they us

the generally are macro predict second So, signs really in. look our one going are there right? to far. half speaking, environment can that like good given No reason The the so are really cautiousness correct you is is we positive what two-fold, for

So that’s part our caution. of

Hazel a the and our drag as the rest softer with Park optimistic about we second drag on of potential and half. are Park, right? the The to So the year second overcome Hazel cautiously one maybe in indicated, landing hoping throughout cautious is being right now, we P&L from

Mig Dobre

around final margin. is question my Okay. Understood. Then

Your margin QX, we full at for the obviously, just XX%, cost guide shy than EBITDA are not of there midpoint in year less XX%.

Todd Butz

Yeah.

Mig Dobre

to Can you. how happen get quarter think about half Thank kind second us has and the you you cadence guidance? the maybe the through to us talk second your in here? What to of

Todd Butz

that Park thing, Park, weighted, I Mig, biggest say talked year, as So we really of large first the we have. would launch the dilutive half, would XX-XX I in had impact facility. it’s a the Hey. Hazel mean the the earlier right? about is Hazel

are from projects quarter, pullback first things. Unfortunately, We and number of there. in a the delays those of up ramping some on customer the saw some we

absorption bit of were business similar we expect get a But cost will is that I the of starting location volume mean, a kind back in base that the expected run QX. that in little So and benefit cadence. maybe than we would into get improving. QX. higher as then We rate the pick up fixed into to really, that half,

year, last if our a to timing are percentage look you progression. to Park, right? this launch. of significantly, back a Hazel of with that QX Hazel continue of to QX going year if It’s matter has So So improved margin really hit Park even you we at

Jag Reddy

Yeah.

If EBITDA Just outside business on whether managing of with Todd right? job to business. to has in single metric, MBX, that. margin right, margin growth, revenue driving it’s whether growth, add right. manufacturing our it’s base company growth, it fantastic we Hazel is team The is every our base whether the of a absolutely additional Park, through think productivity done of

really centered really the schedules our of even Hazer supply with all with chain our their Park around around production is customer So driving around drag interruptions -- additional team and -- has productivity. been challenges,

improvements continue Park look I made is to am have business performing the we we really as on year we rest execution focus with year. over driving So past base Hazel the of and pleased the how the and the to

Mig Dobre

Hazel that and swing be me, to margins be versus back in the to imply margin, essentially that in margin first half swing? clear, back to is the half entirely would XX% to Park which But owe about half

Todd Butz

as right? that progresses that mean impact then Park. there in I our should year Hazel issues cost. chain that negative benefit it is the $X.X two-fold, within customer right? the quarter, Jag and launch base an the is us I which mean hopefully As mentioned, significant had supply subside, will it’s a expectation the million it some give Well, of is a

volume there’s of really get the right? to it, side -- normalized any some here cost that XX% profit if there that’s us. it’s side for right? until And about in XX% that just it the the is profit think we You So that on through to EBITDA, getting past going it turn of going of for volume benefit, sort take absorption also

Jag Reddy

Yeah.

to Park, talked have that of couple programs other bringing half. that’s addition a large start We the in we customer our to Hazel In program only are going QX. late QX second online powersports about

talked customer. about a significant customer on CV also diesel investing we facility CapEx are tanks CV Atkins program our for to in bring that We new

program that So as will help QX in, leverage well. right, assets incremental will existing These and volume increases, in better absorption. us kick our

Mig Dobre

you. Thank Okay.

Jag Reddy

Thanks, Mig.

Operator

you. Thank

De next Maria from Our the Blair. William question of Larry of comes line

Please is line Your now go open. ahead.

Jag Reddy

Good Hi. morning, Larry.

Larry De Maria

morning. guys. Good Hi,

line of on question sort some same the staying Just to here. of degree

Small this quarters your maintained EBITDA up the any the plus markets on and way don’t to the three guide in zero actually of your up of see called average charts going with the at adjusted I midpoint now we in ag You X. bit. in adjusted see your sale you to needs half EBITDA weak, the truck XX.X next go a at second weaker We little midpoint. a out shifted guess XX%

seem here, at make help with obviously, get why midpoint. hit they us to can but kind underlying you because say, bridge have the aspirational, obviously, some numbers, of we let’s to you you would points are least, these what and can a -- So

Jag Reddy

Yeah.

to on that the are indicates vehicles, Larry. negative is be volume. additional of X% year to the color We approximately Commercial on the flattish or ACT each markets, right? happy going provide

though market just the share we Even half. may sales we I with the new As programs up the in gaining are CV in be flat, in be XXXX online second expect coming our mentioned, market. to

year-over-year. going significant share. on to did in we gaining construction we access, be and we powersports, are slightly Construction But down touch access, as example, are an that

the customers We new also in but are are not coming have online that coming got existing year. only with that in new programs with throughout -- customers,

going up The I up though QX, customers just we to powersports, business the are incremental Hazel in the ramp even Park. coming powersports, continuing customers, in expect Current market late online QX, as be to be mentioned, to is them new early down. with in

both for months. the has upside Ag, in mentioned I the small us. in but strong I coming ag potential believe performer strength been ag, in a large Military also

numbers So, growth given pretty all of and year. that, feel good about our we for revenue demand the our hitting

Todd Butz

mean, the in it. quarters do midpoint, margin the at the on as And to out three average called profile, we to XX% to you not the XX% average next have I

the will facility just launch and We Jag Park mentioned other again, that to as see to the do things Hazel expect related continue launches.

to achieve reaffirmed is, that quarter-to-quarter, We you as increase that feel and margin guidance we we that of do expectation think so it. or expect we can reiterated midpoint, see our dollar and still confident our

as our we does chain, question, on -- significant impact supply Certainly, normalization you a and mentioned, supply last Mig, business. have chain

And half. so that in the will expectation is the improve we back

to be going will that those our save and bottomline. again, us dollars allow And to much more to that’s efficient

feel potentially, guidance that. really improve So think markets if we to they the upside still as -- and as think, our look quarters I maybe next stay or we we just few and expect as on good to

Larry De Maria

give a the for put growth on help in first Thanks EBITDA few another the with way, can that. or But half Yeah. maybe XX% second you next half not split And of margin. quarters, us EBITDA?

Todd Butz

I want to again, of So don’t do when you down we it’s I But $XX think was is so would maybe first that. you don’t half indicated the you of say like go -- think midpoint. a XX-XX, when versus second split, guidance, quarterly thinking million XX-XX half. kind of

continue that confident the that and margin We cards. the our the the half. things our feel right? are hoping in are in nice are Those of launches really back factors, we the will will Park, supply chain see gating Hazel we at customers alleviation issues execution, of pickup impact those the Again, progress to wild and

Larry De Maria

Okay. Thank you.

Operator

comes Moore question Tim Instructions] the from next of Our EF line Thank Hutton. you. of [Operator

go is line now ahead. Please open. Your

Jag Reddy

Good morning, Tim.

Tim Moore

Thanks…

Jag Reddy

to MEC. welcome And

Todd Butz

Tim. Hi,

Tim Moore

nice was Oh! markets. appreciate And gross was earlier, like to margin and sequential for quarterly very it. EBITDA see your year those your Jag, Thank you. to margin it expansion ago it sales helpful said was figures and of I your end get the it

what the range? whether the or slow sharing end really a and commercial want the ramp-up elaborate to and you of just facility know kind alluded quarter? the in in on half maybe your reiterate cadence thanks be Hazel commented vehicles that are the commercial the that. not hone the end or bit being would So markets more I the low and more for for second we main end so a of sales But have at can on year factor year. that your some the the to point enough Park it half in the you high fourth maybe of for it is of possibly and swing between of Is second vehicles you conservative down of guidance or just maybe the

Jag Reddy

Excuse Yeah. me.

parts. continuing to upper can’t now, Okay. get production hit customers us Tim, see is have I because through come in avenues. wide forecast is downtime will significant why think, of better. growth many customers continue of the so our One, to they we end reason the Right the to two our to range significant lines for range, their

a line production not delayed are catch That’s as to quarter, had one Mexico. for days, But up. shortage, a structural example, customers they Last CV number their lost going of sale, They rail down our right? large sale. their right, of it’s a just an shut from

to absorption situations We that’s that, have plans. and forecast, our course, to struggle continue within base our similar and across in what of under customer we results

end incentives second powersports those environment, where type the or positive. our The of will macroeconomic situations, volumes they more of not, So continue right, in swing or can range us demand our is end through increase if customers the larger higher around pull to the our hit help the will one markets right? to factories user

think pretty range will chain lower program in we we On we the good Park through supply here, ramp-up. and rates of to the right, we net-net, to see disruptions, higher growth be and stay range. we Hazel other additional that the new the continued continue side, But if drive towards can interest and sitting wins feel end continue

To Hazel whether have amount yeah, expect the range, Park itself. out are me, a range is our will that targets to versus revenues. focus we the or range don’t swing we I in or our around of our demand right? within really the numbers hitting impact. So, to be by of EBITDA margin, ramp-up on rather it significant part hazard going can the some stay hitting the of

Tim Moore

My Jag, question your parter initiative. was next is very two- helpful Great. color. around that a MBX

You mentioned key in the indicators rolled previous remarks that performance already. you out the

have of maybe some excellence So to the are question is, all catch-up commercial to each close rollout you visited and to two-part the And finishing Kaizens plans? of the your you the goal of top customers you behind wondering side? cost been months discuss bit the maybe I the a on pricing driver like pricing a it have that if versus could on just lever, over pricing inflation. little might because am next XX seems your be

Jag Reddy

productivity of skewed it, the call So quality, is right? single we It -- indicators, key has inventory. every plant delivery, safety, okay, what just it, and set performance KPIs, yes, not

right? So disputed year, performance every plant December rolled the across the month measurements last actually, reviews, in or single of So out late to been KPIs then plant rolled been company our business single that’s we have every every and track out.

of that all key we They out plant is right? laid sites, number in performed Boards, had KPI one conducted in Board the similar large each have set all single team, last significant quarter all terms every our Kaizens and second of many already MBX and were or have of up. they of them, for The responsibility

of I many in of President’s one this in Kaizens our key plants in process a plans right? the of done Kaizen our of haven’t I have So, done in small but finishing major Kaizens major are our many year, plants,

about pretty feel So our good rollout. I

right? I when take will out to to root, we like rolled As last are for months take mentioned making late year months program XX XX really progress. So this a good MBX we good that it a

back facilities came just one from Kaizen team results. week, leadership the long -- back a came tremendous had our just in We last of week

indicated We I in quarter’s will call. we highlighted it. we conducted. Kaizens around of that those projects of next about great And the talk QX presentation, as our energy we the see some see I a lot in momentum.

for they each of right? visiting back plans other our back Learning from implement taking right, First home learnings the many of to them. are some plants, to time other and their employees,

I a plant energized for am us just it’s really initiative by drive I not I So been continue in time great a go positive, am and to and every positive, these week improvements. spend really a

Tim Moore

helpful if end sharing in it. it filling had question think doing powersports, Thanks next do it vehicle -- -- of about with you electrification the be programs would you electric next market And color. year? would and haven’t of the an estimate more Hazel yet you you vehicles, could overall And just of you do there, all if what recreational be percentage sales, Hazel for maybe be What possibly of I you your next of sales are take as even could maybe X% everything, when for stuff? type then some question, really if Park. more an you recreational expect EVs close can is ag closures, battery to year be program, you have That’s my ramp-up maybe a if electrification is your the Park on

Jag Reddy

how of a market, do the market same EV quantifying that. the count, can we sometimes, in also CV challenging program, We count then and right? et Tim, because are It’s in in bit little We cetera. process the

to we continue define track. So we how keep will

electric is I say under programs. right content going now to be X% of going better we would are vehicle into our

that get during do Next more to digits will the But in we X%. but year, Investor coming to on get that years, year. we later Day -- we will upper have think single this we did perhaps, a will our topic

And then you question did ask me Park. Hazel another

go access don’t or In what into Park. sort agriculture. military vehicles; terms Hazel of Hazel We markets Park. products powersports; end commercial at going Certainly, type programs expect, of are either to point, into this certainly certainly,

Tim Moore

of be will going of technology. bolt-on expect by more end making can helpful. search be maybe inorganic next-generation something like inroads that of time sounds announced acquisition that. the My appreciate for renewables, cleaner is, is on last products frame the question into year? It an how we That’s the that, it to and lightweight strategy and I the

Jag Reddy

No I our Development. predict be one here, General Counsel for our company. mentioned a predict last having that, as our we able Corporate you. go another mean, company when right? But to Head of obviously, certain hired I Sitting said can won’t Leuba, acquire Sean that can right? and We call, in

able Head execute and a it’s when and really busy, was for right? Caterpillar keeping to for that be Development the right, opportunity us Corporate arises, right He building been process good to of pipeline building

our the So I of both is still customer bullish many vehicles am see through coming frames us in demand invest lightweight place for and for that commercial and I customers, this content. lightweight to from and and to continue construction go ag

So we beef are market pretty that so the bullish arena. our future in on up we that of can we and to that pipeline invest continue

Tim Moore

for That’s a it lot, Great. questions. appreciate it. my Jag. I Thanks

Jag Reddy

Tim. you, Thank

Operator

you. Thank

time. this conference over at waiting questions to for additional no remarks. back with are Reddy I hand there will closing As Jag Mayville the

Jag Reddy

again, our contact Ryan you you joining any Once, Noel or questions, Should Stefan… call. thank please have for

[Abruptly Ended]

Mayville Engineering (MEC) 3 May 232023 Q1 Earnings call transcript