10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to

Commission File Number: 001-38894

Mayville Engineering Company, Inc.

(Exact Name of Registrant as Specified in its Charter)

Wisconsin	39-0944729
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
715 South Street Mayville, Wisconsin	53050
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (920) 387-4500

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	MEC	New York Stock Exchange

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

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

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

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☒

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

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

As of April 28, 2023, the registrant had 20,468,259 shares of common stock, no par value per share, outstanding.

Table of Contents

		Page
PART  I.	FINANCIAL INFORMATION	5
Item 1.	Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Comprehensive Income	6
	Condensed Consolidated Statements of Cash Flows	7
	Condensed Consolidated Statements of Shareholders’ Equity	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	27
PART II.	OTHER INFORMATION	28
Item 1.	Legal Proceedings	28
Items 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 6.	Exhibits	29
Signatures		30

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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

Important factors that could cause actual results or events to differ materially from those expressed in forward-looking statements include, but are not limited to, those described in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (the SEC) on March 1, 2023, as such may be amended or supplemented in Part II, Item 1A of our subsequently filed Quarterly Reports on Form 10-Q (including this report) and the following:

● Macroeconomic conditions, including inflation, rising interest rates and recessionary concerns, as well as ongoing supply chain challenges, labor availability and cost pressures, and the COVID-19 pandemic 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;

● risks related to our information technology systems and infrastructure;

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● 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.

These factors are not necessarily all of the important factors that could cause actual results or events to differ materially from those expressed in forward-looking statements. Other unknown or unpredictable factors could also cause actual results or events to differ materially from those expressed in the forward-looking statements. All forward-looking statements attributable to us are qualified in their entirety by this cautionary statement. Forward-looking statements speak only as of the date hereof. We undertake no obligation to update or revise any forward-looking statements after the date on which any such statement is made, whether as a result of new information, future events or otherwise, except as required by federal securities laws.

4

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Mayville Engineering Company, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share amounts)

(unaudited)

	March 31,		December 31,
	2023		2022
ASSETS
Cash and cash equivalents	$	126	$	127
Receivables, net of allowances for doubtful accounts of $572 at March 31, 2023 and $545 at December 31, 2022		74,239		58,001
Inventories, net		68,948		71,708
Tooling in progress		8,039		7,938
Prepaid expenses and other current assets		3,470		3,529
Total current assets		154,822		141,303
Property, plant and equipment, net		142,956		145,771
Assets held for sale		81		83
Goodwill		71,535		71,535
Intangible assets, net		42,071		43,809
Operating lease assets		34,787		36,073
Other long-term assets		1,749		2,007
Total assets	$	448,001	$	440,581
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	52,376	$	53,735
Current portion of operating lease obligation		4,894		4,857
Accrued liabilities:
Salaries, wages, and payroll taxes		7,320		7,288
Profit sharing and bonus		1,137		6,860
Current portion of deferred compensation		17,802		18,062
Other current liabilities		12,645		11,646
Total current liabilities		96,174		102,448
Bank revolving credit notes		81,576		72,236
Operating lease obligation, less current maturities		30,648		31,891
Deferred compensation, less current portion		3,229		3,132
Deferred income tax liability		12,136		11,818
Other long-term liabilities		895		1,189
Total liabilities	$	224,658	$	222,714
Commitments and contingencies (see Note 8)
Common shares, no par value, 75,000,000 authorized, 21,779,959 shares issued at March 31, 2023 and 21,645,193 at December 31, 2022		—		—
Additional paid-in-capital		202,011		200,945
Retained earnings		28,845		26,274
Treasury shares at cost, 1,357,929 shares at March 31, 2023 and 1,472,447 at December 31, 2022		(7,513)		(9,352)
Total shareholders’ equity		223,343		217,867
Total	$	448,001	$	440,581

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

5

Mayville Engineering Company, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(in thousands, except share amounts and per share data)

(unaudited)

	Three Months Ended
	March 31,
	2023		2022
Net sales	$	142,645	$	136,252
Cost of sales		126,268		121,370
Amortization of intangible assets		1,738		1,738
Profit sharing, bonuses, and deferred compensation		3,003		2,548
Employee stock ownership plan expense		—		490
Other selling, general and administrative expenses		6,966		5,725
Impairment of long-lived assets and gain on contracts		—		(1,183)
Income from operations		4,670		5,564
Interest expense		(1,658)		(567)
Income before taxes		3,012		4,997
Income tax expense		441		1,175
Net income and comprehensive income	$	2,571	$	3,822
Earnings per share:
Basic	$	0.13	$	0.19
Diluted	$	0.12	$	0.19
Weighted average shares outstanding:
Basic		20,315,338		20,398,933
Diluted		20,749,948		20,549,326

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

6

Mayville Engineering Company, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Three Months Ended
	March 31,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	2,571	$	3,822
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		6,142		5,468
Amortization		1,738		1,738
Allowance for doubtful accounts		27		106
Inventory excess and obsolescence reserve		11		174
Stock-based compensation expense		1,066		1,257
Gain on disposal of property, plant and equipment		(138)		(62)
Impairment of long-lived assets and gain on contracts		—		(1,183)
Deferred compensation		(163)		(2,176)
Non-cash lease expense		1,286		1,266
Other non-cash adjustments		83		77
Changes in operating assets and liabilities – net of effects of acquisition:
Accounts receivable		(16,265)		(17,088)
Inventories		2,749		(2,317)
Tooling in progress		(100)		(1,246)
Prepaids and other current assets		110		(216)
Accounts payable		(2,290)		10,526
Deferred income taxes		441		1,155
Operating lease obligations		(1,206)		(1,160)
Accrued liabilities		(2,105)		(566)
Net cash used in operating activities		(6,043)		(425)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment		(2,408)		(12,979)
Proceeds from sale of property, plant and equipment		153		359
Net cash used in investing activities		(2,255)		(12,620)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank revolving credit notes		119,700		118,156
Payments on bank revolving credit notes		(110,360)		(102,436)
Repayments of other long-term debt		(286)		(272)
Purchase of treasury stock		(661)		(2,323)
Payments on finance leases		(96)		(78)
Net cash provided by financing activities		8,297		13,047
Net increase (decrease) in cash and cash equivalents		(1)		2
Cash and cash equivalents at beginning of period		127		118
Cash and cash equivalents at end of period	$	126	$	120
Supplemental disclosure of cash flow information:
Cash paid for interest	$	112	$	437
Non-cash 401(k) contribution of treasury stock	$	2,500	$	2,057
Non-cash construction in progress in accounts payable	$	1,534	$	5,528

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

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Mayville Engineering Company, Inc. and Subsidiaries

Condensed Consolidated Statements of Shareholders’ Equity

(in thousands)

(unaudited)

	Shareholders' Equity
	Additional		Treasury		Retained
	Paid-in-Capital		Shares		Earnings		Total
Balance as of December 31, 2022	$	200,945	$	(9,352)	$	26,274	$	217,867
Net income		—		—		2,571		2,571
401(k) plan contribution		—		2,500		—		2,500
Purchase of treasury stock		—		(661)		—		(661)
Stock-based compensation		1,066		—		—		1,066
Balance as of March 31, 2023	$	202,011	$	(7,513)	$	28,845	$	223,343
	Shareholders' Equity
	Additional		Treasury		Retained
	Paid-in-Capital		Shares		Earnings		Total
Balance as of December 31, 2021	$	197,186	$	(6,462)	$	7,547	$	198,271
Net income		—		—		3,822		3,822
401(k) plan contribution		—		2,057		—		2,057
Purchase of treasury stock		—		(2,323)		—		(2,323)
Stock-based compensation		1,257		—		—		1,257
Balance as of March 31, 2022	$	198,443	$	(6,728)	$	11,369	$	203,084

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

8

Mayville Engineering Company, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

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

(unaudited)

Note 1. Basis of presentation

The interim unaudited condensed consolidated financial statements of Mayville Engineering Company, Inc. and subsidiaries (MEC, the Company, we, our, us or similar terms) presented here have been prepared in accordance with the accounting principles generally accepted in the United States of America (GAAP) and with instructions to Form 10-Q and Article 10 of Regulation S-X. They reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations and financial position for the interim unaudited periods presented. All intercompany balances and transactions have been eliminated in consolidation.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These interim unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K. A summary of the Company’s significant accounting policies is included in the Company’s 2022 financial statements in the Annual Report on Form 10-K. The Company followed these policies in preparation of the interim unaudited Condensed Consolidated Financial Statements except for new accounting pronouncements adopted as described below.

Nature of Operations

MEC is a leading U.S.-based, vertically-integrated, value-added manufacturing partner providing a full suite of manufacturing solutions from concept to production, including design, prototyping and tooling, fabrication, coating, assembly and aftermarket components. Our customers operate in diverse end markets, including heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, agriculture, military and other end markets. Founded in 1945 and headquartered in Mayville, Wisconsin, we are a leading Tier I U.S. supplier of highly engineered components to original equipment manufacturer (OEM) customers with leading positions in their respective markets. The Company operates 20 facilities located in Arkansas, Michigan, Mississippi, Ohio, Pennsylvania, Virginia, and Wisconsin. Our engineering expertise and technical know-how allow us to add value through every product redevelopment cycle (generally every three to five years for our customers).

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.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Measurement of Credit Losses on Financial Instruments, which establishes Accounting Standards Codification (ASC) 326, Financial Instruments – Credit Losses. The ASU revises the measurement of credit losses for financial assets measured at amortized cost from an incurred loss methodology to an expected loss methodology. The ASU affects trade receivables, debt securities, net investment in leases, and most other financial assets that represent a right to receive cash. For as long as the Company remains an emerging growth company (EGC), the new guidance is effective for annual reporting periods beginning after December 15, 2022. The Company adopted the new standard as of January 1, 2023. As our customer base is principally made of blue-chip OEMs with high credit ratings and our trade receivables are due within one year or less, the adoption of this standard did not have a material impact on our consolidated financial statements.

Note 2. Select balance sheet data

Inventory

Inventories are stated at the lower of cost, determined on the first-in, first-out method, or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Work-in-process and finished goods are valued at production costs consisting of material, labor, and overhead.

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Inventories as of March 31, 2023 and December 31, 2022 consist of:

	March 31,		December 31,
	2023		2022
Finished goods and purchased parts	$	34,641	$	44,728
Raw materials		23,806		17,003
Work-in-process		10,501		9,977
Total	$	68,948	$	71,708

Property, plant and equipment

Property, plant and equipment as of March 31, 2023 and December 31, 2022 consist of:

	Useful Lives		March 31,		December 31,
	Years		2023		2022
Land		Indefinite	$	1,030	$	1,030
Land improvements		15-39		3,169		3,169
Building and building improvements		15-39		64,861		59,664
Machinery, equipment and tooling		3-10		260,309		250,110
Vehicles		5		4,372		4,359
Office furniture and fixtures		3-7		20,199		19,585
Construction in progress		N/A		13,612		26,435
Total property, plant and equipment, gross				367,552		364,352
Less accumulated depreciation				224,596		218,581
Total property, plant and equipment, net			$	142,956	$	145,771

Depreciation expense for the three months ended March 31, 2023 and 2022 was $6,142 and $5,468

At December 31, 2021, there was uncertainty as to the level of demand from the former fitness customer. The Company received a notification from the former fitness customer in February 2022 resulting in a change in forecasted future cash flow, triggering an impairment assessment of assets purchased, and assets the Company had committed to purchase, to meet obligations under the agreement with the former fitness customer as of December 31, 2021. As a result, at December 31, 2021, the Company recorded a long-lived asset impairment of $12,875.

During the three months ended March 31, 2022, the Company was able to cancel $1,183 of purchase commitments for property, plant and equipment relating to the former fitness customer that had previously been recorded in the Consolidated Statements of Comprehensive Income as an impairment of long-lived assets and loss on contracts as of December 31, 2021. The cancellation of loss contracts has resulted in the reversal of these amounts from other current liabilities in the Condensed Consolidated Balance Sheets and recorded in the Condensed Consolidated Statements of Comprehensive Income as an impairment of long-lived assets and gain on contracts for the three months ended March 31, 2022.

The Company adopted ASC 842 on January 1, 2022, classifying finance leases of $1,008 and $1,103 in property, plant and equipment on the Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022, respectively. Please refer to Note 4 – Leases for additional information.

Goodwill

There were no changes to the goodwill balance of $71,535 between December 31, 2022 and March 31, 2023.

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Intangible Assets

The following is a listing of intangible assets, the useful lives in years (amortization period) and accumulated amortization as of March 31, 2023 and December 31, 2022:

	Useful Lives		March 31,		December 31,
	Years		2023		2022
Amortizable intangible assets:
Customer relationships and contracts		9-12	$	78,340	$	78,340
Trade name		10		14,780		14,780
Non-compete agreements		5		8,800		8,800
Patents		19		24		24
Accumulated amortization				(63,684)		(61,946)
Total amortizable intangible assets, net				38,260		39,998
Non-amortizable brand name				3,811		3,811
Total intangible assets, net			$	42,071	$	43,809

Non-amortizable brand name is tested annually during the fourth quarter for impairment, or more frequently if triggering events occur indicating there may be impairment.

Changes in intangible assets between December 31, 2022 and March 31, 2023 consist of:

Balance as of December 31, 2022	$	43,809
Amortization expense		(1,738)
Balance as of March 31, 2023	$	42,071

Amortization expense was $1,738 for the three months ended March 31, 2023 and 2022.

Future amortization expense is expected to be as followed:

Year ending December 31,
2023 (remainder)	$	5,128
2024	$	5,192
2025	$	5,192
2026	$	5,192
2027	$	5,192
Thereafter	$	12,364

Note 3. Bank revolving credit notes

On September 26, 2019, and as last amended on March 31, 2022, we entered into an amended and restated credit agreement (Credit Agreement) with certain lenders and Wells Fargo Bank, National Association, as administrative agent (the Agent). The Credit Agreement provides for a $200,000 revolving credit facility (the Revolving Loan), with a letter of credit sub-facility in an aggregate amount not to exceed $5,000, and a swingline facility in an aggregate amount of $20,000. The Credit Agreement also provides for an additional $100,000 of debt capacity through an accordion feature. All amounts borrowed under the Credit Agreement mature on September 26, 2024.

The Credit Agreement contains usual and customary negative covenants for agreements of this type, including, but not limited to, restrictions on our ability to, subject to certain exceptions, create, incur or assume indebtedness, create or incur liens, make certain investments, merge or consolidate with another entity, make certain asset dispositions, pay dividends or other distributions to shareholders, enter into transactions with affiliates, enter into sale leaseback transactions or make capital expenditures. The Credit Agreement also requires us to satisfy certain financial covenants, including a minimum interest coverage ratio of 3.00 to 1.00 as well

11

as a consolidated total leverage ratio not to exceed 3.25 to 1.00, although such leverage ratio can be increased in connection with certain acquisitions.

In order to provide a means of insurance against future macroeconomic events, we entered into an amendment (Second Amendment) to the Credit Agreement on June 30, 2020. The Second Amendment provided the Company with temporary changes to the total leverage ratio covenant for the period from June 30, 2020, through December 31, 2021, in return for certain increases in interest rates, fees and restrictions on certain activities of the Company, including capital expenditures, acquisitions, dividends and share repurchases. New pricing, which took effect for the quarters ending on and after September 30, 2020, includes interest at a fluctuating London Interbank Offered Rate (LIBOR) (at a floor of 75 basis points), plus 1.00% to 2.75%, along with the commitment fee ranging from 20 to 50 basis points.

We entered into an amendment (Third Amendment) to the Credit Agreement on March 31, 2021 which allowed the Company to incur up to $70,000 of capital expenditures in 2021, as opposed to $35,000.

We entered into an amendment (Fourth Amendment) to the Credit Agreement on March 31, 2022 which allowed the Company to incur up to $65,000 of capital expenditures in 2022, as opposed to $35,000, and revised the definition of Consolidated EBITDA to include certain restructuring and impairment charges.

At March 31, 2023, our consolidated total leverage ratio was 1.44 to 1.00 as compared to a covenant maximum of 3.25 to 1.00 in accordance with the Credit Agreement.

At March 31, 2023, our interest coverage ratio was 9.82 to 1.00 as compared to a covenant minimum of 3.00 to 1.00 under the Credit Agreement.

Under the Credit Agreement, interest is payable quarterly at the adjusted LIBOR plus an applicable margin based on the current funded indebtedness to adjusted EBITDA ratio. The interest rate was 6.19% and 5.69% as of March 31, 2023 and December 31, 2022. Additionally, the agreement has a fee on the average daily unused portion of the aggregate unused revolving commitments. This fee was 0.25% as of March 31, 2023 and December 31, 2022.

The Company was in compliance with all financial covenants of its credit agreements as of March 31, 2023 and December 31, 2022. The amount borrowed on the revolving credit notes was $81,576 and $72,236 as of March 31, 2023 and December 31, 2022, respectively.

Note 4. Leases

The Company has real property operating leases for office and light manufacturing space. Operating leases for the Company’s personal property consist of leases for office equipment, vehicles, forklifts and storage tanks for bulk gases. The Company recognizes a ROU asset and a lease liability for operating leases based on the net present value of future minimum lease payments. Lease expense for the Company’s operating leases is recognized on a straight-line basis over the lease term, including renewal periods that are considered reasonably certain.

The Company has finance leases for two laser cutting systems and three vehicles. The Company recognizes an ROU asset and a lease liability for finance leases based on the net present value of future minimum lease payments. Lease expense for the Company’s finance leases is comprised of the amortization of the ROU asset and interest expense recognized based on the effective interest method.

Variable lease expense is related to certain of the Company’s real property leases and personal property leases, and it generally consists of property tax and insurance components that are for the benefit of the lessor (real property leases) and variable overage fees (personal property leases) that are remitted as part of the Company’s lease payments.

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The components of lease expense were as follows:

	Three Months Ended
	March 31,
	2023		2022
Finance lease cost:
Amortization of finance lease assets	$	94	$	79
Interest on finance lease liabilities		11		11
Total finance lease expense		105		90
Operating lease expense		1,286		1,522
Short-term lease expense		139		179
Variable lease expense		69		47
Sublease income (1)		(631)		—
Total lease expense	$	968	$	1,838

(1) The Company subleased a portion of its Hazel Park, MI facility starting in June 2022.

Lease related supplemental cash flow information:

	Three Months Ended
	March 31,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities for finance leases:
Operating cash flows	$	11	$	11
Financing cash flows	$	96	$	78
Cash paid for amounts included in the measurement of lease liabilities for operating leases:
Operating cash flows	$	1,425	$	1,430
Right-of-use assets obtained in exchange for recorded lease obligations:
Operating leases	$	—	$	46
Finance leases	$	—	$	—

ROU assets are assessed for impairment in accordance with the Company’s long-lived asset policy. The Company reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified, and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842.

Note 5. Employee stock ownership plan

Under the Mayville Engineering Company, Inc. Employee Stock Ownership Plan (the ESOP), the Company can make annual discretionary contributions to the trust for the benefit of eligible employees in the form of cash or shares of common stock of the Company subject to the Board of Directors’ approval. For the three months ended March 31, 2023 and 2022, the Company’s estimated ESOP expense was $0 and $490, respectively.

As of January 1, 2023, the Company amended the plan reducing the distribution period from five years to three years.

At various times following death, disability, retirement, termination of employment or the exercise of diversification rights, an ESOP participant is entitled to receive their ESOP account balance in accordance with various distribution methods as permitted under the policies adopted by the ESOP. Prior to the IPO, all distributions were paid to participants in cash.

As of March 31, 2023 and December 31, 2022, the ESOP shares consisted of 4,595,247 and 5,684,879 in allocated shares, respectively.

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Note 6. Retirement plans

The Mayville Engineering Company Inc. 401(k) Plan (the 401(k) Plan) covers substantially all employees meeting certain eligibility requirements. The 401(k) Plan is a defined contribution plan and is intended for eligible employees to defer tax-free contributions to save for retirement. Employees may contribute up to 50% of their eligible compensation to the 401(k) Plan, subject to the limits of Section 401(k) of the Internal Revenue Code.

As of January 1, 2023, the Company implemented an employer match program to the 401(k) Plan. The Company now provides a 50% match for employee contributions, up to 6%. For the three months ended March 31, 2023, the Company’s employer match expense was $874. Additionally, the 401(k) Plan provides for employer discretionary profit-sharing contributions and the Board of Directors may authorize discretionary profit-sharing contributions (which are usually approved at the end of each calendar year). For the three months ended March 31, 2023 and 2022, the Company’s estimated discretionary profit sharing expense was $0 and $391, respectively.

Note 7. Income taxes

On a quarterly basis, the Company estimates its effective tax rate for the full fiscal year and records a quarterly income tax provision based on the anticipated rate. As the year progresses, the Company will refine its estimate based on facts and circumstances by each tax jurisdiction.

Income tax expense was estimated at $441 and the effective tax rate (ETR) was 14.65% for the three months ended March 31, 2023. Our ETR is different from the expected tax rate due to state taxes, non-deductible items, research and development credits and benefit from excess tax deductions related to share based compensation items.

For the three months ended March 31, 2022, income tax expense was estimated at $1,175 and the ETR was 23.52%.

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

The Company’s policy for recording interest and penalties associated with potential income tax audits is to record such expense as a component of income tax expense. There were no amounts for penalties or interest recorded as of March 31, 2023. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its positions.

Uncertain Tax Positions

Based on the Company’s evaluation, it has been concluded that there is one tax position related to the research and development tax credit requiring recognition in the Company’s financial statements as of March 31, 2023. The Company does not anticipate that there will be a material change in the balance of the unrecognized tax benefits in the next 12 months. Any interest and penalties related to uncertain tax positions are recorded in income tax expense. No amounts have been recorded as tax expense for interest and penalties for the three months ended March 31, 2023, as the amount for the utilized portion for the research and development credit on the Wisconsin return is considered to be immaterial. At March 31, 2023 and December 31, 2022, a total of $420 and $384, respectively, of unrecognized tax benefits would, if recognized, impact the Company’s ETR.

The Company files income tax returns in the United States federal jurisdiction and in various state and local jurisdictions. Federal tax returns for tax years beginning January 1, 2019, and state tax returns beginning January 1, 2018, are open for examination.

Note 8. Contingencies

On August 4, 2022, the Company filed a lawsuit against Peloton Interactive, Inc. (“Peloton”) in the Supreme Court of the State of New York, New York County. The lawsuit arises from a March 2021 “Supply Agreement” between the parties, pursuant to which MEC was to manufacture and supply custom component parts for Peloton’s exercise bikes (the “Manufacturing Project”). In the lawsuit, the Company originally asserted two claims (1) breach and anticipatory repudiation of contract and (2) breach of the duty of

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good faith and fair dealing (pleaded in the alternative). In January 2023, in response to Peloton’s motion to dismiss, the court allowed the first claim to proceed and dismissed the alternative claim. In the remaining claim, MEC asserts that Peloton breached and anticipatorily repudiated the Supply Agreement by unilaterally cancelling the Manufacturing Project and refusing to pay MEC certain monthly fixed revenue payments owed under the terms of the Supply Agreement. The total amount for damages claimed is substantial but the amount and timing of the ultimate recovery is uncertain. As a result, any recovery from this litigation or settlement of this claim is a contingent gain and will be recognized if, and when, realized or realizable.

From time to time, the Company may be involved in various claims and lawsuits, both for and against the Company, arising in the normal course of business. Although the results of litigation and claims cannot be predicted with certainty, in management’s opinion, either the likelihood of loss is remote, or any reasonably possible loss associated with the resolution of such proceedings is not expected to have a material adverse impact on the consolidated financial statements.

Note 9. Deferred compensation

The Mayville Engineering Company Deferred Compensation Plan is available for certain employees designated to be eligible to participate by the Company and approved by the Board of Directors. Eligible employees may elect to defer a portion of his or her compensation for any plan year and the deferral cannot exceed 50% of the participant’s base salary and may include the participant’s annual short-term cash incentive up to 100%. The participant’s election must be made prior to the first day of the plan year.

An employer contribution will be made for each participant to reflect the amount of any reduced allocations to the ESOP and/or 401(k) employer contributions due solely to the participant’s deferral amounts, as applicable. In addition, a discretionary amount may be awarded to a participant by the Company.

Deferrals are assumed to be invested in an investment vehicle based on the options made available to the participant (which does not include Company stock).

The deferred compensation plan provides benefits payable upon separation of service or death. Payments are to be made 30 or 180 days after date of separation from service, either in a lump-sum payment or up to five annual installments as elected by the participant when the participant first elects to defer compensation.

The deferred compensation plan is non-funded, and all future contributions are unsecured in that the employees have the status of a general unsecured creditor of the Company and the agreements constitute a promise by the Company to make benefit payments in the future. During the three months ended March 31, 2023 and 2022, eligible employees elected to defer compensation of $236 and $0, respectively. As of March 31, 2023 and December 31, 2022, the short-term portion accrued for all benefit years less than 12 months under this plan was $17,802 and $18,062, respectively. As of March 31, 2023 and December 31, 2022, the long-term portion accrued for all benefit years greater than 12 months under this plan was $3,229 and $3,132. These amounts include the initial deferral of compensation and were adjusted for changes in the value of investment options chosen by the participants. Total expense (credit) for the deferred compensation plan for the three months ended March 31, 2023 and 2022 was $560 and $(1,128), respectively. These expenses (credits) are included in profit sharing, bonuses and deferred compensation on the Condensed Consolidated Statements of Comprehensive Income. Additionally, the Company made distributions of $958 and $1,048 for the three months ended March 31, 2023 and 2022, respectively.

Note 10. Self-Funded insurance

The Company is self-funded for the medical benefits provided to its employees and their dependents. Healthcare costs are expensed as incurred and are based upon actual claims paid, reinsurance premiums, administration fees, and estimated unpaid claims. Since March 31, 2020, the Company has an aggregate stop loss limit to mitigate risk. Expenses related to this were $4,634 and $4,760 for the three months ended March 31, 2023 and 2022, respectively. An estimated accrued liability of $879 and $900 was recorded as of March 31, 2023 and December 31, 2022, respectively, for estimated unpaid claims and is included within other current liabilities on the Condensed Consolidated Balance Sheets.

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Note 11. Segments

The Company applies the provisions of ASC 280, Segment Reporting. An operating segment is defined as a component that engages in business activities whose operating results are reviewed by the chief operating decision maker and for which discrete financial information is available. Based on the provisions of ASC 280, the Company has determined it has one operating segment. The Company does not earn revenues or have long-lived assets located in foreign countries.

Note 12. Fair value of financial instruments

Fair value provides information on what the Company may realize if certain assets were sold or might pay to transfer certain liabilities based upon an exit price. Financial assets and liabilities that are measured and reported at fair value are classified into a three-level hierarchy that prioritizes the inputs used in the valuation process. A financial instrument’s categorization within the valuation hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The hierarchy is based on the observability and objectivity of the pricing inputs as follows:

● Level 1 – Quoted prices in active markets for identical assets or liabilities.

● Level 2 – Significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities or (iii) information derived from or corroborated by observable market data. Long-term debt is classified as a Level 2 fair value input.

● Level 3 – Prices or valuation techniques that require significant unobservable data inputs. These inputs would normally be the Company’s own data and judgements about assumptions that market participants would use in pricing the asset or liability.

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

	Balance at		Fair Value Measurements at
	March 31,		Report Date Using
	2023		(Level 1)		(Level 2)		(Level 3)
Deferred compensation liability	$	21,031	$	21,031	$	—	$	—
Total	$	21,031	$	21,031	$	—	$	—

	Balance at		Fair Value Measurements at
	December 31,		Report Date Using
	2022		(Level 1)		(Level 2)		(Level 3)
Deferred compensation liability	$	21,194	$	21,194	$	—	$	—
Total	$	21,194	$	21,194	$	—	$	—

Fair value measurements for the Company’s cash and cash equivalents are classified based upon Level 1 measurements because such measurements are based upon quoted market prices in active markets for identical assets.

Accounts receivable, accounts payable, long-term debt and accrued liabilities are recorded in the Condensed Consolidated Balance Sheets at cost and approximate fair value.

Deferred compensation liabilities are recorded at amounts due to participants at the time of deferral. Deferrals are invested in an investment vehicle based on the options made available to the participant, considered to be Level 1 and Level 2 on the fair value hierarchy, with the current balance all as Level 1. The change in fair value is recorded in the profit sharing, bonuses, and deferred compensation line item on the Condensed Consolidated Statements of Comprehensive Income. The short-term and long-term balances due to participants are reflected on the current portion of deferred compensation and deferred compensation, less current portion, line items, respectively, on the Condensed Consolidated Balance Sheets.

The Company’s non-financial assets such as goodwill, intangible assets and property, plant, and equipment are re-measured at fair value when there is an indication of impairment and adjusted only when an impairment charge is recognized.

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Note 13. Earnings Per Share

The Company computes earnings per share in accordance with ASC Topic 260, Earnings per Share. In accordance with ASC 260, outstanding options will be considered to have been exercised and outstanding as of the beginning of the period if the average market price of the common stock during the period exceeds the exercise price of the options (they are “in the money”), and the assumed exercise of the options do not have an anti-dilutive impact on earnings per share.

A reconciliation of basic and diluted net income per share attributable to the Company were as follows:

	Three Months Ended
	March 31,
	2023		2022
Net income attributable to MEC	$	2,571	$	3,822
Average shares outstanding		20,315,338		20,398,933
Basic income per share	$	0.13	$	0.19
Average shares outstanding		20,315,338		20,398,933
Effect of dilutive share-based compensation		434,610		150,393
Total potential shares outstanding		20,749,948		20,549,326
Diluted income per share	$	0.12	$	0.19

Options in the money that were not included in the computation of diluted earnings per share because they would have had an anti-dilutive impact on earnings per share were as follows:

	Three Months Ended March 31,
	2023	2022
Stock options	—	479,947

Note 14. Revenue Recognition

Contract Assets and Contract Liabilities

The Company has contract assets and contract liabilities, which are included in tooling in progress and other current liabilities on the Condensed Consolidated Balance Sheets, respectively. Contract assets include products where the Company has satisfied its performance obligation, but receipt of payment is contingent upon delivery. Contract liabilities include deferred tooling revenue, where the performance obligation was not met. The performance obligation is satisfied when the tooling is completed and the customer signs off through the Product Part Approval Process or other documented customer acceptance. Cost of goods sold is recognized and released from the balance sheet when control of the tooling promised under contract is transferred to the customer.

The Company’s contracts with customers are short-term in nature; therefore, revenue is typically recognized, billed and collected within a 12-month period. The following table reflects the changes in our contract assets and liabilities during the three months ended March 31, 2023:

	Contract		Contract
	Assets		Liabilities
As of December 31, 2022	$	7,938	$	6,141
Net activity		101		(447)
As of March 31, 2023	$	8,039	$	5,694

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Disaggregated Revenue

The following table represents a disaggregation of revenue by product category and end market:

	Three Months Ended
	March 31,
	2023		2022
Outdoor sports	$	2,305	$	2,527
Fabrication		87,001		82,232
Performance structures		26,675		28,959
Tube		20,352		18,309
Tank		11,119		8,550
Total		147,452		140,577
Intercompany sales elimination		(4,807)		(4,325)
Total, net sales	$	142,645	$	136,252

	Three Months Ended
	March 31,
	2023		2022
Commercial vehicle	$	59,155	$	50,865
Construction & access		26,507		29,744
Powersports		24,098		22,575
Agriculture		14,451		15,248
Military		8,569		5,171
Other		9,866		12,649
Total, net sales	$	142,645	$	136,252

Note 15. Concentration of major customers

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

	Net Sales				Accounts Receivable
	Three Months Ended				As of		As of
	March 31,				March 31,		December 31,
	2023		2022		2023		2022
Customer
A	15.6	%	18.2	%	11.5	%	11.0	%
B	12.1	%	11.1	%	12.8	%	<10	%
C	15.3	%	15.7	%	<10	%	<10	%
D	<10	%	<10	%	10.8	%	12.6	%

Note 16. Stock based compensation

The Mayville Engineering Company, Inc. 2019 Omnibus Incentive Plan provides the Company the ability to grant monetary payments based on the value of its common stock, up to 2,000,000 shares.

On April 20, 2021, shareholders of the Company approved an amendment to the 2019 Omnibus Incentive Plan increasing the number of shares of common stock authorized for issuance by 2,500,000 shares.

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

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based instrument. For units, fair value is equivalent to the adjusted closing stock price at the date preceding the date of grant. The Black-Scholes option pricing model is utilized to determine fair value for options.

Cancellations and forfeitures are accounted for as incurred.

Stock awards were granted on March 13, 2023, February 28, 2023, January 25, 2023, July 19, 2022, April 19, 2022, February 28, 2022, June 3, 2021, May 12, 2021, April 20, 2021, February 28, 2021, May 12, 2020, February 27, 2020 and May 8, 2019. There were no stock awards granted prior to this.

During the three months ended March 31, 2023, 132,433 units vested. For the same period, 197,597 options vested with a weighted average strike price of $11.65. During the three months ended March 31, 2022, 234,582 units vested. For the same period, 512,927 options vested with a strike price of $9.18.

As of March 31, 2023, 1,302,978 options remained outstanding with a weighted average strike price of $10.51 and a weighted average contractual life of 7.22 years remaining.

The Company’s stock-based compensation expense by award type is summarized as follows:

	Three Months Ended
	March 31,
	2023		2022
Unit awards	$	715	$	751
Option awards		351		506
Stock based compensation expense, net of tax	$	1,066	$	1,257

A roll-forward of unrecognized stock-based compensation expense is displayed in the table below. Unrecognized stock-based compensation expense as of March 31, 2023 will be expensed over the remaining requisite service period from which individual award values relate, up to July 19, 2025.

	Units		Options		Total
Balance as of December 31, 2022	$	1,739	$	1,050	$	2,789
Grants		3,560		2,585		6,145
Forfeitures		(211)		(83)		(294)
Expense		(715)		(351)		(1,066)
Balance as of March 31, 2023	$	4,373	$	3,201	$	7,574

Note 17. Common Equity

At March 31, 2023 the authorized stock of the Company consisted of 75,000,000 shares of common stock without par value.

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Changes in outstanding common shares are summarized as follows:

	Shares
	Outstanding
Shares as of December 31, 2021	20,335,934
Treasury stock purchases	(200,000)
Common stock issued (including share-based compensation impact)	365,582
Balance as of March 31, 2022	20,501,516
	Shares
	Outstanding
Balance as of December 31, 2022	20,172,746
Treasury stock purchases	(41,148)
Common stock issued (including share-based compensation impact)	290,432
Balance as of March 31, 2023	20,422,030

Note 18. Subsequent events

The Company has evaluated subsequent events since March 31, 2023, the date of these financial statements. There were no material events or transactions discovered during this evaluation that requires recognition or disclosure in the financial statements.

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

Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to assist in the understanding and assessing the trends and significant changes in our results of operations and financial condition. Historical results may not be indicative of future performance. This discussion includes forward-looking statements that reflect our plans, estimates and beliefs. Such statements involve risks and uncertainties. Our actual results may differ materially from those contemplated by these forward-looking statements as a result of various factors, including those set forth in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022 and “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” in Part II Item 1A. of this Quarterly Report on Form 10-Q. This discussion should be read in conjunction with our audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022 and our unaudited condensed consolidated financial statements and the notes thereto included in Part I, Item I of this Quarterly Report on Form 10-Q. In this discussion, we use certain non-GAAP financial measures. Explanation of these non-GAAP financial measures and reconciliation to the most directly comparable GAAP financial measures are included in this Management Discussion and Analysis of Financial Condition and Results of Operations. Investors should not consider non-GAAP financial measures in isolation or as substitutes for financial information presented in compliance with GAAP.

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

Overview

MEC is a leading U.S.-based, vertically-integrated, value-added manufacturing partner providing a full suite of manufacturing solutions from concept to production, including design, prototyping and tooling, fabrication, coating, assembly and aftermarket components. Our customers operate in diverse end markets, including heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, agriculture, military and other end markets. We have developed long-standing relationships with our blue-chip customers based upon a high level of experience, trust and confidence.

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.

Macroeconomic Conditions

For the three months ended March 31, 2023 and 2022, net sales reflected the ongoing supply chain constraints impacting some of our customers. In the current period, we continued to experience macroeconomic conditions that originated during the pandemic, including inflationary pressures on wages, benefits and manufacturing supplies due to a higher level of competition for employees, while observing material costs stabilizing.

How We Assess Performance

Net 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.

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

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

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Other Selling, General, and Administrative Expenses. Other selling, general and administrative expenses consist primarily of salaries and personnel costs for our sales and marketing, finance, human resources, information systems, administration and 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.

Other Key Performance Indicators

EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin

EBITDA represents net income before interest expense, provision for income taxes, depreciation and amortization. EBITDA Margin represents EBITDA as a percentage of net sales for each period.

Adjusted EBITDA represents EBITDA before stock-based compensation expense, Hazel Park transition and legal costs due to the former fitness customer and 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. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of net sales for each period. These metrics are supplemental measures of our operating performance that are neither required by, nor presented in accordance with, GAAP. These measures should not be considered as an alternative to net income or any other performance measure derived in accordance with GAAP as an indicator of our operating performance. We present 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. 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. Potential differences between our measures of EBITDA and Adjusted EBITDA compared to other similar companies’ measures of EBITDA and Adjusted EBITDA may include differences in capital structure and tax positions.

The following table presents a reconciliation of net income 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.

	Three Months Ended
	March 31,
	2023			2022
Net income and comprehensive income	$	2,571		$	3,822
Interest expense		1,658			567
Provision for income taxes		441			1,175
Depreciation and amortization		7,880			7,207
EBITDA		12,550			12,771
Stock-based compensation expense		1,066			1,257
Hazel Park transition and legal costs due to former fitness customer		224			1,927
Impairment of long-lived assets and gain on contracts		—			(1,183)
Adjusted EBITDA	$	13,840		$	14,772
Net sales	$	142,645		$	136,252
EBITDA Margin		8.8	%		9.4	%
Adjusted EBITDA Margin		9.7	%		10.8	%

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Consolidated Results of Operations

Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

	Three Months Ended March 31,
	2023				2022				Increase (Decrease)
			% of Net				% of Net		Amount
	Amount		Sales		Amount		Sales		Change		% Change
Net sales	$	142,645	100.0	%	$	136,252	100.0	%	$	6,393	4.7	%
Cost of sales		126,268	88.5	%		121,370	89.1	%		4,898	4.0	%
Manufacturing margins		16,377	11.5	%		14,882	10.9	%		1,495	10.0	%
Amortization of intangible assets		1,738	1.2	%		1,738	1.3	%		—	—	%
Profit sharing, bonuses and deferred compensation		3,003	2.1	%		2,548	1.9	%		455	17.9	%
Employee stock ownership plan expense		—	—	%		490	0.4	%		(490)	(100.0)	%
Other selling, general and administrative expenses		6,966	4.9	%		5,725	4.2	%		1,241	21.7	%
Impairment of long-lived assets and gain on contracts		—	—	%		(1,183)	(0.9)	%		1,183	100.0	%
Income from operations		4,670	3.3	%		5,564	4.1	%		(894)	(16.1)	%
Interest expense		(1,658)	1.2	%		(567)	0.4	%		1,091	192.4	%
Provision for income taxes		441	0.3	%		1,175	0.9	%		(734)	(62.5)	%
Net income and comprehensive income	$	2,571	1.8	%	$	3,822	2.8	%	$	(1,251)	(32.7)	%
EBITDA	$	12,550	8.8	%	$	12,771	9.4	%	$	(221)	(1.7)	%
Adjusted EBITDA	$	13,840	9.7	%	$	14,772	10.8	%	$	(932)	(6.3)	%

Net Sales. Net sales were $142,645 for the three months ended March 31, 2023 as compared to $136,252 for the three months ended March 31, 2022, an increase of $6,393, or 4.7%. This increase was primarily driven by a combination of increased sales volumes within our commercial vehicle, powersports and military end markets and continued price discipline, partially offset by supply chain challenges affecting some of our customers and softening demand in our construction & access end markets.

Manufacturing Margins. Manufacturing margins were $16,377 for the three months ended March 31, 2023 as compared to $14,882 for the three months ended March 31, 2022, an increase of $1,495, or 10.0%. The increase was largely the result of the above-mentioned volume growth and commercial price actions partially offset by lower scrap income.

Manufacturing margin percentages were 11.5% for the three months ended March 31, 2023, as compared to 10.9% for the three months ended March 31, 2022, an increase of 0.6%. The increase was attributable to the items discussed in the preceding paragraph.

Amortization of Intangibles Assets. Amortization of intangible assets were $1,738 for the three months ended March 31, 2023 and 2022.

Profit Sharing, Bonuses and Deferred Compensation Expenses. Profit sharing, bonuses, and deferred compensation expenses were $3,003 for the three months ended March 31, 2023 as compared to $2,548 for the three months ended March 31, 2022, an increase of $455, or 17.9%. The increase was primarily due to the decision made by the Company to modify its profit sharing program by implementing a 401(k) company match as of January 1, 2023, which was higher than the prior year period discretionary 401(k) accrual.

Employee Stock Ownership Plan Expense. Employee stock ownership plan estimated expense was $0 for the three months ended March 31, 2023, as compared to $490 for the three months ended March 31, 2022, a decrease of $490 as the Company transitioned to a 401(k) company match beginning January 1, 2023.

Other Selling, General and Administrative Expenses. Other selling, general and administrative expenses were $6,966 for the three months ended March 31, 2023 as compared to $5,725 for the three months ended March 31, 2022, an increase of $1,241, or 21.7%. The increase was predominantly attributable to increasing 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.

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. The Company received a notification from this customer in February 2022 resulting in a

23

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 December 31, 2021. 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. As a result of this assessment, the Company recorded an impairment on the assets specifically purchased to meet obligations under the agreement with the former fitness customer. As a result, the Company recorded an impairment of long-lived assets and loss on contracts of $16,151 in the fourth quarter of 2021.

During the three months ended March 31, 2022, the Company was able to cancel $1,183 of purchase commitments for property, plant and equipment relating to the former fitness customer that had previously been recorded as an impairment of long-lived assets and loss on contracts at December 31, 2021. The cancellation of purchase commitments resulted in the reversal of this amount.

Interest Expense. Interest expense was $1,658 for the three months ended March 31, 2023 as compared to $567 for the three months ended March 31, 2022, an increase of $1,091, or 192.4%. The change is primarily due to higher interest rates.

Provision for Income Taxes. Income tax expense was $441 for the three months ended March 31, 2023 as compared to $1,175 for the three months ended March 31, 2022. As of March 31, 2023, our federal net operating loss (NOL) carryforward was $21,210 driven by the pretax losses incurred in prior years. The NOL does not expire and will be used to offset future pretax income. We estimate our long-term effective tax rate to be approximately 27%, based on current tax regulations. Please reference Note 7 – Income Taxes of the Condensed Consolidated Financial Statements for further details.

Due to the factors described in the preceding paragraphs, net income, comprehensive income, EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin decreased during the three months ended March 31, 2023 as compared to the three months ended March 31, 2022.

Liquidity and Capital Resources

Cash Flows Analysis

	Three Months Ended
	March 31,				Increase (Decrease)
	2023		2022		$ Change		% Change
Net cash used in operating activities	$	(6,043)	$	(425)		(5,618)	1,322	%
Net cash used in investing activities		(2,255)		(12,620)		10,365	82	%
Net cash provided by financing activities		8,297		13,047		(4,750)	36	%
Net change in cash	$	(1)	$	2	$	(3)	150	%

Operating Activities. Cash used by operating activities was $6,043 for the three months ended March 31, 2023, as compared to $425 for the three months ended March 31, 2022. The $5,618 increase in operating cash flows used was primarily due to a decrease in accounts payable during the current period resulting from reduced capital expenditures in accounts payable and lower raw material prices, partially offset by a decrease in inventory due to the sell through of deferred customer orders.

Investing Activities. Cash used in investing activities was $2,255 for the three months ended March 31, 2023, as compared to $12,620 for the three months ended March 31, 2022. The $10,365 decrease in cash used in investing activities was driven by the completion of the capital investment in the Company’s Hazel Park, MI facility, which was completed at the end of 2022.

Financing Activities. Cash provided by financing activities was $8,297 for the three months ended March 31, 2023, as compared to $13,047 for the three months ended March 31, 2022. The $4,750 decrease was primarily driven by higher debt repayments in excess of borrowings in relation to the Company’s revolving credit facility during the current year period. Additionally, the Company did not purchase any of its common stock in the first quarter of 2023 under our share repurchase program, however, the Company did effectively repurchase $661 of common stock from employees related to the employees’ tax withholding requirements for vested and issued restricted stock units. During the prior year period, the Company repurchased 200,000 shares of its common stock at a total cost of $2,323. The Company’s decision to repurchase additional shares in 2023 will depend on business conditions,

24

free cash flow generation, other cash requirements and stock price. See Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds for additional information regarding share repurchases.

Amended and Restated Credit Agreement

On September 26, 2019, and as last amended as of March 31, 2022, we entered into the Credit Agreement with certain lenders and Wells Fargo Bank, National Association, the Agent. The Credit Agreement provides for a $200,000 Revolving Loan, with a letter of credit sub-facility in an aggregate amount not to exceed $5,000, and a swingline facility in an aggregate amount of $20,000. The Credit Agreement also provides for an additional $100,000 of capacity through an accordion feature. All amounts borrowed under the Credit Agreement mature on September 26, 2024.

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

Borrowings under the Credit Agreement bear interest at a fluctuating LIBOR (which may be adjusted for certain reserve requirements), plus 1.00% to 2.00% depending on the current Consolidated Total Leverage Ratio (as defined in the Credit Agreement). Under certain circumstances, we may not be able to pay interest based on LIBOR. If that happens, we will be required to pay interest at the Base Rate, which is the sum of (a) the higher of (i) the Prime Rate (as publicly announced by the Agent from time to time) and (ii) the Federal Funds Rate plus 0.50%, plus (b) 0.00% to 1.00%, depending on the current Total Consolidated Leverage Ratio. The Credit Agreement also includes provisions for determining a replacement rate when LIBOR is no longer available.

At March 31, 2023, the interest rate on outstanding borrowings under the Revolving Loan was 6.19%. We had availability of $118,424 under the Revolving Loan at March 31, 2023.

We must pay a commitment fee rate ranging from 0.20% to 0.50% per annum on the average daily unused portion of the aggregate unused revolving commitments under the Credit Agreement. We must also pay fees as specified in the Fee Letter (as defined in the Credit Agreement) and with respect to any letters of credit issued under the Credit Agreement.

The Credit Agreement contains usual and customary negative covenants for agreements of this type, including, but not limited to, restrictions on our ability to, subject to certain exceptions, create, incur or assume indebtedness, create or incur liens, make certain investments, merge or consolidate with another entity, make certain asset dispositions, pay dividends or other distributions to shareholders, enter into transactions with affiliates, enter into sale leaseback transactions or make capital expenditures. The Credit Agreement also requires us to satisfy certain financial covenants, including a minimum interest coverage ratio of 3.00 to 1.00. At March 31, 2023, our interest coverage ratio was 9.82 to 1.00. The Credit Agreement also requires us to maintain a consolidated total leverage ratio not to exceed 3.25 to 1.00, although such leverage ratio can be increased in connection with certain acquisitions. As of March 31, 2023, our consolidated total leverage ratio was 1.44 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. If an event of default occurs, the Agent will be entitled to take various actions, including the acceleration of amounts due under the Credit Agreement, termination of the credit facility, and all other actions permitted to be taken by a secured creditor.

On June 30, 2020, March 31, 2021 and March 31, 2022, the Company entered into amendments to the Credit Agreement. Please refer to Note 3 – Bank Revolving Credit Notes in the Notes to the Consolidated Financial Statements for a more detailed discussion.

Capital Requirements and Sources of Liquidity

During the three months ended March 31, 2023 and 2022, our capital expenditures were $2,408 and $12,979, respectively. The decrease of $10,571 was driven by the completion of the capital investment in the Company’s Hazel Park, MI facility, which was completed at the end of 2022. Capital expenditures for the full year 2023 are expected to be between $20,000 and $25,000.

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We have historically relied upon cash available through credit facilities, in addition to cash from operations, to finance our working capital requirements and to support our growth. At March 31, 2023, we had immediate availability of $118,424 through our Revolving Loan and another $100,000 through an accordion feature under our Credit Agreement, subject to the covenants under the Credit Agreement. We regularly monitor potential capital sources, including equity and debt financings, in an effort to meet our planned capital expenditures and liquidity requirements. Our future success will be highly dependent on our ability to access outside sources of capital. We will continue to have access to the availability currently provided under the 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 2023 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 2023 and beyond when taking into consideration the estimated impacts of the current macroeconomic conditions based on the information we have available at this time. However, future cash flows are subject to a number of variables, and additional capital expenditures will be required to conduct our operations. There can be no assurance that operations and other capital resources will provide cash in sufficient amounts to maintain planned or future levels of capital expenditures. In the event we make one or more acquisitions and the amount of capital required is greater than the amount we have available for acquisitions at that time, we could be required to reduce the expected level of capital expenditures and/or seek additional capital. If we seek additional capital, we may do so through borrowings under the Credit Agreement, joint ventures, asset sales, offerings of debt or equity securities or other means. We cannot guarantee that this additional capital will be available on acceptable terms or at all. If we are unable to obtain the funds we need, we may not be able to complete acquisitions that may be favorable to us or finance the capital expenditures necessary to conduct our operations.

Contractual Obligations

The following table presents our obligations and commitments to make future payments under contracts and contingent commitments at March 31, 2023:

			Payments Due by Period
	Total		2023 (Remainder)		2024 – 2025		2026 – 2027		Thereafter
Long-term debt principal payment obligations (1)	$	81,576	$	—	$	81,576	$	—	$	—
Equipment financing agreements (2)		1,184		1,074		110		—		—
Forecasted interest on debt payment obligations (3)		8,048		4,037		4,011		—		—
Finance lease obligations (4)		1,135		320		717		98		—
Operating lease obligations (4)		39,242		4,283		10,490		9,329		15,140
Total	$	131,185	$	9,714	$	96,904	$	9,427	$	15,140

(1) Principal payments under the Company’s Credit Agreement, which expires in 2024.

(2) Financing agreements entered into to purchase manufacturing equipment. Current and long-term portions are classified in other current liabilities and other long-term liabilities, respectively, on the Condensed Consolidated Balance Sheets.

(3) Forecasted interest on debt obligations are based on the debt balance, interest rate, and unused fee of the Company’s revolver credit facility, and the debt balances and interest rates of the Company’s equipment finance agreements as of March 31, 2023.

(4) See Note 4 – Leases in the Notes to Condensed Consolidated Financial Statements for additional information.

Item 3. 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.

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.

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Interest Rate Risk

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

The amount borrowed under the Revolving Loan under the Credit Agreement was $81.6 million as of March 31, 2023. The interest rate was 6.19% as of March 31, 2023. Please see “Liquidity and Capital Resources – Amended and Restated Credit Agreement” in Part I, Item 2 and Note 3 in the Notes to the Unaudited Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q for more specifics.

A hypothetical 100-basis-point increase in interest rates would have resulted in an additional $0.2 million of interest expense based on our variable rate debt at March 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.

Commodity Risk

We source a wide variety of materials and components from a network of suppliers. Commodity raw materials, such as steel, aluminum, copper, paint and paint chemicals, and other production costs are subject to price fluctuations, which could have a negative impact on our results. We strive to pass along such commodity price increases to customers to avoid profit margin erosion and in many cases utilize contracts with those customers to mitigate the impact of commodity raw material price fluctuations. As of March 31, 2023, we did not have any commodity hedging instruments in place.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

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

Our management, under the supervision of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q and has concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may be a party to litigation and subject to claims incident to the ordinary course of business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. Also see Note 8 – Contingencies in the Notes to the Consolidated Financial Statements for additional information.

Item 1A. Risk Factors

There have been no material changes to the risk factors previously disclosed in Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on March 1, 2023.

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

The table below sets forth information with respect to purchases we made of shares of our common stock during the quarter ended March 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)
January 2023	—	$	—	—	$	18,552,679
February 2023	—	$	—	—	$	18,552,679
March 2023	—	$	—	—	$	18,552,679
Total	—			—

(1) On October 19, 2021, the Board of Directors approved a new share repurchase program of up to $25 million of shares through 2023. The new share repurchase program replaced the prior program.

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Item 6. Exhibits.

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

EXHIBIT INDEX

Exhibit Number	Description
3	Bylaws of Mayville Engineering Company, Inc., as amended through April 18, 2023 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on April 19, 2023).
31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

29

SIGNATURES

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

	MAYVILLE ENGINEERING COMPANY, INC.
Date: May 3, 2023	By:	/s/ Jagadeesh A. Reddy
		Jagadeesh A. Reddy
		President & Chief Executive Officer
	By:	/s/ Todd M. Butz
		Todd M. Butz
		Chief Financial Officer

30

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jagadeesh A. Reddy, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Mayville Engineering Company, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 3, 2023	By:	/s/ Jagadeesh A. Reddy
		Jagadeesh A. Reddy
		President & Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Todd M. Butz, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Mayville Engineering Company, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 3, 2023	By:	/s/ Todd M. Butz
		Todd M. Butz
		Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Mayville Engineering Company, Inc. (the “Company”) for the period ended March 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Jagadeesh A. Reddy, as President and Chief Executive Officer of the Company, and Todd M. Butz, as Chief Financial Officer of the Company, each hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 3, 2023	By:	/s/ Jagadeesh A. Reddy
		Jagadeesh A. Reddy
		President & Chief Executive Officer
	By:	/s/ Todd M. Butz
		Todd M. Butz
		Chief Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2023	Apr. 28, 2023
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2023
Document Transition Report	false
Entity File Number	001-38894
Entity Registrant Name	Mayville Engineering Company, Inc.
Entity Incorporation, State or Country Code	WI
Entity Tax Identification Number	39-0944729
Entity Address, Address Line One	715 South Street
Entity Address, City or Town	Mayville
Entity Address, State or Province	WI
Entity Address, Postal Zip Code	53050
City Area Code	920
Local Phone Number	387-4500
Title of 12(b) Security	Common Stock, no par value
Trading Symbol	MEC
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		20,468,259
Entity Central Index Key	0001766368
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
ASSETS
Cash and cash equivalents	$ 126	$ 127
Receivables, net of allowances for doubtful accounts of $572 at March 31, 2023 and $545 at December 31, 2022	74,239	58,001
Inventories, net	68,948	71,708
Tooling in progress	8,039	7,938
Prepaid expenses and other current assets	3,470	3,529
Total current assets	154,822	141,303
Property, plant and equipment, net	142,956	145,771
Assets held for sale	81	83
Goodwill	71,535	71,535
Intangible assets, net	42,071	43,809
Operating lease assets	34,787	36,073
Other long-term assets	1,749	2,007
Total assets	448,001	440,581
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable	52,376	53,735
Current portion of operating lease obligation	4,894	4,857
Accrued liabilities:
Salaries, wages, and payroll taxes	7,320	7,288
Profit sharing and bonus	1,137	6,860
Current portion of deferred compensation	17,802	18,062
Other current liabilities	12,645	11,646
Total current liabilities	96,174	102,448
Bank revolving credit notes	81,576	72,236
Operating lease obligation, less current maturities	30,648	31,891
Deferred compensation, less current portion	3,229	3,132
Deferred income tax liability	12,136	11,818
Other long-term liabilities	895	1,189
Total liabilities	224,658	222,714
Commitments and contingencies (see Note 8)
Common shares, no par value, 75,000,000 authorized, 21,779,959 shares issued at March 31, 2023 and 21,645,193 at December 31, 2022
Additional paid-in-capital	202,011	200,945
Retained earnings	28,845	26,274
Treasury shares at cost, 1,357,929 shares at March 31, 2023 and 1,472,447 at December 31, 2022	(7,513)	(9,352)
Total shareholders' equity	223,343	217,867
Total	$ 448,001	$ 440,581

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Condensed Consolidated Balance Sheets
Allowances for doubtful accounts	$ 572	$ 545
Common Stock, No Par Value	$ 0	$ 0
Common Stock, Shares Authorized	75,000,000	75,000,000
Common Stock, Shares, Issued	21,779,959	21,645,193
Treasury stock at cost	1,357,929	1,472,447

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Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Condensed Consolidated Statements of Comprehensive Income
Net sales	$ 142,645	$ 136,252
Cost of sales	126,268	121,370
Amortization of intangible assets	1,738	1,738
Profit sharing, bonuses, and deferred compensation	3,003	2,548
Employee stock ownership plan expense		490
Other selling, general and administrative expenses	6,966	5,725
Impairment of long-lived assets and gain on contracts		(1,183)
Income from operations	4,670	5,564
Interest expense	(1,658)	(567)
Income before taxes	3,012	4,997
Income tax expense	441	1,175
Net income and comprehensive income	$ 2,571	$ 3,822
Earnings per share:
Basic	$ 0.13	$ 0.19
Diluted	$ 0.12	$ 0.19
Weighted average shares outstanding:
Basic	20,315,338	20,398,933
Diluted	20,749,948	20,549,326

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 2,571	$ 3,822
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	6,142	5,468
Amortization	1,738	1,738
Allowance for doubtful accounts	27	106
Inventory excess and obsolescence reserve	11	174
Stock-based compensation expense	1,066	1,257
Gain on disposal of property, plant and equipment	(138)	(62)
Impairment of long-lived assets and gain on contracts		(1,183)
Deferred compensation	(163)	(2,176)
Non-cash lease expense	1,286	1,266
Other non-cash adjustments	83	77
Changes in operating assets and liabilities - net of effects of acquisition:
Accounts receivable	(16,265)	(17,088)
Inventories	2,749	(2,317)
Tooling in progress	(100)	(1,246)
Prepaids and other current assets	110	(216)
Accounts payable	(2,290)	10,526
Deferred income taxes	441	1,155
Operating lease obligations	(1,206)	(1,160)
Accrued liabilities	(2,105)	(566)
Net cash used in operating activities	(6,043)	(425)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment	(2,408)	(12,979)
Proceeds from sale of property, plant and equipment	153	359
Net cash used in investing activities	(2,255)	(12,620)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank revolving credit notes	119,700	118,156
Payments on bank revolving credit notes	(110,360)	(102,436)
Repayments of other long-term debt	(286)	(272)
Purchase of treasury stock	(661)	(2,323)
Payments on finance leases	(96)	(78)
Net cash provided by financing activities	8,297	13,047
Net increase (decrease) in cash and cash equivalents	(1)	2
Cash and cash equivalents at beginning of period	127	118
Cash and cash equivalents at end of period	126	120
Supplemental disclosure of cash flow information:
Cash paid for interest	112	437
Non-cash 401(k) contribution of treasury stock	2,500	2,057
Non-cash construction in progress in accounts payable	$ 1,534	$ 5,528

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Condensed Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Additional Paid-in-Capital [Member]	Treasury Shares [Member]	Retained Earnings [Member]	Total
Beginning, Balance at Dec. 31, 2021	$ 197,186	$ (6,462)	$ 7,547	$ 198,271
Net income			3,822	3,822
401(k) plan contribution		2,057		2,057
Purchase of treasury stock		(2,323)		(2,323)
Stock-based compensation	1,257			1,257
Ending, Balance at Mar. 31, 2022	198,443	(6,728)	11,369	203,084
Beginning, Balance at Dec. 31, 2022	200,945	(9,352)	26,274	217,867
Net income			2,571	2,571
401(k) plan contribution		2,500		2,500
Purchase of treasury stock		(661)		(661)
Stock-based compensation	1,066			1,066
Ending, Balance at Mar. 31, 2023	$ 202,011	$ (7,513)	$ 28,845	$ 223,343

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Basis of presentation

3 Months Ended

Mar. 31, 2023

Basis Of presentation

Basis of presentation

Note 1. Basis of presentation

The interim unaudited condensed consolidated financial statements of Mayville Engineering Company, Inc. and subsidiaries (MEC, the Company, we, our, us or similar terms) presented here have been prepared in accordance with the accounting principles generally accepted in the United States of America (GAAP) and with instructions to Form 10-Q and Article 10 of Regulation S-X. They reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations and financial position for the interim unaudited periods presented. All intercompany balances and transactions have been eliminated in consolidation.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These interim unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K. A summary of the Company’s significant accounting policies is included in the Company’s 2022 financial statements in the Annual Report on Form 10-K. The Company followed these policies in preparation of the interim unaudited Condensed Consolidated Financial Statements except for new accounting pronouncements adopted as described below.

Nature of Operations

MEC is a leading U.S.-based, vertically-integrated, value-added manufacturing partner providing a full suite of manufacturing solutions from concept to production, including design, prototyping and tooling, fabrication, coating, assembly and aftermarket components. Our customers operate in diverse end markets, including heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, agriculture, military and other end markets. Founded in 1945 and headquartered in Mayville, Wisconsin, we are a leading Tier I U.S. supplier of highly engineered components to original equipment manufacturer (OEM) customers with leading positions in their respective markets. The Company operates 20 facilities located in Arkansas, Michigan, Mississippi, Ohio, Pennsylvania, Virginia, and Wisconsin. Our engineering expertise and technical know-how allow us to add value through every product redevelopment cycle (generally every three to five years for our customers).

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.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Measurement of Credit Losses on Financial Instruments, which establishes Accounting Standards Codification (ASC) 326, Financial Instruments – Credit Losses. The ASU revises the measurement of credit losses for financial assets measured at amortized cost from an incurred loss methodology to an expected loss methodology. The ASU affects trade receivables, debt securities, net investment in leases, and most other financial assets that represent a right to receive cash. For as long as the Company remains an emerging growth company (EGC), the new guidance is effective for annual reporting periods beginning after December 15, 2022. The Company adopted the new standard as of January 1, 2023. As our customer base is principally made of blue-chip OEMs with high credit ratings and our trade receivables are due within one year or less, the adoption of this standard did not have a material impact on our consolidated financial statements.

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Select balance sheet data

3 Months Ended

Mar. 31, 2023

Select balance sheet data

Select balance sheet data

Note 2. Select balance sheet data

Inventory

Inventories are stated at the lower of cost, determined on the first-in, first-out method, or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Work-in-process and finished goods are valued at production costs consisting of material, labor, and overhead.

Inventories as of March 31, 2023 and December 31, 2022 consist of:

	March 31,		December 31,
	2023		2022
Finished goods and purchased parts	$	34,641	$	44,728
Raw materials		23,806		17,003
Work-in-process		10,501		9,977
Total	$	68,948	$	71,708

Property, plant and equipment

Property, plant and equipment as of March 31, 2023 and December 31, 2022 consist of:

	Useful Lives		March 31,		December 31,
	Years		2023		2022
Land		Indefinite	$	1,030	$	1,030
Land improvements		15-39		3,169		3,169
Building and building improvements		15-39		64,861		59,664
Machinery, equipment and tooling		3-10		260,309		250,110
Vehicles		5		4,372		4,359
Office furniture and fixtures		3-7		20,199		19,585
Construction in progress		N/A		13,612		26,435
Total property, plant and equipment, gross				367,552		364,352
Less accumulated depreciation				224,596		218,581
Total property, plant and equipment, net			$	142,956	$	145,771

Depreciation expense for the three months ended March 31, 2023 and 2022 was $6,142 and $5,468

At December 31, 2021, there was uncertainty as to the level of demand from the former fitness customer. The Company received a notification from the former fitness customer in February 2022 resulting in a change in forecasted future cash flow, triggering an impairment assessment of assets purchased, and assets the Company had committed to purchase, to meet obligations under the agreement with the former fitness customer as of December 31, 2021. As a result, at December 31, 2021, the Company recorded a long-lived asset impairment of $12,875.

During the three months ended March 31, 2022, the Company was able to cancel $1,183 of purchase commitments for property, plant and equipment relating to the former fitness customer that had previously been recorded in the Consolidated Statements of Comprehensive Income as an impairment of long-lived assets and loss on contracts as of December 31, 2021. The cancellation of loss contracts has resulted in the reversal of these amounts from other current liabilities in the Condensed Consolidated Balance Sheets and recorded in the Condensed Consolidated Statements of Comprehensive Income as an impairment of long-lived assets and gain on contracts for the three months ended March 31, 2022.

The Company adopted ASC 842 on January 1, 2022, classifying finance leases of $1,008 and $1,103 in property, plant and equipment on the Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022, respectively. Please refer to Note 4 – Leases for additional information.

Goodwill

There were no changes to the goodwill balance of $71,535 between December 31, 2022 and March 31, 2023.

Intangible Assets

The following is a listing of intangible assets, the useful lives in years (amortization period) and accumulated amortization as of March 31, 2023 and December 31, 2022:

	Useful Lives		March 31,		December 31,
	Years		2023		2022
Amortizable intangible assets:
Customer relationships and contracts		9-12	$	78,340	$	78,340
Trade name		10		14,780		14,780
Non-compete agreements		5		8,800		8,800
Patents		19		24		24
Accumulated amortization				(63,684)		(61,946)
Total amortizable intangible assets, net				38,260		39,998
Non-amortizable brand name				3,811		3,811
Total intangible assets, net			$	42,071	$	43,809

Non-amortizable brand name is tested annually during the fourth quarter for impairment, or more frequently if triggering events occur indicating there may be impairment.

Changes in intangible assets between December 31, 2022 and March 31, 2023 consist of:

Balance as of December 31, 2022	$	43,809
Amortization expense		(1,738)
Balance as of March 31, 2023	$	42,071

Amortization expense was $1,738 for the three months ended March 31, 2023 and 2022.

Future amortization expense is expected to be as followed:

Year ending December 31,
2023 (remainder)	$	5,128
2024	$	5,192
2025	$	5,192
2026	$	5,192
2027	$	5,192
Thereafter	$	12,364

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Bank revolving credit notes

3 Months Ended

Mar. 31, 2023

Bank revolving credit notes.

Bank revolving credit notes

Note 3. Bank revolving credit notes

On September 26, 2019, and as last amended on March 31, 2022, we entered into an amended and restated credit agreement (Credit Agreement) with certain lenders and Wells Fargo Bank, National Association, as administrative agent (the Agent). The Credit Agreement provides for a $200,000 revolving credit facility (the Revolving Loan), with a letter of credit sub-facility in an aggregate amount not to exceed $5,000, and a swingline facility in an aggregate amount of $20,000. The Credit Agreement also provides for an additional $100,000 of debt capacity through an accordion feature. All amounts borrowed under the Credit Agreement mature on September 26, 2024.

The Credit Agreement contains usual and customary negative covenants for agreements of this type, including, but not limited to, restrictions on our ability to, subject to certain exceptions, create, incur or assume indebtedness, create or incur liens, make certain investments, merge or consolidate with another entity, make certain asset dispositions, pay dividends or other distributions to shareholders, enter into transactions with affiliates, enter into sale leaseback transactions or make capital expenditures. The Credit Agreement also requires us to satisfy certain financial covenants, including a minimum interest coverage ratio of 3.00 to 1.00 as well

as a consolidated total leverage ratio not to exceed 3.25 to 1.00, although such leverage ratio can be increased in connection with certain acquisitions.

In order to provide a means of insurance against future macroeconomic events, we entered into an amendment (Second Amendment) to the Credit Agreement on June 30, 2020. The Second Amendment provided the Company with temporary changes to the total leverage ratio covenant for the period from June 30, 2020, through December 31, 2021, in return for certain increases in interest rates, fees and restrictions on certain activities of the Company, including capital expenditures, acquisitions, dividends and share repurchases. New pricing, which took effect for the quarters ending on and after September 30, 2020, includes interest at a fluctuating London Interbank Offered Rate (LIBOR) (at a floor of 75 basis points), plus 1.00% to 2.75%, along with the commitment fee ranging from 20 to 50 basis points.

We entered into an amendment (Third Amendment) to the Credit Agreement on March 31, 2021 which allowed the Company to incur up to $70,000 of capital expenditures in 2021, as opposed to $35,000.

We entered into an amendment (Fourth Amendment) to the Credit Agreement on March 31, 2022 which allowed the Company to incur up to $65,000 of capital expenditures in 2022, as opposed to $35,000, and revised the definition of Consolidated EBITDA to include certain restructuring and impairment charges.

At March 31, 2023, our consolidated total leverage ratio was 1.44 to 1.00 as compared to a covenant maximum of 3.25 to 1.00 in accordance with the Credit Agreement.

At March 31, 2023, our interest coverage ratio was 9.82 to 1.00 as compared to a covenant minimum of 3.00 to 1.00 under the Credit Agreement.

Under the Credit Agreement, interest is payable quarterly at the adjusted LIBOR plus an applicable margin based on the current funded indebtedness to adjusted EBITDA ratio. The interest rate was 6.19% and 5.69% as of March 31, 2023 and December 31, 2022. Additionally, the agreement has a fee on the average daily unused portion of the aggregate unused revolving commitments. This fee was 0.25% as of March 31, 2023 and December 31, 2022.

The Company was in compliance with all financial covenants of its credit agreements as of March 31, 2023 and December 31, 2022. The amount borrowed on the revolving credit notes was $81,576 and $72,236 as of March 31, 2023 and December 31, 2022, respectively.

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Leases

3 Months Ended

Mar. 31, 2023

Leases

Leases

Note 4. Leases

The Company has real property operating leases for office and light manufacturing space. Operating leases for the Company’s personal property consist of leases for office equipment, vehicles, forklifts and storage tanks for bulk gases. The Company recognizes a ROU asset and a lease liability for operating leases based on the net present value of future minimum lease payments. Lease expense for the Company’s operating leases is recognized on a straight-line basis over the lease term, including renewal periods that are considered reasonably certain.

The Company has finance leases for two laser cutting systems and three vehicles. The Company recognizes an ROU asset and a lease liability for finance leases based on the net present value of future minimum lease payments. Lease expense for the Company’s finance leases is comprised of the amortization of the ROU asset and interest expense recognized based on the effective interest method.

Variable lease expense is related to certain of the Company’s real property leases and personal property leases, and it generally consists of property tax and insurance components that are for the benefit of the lessor (real property leases) and variable overage fees (personal property leases) that are remitted as part of the Company’s lease payments.

The components of lease expense were as follows:

	Three Months Ended
	March 31,
	2023		2022
Finance lease cost:
Amortization of finance lease assets	$	94	$	79
Interest on finance lease liabilities		11		11
Total finance lease expense		105		90
Operating lease expense		1,286		1,522
Short-term lease expense		139		179
Variable lease expense		69		47
Sublease income (1)		(631)		—
Total lease expense	$	968	$	1,838

(1) The Company subleased a portion of its Hazel Park, MI facility starting in June 2022.

Lease related supplemental cash flow information:

	Three Months Ended
	March 31,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities for finance leases:
Operating cash flows	$	11	$	11
Financing cash flows	$	96	$	78
Cash paid for amounts included in the measurement of lease liabilities for operating leases:
Operating cash flows	$	1,425	$	1,430
Right-of-use assets obtained in exchange for recorded lease obligations:
Operating leases	$	—	$	46
Finance leases	$	—	$	—

ROU assets are assessed for impairment in accordance with the Company’s long-lived asset policy. The Company reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified, and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842.

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Employee stock ownership plan

3 Months Ended

Mar. 31, 2023

Employee stock ownership plan

Employee stock ownership plan

Note 5. Employee stock ownership plan

Under the Mayville Engineering Company, Inc. Employee Stock Ownership Plan (the ESOP), the Company can make annual discretionary contributions to the trust for the benefit of eligible employees in the form of cash or shares of common stock of the Company subject to the Board of Directors’ approval. For the three months ended March 31, 2023 and 2022, the Company’s estimated ESOP expense was $0 and $490, respectively.

As of January 1, 2023, the Company amended the plan reducing the distribution period from five years to three years.

At various times following death, disability, retirement, termination of employment or the exercise of diversification rights, an ESOP participant is entitled to receive their ESOP account balance in accordance with various distribution methods as permitted under the policies adopted by the ESOP. Prior to the IPO, all distributions were paid to participants in cash.

As of March 31, 2023 and December 31, 2022, the ESOP shares consisted of 4,595,247 and 5,684,879 in allocated shares, respectively.

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Retirement plans

3 Months Ended

Mar. 31, 2023

Retirement plans

Retirement Plans

Note 6. Retirement plans

The Mayville Engineering Company Inc. 401(k) Plan (the 401(k) Plan) covers substantially all employees meeting certain eligibility requirements. The 401(k) Plan is a defined contribution plan and is intended for eligible employees to defer tax-free contributions to save for retirement. Employees may contribute up to 50% of their eligible compensation to the 401(k) Plan, subject to the limits of Section 401(k) of the Internal Revenue Code.

As of January 1, 2023, the Company implemented an employer match program to the 401(k) Plan. The Company now provides a 50% match for employee contributions, up to 6%. For the three months ended March 31, 2023, the Company’s employer match expense was $874. Additionally, the 401(k) Plan provides for employer discretionary profit-sharing contributions and the Board of Directors may authorize discretionary profit-sharing contributions (which are usually approved at the end of each calendar year). For the three months ended March 31, 2023 and 2022, the Company’s estimated discretionary profit sharing expense was $0 and $391, respectively.

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Income taxes

3 Months Ended

Mar. 31, 2023

Income taxes

Income taxes

Note 7. Income taxes

On a quarterly basis, the Company estimates its effective tax rate for the full fiscal year and records a quarterly income tax provision based on the anticipated rate. As the year progresses, the Company will refine its estimate based on facts and circumstances by each tax jurisdiction.

Income tax expense was estimated at $441 and the effective tax rate (ETR) was 14.65% for the three months ended March 31, 2023. Our ETR is different from the expected tax rate due to state taxes, non-deductible items, research and development credits and benefit from excess tax deductions related to share based compensation items.

For the three months ended March 31, 2022, income tax expense was estimated at $1,175 and the ETR was 23.52%.

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

The Company’s policy for recording interest and penalties associated with potential income tax audits is to record such expense as a component of income tax expense. There were no amounts for penalties or interest recorded as of March 31, 2023. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its positions.

Uncertain Tax Positions

Based on the Company’s evaluation, it has been concluded that there is one tax position related to the research and development tax credit requiring recognition in the Company’s financial statements as of March 31, 2023. The Company does not anticipate that there will be a material change in the balance of the unrecognized tax benefits in the next 12 months. Any interest and penalties related to uncertain tax positions are recorded in income tax expense. No amounts have been recorded as tax expense for interest and penalties for the three months ended March 31, 2023, as the amount for the utilized portion for the research and development credit on the Wisconsin return is considered to be immaterial. At March 31, 2023 and December 31, 2022, a total of $420 and $384, respectively, of unrecognized tax benefits would, if recognized, impact the Company’s ETR.

The Company files income tax returns in the United States federal jurisdiction and in various state and local jurisdictions. Federal tax returns for tax years beginning January 1, 2019, and state tax returns beginning January 1, 2018, are open for examination.

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Contingencies

3 Months Ended

Mar. 31, 2023

Contingencies

Contingencies

Note 8. Contingencies

On August 4, 2022, the Company filed a lawsuit against Peloton Interactive, Inc. (“Peloton”) in the Supreme Court of the State of New York, New York County. The lawsuit arises from a March 2021 “Supply Agreement” between the parties, pursuant to which MEC was to manufacture and supply custom component parts for Peloton’s exercise bikes (the “Manufacturing Project”). In the lawsuit, the Company originally asserted two claims (1) breach and anticipatory repudiation of contract and (2) breach of the duty of

good faith and fair dealing (pleaded in the alternative). In January 2023, in response to Peloton’s motion to dismiss, the court allowed the first claim to proceed and dismissed the alternative claim. In the remaining claim, MEC asserts that Peloton breached and anticipatorily repudiated the Supply Agreement by unilaterally cancelling the Manufacturing Project and refusing to pay MEC certain monthly fixed revenue payments owed under the terms of the Supply Agreement. The total amount for damages claimed is substantial but the amount and timing of the ultimate recovery is uncertain. As a result, any recovery from this litigation or settlement of this claim is a contingent gain and will be recognized if, and when, realized or realizable.

From time to time, the Company may be involved in various claims and lawsuits, both for and against the Company, arising in the normal course of business. Although the results of litigation and claims cannot be predicted with certainty, in management’s opinion, either the likelihood of loss is remote, or any reasonably possible loss associated with the resolution of such proceedings is not expected to have a material adverse impact on the consolidated financial statements.

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Deferred compensation

3 Months Ended

Mar. 31, 2023

Deferred compensation

Deferred compensation

Note 9. Deferred compensation

The Mayville Engineering Company Deferred Compensation Plan is available for certain employees designated to be eligible to participate by the Company and approved by the Board of Directors. Eligible employees may elect to defer a portion of his or her compensation for any plan year and the deferral cannot exceed 50% of the participant’s base salary and may include the participant’s annual short-term cash incentive up to 100%. The participant’s election must be made prior to the first day of the plan year.

An employer contribution will be made for each participant to reflect the amount of any reduced allocations to the ESOP and/or 401(k) employer contributions due solely to the participant’s deferral amounts, as applicable. In addition, a discretionary amount may be awarded to a participant by the Company.

Deferrals are assumed to be invested in an investment vehicle based on the options made available to the participant (which does not include Company stock).

The deferred compensation plan provides benefits payable upon separation of service or death. Payments are to be made 30 or 180 days after date of separation from service, either in a lump-sum payment or up to five annual installments as elected by the participant when the participant first elects to defer compensation.

The deferred compensation plan is non-funded, and all future contributions are unsecured in that the employees have the status of a general unsecured creditor of the Company and the agreements constitute a promise by the Company to make benefit payments in the future. During the three months ended March 31, 2023 and 2022, eligible employees elected to defer compensation of $236 and $0, respectively. As of March 31, 2023 and December 31, 2022, the short-term portion accrued for all benefit years less than 12 months under this plan was $17,802 and $18,062, respectively. As of March 31, 2023 and December 31, 2022, the long-term portion accrued for all benefit years greater than 12 months under this plan was $3,229 and $3,132. These amounts include the initial deferral of compensation and were adjusted for changes in the value of investment options chosen by the participants. Total expense (credit) for the deferred compensation plan for the three months ended March 31, 2023 and 2022 was $560 and $(1,128), respectively. These expenses (credits) are included in profit sharing, bonuses and deferred compensation on the Condensed Consolidated Statements of Comprehensive Income. Additionally, the Company made distributions of $958 and $1,048 for the three months ended March 31, 2023 and 2022, respectively.

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Self-Funded insurance

3 Months Ended

Mar. 31, 2023

Self-Funded insurance

Self-Funded insurance

Note 10. Self-Funded insurance

The Company is self-funded for the medical benefits provided to its employees and their dependents. Healthcare costs are expensed as incurred and are based upon actual claims paid, reinsurance premiums, administration fees, and estimated unpaid claims. Since March 31, 2020, the Company has an aggregate stop loss limit to mitigate risk. Expenses related to this were $4,634 and $4,760 for the three months ended March 31, 2023 and 2022, respectively. An estimated accrued liability of $879 and $900 was recorded as of March 31, 2023 and December 31, 2022, respectively, for estimated unpaid claims and is included within other current liabilities on the Condensed Consolidated Balance Sheets.

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Segments

3 Months Ended

Mar. 31, 2023

Segments

Segments

Note 11. Segments

The Company applies the provisions of ASC 280, Segment Reporting. An operating segment is defined as a component that engages in business activities whose operating results are reviewed by the chief operating decision maker and for which discrete financial information is available. Based on the provisions of ASC 280, the Company has determined it has one operating segment. The Company does not earn revenues or have long-lived assets located in foreign countries.

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Fair value of financial instruments

3 Months Ended

Mar. 31, 2023

Fair value of financial instruments

Fair value of financial instruments

Note 12. Fair value of financial instruments

Fair value provides information on what the Company may realize if certain assets were sold or might pay to transfer certain liabilities based upon an exit price. Financial assets and liabilities that are measured and reported at fair value are classified into a three-level hierarchy that prioritizes the inputs used in the valuation process. A financial instrument’s categorization within the valuation hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The hierarchy is based on the observability and objectivity of the pricing inputs as follows:

● Level 1 – Quoted prices in active markets for identical assets or liabilities.

● Level 2 – Significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities or (iii) information derived from or corroborated by observable market data. Long-term debt is classified as a Level 2 fair value input.

● Level 3 – Prices or valuation techniques that require significant unobservable data inputs. These inputs would normally be the Company’s own data and judgements about assumptions that market participants would use in pricing the asset or liability.

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

	Balance at		Fair Value Measurements at
	March 31,		Report Date Using
	2023		(Level 1)		(Level 2)		(Level 3)
Deferred compensation liability	$	21,031	$	21,031	$	—	$	—
Total	$	21,031	$	21,031	$	—	$	—

	Balance at		Fair Value Measurements at
	December 31,		Report Date Using
	2022		(Level 1)		(Level 2)		(Level 3)
Deferred compensation liability	$	21,194	$	21,194	$	—	$	—
Total	$	21,194	$	21,194	$	—	$	—

Fair value measurements for the Company’s cash and cash equivalents are classified based upon Level 1 measurements because such measurements are based upon quoted market prices in active markets for identical assets.

Accounts receivable, accounts payable, long-term debt and accrued liabilities are recorded in the Condensed Consolidated Balance Sheets at cost and approximate fair value.

Deferred compensation liabilities are recorded at amounts due to participants at the time of deferral. Deferrals are invested in an investment vehicle based on the options made available to the participant, considered to be Level 1 and Level 2 on the fair value hierarchy, with the current balance all as Level 1. The change in fair value is recorded in the profit sharing, bonuses, and deferred compensation line item on the Condensed Consolidated Statements of Comprehensive Income. The short-term and long-term balances due to participants are reflected on the current portion of deferred compensation and deferred compensation, less current portion, line items, respectively, on the Condensed Consolidated Balance Sheets.

The Company’s non-financial assets such as goodwill, intangible assets and property, plant, and equipment are re-measured at fair value when there is an indication of impairment and adjusted only when an impairment charge is recognized.

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Earnings per share

3 Months Ended

Mar. 31, 2023

Earnings per share

Earnings per share

Note 13. Earnings Per Share

The Company computes earnings per share in accordance with ASC Topic 260, Earnings per Share. In accordance with ASC 260, outstanding options will be considered to have been exercised and outstanding as of the beginning of the period if the average market price of the common stock during the period exceeds the exercise price of the options (they are “in the money”), and the assumed exercise of the options do not have an anti-dilutive impact on earnings per share.

A reconciliation of basic and diluted net income per share attributable to the Company were as follows:

	Three Months Ended
	March 31,
	2023		2022
Net income attributable to MEC	$	2,571	$	3,822
Average shares outstanding		20,315,338		20,398,933
Basic income per share	$	0.13	$	0.19
Average shares outstanding		20,315,338		20,398,933
Effect of dilutive share-based compensation		434,610		150,393
Total potential shares outstanding		20,749,948		20,549,326
Diluted income per share	$	0.12	$	0.19

Options in the money that were not included in the computation of diluted earnings per share because they would have had an anti-dilutive impact on earnings per share were as follows:

	Three Months Ended March 31,
	2023	2022
Stock options	—	479,947

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Revenue recognition

3 Months Ended

Mar. 31, 2023

Revenue recognition

Revenue recognition

Note 14. Revenue Recognition

Contract Assets and Contract Liabilities

The Company has contract assets and contract liabilities, which are included in tooling in progress and other current liabilities on the Condensed Consolidated Balance Sheets, respectively. Contract assets include products where the Company has satisfied its performance obligation, but receipt of payment is contingent upon delivery. Contract liabilities include deferred tooling revenue, where the performance obligation was not met. The performance obligation is satisfied when the tooling is completed and the customer signs off through the Product Part Approval Process or other documented customer acceptance. Cost of goods sold is recognized and released from the balance sheet when control of the tooling promised under contract is transferred to the customer.

The Company’s contracts with customers are short-term in nature; therefore, revenue is typically recognized, billed and collected within a 12-month period. The following table reflects the changes in our contract assets and liabilities during the three months ended March 31, 2023:

	Contract		Contract
	Assets		Liabilities
As of December 31, 2022	$	7,938	$	6,141
Net activity		101		(447)
As of March 31, 2023	$	8,039	$	5,694

Disaggregated Revenue

The following table represents a disaggregation of revenue by product category and end market:

	Three Months Ended
	March 31,
	2023		2022
Outdoor sports	$	2,305	$	2,527
Fabrication		87,001		82,232
Performance structures		26,675		28,959
Tube		20,352		18,309
Tank		11,119		8,550
Total		147,452		140,577
Intercompany sales elimination		(4,807)		(4,325)
Total, net sales	$	142,645	$	136,252

	Three Months Ended
	March 31,
	2023		2022
Commercial vehicle	$	59,155	$	50,865
Construction & access		26,507		29,744
Powersports		24,098		22,575
Agriculture		14,451		15,248
Military		8,569		5,171
Other		9,866		12,649
Total, net sales	$	142,645	$	136,252

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Concentration of major customers

3 Months Ended

Mar. 31, 2023

Concentration of major customers

Concentration of major customers

Note 15. Concentration of major customers

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

	Net Sales				Accounts Receivable
	Three Months Ended				As of		As of
	March 31,				March 31,		December 31,
	2023		2022		2023		2022
Customer
A	15.6	%	18.2	%	11.5	%	11.0	%
B	12.1	%	11.1	%	12.8	%	<10	%
C	15.3	%	15.7	%	<10	%	<10	%
D	<10	%	<10	%	10.8	%	12.6	%

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Stock based compensation

3 Months Ended

Mar. 31, 2023

Stock based compensation

Stock based compensation

Note 16. Stock based compensation

The Mayville Engineering Company, Inc. 2019 Omnibus Incentive Plan provides the Company the ability to grant monetary payments based on the value of its common stock, up to 2,000,000 shares.

On April 20, 2021, shareholders of the Company approved an amendment to the 2019 Omnibus Incentive Plan increasing the number of shares of common stock authorized for issuance by 2,500,000 shares.

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

based instrument. For units, fair value is equivalent to the adjusted closing stock price at the date preceding the date of grant. The Black-Scholes option pricing model is utilized to determine fair value for options.

Cancellations and forfeitures are accounted for as incurred.

Stock awards were granted on March 13, 2023, February 28, 2023, January 25, 2023, July 19, 2022, April 19, 2022, February 28, 2022, June 3, 2021, May 12, 2021, April 20, 2021, February 28, 2021, May 12, 2020, February 27, 2020 and May 8, 2019. There were no stock awards granted prior to this.

During the three months ended March 31, 2023, 132,433 units vested. For the same period, 197,597 options vested with a weighted average strike price of $11.65. During the three months ended March 31, 2022, 234,582 units vested. For the same period, 512,927 options vested with a strike price of $9.18.

As of March 31, 2023, 1,302,978 options remained outstanding with a weighted average strike price of $10.51 and a weighted average contractual life of 7.22 years remaining.

The Company’s stock-based compensation expense by award type is summarized as follows:

	Three Months Ended
	March 31,
	2023		2022
Unit awards	$	715	$	751
Option awards		351		506
Stock based compensation expense, net of tax	$	1,066	$	1,257

A roll-forward of unrecognized stock-based compensation expense is displayed in the table below. Unrecognized stock-based compensation expense as of March 31, 2023 will be expensed over the remaining requisite service period from which individual award values relate, up to July 19, 2025.

	Units		Options		Total
Balance as of December 31, 2022	$	1,739	$	1,050	$	2,789
Grants		3,560		2,585		6,145
Forfeitures		(211)		(83)		(294)
Expense		(715)		(351)		(1,066)
Balance as of March 31, 2023	$	4,373	$	3,201	$	7,574

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Common equity

3 Months Ended

Mar. 31, 2023

Common equity.

Common equity

Note 17. Common Equity

At March 31, 2023 the authorized stock of the Company consisted of 75,000,000 shares of common stock without par value.

Changes in outstanding common shares are summarized as follows:

	Shares
	Outstanding
Shares as of December 31, 2021	20,335,934
Treasury stock purchases	(200,000)
Common stock issued (including share-based compensation impact)	365,582
Balance as of March 31, 2022	20,501,516
	Shares
	Outstanding
Balance as of December 31, 2022	20,172,746
Treasury stock purchases	(41,148)
Common stock issued (including share-based compensation impact)	290,432
Balance as of March 31, 2023	20,422,030

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Subsequent events

3 Months Ended

Mar. 31, 2023

Subsequent events

Subsequent events

Note 18. Subsequent events

The Company has evaluated subsequent events since March 31, 2023, the date of these financial statements. There were no material events or transactions discovered during this evaluation that requires recognition or disclosure in the financial statements.

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Basis of presentation (Policies)

3 Months Ended

Mar. 31, 2023

Basis Of presentation

Nature of Operations

Nature of Operations

MEC is a leading U.S.-based, vertically-integrated, value-added manufacturing partner providing a full suite of manufacturing solutions from concept to production, including design, prototyping and tooling, fabrication, coating, assembly and aftermarket components. Our customers operate in diverse end markets, including heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, agriculture, military and other end markets. Founded in 1945 and headquartered in Mayville, Wisconsin, we are a leading Tier I U.S. supplier of highly engineered components to original equipment manufacturer (OEM) customers with leading positions in their respective markets. The Company operates 20 facilities located in Arkansas, Michigan, Mississippi, Ohio, Pennsylvania, Virginia, and Wisconsin. Our engineering expertise and technical know-how allow us to add value through every product redevelopment cycle (generally every three to five years for our customers).

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.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Measurement of Credit Losses on Financial Instruments, which establishes Accounting Standards Codification (ASC) 326, Financial Instruments – Credit Losses. The ASU revises the measurement of credit losses for financial assets measured at amortized cost from an incurred loss methodology to an expected loss methodology. The ASU affects trade receivables, debt securities, net investment in leases, and most other financial assets that represent a right to receive cash. For as long as the Company remains an emerging growth company (EGC), the new guidance is effective for annual reporting periods beginning after December 15, 2022. The Company adopted the new standard as of January 1, 2023. As our customer base is principally made of blue-chip OEMs with high credit ratings and our trade receivables are due within one year or less, the adoption of this standard did not have a material impact on our consolidated financial statements.

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Select balance sheet data (Tables)

3 Months Ended

Mar. 31, 2023

Select balance sheet data

Schedule of Inventories

	March 31,		December 31,
	2023		2022
Finished goods and purchased parts	$	34,641	$	44,728
Raw materials		23,806		17,003
Work-in-process		10,501		9,977
Total	$	68,948	$	71,708

Schedule of Property, Plant and Equipment

	Useful Lives		March 31,		December 31,
	Years		2023		2022
Land		Indefinite	$	1,030	$	1,030
Land improvements		15-39		3,169		3,169
Building and building improvements		15-39		64,861		59,664
Machinery, equipment and tooling		3-10		260,309		250,110
Vehicles		5		4,372		4,359
Office furniture and fixtures		3-7		20,199		19,585
Construction in progress		N/A		13,612		26,435
Total property, plant and equipment, gross				367,552		364,352
Less accumulated depreciation				224,596		218,581
Total property, plant and equipment, net			$	142,956	$	145,771

Schedule of Listing of Intangible Assets

	Useful Lives		March 31,		December 31,
	Years		2023		2022
Amortizable intangible assets:
Customer relationships and contracts		9-12	$	78,340	$	78,340
Trade name		10		14,780		14,780
Non-compete agreements		5		8,800		8,800
Patents		19		24		24
Accumulated amortization				(63,684)		(61,946)
Total amortizable intangible assets, net				38,260		39,998
Non-amortizable brand name				3,811		3,811
Total intangible assets, net			$	42,071	$	43,809

Schedule of Changes In Intangible Assets

Balance as of December 31, 2022	$	43,809
Amortization expense		(1,738)
Balance as of March 31, 2023	$	42,071

Schedule of Future Amortization Expense

Year ending December 31,
2023 (remainder)	$	5,128
2024	$	5,192
2025	$	5,192
2026	$	5,192
2027	$	5,192
Thereafter	$	12,364

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Leases (Tables)

3 Months Ended

Mar. 31, 2023

Leases

Summary of components of lease expense

	Three Months Ended
	March 31,
	2023		2022
Finance lease cost:
Amortization of finance lease assets	$	94	$	79
Interest on finance lease liabilities		11		11
Total finance lease expense		105		90
Operating lease expense		1,286		1,522
Short-term lease expense		139		179
Variable lease expense		69		47
Sublease income (1)		(631)		—
Total lease expense	$	968	$	1,838

(1) The Company subleased a portion of its Hazel Park, MI facility starting in June 2022.

Schedule of Supplemental cash flow information

	Three Months Ended
	March 31,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities for finance leases:
Operating cash flows	$	11	$	11
Financing cash flows	$	96	$	78
Cash paid for amounts included in the measurement of lease liabilities for operating leases:
Operating cash flows	$	1,425	$	1,430
Right-of-use assets obtained in exchange for recorded lease obligations:
Operating leases	$	—	$	46
Finance leases	$	—	$	—

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Fair value of financial instruments (Tables)

3 Months Ended

Mar. 31, 2023

Fair value of financial instruments

Schedule of Financial Assets and Liabilities Accounted for at Fair Value by Fair Value Hierarchy

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

	Balance at		Fair Value Measurements at
	March 31,		Report Date Using
	2023		(Level 1)		(Level 2)		(Level 3)
Deferred compensation liability	$	21,031	$	21,031	$	—	$	—
Total	$	21,031	$	21,031	$	—	$	—

	Balance at		Fair Value Measurements at
	December 31,		Report Date Using
	2022		(Level 1)		(Level 2)		(Level 3)
Deferred compensation liability	$	21,194	$	21,194	$	—	$	—
Total	$	21,194	$	21,194	$	—	$	—

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Earnings per share (Tables)

3 Months Ended

Mar. 31, 2023

Earnings per share

Schedule of earnings per share

	Three Months Ended
	March 31,
	2023		2022
Net income attributable to MEC	$	2,571	$	3,822
Average shares outstanding		20,315,338		20,398,933
Basic income per share	$	0.13	$	0.19
Average shares outstanding		20,315,338		20,398,933
Effect of dilutive share-based compensation		434,610		150,393
Total potential shares outstanding		20,749,948		20,549,326
Diluted income per share	$	0.12	$	0.19

Schedule of Antidilutive Securities Excluded from Computation of Diluted Earnings Per Share

Options in the money that were not included in the computation of diluted earnings per share because they would have had an anti-dilutive impact on earnings per share were as follows:

	Three Months Ended March 31,
	2023	2022
Stock options	—	479,947

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Revenue recognition (Tables)

3 Months Ended

Mar. 31, 2023

Revenue recognition

Schedule of Changes in Contract Assets and Liabilities

The following table reflects the changes in our contract assets and liabilities during the three months ended March 31, 2023:

	Contract		Contract
	Assets		Liabilities
As of December 31, 2022	$	7,938	$	6,141
Net activity		101		(447)
As of March 31, 2023	$	8,039	$	5,694

Schedule of Disaggregation of Revenue by Product Category and End Market

The following table represents a disaggregation of revenue by product category and end market:

	Three Months Ended
	March 31,
	2023		2022
Outdoor sports	$	2,305	$	2,527
Fabrication		87,001		82,232
Performance structures		26,675		28,959
Tube		20,352		18,309
Tank		11,119		8,550
Total		147,452		140,577
Intercompany sales elimination		(4,807)		(4,325)
Total, net sales	$	142,645	$	136,252

	Three Months Ended
	March 31,
	2023		2022
Commercial vehicle	$	59,155	$	50,865
Construction & access		26,507		29,744
Powersports		24,098		22,575
Agriculture		14,451		15,248
Military		8,569		5,171
Other		9,866		12,649
Total, net sales	$	142,645	$	136,252

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Concentration of major customers (Tables)

3 Months Ended

Mar. 31, 2023

Concentration of major customers

Schedules of Major Customer Concentrations

	Net Sales				Accounts Receivable
	Three Months Ended				As of		As of
	March 31,				March 31,		December 31,
	2023		2022		2023		2022
Customer
A	15.6	%	18.2	%	11.5	%	11.0	%
B	12.1	%	11.1	%	12.8	%	<10	%
C	15.3	%	15.7	%	<10	%	<10	%
D	<10	%	<10	%	10.8	%	12.6	%

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Stock based compensation (Tables)

3 Months Ended

Mar. 31, 2023

Stock based compensation

Summary of Stock-based Compensation Expenses

	Three Months Ended
	March 31,
	2023		2022
Unit awards	$	715	$	751
Option awards		351		506
Stock based compensation expense, net of tax	$	1,066	$	1,257

Schedule of Unrecognized Stock-based Compensation Expense

	Units		Options		Total
Balance as of December 31, 2022	$	1,739	$	1,050	$	2,789
Grants		3,560		2,585		6,145
Forfeitures		(211)		(83)		(294)
Expense		(715)		(351)		(1,066)
Balance as of March 31, 2023	$	4,373	$	3,201	$	7,574

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Common equity (Tables)

3 Months Ended

Mar. 31, 2023

Common equity.

Schedule of Common Stock Outstanding Roll Forward [Table Text Block]

	Shares
	Outstanding
Shares as of December 31, 2021	20,335,934
Treasury stock purchases	(200,000)
Common stock issued (including share-based compensation impact)	365,582
Balance as of March 31, 2022	20,501,516
	Shares
	Outstanding
Balance as of December 31, 2022	20,172,746
Treasury stock purchases	(41,148)
Common stock issued (including share-based compensation impact)	290,432
Balance as of March 31, 2023	20,422,030

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Basis of presentation (Details)	3 Months Ended
	Mar. 31, 2023 segment facility
Basis Of presentation
Number of facilities operated | facility	20
Number Of Operating Segments | segment	1

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Select balance sheet data - Schedule of Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Select balance sheet data
Finished goods and purchased parts	$ 34,641	$ 44,728
Raw materials	23,806	17,003
Work-in-process	10,501	9,977
Total	$ 68,948	$ 71,708

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Select balance sheet data - Schedule of Property, Plant and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Total property, plant and equipment, gross	$ 367,552	$ 364,352
Less accumulated depreciation	224,596	218,581
Total property, plant and equipment, net	142,956	145,771
Land [Member]
Property, Plant and Equipment [Line Items]
Total property, plant and equipment, gross	$ 1,030	1,030
Property, plant and equipment useful lives	Indefinite
Land Improvements [Member]
Property, Plant and Equipment [Line Items]
Total property, plant and equipment, gross	$ 3,169	3,169
Land Improvements [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment useful lives	15 years
Land Improvements [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment useful lives	39 years
Building and Building Improvements [Member]
Property, Plant and Equipment [Line Items]
Total property, plant and equipment, gross	$ 64,861	59,664
Building and Building Improvements [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment useful lives	15 years
Building and Building Improvements [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment useful lives	39 years
Machinery, Equipment and Tooling [Member]
Property, Plant and Equipment [Line Items]
Total property, plant and equipment, gross	$ 260,309	250,110
Machinery, Equipment and Tooling [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment useful lives	3 years
Machinery, Equipment and Tooling [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment useful lives	10 years
Vehicle Leases
Property, Plant and Equipment [Line Items]
Total property, plant and equipment, gross	$ 4,372	4,359
Property, plant and equipment useful lives	5 years
Office Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Total property, plant and equipment, gross	$ 20,199	19,585
Office Furniture and Fixtures [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment useful lives	3 years
Office Furniture and Fixtures [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment useful lives	7 years
Construction in Progress [Member]
Property, Plant and Equipment [Line Items]
Total property, plant and equipment, gross	$ 13,612	$ 26,435

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Select balance sheet data - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2022
Select Balance Sheet Data [Line Items]
Depreciation	$ 6,142	$ 5,468
Impairment, Long-Lived Asset, Held-for-Use, Statement of Income or Comprehensive Income [Extensible Enumeration]			Impairment Of Long Lived Assets And Gain Loss On Contracts To Be Disposed Of
Purchase commitments for property, plant and equipment canceled		1,183
Finance leases right of use assets	$ 1,008			$ 1,103
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Property Plant And Equipment Net			Property Plant And Equipment Net
Amortization expense	$ 1,738	$ 1,738
Former Customer [Member]
Select Balance Sheet Data [Line Items]
Impairment of long-lived asset			$ 12,875

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Select balance sheet data - Schedule of Changes In Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Select balance sheet data
Goodwill	$ 71,535	$ 71,535
Change in goodwill carrying amount	$ 0

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Select balance sheet data - Schedule of Listing of Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Amortizable intangible assets [Abstract]
Accumulated amortization	$ (63,684)	$ (61,946)
Total amortizable intangible assets, net	38,260	39,998
Total intangible assets, net	42,071	43,809
Customer relationships and contracts [Member]
Amortizable intangible assets [Abstract]
Amortizable intangible assets, gross	$ 78,340	78,340
Trade name [Member]
Amortizable intangible assets [Abstract]
Intangible assets useful Lives	10 years
Amortizable intangible assets, gross	$ 14,780	14,780
Non-compete agreements [Member]
Amortizable intangible assets [Abstract]
Intangible assets useful Lives	5 years
Amortizable intangible assets, gross	$ 8,800	8,800
Patents [Member]
Amortizable intangible assets [Abstract]
Intangible assets useful Lives	19 years
Amortizable intangible assets, gross	$ 24	24
Non-amortizable Brand Name [Member]
Amortizable intangible assets [Abstract]
Total intangible assets, net	$ 3,811	$ 3,811
Minimum [Member] | Customer relationships and contracts [Member]
Amortizable intangible assets [Abstract]
Intangible assets useful Lives	9 years
Maximum [Member] | Customer relationships and contracts [Member]
Amortizable intangible assets [Abstract]
Intangible assets useful Lives	12 years

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Select balance sheet data - Schedule of Changes In Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Select balance sheet data
Balance	$ 43,809
Amortization expense	(1,738)	$ (1,738)
Balance	$ 42,071

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Select balance sheet data - Schedule of Future Amortization Expense (Details) $ in Thousands	Mar. 31, 2023 USD ($)
Select balance sheet data
2023 (remainder)	$ 5,128
2024	5,192
2025	5,192
2026	5,192
2027	5,192
Thereafter	$ 12,364

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Bank revolving credit notes - Additional Information (Details) - USD ($) $ in Thousands		3 Months Ended	12 Months Ended
	Mar. 31, 2022	Mar. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Line Of Credit Facility [Line Items]
Revolving credit notes		$ 81,576	$ 72,236
A&R Credit Agreement [Member]
Line Of Credit Facility [Line Items]
Minimum interest coverage ratio		3.00%
Maximum consolidated leverage ratio		3.25%
A&R Credit Agreement [Member] | The Agent [Member]
Line Of Credit Facility [Line Items]
Credit agreement additional borrowing capacity through accordion feature	$ 100,000
Credit agreement maturity date	Sep. 26, 2024
Second Amendment [Member]
Line Of Credit Facility [Line Items]
Minimum interest coverage ratio		3.00%
Maximum consolidated leverage ratio		3.25%
Debt instrument covenant description		The Second Amendment provided the Company with temporary changes to the total leverage ratio covenant for the period from June 30, 2020, through December 31, 2021, in return for certain increases in interest rates, fees and restrictions on certain activities of the Company, including capital expenditures, acquisitions, dividends and share repurchases. New pricing, which took effect for the quarters ending on and after September 30, 2020, includes interest at a fluctuating London Interbank Offered Rate (LIBOR) (at a floor of 75 basis points), plus 1.00% to 2.75%, along with the commitment fee ranging from 20 to 50 basis points.
Floor rate		0.75%
Consolidated leverage ratio		1.44%
Interest coverage ratios		9.82%
Second Amendment [Member] | Minimum [Member]
Line Of Credit Facility [Line Items]
Debt instrument commitment fee percentage		0.20%
Second Amendment [Member] | Minimum [Member] | LIBOR [Member]
Line Of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate		1.00%
Second Amendment [Member] | Maximum [Member]
Line Of Credit Facility [Line Items]
Debt instrument commitment fee percentage		0.50%
Second Amendment [Member] | Maximum [Member] | LIBOR [Member]
Line Of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate		2.75%
Third Amendment [Member]
Line Of Credit Facility [Line Items]
Capital expenditure incurred				$ 35,000
Third Amendment [Member] | Maximum [Member]
Line Of Credit Facility [Line Items]
Capital expenditure incurred				$ 70,000
Fourth Amendment [Member]
Line Of Credit Facility [Line Items]
Capital expenditure incurred			35,000
Fourth Amendment [Member] | Maximum [Member]
Line Of Credit Facility [Line Items]
Capital expenditure incurred			$ 65,000
Revolving Credit Facility [Member]
Line Of Credit Facility [Line Items]
Interest rate		6.19%	5.69%
Revolving commitments fee percentage		0.25%	0.25%
Revolving credit notes		$ 81,576	$ 72,236
Revolving Credit Facility [Member] | A&R Credit Agreement [Member] | The Agent [Member]
Line Of Credit Facility [Line Items]
Credit agreement borrowing capacity	$ 200,000
Letter of Credit Sub-facility [Member] | A&R Credit Agreement [Member] | The Agent [Member]
Line Of Credit Facility [Line Items]
Credit agreement borrowing capacity	5,000
Swingline Facility [Member] | A&R Credit Agreement [Member] | The Agent [Member]
Line Of Credit Facility [Line Items]
Credit agreement borrowing capacity	$ 20,000

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Leases - Components of lease expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Leases
Amortization of finance lease assets	$ 94	$ 79
Interest on finance lease liabilities	11	11
Total finance lease expense	105	90
Operating lease expense	1,286	1,522
Short-term lease expense	139	179
Variable lease expense	69	47
Sublease income	(631)
Total lease expense	$ 968	$ 1,838

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Leases - Supplemental cash flow information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Leases
Cash paid for amounts included in the measurement of lease liabilities for finance leases: Operating cash flows	$ 11	$ 11
Cash paid for amounts included in the measurement of lease liabilities for finance leases: Financing cash flows	96	78
Cash paid for amounts included in the measurement of lease liabilities for operating leases: Operating cash flows	$ 1,425	1,430
Right-of-use assets obtained in exchange for recorded lease obligations: Operating leases		$ 46

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Employee stock ownership plan - Additional Information (Details) - USD ($) $ in Thousands		3 Months Ended		12 Months Ended
	Jan. 01, 2023	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Employee stock ownership plan (ESOP), (income) expense			$ 490
Distribution period	3 years			5 years
Shares in ESOP		4,595,247		5,684,879
Employee Stock Option [Member]
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Employee stock ownership plan (ESOP), (income) expense		$ 0	$ 490

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Retirement plans - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Retirement plans
Defined Contribution Plan Maximum Annual Contributions Per Employee Percent	50.00%
Employer match percentage	50.00%
Percent of employee contributions eligible for employer match	6.00%
Employer match expense	$ 874
Defined contribution plan, employer discretionary contribution amount	$ 0	$ 391

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Income taxes - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Income taxes
Income tax expense	$ 441	$ 1,175
Effective income tax rate	14.65%	23.52%
Penalties or interest recorded	$ 0
Tax expense for interest and penalties	0
Unrecognized tax benefits that would impact effective tax rate	$ 420		$ 384

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Contingencies (Details)	Aug. 04, 2022 claim
Contingencies
Number of claims	2

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Deferred compensation - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Deferred Compensation Arrangement With Individual Excluding Share Based Payments And Postretirement Benefits [Line Items]
Description of deferred compensation arrangements	The Mayville Engineering Company Deferred Compensation Plan is available for certain employees designated to be eligible to participate by the Company and approved by the Board of Directors.
Deferred compensation plan (Income) expense	$ 3,003	$ 2,548
Deferred compensation cash-based arrangements liability, Current	17,802		$ 18,062
Deferred compensation cash-based arrangements liability, Non current	3,229		$ 3,132
Deferred compensation, distributions paid	958	1,048
Deferred Profit Sharing [Member]
Deferred Compensation Arrangement With Individual Excluding Share Based Payments And Postretirement Benefits [Line Items]
Deferred compensation plan (Income) expense	560	(1,128)
Employees [Member]
Deferred Compensation Arrangement With Individual Excluding Share Based Payments And Postretirement Benefits [Line Items]
Deferred compensation plan (Income) expense	$ 236	$ 0
Maximum [Member]
Deferred Compensation Arrangement With Individual Excluding Share Based Payments And Postretirement Benefits [Line Items]
Deferred compensation arrangements	50.00%
Annual short term cash incentive	100.00%

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Self-Funded insurance - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Self-Funded insurance
Reinsured limit of aggregate expense	$ 4,634	$ 4,760
Estimated accrued liability	$ 879		$ 900

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Segments - Additional Information (Details)	3 Months Ended
	Mar. 31, 2023 segment
Segments
Number of operating segments	1

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Fair value of financial instruments - Schedule of Financial Assets and Liabilities Accounted for at Fair Value by Fair Value Hierarchy (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total	$ 21,031	$ 21,194
Fair Value, Inputs, Level 1 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total	21,031	21,194
Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total	0	0
Fair Value, Inputs, Level 3 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total	0	0
Deferred Compensation Liability [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total	21,031	21,194
Deferred Compensation Liability [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total	21,031	21,194
Deferred Compensation Liability [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total	0	0
Deferred Compensation Liability [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total	$ 0	$ 0

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Earnings Per Share, Basic [Abstract]
Net income attributable to MEC	$ 2,571	$ 3,822
Average shares outstanding	20,315,338	20,398,933
Basic income per share	$ 0.13	$ 0.19
Earnings Per Share, Diluted, Other Disclosures [Abstract]
Average shares outstanding	20,315,338	20,398,933
Effect of dilutive share-based compensation	434,610	150,393
Total potential shares outstanding	20,749,948	20,549,326
Diluted income per share	$ 0.12	$ 0.19

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Earnings per share - Schedule of Antidilutive Securities Excluded from Computation of Diluted Earnings Per Share (Details)	3 Months Ended
	Mar. 31, 2022 shares
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted earnings per share	479,947

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Revenue recognition - Schedule of Changes in Contract Assets and Liabilities (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($)
Revenue recognition
Contract asset, beginning balance	$ 7,938
Net activity	101
Contract asset, ending balance	8,039
Contract liability, beginning balance	6,141
Net activity	(447)
Contract liability, ending balance	$ 5,694

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Revenue recognition - Schedule of Disaggregation of Revenue by Product Category (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Disaggregation Of Revenue [Line Items]
Total, net sales	$ 142,645	$ 136,252
Operating Segments
Disaggregation Of Revenue [Line Items]
Total, net sales	147,452	140,577
Intercompany sales elimination
Disaggregation Of Revenue [Line Items]
Total, net sales	(4,807)	(4,325)
Outdoor sports | Operating Segments
Disaggregation Of Revenue [Line Items]
Total, net sales	2,305	2,527
Fabrication | Operating Segments
Disaggregation Of Revenue [Line Items]
Total, net sales	87,001	82,232
Performance structures | Operating Segments
Disaggregation Of Revenue [Line Items]
Total, net sales	26,675	28,959
Tube | Operating Segments
Disaggregation Of Revenue [Line Items]
Total, net sales	20,352	18,309
Tank | Operating Segments
Disaggregation Of Revenue [Line Items]
Total, net sales	$ 11,119	$ 8,550

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Revenue recognition - Schedule of Disaggregation of Revenue by End Market (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Disaggregation Of Revenue [Line Items]
Total, net sales	$ 142,645	$ 136,252
Commercial Vehicle [Member]
Disaggregation Of Revenue [Line Items]
Total, net sales	59,155	50,865
Construction And Access [Member]
Disaggregation Of Revenue [Line Items]
Total, net sales	26,507	29,744
Powersports [Member]
Disaggregation Of Revenue [Line Items]
Total, net sales	24,098	22,575
Agriculture [Member]
Disaggregation Of Revenue [Line Items]
Total, net sales	14,451	15,248
Military [Member]
Disaggregation Of Revenue [Line Items]
Total, net sales	8,569	5,171
Other Market [Member]
Disaggregation Of Revenue [Line Items]
Total, net sales	$ 9,866	$ 12,649

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Concentration of major customers - Schedule of Major Customer Concentrations (Details) - Customer Concentration Risk [Member]	3 Months Ended		12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Customer A [Member] | Net Sales [Member]
Concentration Risk [Line Items]
Concentration risk percentage	15.60%	18.20%
Customer A [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Concentration risk percentage	11.50%		11.00%
Customer B [Member] | Net Sales [Member]
Concentration Risk [Line Items]
Concentration risk percentage	12.10%	11.10%
Customer B [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Concentration risk percentage	12.80%
Concentration risk percentage			<10
Customer C [Member] | Net Sales [Member]
Concentration Risk [Line Items]
Concentration risk percentage	15.30%	15.70%
Customer C [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Concentration risk percentage	<10		<10
Customer D [Member] | Net Sales [Member]
Concentration Risk [Line Items]
Concentration risk percentage	<10	<10
Customer D [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Concentration risk percentage	10.80%		12.60%

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Stock based compensation - Summary of Stock-based Compensation Expenses (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock based compensation expense, net of tax	$ 1,066	$ 1,257
Unit awards [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock based compensation expense, net of tax	715	751
Option awards [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock based compensation expense, net of tax	$ 351	$ 506

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Stock based compensation - Schedule of Unrecognized Stock-based Compensation Expense (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Beginning Balance	$ 2,789
Grants	6,145
Forfeitures	(294)
Expense	(1,066)
Ending Balance	7,574
Units [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Beginning Balance	1,739
Grants	3,560
Forfeitures	(211)
Expense	(715)
Ending Balance	4,373
Stock Options [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Beginning Balance	1,050
Grants	2,585
Forfeitures	(83)
Expense	(351)
Ending Balance	$ 3,201

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Stock based compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
	May 08, 2019	Mar. 31, 2023	Mar. 31, 2022	Apr. 20, 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options, outstanding number		1,302,978
Weighted average exercise price		$ 10.51
Weighted average contractual life remaining		7 years 2 months 19 days
Unrecognized stock-based compensation recognition period		Jul. 19, 2025
Non-Employee Director [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options awarded, value	$ 0
2019 Omnibus Incentive Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Payments based on the value of its common stock		2,000,000
Number of shares authorized				2,500,000
Restricted Stock Units [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of units, vested		132,433	234,582
Employee Stock Option [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of units, vested		197,597	512,927
Weighted average strike price		$ 11.65	$ 9.18

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Common equity (Details) - shares	Mar. 31, 2023	Dec. 31, 2022
Common equity.
Common Stock, Shares Authorized	75,000,000	75,000,000

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Common equity - Changes in outstanding common shares (Details) - Common Stock [Member] - shares	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Beginning balance	20,172,746	20,335,934
Treasury stock purchases	(41,148)	(200,000)
Common stock issued (including share-based compensation impact)	290,432	365,582
Ending balance	20,422,030	20,501,516