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What changed in Mayville Engineering Company, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Mayville Engineering Company, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+204 added−216 removedSource: 10-K (2025-03-06) vs 10-K (2024-03-06)

Top changes in Mayville Engineering Company, Inc.'s 2024 10-K

204 paragraphs added · 216 removed · 152 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

51 edited+7 added−23 removed80 unchanged
Biggest changeImportant 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 I, Item 1A of this Annual Report on Form 10-K for the year ended December 31, 2023, as such may be amended or supplemented in Part II, Item 1A of our subsequently filed Quarterly Reports on Form 10-Q, and the following: ● Macroeconomic conditions, including inflation, elevated interest rates and recessionary concerns, as well as continuing supply chain constraints affecting some of our customers, labor availability and material cost pressures, have had, and may continue to have, a negative impact on our business, financial condition, cash flows and results of operations (including future uncertain impacts); ● risks relating to developments in the industries in which our customers operate; ● risks related to scheduling production accurately and maximizing efficiency; ● our ability to realize net sales represented by our awarded business; ● failure to compete successfully in our markets; ● our ability to maintain our manufacturing, engineering and technological expertise; ● the loss of any of our large customers or the loss of their respective market shares; ● risks related to entering new markets; ● our ability to recruit and retain our key executive officers, managers and trade-skilled personnel; ● volatility in the prices or availability of raw materials critical to our business; ● manufacturing risks, including delays and technical problems, issues with third-party suppliers, environmental risks and applicable statutory and regulatory requirements; ● our ability to successfully identify or integrate acquisitions; ● our ability to develop new and innovative processes and gain customer acceptance of such processes; 1 Table of Contents ● risks related to our information technology systems and infrastructure; ● geopolitical and economic developments, including foreign trade relations and associated tariffs; ● results of legal disputes, including product liability, intellectual property infringement and other claims; ● risks associated with our capital-intensive industry; ● risks related to our treatment as an S Corporation prior to the consummation of our initial public offering of common stock (IPO); and ● risks related to our employee stock ownership plan’s treatment as a tax-qualified retirement plan.
Biggest changeImportant 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 I, Item 1A of this Annual Report on Form 10-K for the year ended December 31, 2024, and as such may be amended or supplemented in Part II, Item 1A of our subsequently filed Quarterly Reports on Form 10-Q, and the following: ● Macroeconomic conditions, including inflation, elevated interest rates, labor availability, material cost pressures and inconsistent customer demand, have had, and may continue to have, a negative impact on our business, financial condition, cash flows and results of operations (including future uncertain impacts); ​ ● risks relating to developments in the industries in which our customers operate; ● risks related to scheduling production accurately and maximizing efficiency; ● our ability to realize net sales represented by our awarded business; ● failure to compete successfully in our markets; ● our ability to maintain our manufacturing, engineering and technological expertise; ● the loss of any of our large customers or the loss of their respective market shares; ● risks related to entering new markets; ● our ability to recruit and retain our key executive officers, managers and trade-skilled personnel; ● volatility in the prices or availability of raw materials critical to our business; ● manufacturing risks, including delays and technical problems, issues with third-party suppliers, environmental risks and applicable statutory and regulatory requirements; ● our ability to successfully identify or integrate acquisitions; ● our ability to develop new and innovative processes and gain customer acceptance of such processes; 1 Table of Contents ● risks related to our information technology systems and infrastructure; ● geopolitical and economic developments, including foreign trade relations and associated tariffs; ● results of legal disputes, including product liability, intellectual property infringement and other claims; ● risks associated with our capital-intensive industry; ● risks related to our treatment as an S Corporation prior to the consummation of our initial public offering of common stock (IPO); ● risks related to our employee stock ownership plan’s treatment as a tax-qualified retirement plan; and ● our ability to remediate the material weakness in internal control over financial reporting identified in preparing our financial statements included in this Annual Report on Form 10-K, and to subsequently maintain effective internal control over financial reporting.
We build and service all categories of tooling, including large progressive dies. ● Laser Cutting ¾ Our programmable fiber and CO2 laser cutting capabilities eliminate expensive hard tooling. Our equipment can cut metal up to 1 inch thick while maintaining tolerances to .002 inches at speeds up to 4,000 per minute.
We build and service all categories of tooling, including large progressive dies. ● Laser Cutting ¾ Our programmable fiber and CO2 laser cutting capabilities eliminate expensive hard tooling. Our equipment can cut metal up to 1 inch thick while maintaining tolerances to .002 inches at speeds up to 4,000 watts per minute.
Most recently, we have invested in multiple fiber laser systems, robotic brake presses and tube bending cells with automation aimed at reducing labor content and optimizing floor space which allows us to generate more revenue with the same workforce and footprint.
Most recently, we have invested in multiple fiber laser systems, robotic brake presses, cobots and tube bending cells with automation aimed at reducing labor content and optimizing floor space which allows us to generate more revenue with the same workforce and footprint.
We maintain a full spectrum of capabilities across our 23 facilities to address a wide set of customer needs, including upfront product development advice and prototyping, unique manufacturing processes and capabilities across a variety of products and back-end finishing, assembly and aftermarket components representing a unique end-to-end offering.
We maintain a full spectrum of capabilities across our facilities to address a wide set of customer needs, including upfront product development advice and prototyping, unique manufacturing processes and capabilities across a variety of products and back-end finishing, assembly and aftermarket components representing a unique end-to-end offering.
These two examples of investments in technology-enabled infrastructure allow us to reallocate our workforce, as employees can be retrained and redeployed into more technically skilled positions. In today’s ever-changing labor market, the ability to redeploy labor to increase flexibility and capacity for our customers is of the utmost importance and interest.
These investments in technology-enabled infrastructure allow us to reallocate our workforce, as employees can be retrained and redeployed into more technically skilled positions. In today’s ever-changing labor market, the ability to redeploy labor to increase flexibility and capacity for our customers is of the utmost importance and interest.
We make available free of charge (other than an investor’s own internet access charges) through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, amendments to these reports and our proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the United States Securities and Exchange Commission (the SEC). 12 Table of Contents
We make available free of charge (other than an investor’s own internet access charges) through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, amendments to these reports and our proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the United States Securities and Exchange Commission (the SEC).
Medium-duty commercial vehicles include classes 3-7 trucks such as box trucks; ● Construction & Access Equipment: Primary applications include wheel loaders, crawlers, skid steer loaders, excavators, motor graders, aerial lifts, boom lifts and other construction equipment; ● Powersports: Encompasses our all-terrain (ATV) and multi-utility (MUV) vehicles, as well as marine and motorcycle markets; ● Agriculture: Primary applications include tractors, combines, sprayers, turf care, implements and other agriculture-related equipment; ● Military: We provide a variety of components for military vehicle platforms; ● Other: We provide components and assemblies to a variety of other industrial end markets, such as energy infrastructure, electric vehicles, industrial equipment and fixtures, consumer tools, mining, forestry, medical and the automotive end market.
Medium-duty commercial vehicles include classes 3-7 trucks such as box trucks; ● Construction & Access Equipment: Primary applications include wheel loaders, crawlers, skid steer loaders, excavators, motor graders, aerial lifts, boom lifts and other construction equipment; ● Powersports: Encompasses our all-terrain (ATV) and multi-utility (MUV) vehicles, as well as marine and motorcycle markets; ● Agriculture: Primary applications include tractors, combines, sprayers, turf care, implements and other agriculture-related equipment; ● Military: We provide a variety of components for military vehicle platforms; ● Other: We provide components and assemblies to a variety of other industrial end markets, such as power generation, industrial equipment and fixtures, consumer tools, mining, forestry, medical and the automotive end market.
While each specific OEM differs in its strategy, we see these trends continuing as customers deal with workforce and supply chain constraints and look for optimum return on investments while improving cash flow.
While each specific OEM differs in its strategy, we see these trends continuing as customers deal with workforce constraints and look for optimum return on investments while improving cash flow.
For example, our more than 40-year relationship with Deere & Company (John Deere) began with a small order of simple stamped parts for a farm tractor in its agricultural segment that expanded over time and represented 2023 sales in excess of $87 million across five market segments, representing over 65 model platforms.
For example, our more than 40-year relationship with Deere & Company (John Deere) began with a small order of simple stamped parts for a farm tractor in its agricultural segment that expanded over time and represented 2024 sales in excess of $65 million across five market segments, representing over 65 model platforms.
Our depth of capabilities allows us to offer our customers: ● low volume production capability; 4 Table of Contents ● customized and sophisticated solutions; ● unique engineering and manufacturing capabilities throughout the product lifecycle; ● critical scale to service large national and regional customers as well as local customers; and ● the ability to act as a single point of contact and offer seamless customer service.
Our depth of capabilities allows us to offer our customers: ● low volume production capability; ● customized and sophisticated solutions; ● unique engineering and manufacturing capabilities throughout the product lifecycle; ● critical scale to service large national and regional customers as well as local customers; and ● the ability to act as a single point of contact and offer seamless customer service.
Our range of capabilities combined with our breadth of components, including fabrications, tubes, tanks, and performance structures, expands the applicable uses and end markets in which we may offer our components.
Our range of capabilities combined with our breadth of components, including fabrications, tubes, tanks, performance structures and aluminum extrusions, expands the applicable uses and end markets in which we may offer our components.
Moreover, as our heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, and agriculture customers’ revenues fluctuated from 2013 to 2017, with median peak-to-trough sales decline of 23%, our peak-to-trough sales declines were less than that of those respective markets at only 10%.
For example as our heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, and agriculture customers’ revenues fluctuated from 2013 to 2017, with median peak-to-trough sales decline of 23%, our peak-to-trough sales declines were less than that of those respective markets at only 10%.
Further, as these fluctuations affect the market, we are favorably positioned to benefit from the broader trend of our OEM customers consolidating to fewer and more sophisticated suppliers in order to improve quality and delivery while lowering the total cost of doing business.
Further, as these fluctuations affect the market, we are favorably positioned to benefit from the broader trend of our OEM customers consolidating to fewer and more sophisticated suppliers in order to improve quality and delivery 3 Table of Contents while lowering the total cost of doing business.
According to the Fabricator magazine, we have been ranked as the largest fabricator in the United States for the past 13 years in a row (2011 – 2023). The market is highly fragmented and characterized by high barriers to entry given the complex nature of the work, established relationships and high customer switching costs.
According to the Fabricator magazine, we have been ranked as the largest fabricator in the United States for the past 14 years in a row (2011 – 2024). The market is highly fragmented and characterized by high barriers to entry given the complex nature of the work, established relationships and high customer switching costs.
According to The Fabricator magazine, we have been ranked as the largest fabricator in the United States for the past 13 years in a row (2011 – 2023). Our customers’ complex products require a unique combination of our capabilities that allow us to achieve a customized offering to satisfy our customers’ desired outcomes.
According to The Fabricator magazine, we have been ranked as the largest fabricator in the United States for the past 14 years in a row (2011 – 2024). Our customers’ complex products require a unique combination of our capabilities that allow us to achieve a customized offering to satisfy our customers’ desired outcomes.
Further enhancing our benefit offerings, we provide an on-site healthcare team at certain facilities to treat work and non-work related injuries and assist employees with general wellness and overall well-being. Lastly, MEC has several initiatives centered around employee appreciation, which include: cookouts and holiday lunches, Fresh Market food program and quarterly bonuses.
Further enhancing our benefit offerings, we provide an on-site healthcare team at certain facilities to treat work and non-work related injuries and assist employees with general wellness and overall well-being. Lastly, MEC has several initiatives entered around employee appreciation which include: cookouts, holiday lunches and a Fresh Market food program.
This consolidation trend will allow us to grow and protects our cash flow as markets change and shift. 3 Table of Contents We have also experienced, and benefitted from, OEM trends seeking to improve their strategy execution and simplify their business through outsourcing and reshoring.
This consolidation trend will allow us to grow and protects our cash flow as markets change and shift. We have also experienced, and benefitted from, OEM trends seeking to improve their strategy execution and simplify their business through outsourcing and reshoring.
For example, our diverse manufacturing capabilities across product lines have contributed to us being selected the Largest Fabricator by The Fabricator magazine’s “FAB 40” listing in the desirable U.S. markets for the past 13 years in a row (2011 – 2023).
For example, our diverse manufacturing capabilities across product lines have contributed to us being selected the Largest Fabricator by The Fabricator magazine’s “FAB 40” listing in the desirable U.S. markets for the past 14 years in a row (2011 – 2024).
Our key customers have globally recognized brands and demand the highest product quality and expertise. Over our more than 75-year history, we have developed capabilities and provided solutions that result in customer loyalty and long-standing relationships, which we call “The MEC Advantage”.
Our key customers have globally recognized brands and demand the highest product quality and expertise. Over our nearly 80-year history, we have developed capabilities and provided solutions that result in customer loyalty and long-standing relationships, which we call “The MEC Advantage”.
For example, we provide John Deere, a leading customer with 2023 net sales accounting for 14.8% of our total revenue, with over 5,000 SKUs across over 65 individual John Deere platforms including the agriculture, forestry, turf care, power systems and construction & access equipment end markets.
For example, we provide John Deere, a leading customer with 2024 net sales accounting for 11.3% of our total revenue, with over 5,000 SKUs across over 65 individual John Deere platforms including the agriculture, forestry, turf care, power systems and construction & access equipment end markets.
While there are numerous competitors in the markets in which we operate, few maintain the product breadth, manufacturing capabilities, scale or engineering expertise that we do.
While there are numerous competitors in the markets in which we operate, few maintain the product 4 Table of Contents breadth, manufacturing capabilities, scale or engineering expertise that we do.
The Company is focused on increasing our investment in our workforce and the recruiting and retention of skilled, experienced employees to support the growth of its business. We seek to utilize competitive, performance-based incentives, develop high-potential candidates for internal development and advancement, ensure business continuity through multi-tiered succession planning and ensure a stable recruiting pipeline.
The Company remains focused on increasing our investment in our workforce and the recruiting and retention of skilled, experienced employees to support the growth of its business. This component of MBX is designed to provide competitive, performance-based incentives, develop high-potential candidates for internal development and advancement, ensure business continuity through multi-tiered succession planning and ensure a stable recruiting pipeline.
We maintain a multitude of alternative 9 Table of Contents suppliers to which we could transfer orders to, if needed. As we continue to grow, however, we intend to leverage our size and scale to rationalize our supply base to further reduce material costs.
Our suppliers are strategically located to maximize efficiencies and minimize shipping costs. We maintain a multitude of alternative 9 Table of Contents suppliers to which we could transfer orders to, if needed. As we continue to grow, however, we intend to leverage our size and scale to rationalize our supply base to further reduce material costs.
Our Code of Conduct Policy covers such topics as conducting Company affairs and fair dealing, conflicts of interest, compliance and disclosures, proper use of Company assets, protecting confidential information and reporting and enforcement of Code of Conduct violations.
Our Code of Conduct Policy covers such topics as freedom from discrimination, freedom of harassment, non-retaliation, conducting Company affairs and fair dealing, conflicts of interest, compliance and disclosures, proper use of Company assets, protecting confidential information and reporting and enforcement of Code of Conduct violations.
Sales personnel are aligned by market segment and customer, including heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, agriculture, military and other end markets, and employ a highly technical and collaborative sales process with deep knowledge of our customers and capabilities. Sales personnel have assigned support teams comprised of inside sales, commercial operations, marketing and sales administration personnel.
Sales personnel are aligned by market segment and customer, including heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, agriculture, military and other end markets, and employ a highly technical and collaborative sales process with deep knowledge of our customers and capabilities.
In 2023, our top customer and top ten customers accounted for 15.0% and 74.6% of net sales, respectively, which collectively represents hundreds of platforms that we serve across a variety of end markets and customer operating segments.
In 2024, our top customer and top ten customers accounted for 16.8% and 70.6% of net sales, respectively, which collectively represents hundreds of platforms that we serve across a variety of end markets and customer operating segments.
Health and safety The safety, health and well-being of our employees is one of the Company’s top priorities. Our “Work MEC Safe” program creates a strong safety culture based on five key elements: Inspire, Lead, Analyze, Educate and Recognize.
Health and safety The safety, health and well-being of our employees is one of the Company’s top priorities, and we are committed to providing a safe workplace for all of our employees. Our “Work MEC Safe” program creates a strong safety culture based on five key elements: Inspire, Lead, Analyze, Educate and Recognize.
As part of this initiative, our intentions are to prioritize capital investment towards the light-weighting of materials fabrication, such as aluminum, plastics, and composites, to ensure we are in position to support growth into battery electric vehicles, energy infrastructure and renewables. Human Resource Optimization.
As part of this initiative, our intentions are to prioritize capital investment towards the light-weighting of materials fabrication, such as aluminum, plastics, and composites, to ensure we are in position to support growth within high-growth energy transition markets. Human Resource Optimization.
The Company is focused on driving commercial growth through an integrated, solutions-oriented approach that leverages its full suite of design, prototyping and aftermarket services; an expansion of its fabrication capabilities beyond steel, with an emphasis on lightweight aluminum, plastics and composites; targeted growth in higher value and high-growth adjacent markets including energy transition and clean technology; wallet share expansion among our current customer base; and the implementation of a value-based pricing model capturing the cost to serve.
The Company is focused on driving commercial growth through an integrated, solutions-oriented approach that leverages its full suite of design, prototyping and aftermarket services; an expansion of its fabrication capabilities beyond steel, with an emphasis on lightweight aluminum, plastics and composites; diversification within high-growth energy transition markets; further market penetration within existing end markets; and the implementation of a value-based pricing model capturing the cost to serve.
As part of this effort, the Company moved its corporate headquarters to Milwaukee, WI in 2024. Additionally, as we continue to invest in our business and increasingly implement a more technology-enabled infrastructure, we strive to redeploy our employees in other, higher-skilled areas of our business and invest in training where needed.
Additionally, as we continue to invest in our business and increasingly implement a more technology-enabled infrastructure, we strive to redeploy our employees in other, higher-skilled areas of our business and invest in training where needed.
We have a track record of growth and are well-positioned to increase our market share and benefit from the growth in customer demand as well as the secular trends of reshoring and outsourcing across the end markets that we serve. To help pursue our strategic mission, we have approximately 2,500 employees who are tactically aligned around our core values.
We have a track record of growth and are well-positioned to increase our market share and benefit from the growth in customer demand as well as the secular trends of reshoring and outsourcing across the end markets that we serve.
We have leveraged our purchasing power to make significant investments in operational infrastructure throughout our history, in items such as flexible and re-deployable automation and capacity improvements to enhance throughput, quality and consistency. For example, we were one of the first in our industry to adopt fiber lasers and have continued to invest in this capability.
We have leveraged our technical expertise within capital expenditure programs to make significant investments in operational infrastructure throughout our history via flexible and re-deployable automation, creating capacity, enhancing throughput, quality, and consistency. For example, we were one of the first in our industry to adopt fiber lasers and have continued to invest in this metal cutting capability.
The Company is focused on effectuating cultural change across the organization by the implementation of performance-based metrics, daily lean management and other process-oriented strategies. Through these efforts, the Company intends to create a high-performance culture enabling teams to drive profitable growth. Operational Excellence.
The Company is focused on effectuating cultural change across the organization by the implementation of performance-based metrics, lean daily management and other process-oriented strategies. Through these efforts, the Company is building a high-performance culture capable of driving improved performance, asset utilization and cost optimization. Operational Excellence.
Through this expansion, with product shipping from multiple facilities, we have been able to deepen our relationship and expand our market position through each of their new product updates, solidifying us as a strategic partner. We serve our customers through 23 strategically located U.S. facilities, across seven states, with more than three million square feet of manufacturing capacity.
Through this expansion, with product shipping from multiple facilities, we have been able to deepen our relationship and expand our market position through each of their new product updates, solidifying us as a strategic partner.
In addition, the ongoing investment in flexible, re-deployable automation allows us to expand output while reducing cost and improving quality, productivity and consistency for margin enhancement and market leading competitiveness.
Coupled with our focus on market alignment and execution, we constantly strive to improve and refine capabilities, capacities and reduce our carbon footprint. In addition, the ongoing investment in flexible, re-deployable automation allows us to expand output while reducing cost and improving quality, productivity and consistency for margin enhancement and market leading competitiveness.
Our broad capabilities offering and track record of producing the highest quality solutions have allowed us to establish, and subsequently deepen, relationships with additional products and platforms over time.
We maintain an established base of long-standing customers comprised of leading, blue-chip OEM manufacturers across the United States. Our broad capabilities offering and track record of producing the highest quality solutions have allowed us to establish, and subsequently deepen, relationships with additional products and platforms over time.
We are led by an experienced management team that has contributed to our growth by establishing deep and long-standing relationships with key customers and has worked to expand the customer base both organically and through strategic acquisitions. 2 Table of Contents We maintain an established base of long-standing customers comprised of leading, blue-chip OEM manufacturers across the United States.
To help pursue our strategic mission, we have approximately 2,200 employees who are tactically 2 Table of Contents aligned around our core values. We are led by an experienced management team that has contributed to our growth by establishing deep and long-standing relationships with key customers and has worked to expand the customer base both organically and through strategic acquisitions.
Further, we are diversified by customers and end markets with net sales attributed to our top 20 customers accounting for $503 million of 2023 net sales, and no single end market accounting for more than 38% of net sales.
Further, we are diversified by customers and end markets with net sales attributed to our top 20 customers accounting for $478 million of 2024 net sales, and no single end market accounting for more than 38% of net sales. For the year ended December 31, 2024, PACCAR Inc. and John Deere accounted for 16.8% and 11.3% of net sales, respectively.
Lehr earned a Bachelor of Science in Business Administration with a Major in Accounting from Marquette University. Available Information Our website address is www.mecinc.com. We are not including the information provided on our website as a part of, or incorporating it by reference into, this Annual Report on Form 10-K.
We are not including the information provided on our website as a part of, or incorporating it by reference into, this Annual Report on Form 10-K.
Environmental Matters We are subject to numerous federal, state and local laws and regulations relating to manufacturing, handling and disposal of materials into the environment.
Environmental Matters We are subject to numerous federal, state and local laws and regulations relating to manufacturing, handling and disposal of materials into the environment. We believe that our environmental control procedures are adequate. ​ 11 Table of Contents Available Information Our website address is www.mecinc.com.
The sales process typically takes 3 to 18 months and ultimately ends in the implementation of product lifecycle timelines and purchase orders under long-term customer arrangements. The sales team utilizes systems infrastructure that effectively track and manage backlogs, quotes and bookings information, strategic projects and call reports, all of which are reviewed at weekly sales team meetings.
The sales team utilizes systems infrastructure that effectively track and manage backlogs, quotes and bookings information, strategic projects and call reports, all of which are reviewed at weekly sales team meetings.
Our Human Capital Management As of December 31, 2023, we had approximately 2,500 full-time employees, approximately 1,900 of whom are production employees. None of our employees are represented by a union and we are not party to any collective bargaining agreements.
Additionally, we believe our success depends on our ability to attract, develop and retain highly skilled employees. As of December 31, 2024, we had approximately 2,200 full-time employees, approximately 1,700 of whom are production employees. None of our employees are represented by a union and 10 Table of Contents we are not party to any collective bargaining agreements.
We strive to maintain our assets or upgrade capabilities where deterioration has driven obsolescence or better technology is available, reducing our carbon footprint.
We maintain an advanced machinery portfolio in our facilities allowing us to leverage our employee workforce with state-of-the-art capabilities and functionality. We strive to maintain our assets or upgrade capabilities where deterioration has driven obsolescence or better technology is available, reducing our carbon footprint.
Our coating capabilities offer a full-range of high technology industrial coating capabilities, including: E-Coat, military certified CARC, commercial and industrial powder and liquid coatings. Our coating systems utilize direct-to-metal and pre-treatments including acid pickle, zinc phosphate and in-line Alodine for the conversion of aluminum.
Our coating capabilities offer a full-range of high technology industrial applications, including: E-Coat, military certified CARC, commercial and industrial powder and liquid coatings.
Moreover, the agility that our quick response manufacturing methodology provides us keeps our purchasing, manufacturing, engineering and quality teams on the cutting edge of flexible manufacturing.
Moreover, the agility that our quick response manufacturing methodology provides keeps our purchasing, 8 Table of Contents manufacturing, engineering and quality teams on the cutting edge of flexible manufacturing. This adaptable approach also decreases manufacturing costs, allows for faster order turnaround times and elimination of excess waste.
Refer to Note 18 – Stock-based compensation within the Notes to Consolidated Financial Statements for additional detail related to our stock-based compensation program.
All full-time employees are offered an incentive program and select employees responsible for driving results are eligible to receive stock-based compensation through our Omnibus Incentive Plan. Refer to Note 18 – Stock-based compensation within the Notes to Consolidated Financial Statements for additional detail related to our stock-based compensation program.
We are consistently involved in the request for proposal processes, where our sales teams with deep process expertise collaborate with customers on optimal designs for manufacturability and manufacturing efficiency. The upfront collaboration drives formalization of product specifications, program lifecycle planning, cost estimates and risk mitigation.
Sales personnel have assigned support teams comprised of inside sales and account management, commercial operations, estimating and application engineering and marketing personnel. We are consistently involved in the request for proposal processes, where our sales teams with deep process expertise collaborate with customers on optimal designs for manufacturability and manufacturing efficiency.
Raw Materials and Manufactured Components Our primary purchased commodities are steel and aluminum. We maintain a broad and diverse base of over 800 direct material suppliers. Our established relationships provide efficient and flexible access to resources and redundancy to ensure support of our customers. We have no history of significant supply issues or outages.
Our established relationships provide efficient and flexible access to resources and redundancy to ensure support of our customers. We have no history of significant supply issues or outages. In 2024, no single supplier represented more than 12% of our total raw material purchases and over 98% of the raw materials we purchased were sourced from suppliers in the United States.
Our expansive footprint enables us to service and maintain strong relationships with existing key customers across the United States with a “local” presence, as well as target new customer opportunities. Coupled with our focus on market alignment and execution, we constantly strive to improve and refine capabilities, capacities and reduce our carbon footprint.
We serve our customers through 23 strategically located U.S. facilities, of which 22 are in use, across seven states, with more than three million square feet of manufacturing capacity. Our expansive footprint enables us to service and maintain strong relationships with existing key customers across the United States with a “local” presence, as well as target new customer opportunities.
On average, our employees have approximately nine years of service with us. ​ 10 Table of Contents Training and development We maintain an experienced and skilled workforce. We have been focused on attracting and retaining high quality personnel as they represent a critical factor in our continued success.
On average, our employees have approximately nine years of service with us. Training and development We invest in developing and maintaining a highly skilled workforce. Our employees pursue diverse career paths through on-the-job training, certification programs, and tuition reimbursement.
For the year ended December 31, 2023, PACCAR Inc., John Deere and AB Volvo accounted for 15.0%, 14.8% and 10.6% of net sales, respectively. We have not historically experienced customer attrition given high customer switching costs resulting from our embedded relationships driven by our broad capabilities and scale.
We have not historically experienced customer attrition given high customer switching costs resulting from our embedded relationships driven by our broad capabilities and scale. Raw Materials and Manufactured Components Our primary purchased commodities are steel and aluminum. We maintain a broad and diverse base of over 800 direct material suppliers.
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Throughout the past couple of years, we have implemented 10,000- and 12,000-watt fiber lasers with an automation tower, which are on average three times faster, provide a cleaner, more precise cut and use one-third the power of traditional CO2 lasers, with a payback period of less than two years.
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We continue to implement new high wattage fiber lasers with connected material handling automation systems. These connected machines are multiple times faster with more precision and consume less power than similar machines from a few years ago. Additionally, we operate robotic press brakes at several locations with a continuous shift towards precision and automation.
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Additionally, the implementation of robotic brakes has improved quality through a continued shift towards precision automation. By reducing setup procedures, manual employee lifting requirements and downtime while offering additional capacity, the implementation of robotic brakes has resulted in a payback period of approximately two years.
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By reducing setup times, faster speeds, accuracy, better ergonomics and employee interactions, these investments have resulted in attractive paybacks. Furthermore, we implemented cobots for welding and material handling applications at several facilities improving labor utilization and plan to continue with further investment in this technology.
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This adaptable approach also decreases manufacturing costs, allows for faster order turnaround times and elimination of excess waste. 8 Table of Contents We maintain an advanced machinery portfolio in our facilities allowing us to leverage our employee workforce with state-of-the-art capabilities and functionality.
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Our coating systems utilize direct-to-metal and pre-treatments including acid pickle, zinc phosphate and in-line Alodine for the conversion of aluminum. ● Lean and Continuous Improvement ¾ Through our formal, robust MBX system, MEC is driving lean and continuous improvement in every facet of our business. Eliminating waste leads to value creation, overall customer satisfaction and revenue growth.
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For example, we experienced net sales growth during the 2008 and 2009 recessions due to strong orders, particularly from our customers focused on the military end market.
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The upfront collaboration drives formalization of product specifications, program lifecycle planning, cost estimates and risk mitigation. The sales process typically takes 3 to 18 months and ultimately ends in the implementation of product lifecycle timelines and purchase orders under long-term customer arrangements.
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In 2023, no single supplier represented more than 16% of our total raw material purchases and over 98% of the raw materials we purchased were sourced from suppliers in the United States. Our suppliers are strategically located to maximize efficiencies and minimize shipping costs.
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Our Human Capital Management We build a high-performance culture where employees are empowered to innovate and deliver premium products to our customers. Our “One MEC, One Mission” values guide how we work and interact with each other. Our foundation rests on integrity, respect, and teamwork, alongside our commitment to agility, customer focus, and collaboration.
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There are many different career paths available to employees, and in order to assist in their career development, we offer multiple in-house training programs, mentorship programs and tuition reimbursement.
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We support talent development at all levels through our annual performance review process, which includes creating individual development plans for employee growth. While hiring skilled trade workers remains challenging across our industry, our investments in new technologies and capabilities enable us to retrain employees from traditional roles for other positions within the Company.
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Our talent development efforts span across all levels of the organization, including an annual performance review process, which includes a development plan assessment allowing employees to discuss and build development plans with their leaders to develop their careers and an executive coaching program that prepares our future leaders for increased responsibilities at MEC.
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Compensation and benefits We provide competitive compensation and comprehensive benefits, benchmarking our packages annually against similar industries in our facilities locations. Our compensation strategy aims to reward performance, support the Company’s goals, and attract and retain top talent. Our stock-based compensation plan helps us maintain competitive total compensation packages while incentivizing long-term company performance.
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Despite the recent market challenges in hiring trade-skilled employees, our continued investment in newer technologies and capabilities has allowed us to opportunistically re-train and redeploy employees from certain previously human capital-intensive roles into other areas of the Company.
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Compensation and benefits We believe we deliver highly competitive compensation and comprehensive benefit packages, annually benchmarking them against comparable industries in the same geographic vicinity to where our facilities are located. The goals of our compensation programs are to: align pay for performance, support the Company’s goals and attract, retain and motivate high-potential candidates.
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Additionally, our stock-based compensation plan is a key part of how we stay competitive from a total compensation perspective, as it incentivizes and rewards sustained Company performance. Select employees responsible for driving results are eligible to receive stock-based compensation through our Omnibus Incentive Plan.
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We believe that our environmental control procedures are adequate. 11 Table of Contents Information About Our Executive Officers The following table sets forth certain information as of February 1, 2024, regarding our executive officers: ​ ​ ​ ​ ​ Name Age Position Jagadeesh A. Reddy ​ 52 ​ President and Chief Executive Officer Todd M.
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Butz ​ 52 ​ Chief Financial Officer Ryan F. Raber 41 Executive Vice President - Strategy, Sales & Marketing Sean P. Leuba ​ 53 ​ Senior Vice President - Corporate Development and General Counsel Rachele M. Lehr ​ 47 ​ Chief Human Resources Officer ​ Jagadeesh A.
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Reddy joined our company as President, Chief Executive Officer and as a member of the Board of Directors in July 2022. Before joining our company, Mr. Reddy was a member of the senior leadership team at W.R.
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Grace where he was responsible for the Strategy and Growth function as well as Managing Director of Advanced Refining Technologies LLC (ART), Grace’s global joint venture with Chevron. Mr. Reddy previously served as Vice President and General Manager, Water Technologies Strategic Business Unit, and Vice President, Corporate Strategy at Pentair PLC.
Removed
Prior to Pentair PLC, he held strategy and business leadership roles at ITT Corporation, and its spin-off, Xylem Inc, spent time in M&A roles with United Technologies Corp, product management roles with Danaher Corporation and started his career in manufacturing operations at Denso Corporation. Mr.
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Reddy earned a Master of Business Administration in Finance and Strategy from the Kellogg School of Management and a Master’s in Engineering Management from the McCormick School of Engineering, both at Northwestern University. He also holds a Master’s in Industrial Engineering from the University of Tennessee, and a Bachelor’s in Mechanical Engineering from a university in India. Todd M.
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Butz joined our company in 2008 and has served as our Chief Financial Officer since January 2014. Mr. Butz also serves on the Board of Trustees for Marian University. Prior to joining our company, Mr.
Removed
Butz spent time in various roles including Manager of Worldwide Financial Reporting at Mercury Marine, a subsidiary of the Brunswick Corporation, and Audit Supervisor at Schenck Business Solutions, now Clifton Larsen Allen. Mr. Butz earned a Bachelor of Science in Accounting and Business Management from Marian University and is currently a licensed certified public accountant. Ryan F.
Removed
Raber joined our company in 2009 and has served as our Executive Vice President – Strategy, Sales & Marketing since June 2019. Prior to serving in his current position, Mr. Raber served as our Executive Vice President – Sales & Marketing beginning in November 2018 and as our Vice President of Sales & Marketing beginning in August 2013. Mr.
Removed
Raber earned a Masters of Business Administration from the University of Wisconsin-Madison and a Bachelor of Science in Mechanical Engineering from Purdue University. Sean P. Leuba joined our company in January 2023 as Senior Vice President – Corporate Development and General Counsel. Before joining our company, Mr. Leuba was the Head of Corporate Development for Caterpillar Inc. Previously, Mr.
Removed
Leuba served in multiple progressively senior roles, including as General Manager, Caterpillar Electric Power Division and General Manager, Caterpillar Remanufactured Products Division. Prior to joining Caterpillar, Mr. Leuba practiced law with Arnold & Porter in its Washington, D.C. office focusing on corporate, securities, mergers & acquisitions and venture capital. Mr.
Removed
Leuba earned a Master of Business Administration in Finance from the University of Chicago, a Juris Doctor from the Washington and Lee University School of Law, and a Bachelor of Arts from the University of Maryland Baltimore County. Rachele M. Lehr joined our company in March 2023 as Chief Human Resources Officer. Prior to joining our company, Ms.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

34 edited+12 added−10 removed136 unchanged
Biggest changeWe may engage in a business combination with an interested shareholder after the expiration of the three-year period with respect to that shareholder only if one or more of the following conditions is satisfied: (i) our Board of Directors approved the acquisition of the stock before the date on which the shareholder acquired the shares, (ii) the business combination is approved by a majority of our outstanding voting stock not beneficially owned by the interested shareholder or (iii) the consideration to be received by shareholders meets certain fair prices requirements of the WBCL with respect to form and amount. 24 Table of Contents In addition, our articles of incorporation and bylaws contain provisions that may make the acquisition of the company more difficult, including the following: ● establishing a classified Board of Directors so that not all members of our Board of Directors are elected at one time, which could delay the ability of shareholders to change the membership of a majority of our Board of Directors; ● authorizing undesignated preferred stock, the terms of which may be established and shares of which may be issued by our Board of Directors without shareholder approval; ● requiring certain procedures to be satisfied in order for a shareholder to call a special meeting of shareholders, including requiring that we receive written demands for a special meeting from holders of 10% or more of all the votes entitled to be cast on any issue proposed to be considered; ● requiring that a director may be removed from office only for “cause” and with the affirmative vote of shareholders holding at least 66 2/3% of the then outstanding shares of stock entitled to vote in the election of directors; ● not providing for cumulative voting in the election of directors, which would otherwise allow holders of less than a majority of stock to elect some directors; and ● establishing advance notice procedures for shareholder proposals or the nomination of candidates for election as directors.
Biggest changeIn addition, our articles of incorporation and bylaws contain provisions that may make the acquisition of the company more difficult, including the following: ● establishing a classified Board of Directors so that not all members of our Board of Directors are elected at one time, which could delay the ability of shareholders to change the membership of a majority of our Board of Directors; ● authorizing undesignated preferred stock, the terms of which may be established and shares of which may be issued by our Board of Directors without shareholder approval; ● requiring certain procedures to be satisfied in order for a shareholder to call a special meeting of shareholders, including requiring that we receive written demands for a special meeting from holders of 10% or more of all the votes entitled to be cast on any issue proposed to be considered; ● requiring that a director may be removed from office only for “cause” and with the affirmative vote of shareholders holding at least 66 2/3% of the then outstanding shares of stock entitled to vote in the election of directors; ● not providing for cumulative voting in the election of directors, which would otherwise allow holders of less than a majority of stock to elect some directors; and ● establishing advance notice procedures for shareholder proposals or the nomination of candidates for election as directors. 24 Table of Contents These provisions could have the effect of discouraging, delaying or preventing a transaction involving a change in control of the Company.
Our Credit Agreement contains a number of covenants that limit our ability and the ability of our subsidiaries to: ● create, incur or assume indebtedness (other than certain permitted indebtedness); ● create or incur liens (other than certain permitted liens); ● make investments (other than certain permitted investments); ● merge or consolidate with another entity; ● make asset dispositions (other than certain permitted dispositions); ● declare or pay any dividend or any other distribution to shareholders; ● enter into transactions with affiliates; ● make certain organizational changes, including changing our fiscal year end or amending our organizational documents; ● enter into any agreement further restricting our ability to create or assume any lien; ● sell notes receivable or accounts receivable except under certain circumstances; ● enter into sale leaseback transactions; 22 Table of Contents ● incur capital expenditures in excess of $35.0 million in any fiscal year; ● permit any person or group other than the ESOP or other employee benefit plan of ours (like our 401(k) plan) to own or control more than 35% of our equity interests; or ● permit our Board of Directors to not be 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).
Our Credit Agreement contains a number of covenants that limit our ability and the ability of our subsidiaries to: ● create, incur or assume indebtedness (other than certain permitted indebtedness); ● create or incur liens (other than certain permitted liens); ● make investments (other than certain permitted investments); ● merge or consolidate with another entity; ● make asset dispositions (other than certain permitted dispositions); ● declare or pay any dividend or any other distribution to shareholders; ● enter into transactions with affiliates; ● make certain organizational changes, including changing our fiscal year end or amending our organizational documents; ● enter into any agreement further restricting our ability to create or assume any lien; ● sell notes receivable or accounts receivable except under certain circumstances; ● enter into sale leaseback transactions; ● incur capital expenditures in excess of $35.0 million in any fiscal year; ● permit any person or group other than the ESOP or other employee benefit plan of ours (like our 401(k) plan) to own or control more than 35% of our equity interests; or ● permit our Board of Directors to not be 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).
Our expenses relating to employee health benefits are significant. Unfavorable changes in the cost of and the unpredictability of claims under such benefits, including the current inflationary pressures on wages and benefits, could impact our financial results and cash flows.
Our expenses relating to employee health benefits are significant. Unfavorable changes in the cost of and the unpredictability of claims under such benefits, including inflationary pressures on wages and benefits, could impact our financial results and cash flows.
Although we have invested in the protection of our data and information 18 Table of Contents technology to reduce these risks and periodically test the security of our information systems network, there can be no assurance that our efforts will prevent breakdowns or breaches in our systems that could have a material adverse effect on our financial condition, results of operations and liquidity.
Although we have invested in the protection of our data and information 17 Table of Contents technology to reduce these risks and periodically test the security of our information systems network, there can be no assurance that our efforts will prevent breakdowns or breaches in our systems that could have a material adverse effect on our financial condition, results of operations and liquidity.
Some of our suppliers supply components and materials that cannot be quickly or inexpensively re-sourced to another supplier due to long lead times and contractual commitments that might be required by another supplier in order to provide the components or materials. ​ 17 Table of Contents Increases in the cost of employee benefits could impact our financial results and cash flows.
Some of our suppliers supply components and materials that cannot be quickly or inexpensively re-sourced to another supplier due to long lead times and contractual commitments that might be required by another supplier in order to provide the components or materials. 16 Table of Contents Increases in the cost of employee benefits could impact our financial results and cash flows.
Although we do not have any operations outside the United States, geopolitical events, including the ongoing conflict between Russia and Ukraine and the conflict in the Middle East, has caused greater uncertainty in the global economy and has led to significant volatility in raw material costs, component costs, commodity prices and energy costs, exacerbating the inflation situation.
Although we do not have any operations outside the United States, geopolitical events, including the ongoing conflicts between Russia and Ukraine and in the Middle East, has caused greater uncertainty in the global economy and has led to significant volatility in raw material costs, component costs, commodity prices and energy costs, exacerbating the inflation situation.
Severe weather or other natural disasters could be destructive, which could result in increased costs, including supply chain costs. 19 Table of Contents In addition, a number of government bodies have finalized, proposed or are contemplating legislative and regulatory changes in response to growing concerns about climate change.
Severe weather or other natural disasters could be destructive, which could result in increased costs, including supply chain costs. 18 Table of Contents In addition, a number of government bodies have finalized, proposed or are contemplating legislative and regulatory changes in response to growing concerns about climate change.
Furthermore, any claims or litigation, even if fully indemnified or insured, could damage our reputation and make it more difficult to compete effectively or obtain adequate insurance in the future. 20 Table of Contents The components we manufacture can expose us to potential liabilities.
Furthermore, any claims or litigation, even if fully indemnified or insured, could damage our reputation and make it more difficult to compete effectively or obtain adequate insurance in the future. 19 Table of Contents The components we manufacture can expose us to potential liabilities.
As a result, our employees and former employees, if acting together, will be able to influence or control matters requiring approval by our shareholders, including the election of directors, influence over our management and policies and the approval of mergers, acquisitions or other extraordinary transactions.
As a result, our employees and former employees, if acting together, will be able to significantly influence matters requiring approval by our shareholders, including the election of directors, influence over our management and policies and the approval of mergers, acquisitions or other extraordinary transactions.
See “Prior to our initial public offering, we were treated as an S Corporation, and claims of taxing authorities related to our prior status as an S Corporation could have an adverse effect on our business, financial condition and results of operations.” Risks Related to Our Indebtedness Our Amended and Restated Credit Agreement restricts our ability and the ability of our subsidiaries to engage in some business and financial transactions.
See “Prior to our initial public offering, we were treated as an S Corporation, and claims of taxing authorities related to our prior status as an S Corporation could have an adverse effect on our business, financial condition and results of operations.” 21 Table of Contents Risks Related to Our Indebtedness Our Amended and Restated Credit Agreement restricts our ability and the ability of our subsidiaries to engage in some business and financial transactions.
The continued success of our business will depend upon our ability to: ● hire, retain and expand our pool of qualified engineering and trade-skilled personnel; 15 Table of Contents ● maintain technological leadership in our industry; ● implement new and expand upon current robotics, automation and tooling technologies; and ● anticipate or respond to changes in manufacturing processes in a cost-effective and timely manner.
The continued success of our business will depend upon our ability to: ● hire, retain and expand our pool of qualified engineering and trade-skilled personnel; ● maintain technological leadership in our industry; ● implement new and expand upon current robotics, automation and tooling technologies; and ● anticipate or respond to changes in manufacturing processes in a cost-effective and timely manner.
Factors that could cause fluctuations in the market price of our common stock include the following: sales of substantial amounts of our securities by our directors, executive officers or significant shareholders (including our current and former employees via the ESOP and the 401(k) Plan) or the perception that such sales could occur; general economic and geopolitical conditions, inflation, interest rates, tariffs, fuel prices, international currency fluctuations, recessionary concerns and acts of war or terrorism; price and volume fluctuations in the overall stock market from time to time; relatively small percentage of our common stock available publicly; actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us; changes in the market’s expectations about our operating results; changes in our orders in a given period; success of competitors; our operating results failing to meet the expectation of securities analysts or investors in a particular period; changes in financial estimates and recommendations by securities analysts concerning us or the markets in general; operating and stock price performance of other companies that investors deem comparable to us; our ability to manufacture new and enhanced components for the products of our customers on a timely basis; changes in laws and regulations affecting our business; commencement of, or involvement in, litigation involving us; changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; the volume of securities available for public sale; any major change in our Board of Directors or management; and changes in our investor base.
Factors that could cause fluctuations in the market price of our common stock include the following: general economic and geopolitical conditions, inflation, interest rates, tariffs, fuel prices, international currency fluctuations and acts of war or terrorism; price and volume fluctuations in the overall stock market from time to time; actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us; changes in the market’s expectations about our operating results; changes in our orders in a given period; success of competitors; our operating results failing to meet the expectation of securities analysts or investors in a particular period; 23 Table of Contents changes in financial estimates and recommendations by securities analysts concerning us or the markets in general; operating and stock price performance of other companies that investors deem comparable to us; our ability to manufacture new and enhanced components for the products of our customers on a timely basis; changes in laws and regulations affecting our business; commencement of, or involvement in, litigation involving us; changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; the volume of securities available for public sale; sales of substantial amounts of our securities by our directors, executive officers or significant shareholders (including our current and former employees via the ESOP and the 401(k) Plan) or the perception that such sales could occur; any major change in our Board of Directors or management; and changes in our investor base.
We may make fewer sales to these customers for a variety of reasons, including, but not limited to: ● loss of business relationship; ● reduced or delayed customer requirements; ● the insourcing of business that has been traditionally outsourced to us; ● strikes or other work stoppages affecting production by our customers; or ● reduced demand for our customers’ products, including as a result of inflationary pressures, rising interest rates, recessionary concerns and/or geopolitical events.
We may make fewer sales to these customers for a variety of reasons, including, but not limited to: ● loss of business relationship; ● reduced or delayed customer requirements; ● the insourcing of business that has been traditionally outsourced to us; ● strikes or other work stoppages affecting production by our customers; or ● reduced demand for our customers’ products, including as a result of inflationary pressures, elevated interest rates and/or geopolitical events.
Such diversification requires investments and resources that may not be available as needed. Furthermore, even if we sign contracts in new markets, we cannot guarantee that we will be successful in leveraging our capabilities into these new markets and thus in meeting the needs of these new customers and competing favorably in these new markets.
Such diversification requires investments and resources that may not be available as needed. Furthermore, even if we sign contracts in new markets, we cannot guarantee that we will be successful in leveraging our capabilities into these new markets and thus in meeting the 15 Table of Contents needs of these new customers and competing favorably in these new markets.
If these new customers experience reduced demand for their products or financial difficulties, our future prospects will be negatively affected as well. 16 Table of Contents We depend on our key executive officers, managers, and trade-skilled personnel and may have difficulty retaining and recruiting qualified employees.
If these new customers experience reduced demand for their products or financial difficulties, our future prospects will be negatively affected as well. We depend on our key executive officers, managers, and trade-skilled personnel and may have difficulty retaining and recruiting qualified employees.
Our future growth rate depends upon our agility to compete successfully, which is impacted by a number of factors, including, but not limited to, our ability to (i) identify emerging technological trends in our target end markets, (ii) develop and maintain a wide range of competitive and appropriately priced processes and solutions and defend our market share against an ever-expanding number of competitors including many new and non-traditional competitors, (iii) ensure that our processes and solutions remain cost-competitive and (iv) attract, develop and retain individuals with the requisite technical expertise and understanding of customers’ needs to develop and sell new technologies and processes.
Our future growth rate depends upon our agility to compete successfully, which is impacted by a number of factors, including, but not limited to, our ability to (i) identify emerging technological trends in our target end markets, (ii) develop and maintain a wide range of competitive and appropriately priced processes and solutions and defend our market share against an ever-expanding number of competitors including many new and non-traditional competitors, (iii) ensure that our processes and solutions remain cost-competitive and (iv) attract, develop and retain individuals with the requisite technical expertise and understanding of customers’ needs to develop and sell new technologies and processes. 14 Table of Contents We may not be able to maintain our manufacturing, engineering and technological expertise.
These factors include: ● seasonality of demand for our customers’ products which may cause our manufacturing capacity to be underutilized for periods of time; ● our customers’ failure to successfully market their products, to gain or retain widespread commercial acceptance of their products or to compete effectively in their industries; ● loss of market share for our customers’ products, which may lead our customers to reduce or discontinue purchasing our processes and solutions and to reduce prices, thereby exerting pricing pressure on us; ● economic conditions in the markets in which our customers operate, in particular, the United States, including inflationary pressures and the other negative impacts on economic conditions, as well as recessionary periods such as a global economic downturn; ● our customers’ decision to insource the production of components that has traditionally been outsourced to us; and ● product design changes or manufacturing process changes that may reduce or eliminate demand for the components we supply. 13 Table of Contents We expect that future sales will continue to depend on the success of our customers.
These factors include: ● seasonality of demand for our customers’ products, and/or customer destocking activities, which may cause our manufacturing capacity to be underutilized for periods of time; ● our customers’ failure to successfully market their products, to gain or retain widespread commercial acceptance of their products or to compete effectively in their industries; ● loss of market share for our customers’ products, which may lead our customers to reduce or discontinue purchasing our processes and solutions or to reduce prices, thereby exerting pricing pressure on us; 12 Table of Contents ● economic conditions in the markets in which our customers operate, in particular, the United States, including inflationary pressures and other negative impacts on economic conditions, as well as recessionary periods such as a global economic downturn; ● our customers’ decision to insource the production of components that has traditionally been outsourced to us; and ● product design changes or manufacturing process changes that may reduce or eliminate demand for the components we supply.
As of December 31, 2023, our employees and certain former employees, through their interests in the ESOP and the Mayville Engineering Company, Inc. 401(k) Plan (the 401(k) Plan), beneficially owned approximately 36% of the outstanding shares of our common stock.
As of December 31, 2024, our employees and certain former employees, through their interests in the ESOP and the Mayville Engineering Company, Inc. 401(k) Plan (the 401(k) Plan), beneficially owned approximately 28% of the outstanding shares of our common stock.
If our indebtedness is accelerated, we cannot be certain that we will have sufficient funds available to pay the accelerated indebtedness or that we will have the ability to refinance the accelerated indebtedness on terms favorable to us or at all.
If our indebtedness is accelerated, we cannot be certain that we will have 22 Table of Contents sufficient funds available to pay the accelerated indebtedness or that we will have the ability to refinance the accelerated indebtedness on terms favorable to us or at all.
Additionally, the ESOP Trustee and the 23 Table of Contents 401(k) Plan Trustee have fiduciary duties under ERISA which may cause the ESOP Trustee or the 401(k) Plan Trustee to override participants’ voting discretions.
Additionally, the ESOP Trustee and the 401(k) Plan Trustee have fiduciary duties under ERISA which may cause the ESOP Trustee or the 401(k) Plan Trustee to override participants’ voting discretions.
We are able to incur additional debt, which could reduce our ability to satisfy our current obligations under our existing indebtedness. At December 31, 2023, we had $147.5 million outstanding under our revolving credit facility.
We are able to incur additional debt, which could reduce our ability to satisfy our current obligations under our existing indebtedness. At December 31, 2024, we had $79.7 million outstanding under our revolving credit facility.
Any failure to realize these net sales could have a material adverse effect on our business, financial condition, results of operations and cash flows. 14 Table of Contents In addition to not having a commitment from our customers and anticipated new customers regarding the minimum number of components they must purchase from us if we obtain awarded business, typically the terms and conditions of the agreements with our customers provide that they have the contractual right to unilaterally terminate our contracts with them with no notice or limited notice.
In addition to not having a commitment from our customers and anticipated new customers regarding the minimum number of components they must purchase from us if we obtain awarded business, typically the terms and conditions of the agreements with our customers provide that they have the contractual right to unilaterally terminate our contracts with them with no notice or limited notice.
These provisions could have the effect of discouraging, delaying or preventing a transaction involving a change in control of the Company. These provisions could also have the effect of discouraging proxy contests and make it more difficult for shareholders to elect directors of their choosing or prevent us from taking other corporate actions that shareholders may desire.
These provisions could also have the effect of discouraging proxy contests and make it more difficult for shareholders to elect directors of their choosing or prevent us from taking other corporate actions that shareholders may desire. Item 1B. Unresolved Staff Comments. None.
Macroeconomic conditions, including inflation, elevated interest rates and recessionary concerns, as well as continuing supply chain constraints affecting some of our customers, labor availability and material cost pressures, have had, and may continue to have, a negative impact on our business, financial condition, cash flows and results of operations.
Macroeconomic conditions, including inflation, elevated interest rates, labor availability, material cost pressures and inconsistent customer demand, have had, and may continue to have, a negative impact on our business, financial condition, cash flows and results of operations.
Therefore, we rely on and plan our production and inventory levels based on our customers’ advance orders, commitments and/or forecasts as well as our internal assessments and forecasts of customer demand.
Additionally, customers may change production quantities or delay production with little lead-time or advance notice. Therefore, we rely on and plan our production and inventory levels based on our customers’ advance orders, commitments and/or forecasts as well as our internal assessments and forecasts of customer demand.
The realization of future net sales from awarded business is inherently subject to a number of important risks and uncertainties, including a lack of long-term commitments and production schedules with customers and anticipated new customers. Accordingly, we cannot assure you that we will realize any or all of the future net sales represented by our awarded business.
The realization of future net sales from awarded business is inherently subject to a number of important risks and uncertainties, including a lack of long-term commitments and production schedules with customers and anticipated new customers.
Employee Stock Ownership Plan (ESOP), which is a retirement plan intended to be tax-qualified. If the ESOP fails to meet the requirements of a tax-qualified retirement plan, we could be subject to substantial penalties.
Prior to the completion of our initial public offering we were 100% owned by the Mayville Engineering Company, Inc. Employee Stock Ownership Plan (ESOP), which is a retirement plan intended to be tax-qualified. If the ESOP fails to meet the requirements of a tax-qualified retirement plan, we could be subject to substantial penalties.
For example, our largest customers in 2023 included PACCAR Inc., John Deere and AB Volvo which accounted for 15.0%, 14.8% and 10.6% of our net sales, respectively.
For example, our largest customers in 2024 included PACCAR Inc. and John Deere which accounted for 16.8% and 11.3% of our net sales, respectively.
We may not be able to maintain our manufacturing, engineering and technological expertise. The markets for our processes and solutions are characterized by changing technology and evolving process development.
The markets for our processes and solutions are characterized by changing technology and evolving process development.
Any such claims could result in additional costs to us and could have a material adverse effect on our business, financial condition and results of operations. 21 Table of Contents Prior to the completion of our initial public offering we were 100% owned by the Mayville Engineering Company, Inc.
Any such claims could result in additional costs to us and could have a material adverse effect on our business, financial condition and results of operations. ​ 20 Table of Contents We have a material weakness in our internal control over financial reporting.
For instance, we were negatively impacted in 2023 by supply chain constraints impacting certain of our OEMs customers. In addition, in 2023, continued inflationary pressures on wages, benefits, materials, and manufacturing supplies negatively impacted our results of operations and cash flows.
For instance, we were negatively impacted in 2024 by customers implementing channel inventory de-stocking activities to reduce their inventory from near historic high levels. In addition, in 2024, continued inflationary pressures on wages, benefits, materials, and manufacturing supplies negatively impacted our results of operations and cash flows.
We expect certain supply chain constraints, material cost inflation and inflationary pressures on wages and benefits to continue in 2024 and we may not be able to fully mitigate the impact of the inflationary cost pressures through price increases.
We expect material cost inflation and inflationary pressures on wages and benefits to continue in 2025 and we may not be able to fully mitigate the impact of the inflationary cost pressures through price increases. Continuing or worsening inflation and/or labor challenges may have a material adverse impact on our business, financial condition, cash flows and/or results of operations.
Most of our customers do not commit to long-term contracts or firm production schedules, and we continue to experience reduced lead-times in customer orders. Additionally, customers may change production quantities or delay production with little lead-time or advance notice.
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. Most of our customers do not commit to long-term contracts or firm production schedules, and we continue to experience reduced lead-times in customer orders.
If economic conditions and demand for our customers’ products deteriorate, we may experience a material adverse effect on our business, operating results and financial condition. 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 expect that future sales will continue to depend on the success of our customers. If economic conditions and demand for our customers’ products deteriorate, we may experience a material adverse effect on our business, operating results and financial condition.
Removed
Continuing or worsening inflation, recessionary concerns and/or supply chain and labor challenges may have a material adverse impact on our business, financial condition, cash flows and/or results of operations.
Added
Accordingly, we 13 Table of Contents cannot assure you that we will realize any or all of the future net sales represented by our awarded business. Any failure to realize these net sales could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Removed
In the past, following periods of volatility in the overall market and the market price of a particular company’s securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.
Added
If our remediation of this material weakness is not effective, or if we experience additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common stock.
Removed
Risks Related to Being a Relatively New Public Company We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.
Added
In connection with the preparation of our annual report for the year ended December 31, 2024, we identified a material weakness in our internal control over financial reporting.
Removed
We are an “emerging growth company” as defined by the Jumpstart Our Business Startups Act of 2012 (JOBS Act). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies.
Added
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, 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 the review and approval of journal entries.
Removed
We have elected to use this exemption from new or revised accounting standards and, therefore, we will not be subject to the same new or revised accounting standards as other public companies that have not made this election.
Added
We are in the process of taking steps intended to remediate the material weakness. See Part II, Item 9A “Controls and Procedures,” of this Annual Report on Form 10-K for additional information.
Removed
In addition, as an emerging growth company under the JOBS Act we are only subject to one portion of Section 404 of the Sarbanes-Oxley Act of 2002 at this time—management reporting on the assessment of internal control over financial reporting (we are not currently required to have our independent auditors issue a report addressing these assessments).
Added
While we believe these efforts will improve our internal controls and address the underlying causes of the material weakness, the material weakness will not be fully remediated until our remediation plan has been fully implemented and we have concluded that our controls are operating effectively for a sufficient period of time.
Removed
Assuming we have not ceased to qualify as an “emerging growth company” earlier, we will be required to comply with both the management and the auditor assessment of internal control over financial reporting requirements of Section 404 at the time we file our annual report for 2024.
Added
We cannot be certain that the steps we are taking will be sufficient to remediate the control deficiencies that led to the material weakness in our internal control over financial reporting or prevent future material weaknesses or control deficiencies from occurring.
Removed
For as long as we continue to be an emerging growth company, we also intend to take advantage of certain other exemptions from various reporting requirements that are applicable to other public companies including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Added
In addition, we cannot be certain that we have identified all material weaknesses in our internal control over financial reporting, or that in the future we will not have additional material weaknesses.
Removed
We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions.
Added
If we fail to effectively remediate this material weakness in our internal control over financial reporting, or if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls in the future, we may be unable to accurately report our financial results, or report them within the timeframes required by the SEC.
Removed
If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. 25 Table of Contents We will remain an emerging growth company until the earliest of (i) the last day of the year which we have total annual gross revenue of $1.07 billion or more; (ii) the last day of the year following the fifth anniversary of the date of the closing of our initial public offering; (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.
Added
We also could become subject to sanctions or investigations by the securities exchange on which our common shares are listed, the SEC or other regulatory authorities.
Added
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 our financial reporting, we may face restricted access to the capital markets and our stock price may be adversely affected.
Added
We may engage in a business combination with an interested shareholder after the expiration of the three-year period with respect to that shareholder only if one or more of the following conditions is satisfied: (i) our Board of Directors approved the acquisition of the stock before the date on which the shareholder acquired the shares, (ii) the business combination is approved by a majority of our outstanding voting stock not beneficially owned by the interested shareholder or (iii) the consideration to be received by shareholders meets certain fair prices requirements of the WBCL with respect to form and amount.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe also actively engage with key vendors, industry participants and intelligence and law enforcement communities as part of our continuing efforts to evaluate and enhance the effectiveness of our information security policies and procedures. Oversight of cybersecurity risk is maintained by the Company’s Board of Directors and is supported by the Audit Committee of our Board of Directors (Audit Committee).
Biggest changeWe also actively engage with key vendors, industry participants and intelligence and law enforcement communities as part of our continuing efforts to evaluate and enhance the effectiveness of our information security policies and procedures. Oversight of cybersecurity risk is maintained by the Company’s Board of Directors and is supported by the Audit Committee.
To evaluate and enhance our cybersecurity program, it is regularly evaluated by external experts with the results of those reviews reported to senior management and the Audit Committee.
To evaluate and enhance our cybersecurity program, it is regularly evaluated by external experts with the results of those reviews reported to senior management and the Audit Committee of our Board of Directors (Audit Committee).
The Director of IT periodically briefs the Audit Committee and our CFO, as well as our Chief Executive Officer, other members of the Board of Directors and other members of our senior management as appropriate. These reports include, but are not limited to, new developments, evolving standards, vulnerability assessments, third-party and independent reviews, threat environment summaries and technological trends.
The CIO periodically briefs the Audit Committee and our CFO, as well as our Chief Executive Officer (CEO), other members of the Board of Directors and other members of our senior management as appropriate. These reports include, but are not limited to, new developments, evolving standards, vulnerability assessments, third-party and independent reviews, threat environment summaries and technological trends.
See also Item 1A, “Risk Factors” for additional discussion regarding risks related to information technology systems. ​ 26 Table of Contents
See also Item 1A, “Risk Factors” for additional discussion regarding risks related to information technology systems. ​ 25 Table of Contents
The Company’s information security program is managed by the Company’s Director of IT, whom reports to the Chief Financial Officer (CFO), and whose team is responsible for leading enterprise-wide cybersecurity strategy, policy, standards, architecture and processes.
The Company’s information security program is managed by the Company’s Chief Information Officer (CIO), whom reports to the Chief Financial Officer (CFO), and whose team is responsible for leading enterprise-wide cybersecurity strategy, policy, standards, architecture and processes.
Removed
When applicable, the Audit Committee and other members of the Board of Directors also receive prompt information from the CFO regarding any material cybersecurity incident and appropriate ongoing updates thereto.
Added
In the event of a potentially material cybersecurity incident, the CIO will meet with the Company’s Audit Committee, CEO, CFO, legal counsel and any other members of senior management as appropriate to review the cybersecurity event, perform a materiality analysis and, if appropriate, identify any information required to be disclosed in a Current Report on Form 8-K.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeVanderbilt, MI Manufacturing 40,000 Owned 21. Piedmont, MI Manufacturing 34,000 Leased 22. Milwaukee, WI ​ Corporate Headquarters 17,000 Leased 23. Fond du Lac, WI ​ Manufacturing — (2) ​ Owned TOTAL 3,301,000 ​ ​ (1) Excludes approximately 182,000 square feet of subleased manufacturing space starting in June 2022.
Biggest changeVanderbilt, MI Manufacturing 40,000 Owned 21. Piedmont, MI Manufacturing 34,000 Leased 22. Milwaukee, WI ​ Corporate Headquarters 17,000 Leased 23. Fond du Lac, WI ​ Manufacturing — (3) ​ Owned TOTAL 3,275,000 ​ ​ (1) Excludes approximately 182,000 square feet of subleased manufacturing space starting in June 2022. (2) Facility held for sale as of December 31, 2024.
(2) Excludes approximately 23,000 square feet of owned manufacturing space that is leased to a non-related party starting in September 2023.
(3) Excludes approximately 23,000 square feet of owned manufacturing space that is leased to a non-related party starting in September 2023.
Wautoma, WI Manufacturing 157,000 Owned 12. Atkins, VA Manufacturing 150,000 Owned 13. Byron Center, MI Manufacturing 138,000 Leased 14. Defiance, OH Manufacturing 90,000 Leased 15. Greenville, MS Manufacturing 76,000 Leased 16. Wayland, MI Manufacturing 75,000 Leased 17. Neillsville, WI Manufacturing 58,000 Owned 18. Vanderbilt, MI Manufacturing 50,000 Owned 19. Neillsville, WI Manufacturing 42,000 Owned 20.
Wautoma, WI Held for Sale 157,000 (2) ​ Owned 12. Atkins, VA Manufacturing 150,000 Owned 13. Byron Center, MI Manufacturing 138,000 Leased 14. Defiance, OH Manufacturing 90,000 Leased 15. Greenville, MS Manufacturing 76,000 Leased 16. Wayland, MI Manufacturing 75,000 Leased 17. Neillsville, WI Manufacturing 58,000 Owned 18. Vanderbilt, MI Manufacturing 50,000 Owned 19. Neillsville, WI Manufacturing 42,000 Owned 20.
Beaver Dam, WI Manufacturing 303,000 Owned 4. Hazel Park, MI ​ Manufacturing ​ 263,000 (1) ​ Leased 5. Defiance, OH Manufacturing 250,000 Owned 6. Defiance, OH Manufacturing 192,000 Owned 7. Heber Springs, AR Manufacturing 190,000 Owned 8. Bedford, PA Manufacturing 181,000 Leased 9. Mayville, WI Manufacturing 167,000 Owned 10. Beaver Dam, WI Manufacturing 163,000 Owned 11.
Fond du Lac, WI ​ Manufacturing ​ 299,000 ​ Owned 4. Hazel Park, MI ​ Manufacturing ​ 263,000 (1) ​ Leased 5. Defiance, OH Manufacturing 250,000 Owned 6. Defiance, OH Manufacturing 192,000 Owned 7. Heber Springs, AR Manufacturing 190,000 Owned 8. Bedford, PA Manufacturing 181,000 Leased 9. Mayville, WI Manufacturing 167,000 Owned 10. Beaver Dam, WI Manufacturing 163,000 Owned 11.
We believe that our facilities are sufficient to meet our current and near-term manufacturing needs. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximate ​ ​ Facility Description of Use Square Feet Ownership 1. Mayville, WI ​ Manufacturing ​ 340,000 ​ Owned 2. Fond du Lac, WI ​ Manufacturing ​ 325,000 ​ Owned 3.
We believe that our facilities are sufficient to meet our current and near-term manufacturing needs. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximate ​ ​ Facility Description of Use Square Feet Ownership 1. Mayville, WI ​ Manufacturing ​ 340,000 ​ Owned 2. Beaver Dam, WI Manufacturing 303,000 Owned 3.
Removed
Item 2. Properties. We maintain 23 strategically located U.S. facilities comprising of more than three million square feet of manufacturing space with our headquarters in Milwaukee, WI.
Added
Item 2. Properties. We maintain owned and leased manufacturing and office facilities throughout the U.S. The Company’s corporate office is located in Milwaukee, Wisconsin.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAlso see Note 9 – Commitments and Contingencies in the Notes to Consolidated Financial Statements for additional information. Item 4. Mine Safety Disclosures. Not applicable. 27 Table of Contents PART II
Biggest changeAlso see Note 9 – Commitments and Contingencies in the Notes to Consolidated Financial Statements for additional information.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Removed
Item 4. Mine Safety Disclosures ​ 27 ​ ​ ​ ​ PART II ​ ​ ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ 28 Item 6 . Reserved ​ 30 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 30 Item 7A.
Added
Item 4. Mine Safety Disclosures. Not applicable. ​ 26 Table of Contents Information About Our Executive Officers The following table sets forth certain information as of February 1, 2025, regarding our executive officers: ​ ​ ​ ​ ​ Name Age Position Jagadeesh (Jag) A. Reddy ​ 53 ​ President and Chief Executive Officer Todd M.
Removed
Quantitative and Qualitative Disclosures About Market Risk ​ 40 Item 8. Financial Statements and Supplementary Data ​ 41
Added
Butz ​ 53 ​ Chief Financial Officer Ryan F. Raber 42 Executive Vice President - Strategy, Sales & Marketing Sean P. Leuba ​ 54 ​ Senior Vice President - Corporate Development and General Counsel Rachele M. Lehr ​ 48 ​ Chief Human Resources Officer Jagadeesh A.
Added
Reddy joined our company as President, Chief Executive Officer and as a member of the Board of Directors in July 2022. Before joining our company, Mr. Reddy was a member of the senior leadership team at W.R.
Added
Grace where he was responsible for the Strategy and Growth function as well as Managing Director of Advanced Refining Technologies LLC (ART), Grace’s global joint venture with Chevron. Mr. Reddy previously served as Vice President and General Manager, Water Technologies Strategic Business Unit, and Vice President, Corporate Strategy at Pentair PLC.
Added
Prior to Pentair PLC, he held strategy and business leadership roles at ITT Corporation, and its spin-off, Xylem Inc, spent time in M&A roles with United Technologies Corp, product management roles with Danaher Corporation and started his career in manufacturing operations at Denso Corporation. Mr.
Added
Reddy earned a Master of Business Administration in Finance and Strategy from the Kellogg School of Management and a Master’s in Engineering Management from the McCormick School of Engineering, both at Northwestern University. He also holds a Master’s in Industrial Engineering from the University of Tennessee, and a Bachelor’s in Mechanical Engineering from a university in India. Todd M.
Added
Butz joined our company in 2008 and has served as our Chief Financial Officer since January 2014. Mr. Butz also currently serves and has served on various non-profit boards. Prior to joining our company, Mr.
Added
Butz spent time in various roles including Manager of Worldwide Financial Reporting at Mercury Marine, a subsidiary of the Brunswick Corporation, and Audit Supervisor at Schenck Business Solutions, now Clifton Larsen Allen. Mr. Butz earned a Bachelor of Science in Accounting and Business Management from Marian University and is currently a licensed certified public accountant. Ryan F.
Added
Raber joined our company in 2009 and has served as our Executive Vice President – Strategy, Sales & Marketing since June 2019. Prior to serving in his current position, Mr. Raber served as our Executive Vice President – Sales & Marketing beginning in November 2018 and as our Vice President of Sales & Marketing beginning in August 2013. Mr.
Added
Raber earned a Masters of Business Administration from the University of Wisconsin-Madison and a Bachelor of Science in Mechanical Engineering from Purdue University. Sean P. Leuba joined our company in January 2023 as Senior Vice President – Corporate Development and General Counsel. Before joining our company, Mr. Leuba was the Head of Corporate Development for Caterpillar Inc. Previously, Mr.
Added
Leuba served in multiple progressively senior roles, including as General Manager, Caterpillar Electric Power Division and General Manager, Caterpillar Remanufactured Products Division. Prior to joining Caterpillar, Mr. Leuba practiced law with Arnold & Porter in its Washington, D.C. office focusing on corporate, securities, mergers & acquisitions and venture capital. Mr.
Added
Leuba earned a Master of Business Administration in Finance from the University of Chicago, a Juris Doctor from the Washington and Lee University School of Law, and a Bachelor of Arts from the University of Maryland Baltimore County. Rachele M. Lehr joined our company in March 2023 as Chief Human Resources Officer. Prior to joining our company, Ms.
Added
Lehr spent nearly 15 years at Briggs & Stratton where she held senior finance and corporate roles of increasing scope and complexity, including Senior Vice President of Human Resources and Administration, Director of Human Resources and Controller for a $600 million international business. Prior to joining Briggs & Stratton, Ms.
Added
Lehr served as Sales Controller for Bar-S Foods (A Sigma Company) and started her career at PricewaterhouseCoopers LLP, a public accounting firm. Ms. Lehr earned a Bachelor of Science in Business Administration with a Major in Accounting from Marquette University and is a certified public accountant (currently inactive). ​ 27 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities The table below sets forth information with respect to purchases we made of shares of our common stock during the three months ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number ​ Dollar Value of ​ ​ ​ ​ ​ ​ ​ of Shares ​ Shares that ​ ​ Total ​ ​ ​ ​ Purchased as ​ May Yet Be ​ ​ Number ​ ​ ​ ​ Part of Publicly ​ Purchased ​ ​ of Shares ​ Average Price ​ Announced Plans ​ Under the Plans Period Purchased Paid per Share or Programs (1) or Programs (1) October 2023 ​ — ​ $ — ​ — ​ $ 25,000,000 November 2023 ​ — ​ $ — ​ — ​ $ 25,000,000 December 2023 ​ — ​ $ — ​ — ​ $ 25,000,000 Total — ​ ​ — ​ (1) On October 19, 2021, the Board of Directors approved a share repurchase program of up to $25 million of shares through 2023.
Biggest changeIssuer Purchases of Equity Securities The table below sets forth information with respect to purchases we made of shares of our common stock during the three months ended December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number ​ Dollar Value of ​ ​ ​ ​ ​ ​ ​ of Shares ​ Shares that ​ ​ Total ​ ​ ​ ​ Purchased as ​ May Yet Be ​ ​ Number ​ ​ ​ ​ Part of Publicly ​ Purchased ​ ​ of Shares ​ Average Price ​ Announced Plans ​ Under the Plans Period Purchased Paid per Share or Programs (1) or Programs (1) October 2024 ​ — ​ $ — ​ — ​ $ 23,004,056 November 2024 ​ 172,621 ​ $ 17.35 ​ 172,621 ​ $ 20,008,251 December 2024 ​ 52,759 ​ $ 17.13 ​ 52,759 ​ $ 19,104,268 Total 225,380 ​ ​ 225,380 ​ ​ (1) On October 26, 2023, the Board of Directors approved a new share repurchase program of up to $25 million of shares through 2026.
As of February 1, 2024, there were six registered shareholders of record of our common stock and thousands of beneficial holders of our common stock, including all the participants in our ESOP and many participants in our 401(k) Plan. We have never declared or paid any cash dividends on our common stock.
As of February 1, 2025, there were seven registered shareholders of record of our common stock and thousands of beneficial holders of our common stock, including all the participants in our ESOP and many participants in our 401(k) Plan. We have never declared or paid any cash dividends on our common stock.
The new share repurchase program replaced the prior program. ​ 28 Table of Contents Stock Performance Graph The following graph compares the total return on our common stock since the time of the Company’s IPO with similar returns on the Standard & Poor’s (S&P) SmallCap 600 Index and the Dow Jones Industrial Average Index.
The new share repurchase program replaced the prior program. ​ 28 Table of Contents Stock Performance Graph The following graph compares the total return on our common stock between January 1, 2020 and December 31, 2024 with similar returns on the Standard & Poor’s (S&P) SmallCap 600 Index and the Dow Jones Industrial Average Index.
COMPARISON OF CUMULATIVE TOTAL RETURN Among Mayville Engineering Company, Inc., the S&P SmallCap 600 Index and The Dow Jones Industrial Average ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 5/9/2019 ​ 12/31/2019 12/31/2020 ​ 12/31/2021 12/31/2022 12/31/2023 Mayville Engineering Company, Inc. ​ $ 100.00 ​ $ 55.18 ​ $ 78.94 ​ $ 87.71 ​ $ 74.47 ​ $ 84.82 S&P SmallCap 600 ​ $ 100.00 ​ $ 106.11 ​ $ 116.26 ​ $ 145.65 ​ $ 120.27 ​ $ 136.97 Dow Jones Industrial Average ​ $ 100.00 ​ $ 109.90 ​ $ 117.87 ​ $ 139.94 ​ $ 127.65 ​ $ 145.14 ​ Securities Authorized For Issuance Under Equity Compensation Plans See Part III, Item 12, of this Annual Report on Form 10-K for certain information regarding our equity compensation plans. ​
COMPARISON OF CUMULATIVE TOTAL RETURN Among Mayville Engineering Company, Inc., the S&P SmallCap 600 Index and The Dow Jones Industrial Average ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1/1/2020 ​ 12/31/2020 12/31/2021 ​ 12/31/2022 12/31/2023 12/31/2024 Mayville Engineering Company, Inc. ​ $ 100.00 ​ $ 143.07 ​ $ 158.96 ​ $ 134.97 ​ $ 153.73 ​ $ 167.59 S&P SmallCap 600 ​ $ 100.00 ​ $ 109.57 ​ $ 137.26 ​ $ 113.35 ​ $ 129.09 ​ $ 137.90 Dow Jones Industrial Average ​ $ 100.00 ​ $ 107.25 ​ $ 127.33 ​ $ 116.15 ​ $ 132.07 ​ $ 149.08 ​ Securities Authorized For Issuance Under Equity Compensation Plans See Part III, Item 12, of this Annual Report on Form 10-K for certain information regarding our equity compensation plans. ​
Removed
On October 26, 2023, the Board of Directors approved a new share repurchase program of up to $25 million of shares through 2026.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeTwelve Months Ended December 31, 2023 Compared to Twelve Months Ended December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ ​ 2022 ​ ​ Increase (Decrease) ​ ​ ​ ​ % of Net ​ ​ ​ ​ % of Net ​ ​ Amount ​ ​ ​ Amount Sales ​ Amount Sales ​ Change % Change ​ Net sales ​ $ 588,425 ​ 100.0 % ​ $ 539,392 ​ 100.0 % ​ $ 49,033 ​ 9.1 % Cost of sales ​ ​ 518,722 ​ 88.2 % ​ ​ 478,323 ​ 88.7 % ​ ​ 40,399 ​ 8.4 % Manufacturing margins ​ ​ 69,703 ​ 11.8 % ​ ​ 61,069 ​ 11.3 % ​ ​ 8,634 ​ 14.1 % Amortization of intangible assets ​ 7,742 1.3 % ​ ​ 6,952 1.3 % ​ ​ 790 11.4 % Profit sharing, bonuses and deferred compensation ​ 11,588 2.0 % ​ ​ 7,997 1.5 % ​ ​ 3,591 44.9 % Other selling, general and administrative expenses ​ 30,182 5.1 % ​ ​ 24,692 4.6 % ​ ​ 5,490 22.2 % Impairment of long-lived assets and gain on contracts ​ — — % ​ ​ (4,346) (0.8) % ​ ​ 4,346 N/A ​ Income from operations ​ 20,191 3.4 % ​ ​ 25,774 4.8 % ​ ​ (5,583) (21.7) % Interest expense ​ (11,092) 1.9 % ​ ​ (3,380) 0.6 % ​ ​ 7,712 228.2 % Loss on extinguishment of debt ​ ​ (216) ​ 0.0 % ​ ​ — ​ — % ​ ​ 216 ​ N/A ​ Provision for income taxes ​ 1,039 0.2 % ​ ​ 3,667 0.7 % ​ ​ (2,628) (71.7) % Net income and comprehensive income ​ $ 7,844 1.3 % ​ $ 18,727 3.5 % ​ $ (10,883) (58.1) % EBITDA ​ $ 55,055 9.4 % ​ $ 55,085 10.2 % ​ $ (30) (0.1) % Adjusted EBITDA ​ $ 66,053 11.2 % ​ $ 60,778 11.3 % ​ $ 5,275 8.7 % ​ Net Sales.
Biggest changeTwelve Months Ended December 31, 2024 Compared to Twelve Months Ended December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 ​ ​ 2023 ​ ​ Increase (Decrease) ​ ​ ​ ​ % of Net ​ ​ ​ ​ % of Net ​ ​ Amount ​ ​ ​ Amount Sales ​ Amount Sales ​ Change % Change ​ Net sales ​ $ 581,604 ​ 100.0 % ​ $ 588,425 ​ 100.0 % ​ $ (6,821) ​ (1.2) % Cost of sales ​ ​ 510,507 ​ 87.8 % ​ ​ 518,722 ​ 88.2 % ​ ​ (8,215) ​ (1.6) % Manufacturing margins ​ ​ 71,097 ​ 12.2 % ​ ​ 69,703 ​ 11.8 % ​ ​ 1,394 ​ 2.0 % Amortization of intangible assets ​ 6,933 1.2 % ​ ​ 7,742 1.3 % ​ ​ (809) (10.4) % Profit sharing, bonuses and deferred compensation ​ 13,593 2.3 % ​ ​ 11,588 2.0 % ​ ​ 2,005 17.3 % Other selling, general and administrative expenses ​ 31,518 5.4 % ​ ​ 30,182 5.1 % ​ ​ 1,336 4.4 % Gain on lawsuit settlement ​ ​ (25,500) ​ (4.4) % ​ ​ — ​ — % ​ ​ (25,500) ​ NM ​ Income from operations ​ 44,553 7.7 % ​ ​ 20,191 3.4 % ​ ​ 24,362 120.7 % Interest expense ​ (10,989) 1.9 % ​ ​ (11,092) 1.9 % ​ ​ (103) (0.9) % Loss on extinguishment of debt ​ ​ — ​ — % ​ ​ (216) ​ 0.0 % ​ ​ (216) ​ (100.0) % Provision for income taxes ​ 7,596 1.3 % ​ ​ 1,039 0.2 % ​ ​ 6,557 631.1 % Net income and comprehensive income ​ $ 25,968 4.5 % ​ $ 7,844 1.3 % ​ $ 18,124 231.1 % EBITDA ​ $ 82,141 14.1 % ​ $ 55,055 9.4 % ​ $ 27,086 49.2 % Adjusted EBITDA ​ $ 64,407 11.1 % ​ $ 66,053 11.2 % ​ $ (1,646) (2.5) % Net Sales.
These measures should not be considered as an alternative to net income (loss) or any other performance measure derived in accordance with GAAP as an indicator of our operating performance.
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 test our goodwill for impairment on an annual basis, and more frequently if events or changes in circumstances indicate that it might be impaired. For the years ended December 31, 2023 and 2022, there were no events or changes in circumstances that would indicate an impairment of our goodwill.
We test our goodwill for impairment on an annual basis, and more frequently if events or changes in circumstances indicate that it might be impaired. For the years ended December 31, 2024 and 2023, there were no events or changes in circumstances that would indicate an impairment of our goodwill.
We will continue to have access to the availability currently provided under the Credit Agreement as long as we remain compliant with the financial covenants. Based on our estimates at this time, we expect to be in compliance with these financial covenants through 2024 and the foreseeable future.
We will continue to have access to the availability currently provided under the Credit Agreement as long as we remain compliant with the financial covenants. Based on our estimates at this time, we expect to be in compliance with these financial covenants through 2025 and the foreseeable future.
We believe that our operating cash flow and available borrowings under the Credit Agreement are sufficient to fund our operations for 2024 and beyond. However, future cash flows are subject to a number of variables, and additional capital expenditures will be required to conduct our operations.
We believe that our operating cash flow and available borrowings under the Credit Agreement are sufficient to fund our operations for 2025 and beyond. However, future cash flows are subject to a number of variables, and additional capital expenditures will be required to conduct our operations.
For the year ended December 31, 2023 and 2022, there were no events or changes in circumstances that indicated a material impairment of our long-lived assets. Determining the useful life of an intangible asset also requires judgment.
For the year ended December 31, 2024 and 2023, there were no events or changes in circumstances that indicated a material impairment of our long-lived assets. Determining the useful life of an intangible asset also requires judgment.
We have developed long-standing relationships with our blue-chip customers based upon our commitment to “Unmatched Excellence”. Our one operating segment focuses on producing metal components that are used in a broad range of heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, agricultural, military and other products.
We have developed long-standing relationships with our blue-chip customers based upon our commitment to “Unmatched Excellence”. 31 Table of Contents Our one operating segment focuses on producing metal components that are used in a broad range of heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, agricultural, military and other products.
A discussion regarding our financial condition and results of operations for the twelve months ended December 31, 2022 compared to the twelve months ended December 31, 2021 can be found under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on the Form 10-K for the fiscal year ended December 31, 2022, which was filed with the SEC on March 1, 2023 and is available on the SEC’s website at www.sec.gov, as well as our website at www.ir.mecinc.com.
A discussion regarding our financial condition and results of operations for the twelve months ended December 31, 2023 compared to the twelve months ended December 31, 2022 can be found under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on the Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on March 6, 2024 and is available on the SEC’s website at www.sec.gov, as well as our website at www.ir.mecinc.com.
If we seek additional capital, we may do so through borrowings under the Credit Agreement, joint ventures, asset sales, offerings of debt or equity securities or other means. We cannot 38 Table of Contents guarantee that this additional capital will be available on acceptable terms or at all.
If we seek additional capital, we may do so through borrowings under the 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.
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. 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.
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. Our calculation of EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow may not be comparable to the similarly named measures reported by other companies.
Adjusted EBITDA represents EBITDA before CEO transition costs, stock-based compensation expense, Mid-States Aluminum (MSA) acquisition related costs, loss on extinguishment of debt, field replacement claim, Hazel Park transition and legal costs due to the former fitness customer, costs recognized on step-up of MSA acquired inventory, impairment charges on long-lived assets and inventory and gain on contracts specifically purchased to meet obligations under the agreement with our former fitness customer and Chief Operating Officer (COO) restructuring costs.
Adjusted EBITDA represents EBITDA before CEO transition costs, loss on extinguishment of debt, Mid-States Aluminum (MSA) acquisition related costs, stock-based compensation expense, field replacement claim, legal costs due to former fitness customer, costs recognized on step-up of MSA acquired inventory, impairment of long-lived assets and gain on contracts specifically purchased to meet obligations under the agreement with our former fitness customer, Wautoma restructuring charges, Chief Operating Officer (COO) restructuring costs and gain on lawsuit settlement.
We present EBITDA, EBITDA Margin, 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.
We present EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow as management uses these measures as key performance indicators, and we believe they are measures frequently used by securities analysts, investors and other parties to evaluate companies in our industry.
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.
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.
At December 31, 2023, we had immediate availability of $102,507 through our revolving credit facility and the availability of incremental facilities to the greater of $100,000 and 125% of the Company’s twelve month trailing Consolidated EBITDA through an accordion feature under our Credit Agreement, subject to the covenants under the Credit Agreement.
At December 31, 2024, we had immediate availability of $170,275 through our revolving credit facility and the availability of incremental facilities to the greater of $100,000 and 125% of the Company’s twelve month trailing Consolidated EBITDA through an accordion feature under our Credit Agreement, subject to the covenants under the Credit Agreement.
Manufacturing margin percentages were 11.8% for the twelve months ended December 31, 2023 as compared to 11.3% for the twelve months ended December 31, 2022, an increase of 0.5%. The increase was attributable to the items discussed in the preceding paragraph. Amortization of Intangible Assets.
Manufacturing margin percentages were 12.2% for the twelve months ended December 31, 2024 as compared to 11.8% for the twelve months ended December 31, 2023, an increase of 0.4%. The increase was attributable to the items discussed in the preceding paragraph. Amortization of Intangible Assets.
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. ​ 33 Table of Contents The following table presents a reconciliation of net income (loss) and comprehensive income (loss), the most directly comparable measure calculated in accordance with GAAP, to EBITDA and Adjusted EBITDA, and the calculation of EBITDA Margin and Adjusted EBITDA Margin for each of the periods presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twelve Months Ended ​ ​ December 31, ​ 2023 2022 2021 Net income (loss) and comprehensive income (loss) ​ $ 7,844 ​ $ 18,727 ​ $ (7,451) Interest expense ​ 11,092 ​ ​ 3,380 ​ ​ 2,003 ​ Provision (benefit) for income taxes ​ 1,039 ​ ​ 3,667 ​ ​ (1,943) ​ Depreciation and amortization ​ 35,080 ​ ​ 29,311 ​ ​ 31,783 ​ EBITDA ​ 55,055 ​ 55,085 ​ 24,392 ​ CEO transition costs (1) ​ ​ — ​ ​ 1,512 ​ ​ — ​ Loss on extinguishment of debt (2) ​ 216 ​ ​ — ​ ​ — ​ MSA acquisition related costs (3) ​ 1,411 ​ ​ — ​ ​ — ​ Stock-based compensation expense (4) ​ 4,485 ​ ​ 3,759 ​ ​ 4,962 ​ Field replacement claim (5) ​ ​ 490 ​ ​ — ​ ​ — ​ Hazel Park transition and legal costs due to former fitness customer (6) ​ 2,650 ​ ​ 4,768 ​ ​ — ​ Costs recognized on step-up of MSA acquired inventory (7) ​ ​ 891 ​ ​ — ​ ​ — ​ Impairment of inventory and loss on contracts (8) ​ — ​ ​ — ​ ​ 700 ​ Impairment of long-lived assets and (gain) loss on contracts (9) ​ — ​ ​ (4,346) ​ ​ 16,151 ​ COO restructuring costs (10) ​ ​ 855 ​ ​ — ​ ​ — ​ Adjusted EBITDA ​ $ 66,053 ​ $ 60,778 ​ $ 46,205 ​ Net sales ​ $ 588,425 ​ $ 539,392 ​ $ 454,826 ​ EBITDA Margin ​ 9.4 % 10.2 % 5.4 % Adjusted EBITDA Margin ​ 11.2 % 11.3 % 10.2 % (1) Costs, primarily professional services and legal fees, associated with the retirement and replacement of the former CEO.
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. ​ 33 Table of Contents The following table presents a reconciliation of net income and comprehensive income, the most directly comparable measure calculated in accordance with GAAP, to EBITDA and Adjusted EBITDA, and the calculation of EBITDA Margin and Adjusted EBITDA Margin for each of the periods presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twelve Months Ended ​ ​ December 31, ​ 2024 2023 2022 Net income and comprehensive income ​ $ 25,968 ​ $ 7,844 ​ $ 18,727 Interest expense ​ 10,989 ​ ​ 11,092 ​ ​ 3,380 ​ Provision for income taxes ​ 7,596 ​ ​ 1,039 ​ ​ 3,667 ​ Depreciation and amortization ​ 37,588 ​ ​ 35,080 ​ ​ 29,311 ​ EBITDA ​ 82,141 ​ 55,055 ​ 55,085 ​ CEO transition costs (1) ​ ​ — ​ ​ — ​ ​ 1,512 ​ Loss on extinguishment of debt (2) ​ — ​ ​ 216 ​ ​ — ​ MSA acquisition related costs (3) ​ — ​ ​ 1,411 ​ ​ — ​ Stock-based compensation expense (4) ​ 5,186 ​ ​ 4,485 ​ ​ 3,759 ​ Field replacement claim (5) ​ ​ — ​ ​ 490 ​ ​ — ​ Hazel Park transition and legal costs due to former fitness customer (6) ​ 2,088 ​ ​ 2,650 ​ ​ 4,768 ​ Costs recognized on step-up of MSA acquired inventory (7) ​ ​ — ​ ​ 891 ​ ​ — ​ Impairment of long-lived assets and (gain) on contracts (8) ​ — ​ ​ — ​ ​ (4,346) ​ COO restructuring costs (9) ​ ​ — ​ ​ 855 ​ ​ — ​ Wautoma restructuring charges (10) ​ 492 ​ ​ — ​ ​ — ​ Gain on lawsuit settlement (11) ​ ​ (25,500) ​ ​ — ​ ​ — ​ Adjusted EBITDA ​ $ 64,407 ​ $ 66,053 ​ $ 60,778 ​ Net sales ​ $ 581,604 ​ $ 588,425 ​ $ 539,392 ​ EBITDA Margin ​ 14.1 % 9.4 % 10.2 % Adjusted EBITDA Margin ​ 11.1 % 11.2 % 11.3 % (1) Costs, primarily professional services and legal fees, associated with the retirement and replacement of the former CEO.
Investing Activities. Cash used in investing activities was $104,132 for the twelve months ended December 31, 2023, as compared to $50,668 for the twelve months ended December 31, 2022.
Investing Activities. Cash used in investing activities was $11,712 for the twelve months ended December 31, 2024, as compared to $104,132 for the twelve months ended December 31, 2023.
In addition to the current macroeconomic conditions, several factors affect our net sales in any given period, including weather, timing of acquisitions and the production schedules of our customers. Net sales are recognized at the time of shipment or at delivery to the customer. Manufacturing Margins. Manufacturing margins represents net sales less cost of sales.
Net sales reflect sales of our components and products net of allowances for returns and discounts. In addition to the current macroeconomic conditions, several factors affect our net sales in any given period, including weather, timing of acquisitions and the production schedules of our customers. Net sales are recognized at the time of shipment or at delivery to the customer.
Cash provided by financing activities was $63,314 for the twelve months ended December 31, 2023, as compared to cash used in financing activities of $1,749 for the twelve months ended December 31, 2022.
Cash used in financing activities was $78,561 for the twelve months ended December 31, 2024, as compared to cash provided by financing activities of $64,314 for the twelve months ended December 31, 2023.
The Credit Agreement also includes provisions for determining a replacement rate when SOFR is no longer available. 37 Table of Contents At December 31, 2023, the interest rate on outstanding borrowings under our revolving credit facility was 7.71%. We had availability of $102,507 under the revolving credit facility at December 31, 2023.
The Credit Agreement also includes provisions for determining a replacement rate when SOFR is no longer available. At December 31, 2024, the interest rate on outstanding borrowings under our revolving credit facility was 6.55%. We had availability of $170,275 under the revolving credit facility at December 31, 2024.
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.
Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of net sales for each period. Free cash flow represents net cash provided by operating activities less cash flow used in the purchase of property, plant and equipment. These metrics are supplemental measures of our operating performance that are neither required by, nor presented in accordance with, GAAP.
The 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, and failure to maintain subsidiary guarantees.
As of December 31, 2024, our consolidated total leverage ratio was 1.28 to 1.00. The 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, and failure to maintain subsidiary guarantees.
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 certain 32 Table of Contents other managerial employees and certain corporate level administrative expenses such as incentive compensation, audit, accounting, legal and other consulting and professional services, travel, and insurance.
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 certain other managerial employees and certain corporate level administrative expenses such as incentive compensation, audit, accounting, legal and other consulting and professional services, travel, and insurance. ​ 32 Table of Contents Other Key Performance Indicators EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow EBITDA represents net income before interest expense, provision for income taxes, depreciation and amortization.
Profit sharing, bonuses and deferred compensation expenses were $11,588 for the twelve months ended December 31, 2023 as compared to $7,997 for the twelve months ended December 31, 2022, an increase of $3,591, or 44.9%.
Profit sharing, bonuses and deferred compensation expenses were $13,593 for the twelve months ended December 31, 2024 as compared to $11,588 for the twelve months ended December 31, 2023, an increase of $2,005, or 17.3%.
The Credit Agreement also requires us to satisfy certain financial covenants, including a minimum interest coverage ratio of 3.00 to 1.00. At December 31, 2023, our interest coverage ratio was 5.49 to 1.00.
The Credit Agreement also requires us to satisfy certain financial covenants, including a minimum interest coverage ratio of 3.00 to 1.00. At December 31, 2024, our interest coverage ratio was 4.62 to 1.00. The Credit Agreement also requires us to maintain a consolidated total leverage ratio not to exceed 3.50 to 1.00.
Cash provided by operating activities was $40,363 for the twelve months ended December 31, 2023 as compared to $52,426 for the twelve months ended December 31, 2022. Of the $12,063 decrease in operating cash flows, $17,562 was due to a payout of deferred compensation to a retired Company executive.
Cash provided by operating activities was $89,807 for the twelve months ended December 31, 2024 as compared to $40,363 for the twelve months ended December 31, 2023. Of the $49,444 increase in operating cash flows, $17,562 is due to a payout of deferred compensation to a retired Company executive made in the prior year period.
Capital expenditures for the full year 2024 are expected to be between $15,000 and $20,000. 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.
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.
Other Selling, General and Administrative (SG&A) Expenses. Other selling, general and administrative expenses were $30,182 for the twelve months ended December 31, 2023 as compared to $24,692 for the twelve months ended December 31, 2022, an increase of $5,490, or 22.2%.
Other selling, general and administrative expenses were $31,518 for the twelve months ended December 31, 2024 as compared to $30,182 for the twelve months ended December 31, 2023, an increase of $1,336, or 4.4%.
Due to the factors described in the preceding paragraphs, Adjusted EBITDA increased, while net income, comprehensive income, EBITDA, EBITDA Margin and Adjusted EBITDA Margin decreased during 2023. ​ 36 Table of Contents Liquidity and Capital Resources The following is a summary of our cash flows from operating, investing, and financing activities, as reflected in the Consolidated Statement of Cash Flows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twelve Months Ended ​ ​ ​ December 31, ​ 2023 2022 2021 Net cash provided by operating activities ​ ​ $ 40,363 ​ $ 52,426 ​ $ 14,457 Net cash used in investing activities ​ (104,132) ​ (50,668) ​ (33,961) Net cash provided by (used in) financing activities ​ 64,314 ​ (1,749) ​ 19,501 Net change in cash ​ ​ $ 545 ​ $ 9 ​ $ (3) ​ Cash Flows Analysis Twelve Months Ended December 31, 2023 Compared to Twelve Months Ended December 31, 2022 Operating Activities.
Liquidity and Capital Resources The following is a summary of our cash flows from operating, investing, and financing activities, as reflected in the Consolidated Statement of Cash Flows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twelve Months Ended ​ ​ ​ December 31, ​ 2024 2023 2022 Net cash provided by operating activities ​ ​ $ 89,807 ​ $ 40,363 ​ $ 52,426 Net cash used in investing activities ​ (11,712) ​ (104,132) ​ (50,668) Net cash provided by (used in) financing activities ​ (78,561) ​ 64,314 ​ (1,749) Net change in cash ​ ​ $ (466) ​ $ 545 ​ $ 9 ​ Cash Flows Analysis Twelve Months Ended December 31, 2024 Compared to Twelve Months Ended December 31, 2023 Operating Activities.
The Fond du Lac Term Note is secured by a security agreement, payable in annual installments of $500 plus interest at 2.00% and is due in full in December 2028. The short-term and long-term balance of $500 and $1,875, respectively, are recorded in other current liabilities and other long-term liabilities in the Consolidated Balance Sheets.
Other Debt Additionally, the Company has a Fond du Lac County and Fond du Lac Economic Development Corporation term note (Fond du Lac Term Note). The Fond du Lac Term Note is secured by a security agreement, payable in annual installments of $500 plus interest at 2.00% and is due in full in December 2028.
(9) Initial impairment and (gain) loss on the sale of the fixed assets impaired as a result of the change in forecast of our former fitness customer. (10) Restructuring costs associated with the separation of the former COO.
(7) Expense associated with the recognized fair value step-up of inventory in correlation with the MSA acquisition. (8) Gain on the sale of the fixed assets that were previously impaired as a result of the change in forecast of our former fitness customer. (9) Restructuring costs associated with the separation of the former COO.
The Credit Agreement also provides for the availability of incremental facilities to the greater of $100,000 and 125% of the Company’s twelve month trailing Consolidated EBITDA through an accordion feature. All amounts borrowed under the credit agreement mature on June 28, 2028.
The Credit Agreement provides for a $250,000 revolving credit facility, with a letter of credit sub-facility, and a swingline facility in an aggregate amount of $25,000. The Credit Agreement also provides for the availability of incremental facilities to the greater of $100,000 and 125% of the Company’s twelve month trailing Consolidated EBITDA through an accordion feature.
The Company’s decision to repurchase additional shares in 2024 will depend on business conditions, free cash flow generation, other cash requirements and stock price. See Part II, Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities for additional information regarding share repurchases.
Additionally, under the share repurchase plan, the Company purchased $5,896 of common stock in 2024 as compared to $2,661 of its common stock in 2023. The Company’s decision to repurchase additional shares in 2025 will depend on business conditions, free cash flow generation, other cash requirements and stock price. See Part II, Item 5.
(3) Forecasted interest on debt obligations are based on the debt balance, interest rate, and unused fee of the Company’s revolving credit facility, debt balance and interest rate of the Company’s Fond due Lac Term Note and the debt balances and interest rates of the Company’s equipment finance agreements as of December 31, 2023.
(2) Forecasted interest on debt obligations are based on the debt balance, interest rate, and unused fee of the Company’s revolving credit facility and debt balance and interest rate of the Company’s Fond due Lac Term Note. (3) See Note 5 – Leases in the Notes to Consolidated Financial Statements for additional information.
Contractual Obligations The following table presents our obligations and commitments to make future payments under contracts and contingent commitments at December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments Due by Period ​ Total 2024 2025 – 2026 2027 – 2028 Thereafter Long-term debt principal payment obligations (1) ​ $ 149,868 ​ $ 500 ​ $ 1,000 ​ $ 148,368 ​ $ — Equipment financing agreements (2) ​ ​ 306 ​ ​ 306 ​ ​ — ​ ​ — ​ ​ — Forecasted interest on debt payment obligations (3) ​ ​ 29,791 ​ ​ 7,626 ​ ​ 12,840 ​ ​ 9,325 ​ ​ — Finance lease obligations (4) ​ 961 ​ 468 ​ 441 ​ 52 ​ — Operating lease obligations (4) ​ 37,492 ​ 5,840 ​ 10,112 ​ 9,883 ​ 11,657 Total ​ $ 218,418 ​ $ 14,740 ​ $ 24,393 ​ $ 167,628 ​ $ 11,657 (1) Principal payments under the Company’s Credit Agreement, which expires in 2028 and the Fond du Lac Term Note, which is due in full in December 2028.
Contractual Obligations The following table presents our obligations and commitments to make future payments under contracts and contingent commitments at December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments Due by Period ​ ​ Total 2025 2026 – 2027 2028 – 2029 Thereafter Long-term debt principal payment obligations (1) ​ $ 81,600 ​ $ 500 ​ $ 1,000 ​ $ 80,100 ​ $ — ​ Forecasted interest on debt payment obligations (2) ​ ​ 20,407 ​ ​ 6,367 ​ ​ 11,196 ​ ​ 2,844 ​ ​ — ​ Finance lease obligations (3) ​ 730 ​ 434 ​ 296 ​ — ​ — Operating lease obligations (3) ​ 33,480 ​ 5,765 ​ 11,028 ​ 8,813 ​ 7,874 Total ​ $ 136,217 ​ $ 13,066 ​ $ 23,520 ​ $ 91,757 ​ $ 7,874 ​ (1) Principal payments under the Company’s Credit Agreement, which expires in 2028 and the Fond du Lac Term Note, which is due in full in December 2028.
The Company expects some of these dynamics to continue in 2024 and could continue to have an impact on demand, material costs and labor. How We Assess Performance Net Sales. Net sales reflect sales of our components and products net of allowances for returns and discounts.
Macroeconomic Conditions The broader market dynamics over the past few years have resulted in impacts to the Company, elevated interest rates, inconsistent customer demand, material cost inflation and labor availability. The Company expects some of these dynamics to continue in 2025 and could continue to have an impact on demand, material costs and labor. How We Assess Performance Net Sales.
Amortization of intangible assets were $7,742 for the twelve months ended December 31, 2023 as compared to $6,952 for the twelve months ended December 31, 2022, an increase of $790, or 11.4%. This increase was solely due to the amortization expense associated with the identifiable intangible assets from the MSA acquisition.
Amortization of intangible assets were $6,933 for the twelve months ended December 31, 2024 as compared to $7,742 for the twelve months ended December 31, 2023, a decrease of $809, or 10.4%.
Amended and Restated Credit Agreement On June 28, 2023, we entered into an amended and restated credit agreement (the Credit Agreement) with certain lenders and Wells Fargo Bank, National Association, the Agent. The Credit Agreement provides for a $250,000 revolving credit facility, with a letter of credit sub-facility, and a swingline facility in an aggregate amount of $25,000.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities for additional information regarding share repurchases. Amended and Restated Credit Agreement On June 28, 2023, we entered into an amended and restated credit agreement (the Credit Agreement) with certain lenders and Wells Fargo Bank, National Association, the Agent.
Other Key Performance Indicators EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin EBITDA represents net income (loss) before interest expense, provision (benefit) for income taxes, depreciation and amortization. EBITDA Margin represents EBITDA as a percentage of net sales for each period.
EBITDA Margin represents EBITDA as a percentage of net sales for each period.
The increase was predominantly attributable to the incremental SG&A and transactions costs related to the acquisition of MSA, increased salaries, wages and benefits, recruiting fees and higher professional fees related to the Company preparing to be Sarbanes-Oxley Act Section 404(b) compliant for 2024 and higher legal fees associated with the on-going litigation with our former fitness customer, partially offset by CEO transition costs incurred during the prior year period.
The increase was predominantly attributable to higher costs related to compliance requirements and annual wage inflation, partially offset by lower legal fees associated with the litigation against the former fitness customer and non-recurring professional fees related to the MSA acquisition during the prior year period. Gain on Lawsuit Settlement.
The change is due to higher borrowing levels to finance the acquisition of MSA, which closed on July 1, 2023, and increased interest rates as compared to the prior year period. Provision for Income Taxes. Income tax expense was $1,039 for the twelve months ended December 31, 2023 as compared to $3,667 for the twelve months ended December 31, 2022.
Interest Expense. Interest expense was $10,989 for the twelve months ended December 31, 2024 as compared to $11,092 for the twelve months ended December 31, 2023, a decrease of $103, or 0.9%. The decrease is due to lower average debt levels on our revolver as compared to the prior year period. Provision for Income Taxes.
Interest Expense. Interest expense was $11,092 for the twelve months ended December 31, 2023 as compared to $3,380 for the twelve months ended December 31, 2022, an increase of $7,712, or 228.2%.
Free Cash Flows Analysis Twelve Months Ended December 31, 2023 Compared to Twelve Months Ended December 31, 2022 ​ Free cash flow for the year ended December 31, 2023 was $23,765 as compared to ($6,184) for the twelve months ended December 31, 2022, an increase of $29,949.
Manufacturing margins were $69,703 for the twelve months ended December 31, 2023 as compared to $61,069 for the twelve months ended December 31, 2022, an increase of $8,634, or 14.1%. The increase was primarily driven by the above-mentioned organic volume growth, MSA acquisition and commercial price actions.
These items were partially offset by incremental volumes from new program wins and the acquisition of MSA in the third quarter of the prior year. Manufacturing Margins. Manufacturing margins were $71,097 for the twelve months ended December 31, 2024 as compared to $69,703 for the twelve months ended December 31, 2023, an increase of $1,394, or 2.0%.
The increase was primarily due to deferred compensation expense during the current year period versus a credit during the prior year period due to fluctuations within the financial markets, the Company’s contributions to the 401(k) match being higher than the prior year period discretionary 401(k) accrual and less stock-based compensation expense in the prior year period due to increased forfeitures of unvested awards, slightly offset by lower bonus expense.
The increase was primarily driven by higher bonus accruals aligning with the Company’s attainment of certain financial performance targets for the current year period and higher stock-based compensation expense due to higher forfeitures of unvested awards in the prior year period. 36 Table of Contents Other Selling, General and Administrative Expenses.
The decrease of $2,628 is primarily due to higher net income and comprehensive income in the prior year period. Please reference Note 8 – Income Taxes in the Notes to Consolidated Financial Statements for further details.
See Note 8 of the Consolidated Financial Statements for further details. Due to the factors described in the preceding paragraphs, net income and comprehensive income, EBITDA, and EBITDA Margin increased while Adjusted EBITDA and Adjusted EBITDA Margin decreased during 2024.
The $53,464 increase in cash used in investing activities was mainly due to the acquisition of MSA, which was completed on July 1, 2023, partially offset by less capital investments in the current year period due to the completion of the capital investment in the Company’s Hazel Park, MI facility at the end of 2022. Financing Activities.
The $92,420 decrease in cash used in investing activities was mainly due to the acquisition of MSA that used cash of $88,593 and was completed on July 1, 2023, along with a decrease in capital expenditures. Financing Activities.
See Note 19 – Restructuring within the Notes to Consolidated Financial Statements for additional detail. ​ 34 Table of Contents Consolidated Results of Operations A discussion regarding our financial condition and results of operations for the twelve months ended December 31, 2023 compared to the twelve months ended December 31, 2022 is presented below.
The increase in free cash flow was primarily due to less capital investments in 2023 due to the completion of the capital investment in the Company’s Hazel Park, MI facility at the end of 2022, partially offset by a decrease in operating activities, mainly due to a payout of deferred compensation to a retired Company executive in 2023. 35 Table of Contents Consolidated Results of Operations A discussion regarding our financial condition and results of operations for the twelve months ended December 31, 2024 compared to the twelve months ended December 31, 2023 is presented below.
Removed
Emerging Growth Company The JOBS Act permits an “emerging growth company” like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies.
Added
See Note 19 within the Notes to Consolidated Financial Statements for additional detail. (10) Restructuring charges related to the closure of the Wautoma facility. See Note 19 within the Notes to Consolidated Financial Statements for additional detail. (11) Payment received from the former fitness customer resolving a previously disclosed lawsuit.
Removed
We are choosing to use this provision and, as a result, we will comply with new or revised accounting standards as required for private companies. 31 Table of Contents Internal Controls and Procedures Our management is responsible for establishing and maintaining adequate internal control over financial reporting for our company.
Added
See Note 9 within the Notes to Consolidated Financial Statements for additional detail. ​ 34 Table of Contents The following table presents a reconciliation of net cash provided by operating activities, the most directly comparable measure calculated in accordance with GAAP, to free cash flow for each of the periods presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twelve Months Ended ​ ​ December 31, ​ 2024 2023 2022 Net cash provided by operating activities ​ $ 89,807 ​ $ 40,363 ​ $ 52,426 Less: Capital expenditures ​ ​ 12,098 ​ ​ 16,598 ​ ​ 58,610 Free cash flow ​ $ 77,709 ​ $ 23,765 ​ $ (6,184) ​ Free Cash Flows Analysis Twelve Months Ended December 31, 2024 Compared to Twelve Months Ended December 31, 2023 ​ Free cash flow for the year ended December 31, 2024 was $77,709 as compared to $23,765 for the twelve months ended December 31, 2023, an increase of $53,944 or 227.0%.
Removed
Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.
Added
The increase in free cash flow was primarily due to an increase in cash provided by operating activities and a decrease in capital expenditures. Please see the “Liquidity and Capital Resources” section below for further information.
Removed
Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures of our assets are made in accordance with management’s authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements would be prevented or detected on a timely basis.
Added
Net sales were $581,604 for the twelve months ended December 31, 2024 as compared to $588,425 for the twelve months ended December 31, 2023, a decrease of $6,821, or 1.2%.
Removed
Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.
Added
This decrease was primarily due to softening demand within the second half of the current year in all our key end markets, customer de-stocking channel inventory and the foreseen roll-off of certain military aftermarket programs at the end of 2023.
Removed
Furthermore, our controls and procedures can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the control, and misstatements due to error or fraud may occur and not be detected on a timely basis.
Added
The increase was primarily driven by MBX initiatives, commercial pricing actions and cost reduction actions, most notably, a 12% reduction in the Company’s labor force which occurred in the third quarter of 2024.
Removed
Macroeconomic Conditions The broader market dynamics over the past few years have resulted in impacts to the Company, including supply chain constraints affecting some of our customers, material cost inflation and inflationary pressures on wages and benefits due to labor availability.
Added
The decrease was due to the full amortization of certain intangible assets in prior periods, slightly offset by the full year of amortization expense in 2024 associated with the identifiable intangible assets from the MSA acquisition. Profit Sharing, Bonuses and Deferred Compensation Expenses.
Removed
(7) Expense associated with the recognized fair value step-up of inventory in correlation with the MSA acquisition. See Note 2 – Acquisitions within the Notes to Consolidated Financial Statements for additional detail. (8) Loss on purchase commitments and scrapped inventory as a result of the change in forecast of our former fitness customer.
Added
On October 28, 2024, the Company and a former fitness customer entered into a formal Settlement Agreement (the “Agreement”) resolving a previously disclosed lawsuit.
Removed
Net sales were $588,425 for the twelve months ended December 31, 2023 as compared to $539,392 for the twelve months ended December 31, 2022, an increase of $49,033, or 9.1%. This increase was primarily due to the acquisition of MSA, increased organic sales volumes within our commercial vehicle, powersports and military end markets and continued price discipline.
Added
Under the terms of the Agreement, the Company and the former fitness customer agreed to dismiss the lawsuit and exchange mutual releases, and MEC received a gross payment of $25,500 from the former fitness customer in the fourth quarter of the current year. See Note 9 within the Notes to Consolidated Financial Statements for additional information regarding the lawsuit.
Removed
These increases were slightly offset by softening demand in our construction and agriculture end markets, lower material price pass-throughs to customers and United Auto Workers labor union strikes impacting a few of our customers that occurred in the fourth quarter of the current period. Manufacturing Margins.
Added
Income tax expense was $7,596 for the twelve months ended December 31, 2024 as compared to $1,039 for the twelve months ended December 31, 2023, an increase of $6,557 or 631.1%. The increase is primarily due to the gain on lawsuit settlement in the current year period, partially offset by an increased tax benefit associated with stock-based compensation option exercises.
Removed
These items were partially negated by unabsorbed fixed costs associated with new project launches, a one-time field replacement claim, higher employee healthcare expenses, the non-recurring inventory step-up expense associated with the MSA acquisition and restructuring costs related to the former COO.
Added
The remaining increase of $31,882 was primarily due to the lawsuit settlement payment of $25,500 and changes in net working capital items.
Removed
Refer to Note 2 – Acquisitions within the Notes to Consolidated Financial Statements for additional information related to these identifiable intangible assets. 35 Table of Contents Profit Sharing, Bonuses and Deferred Compensation Expenses.
Added
The primary increases associated with working capital changes include a decrease in accrued liabilities in the prior year as part of a 401(k) Plan amendment, the utilization of income tax net operating losses and tax credit carryforwards and a decrease in cash used for accounts payable due to the timing of supplier payments positively impacted cash provided by operating activities for the current year period.
Removed
Impairment of Long-Lived Assets and Gain on Contracts. At December 31, 2021, there was uncertainty as to the level of demand from the former fitness customer.
Added
The change was primarily due to the debt repayments in excess of borrowings during the current year period and the withdrawal of funds used to 37 Table of Contents purchase MSA in the prior year period.
Removed
The Company received a notification from this customer in February 2022 resulting in a change in forecasted future cash flow, triggering an impairment assessment of assets purchased, and assets the Company committed to purchase, to meet obligations under the agreement with the former fitness customer as of December 31, 2021.
Added
All amounts borrowed under the credit agreement mature on June 28, 2028.
Removed
The notification informed the Company that it did not forecast any demand for any products or parts that were the subject of the agreement between the Company and the customer for the remainder of the agreement’s term, which ends in March 2026. Given the circumstances, GAAP required the Company to assess whether the assets were impaired.
Added
The balance outstanding as of December 31, 2024 was $1,875, with the short-term and long-term balance of $500 and $1,375, respectively, recorded in other current liabilities and other long-term liabilities in the Consolidated Balance Sheets. 38 Table of Contents Capital Requirements and Sources of Liquidity During the twelve months ended December 31, 2024 and 2023, our capital expenditures were $12,098 and $16,598, respectively.
Removed
As a result of this assessment, the Company recorded an impairment on the assets purchased and loss on contracts agreed upon specifically to meet obligations under the agreement with the former fitness customer. Consequently, the Company recorded an impairment of long-lived assets and loss on contracts of $16,151 in the fourth quarter of 2021.
Added
The decrease of $4,500 was driven by the Company controlling its spend due to the end market demand softening. Capital expenditures for the full year 2025 are expected to be between $13,000 and $17,000.
Removed
During the twelve months ended December 31, 2022, the Company was able to cancel $2,257 of purchase commitments for property, plant and equipment that had been recorded as an impairment of long-lived assets and loss on contracts at December 31, 2021, as previously described. The cancellation of purchase commitments resulted in the reversal of previously recorded impairment expense.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeCustomer Forecasts The 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-quarter dependent upon the respective markets that our customers provide products in.
Biggest changeTo reduce such risks, we selectively use financial instruments and other proactive management techniques. 39 Table of Contents Customer Forecasts The 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-quarter dependent upon the respective markets that our customers provide products in.
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 December 31, 2023, we did not have any commodity hedging instruments in place. ​ 40 Table of Contents
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 December 31, 2024, we did not have any commodity hedging instruments in place. ​ 40 Table of Contents
A hypothetical 100-basis-point increase in our borrowing rates would have resulted in an additional $1.4 million of interest expense based on our variable rate debt at December 31, 2023. 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 our cash flow.
A hypothetical 100-basis-point increase in our borrowing rates would have resulted in an additional $1.1 million of interest expense based on our variable rate debt at December 31, 2024. 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 our cash flow.
The amount borrowed under our revolving credit facility under the Credit Agreement was $147.5 million with an interest rate of 7.71% as of December 31, 2023.
The amount borrowed under our revolving credit facility under the Credit Agreement was $79.7 million with an interest rate of 6.55% as of December 31, 2024.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. We are exposed to market risk from changes in customer forecasts, interest rates, and, to a lesser extent, commodities. To reduce such risks, we selectively use financial instruments and other proactive management techniques.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. We are exposed to market risk from changes in customer forecasts, interest rates, and, to a lesser extent, commodities.

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