The following is a summary of the Mayville Engineering Company, Inc. (MEC) Q4 2023 Earnings Call Transcript:

Financial Performance:

• In Q4, MEC reported year-over-year organic revenue growth, increased profitability, and record free cash flow generation with a noteworthy $19.9 million.

• It achieved a reduction in net debt to a ratio of 2.1x to the trailing 12 months adjusted EBITDA, on track for a further decrease to between 1.5x and 2x by 2024.

• The company demonstrated a commitment to shareholder returns via $2 million open market share repurchases.

• The 2024 financial guidance issued includes net sales of $620 million to $640 million, adjusted EBITDA of $72 million to $76 million, and free cash flow of $35 million to $45 million.

• Ambitious 2026 targets have been set, including revenue of $750 million to $850 million, adjusted EBITDA margins of 14% to 16%, and free cash flow of $65 million to $75 million.

Business Progress:

• Strategic moves by MEC include expansion into higher-value markets, improved operational discipline, and investment in high-return capital-light advancements, including automation and robotics.

• The company foresees new project launches and market share gains offsetting the anticipated demand headwinds in key end markets throughout 2024.

• There are plans for the Hazel Park facility to achieve $100 million in annual sales by 2024, intending a 100 to 150 basis point rise in margin improvement by 2026.

• MEC plans to utilize the expected $35 to $45 million in free cash flow in 2024 for debt reduction and opportunistic share repurchases.

• In the future, the company envisions further growth through M&A, targeting high-growth adjacent end markets as they reach their net leverage goals.

• There is a strong backlog for Q1 of 2024, with adequate prospects for Q2, although a slight decline is predicted toward the second half of the year.

More details: Mayville Engineering IR

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