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 June 30, 2024

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.)
135 S. 84th Street, Suite 300 Milwaukee, Wisconsin	53214
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (414) 381-2860

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 August 2, 2024, the registrant had 20,619,530 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	9
	Notes to Unaudited Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	31
PART II.	OTHER INFORMATION	32
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 1C.	Cybersecurity	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 5.	Other Information	33
Item 6.	Exhibits	34
Signatures		35

2

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, 2023, filed with the Securities and Exchange Commission (the SEC) on March 6, 2024, 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, elevated interest rates and recessionary concerns, as well as continuing supply chain constraints affecting some of our customers, labor availability and material cost pressures, have had, and may continue to have, a negative impact on our business, financial condition, cash flows and results of operations (including future uncertain impacts);

● risks relating to developments in the industries in which our customers operate;

● risks related to scheduling production accurately and maximizing efficiency;

● our ability to realize net sales represented by our awarded business;

● failure to compete successfully in our markets;

● our ability to maintain our manufacturing, engineering and technological expertise;

● the loss of any of our large customers or the loss of their respective market shares;

● risks related to entering new markets;

● our ability to recruit and retain our key executive officers, managers and trade-skilled personnel;

● volatility in the prices or availability of raw materials critical to our business;

● manufacturing risks, including delays and technical problems, issues with third-party suppliers, environmental risks and applicable statutory and regulatory requirements;

● our ability to successfully identify or integrate acquisitions;

● our ability to develop new and innovative processes and gain customer acceptance of such processes;

● risks related to our information technology systems and infrastructure, including cybersecurity risks and data leakage risks;

3

● 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; 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)

	June 30,		December 31,
	2024		2023
ASSETS
Cash and cash equivalents	$	314	$	672
Receivables, net of allowances for doubtful accounts of $697 at June 30, 2024 and $685 at December 31, 2023		67,853		57,445
Inventories, net		60,816		67,782
Tooling in progress		6,074		5,457
Prepaid expenses and other current assets		5,155		3,267
Total current assets		140,212		134,623
Property, plant and equipment, net		168,757		175,745
Goodwill		92,650		92,650
Intangible assets, net		55,201		58,667
Operating lease assets		29,868		32,233
Other long-term assets		1,463		2,743
Total assets	$	488,151	$	496,661
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	53,963	$	46,526
Current portion of operating lease obligation		4,856		5,064
Accrued liabilities:
Salaries, wages, and payroll taxes		7,211		6,368
Profit sharing and bonus		3,275		3,107
Other current liabilities		12,523		10,644
Total current liabilities		81,828		71,709
Bank revolving credit notes		122,063		147,493
Operating lease obligation, less current maturities		26,616		28,606
Deferred compensation, less current portion		4,315		3,816
Deferred income tax liability		12,847		12,606
Other long-term liabilities		2,398		2,453
Total liabilities	$	250,067	$	266,683
Commitments and contingencies (see Note 9)
Common shares, no par value, 75,000,000 authorized, 22,077,389 shares issued at June 30, 2024 and 21,853,477 at December 31, 2023		—		—
Additional paid-in-capital		207,454		205,373
Retained earnings		41,141		34,118
Treasury shares at cost, 1,604,090 shares at June 30, 2024 and 1,542,893 at December 31, 2023		(10,511)		(9,513)
Total shareholders’ equity		238,084		229,978
Total liabilities and shareholders' equity	$	488,151	$	496,661

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				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Net sales	$	163,636	$	138,980	$	324,905	$	281,626
Cost of sales		141,359		122,885		281,696		249,154
Amortization of intangible assets		1,733		1,738		3,466		3,476
Profit sharing, bonuses, and deferred compensation		4,133		2,688		7,933		5,690
Other selling, general and administrative expenses		8,261		7,396		16,030		14,363
Income from operations		8,150		4,273		15,780		8,943
Interest expense		(2,969)		(1,968)		(6,324)		(3,626)
Loss on extinguishment of debt		—		(216)		—		(216)
Income before taxes		5,181		2,089		9,456		5,101
Income tax expense		1,399		475		2,433		916
Net income and comprehensive income	$	3,782	$	1,614	$	7,023	$	4,185
Earnings per share:
Basic	$	0.18	$	0.08	$	0.34	$	0.21
Diluted	$	0.18	$	0.08	$	0.34	$	0.20
Weighted average shares outstanding:
Basic		20,602,650		20,494,437		20,544,292		20,405,383
Diluted		21,034,780		20,827,728		20,914,499		20,789,175

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)

	Six Months Ended
	June 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	7,023	$	4,185
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation		15,179		12,415
Amortization		3,466		3,476
Allowance for doubtful accounts		12		6
Inventory excess and obsolescence reserve		(164)		41
Stock-based compensation expense		2,495		2,420
Loss (gain) on disposal of property, plant and equipment		2		(135)
Deferred compensation		451		(17,475)
Loss on extinguishment of debt		—		216
Non-cash lease expense		2,702		2,144
Other non-cash adjustments		143		184
Changes in operating assets and liabilities:
Accounts receivable		(10,420)		(11,071)
Inventories		7,130		4,839
Tooling in progress		(617)		111
Prepaids and other current assets		(1,951)		(897)
Accounts payable		6,391		(3,061)
Deferred income taxes		1,764		638
Operating lease obligations		(2,535)		(1,986)
Accrued liabilities		2,829		(1,915)
Net cash provided by (used in) operating activities		33,900		(5,865)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment		(6,874)		(6,320)
Proceeds from sale of property, plant and equipment		107		153
Net cash used in investing activities		(6,767)		(6,167)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank revolving credit notes		273,536		347,324
Payments on bank revolving credit notes		(298,967)		(241,618)
Repayments of other long-term debt		(306)		(575)
Payments of financing costs		—		(1,248)
Shares withheld for employees' taxes		(758)		—
Purchase of treasury stock		(998)		(1,661)
Payments on finance leases		(343)		(192)
Proceeds from the exercise of stock options		345		—
Net cash provided by (used in) financing activities		(27,491)		102,030
Net increase (decrease) in cash and cash equivalents		(358)		89,998
Cash and cash equivalents at beginning of period		672		127
Cash and cash equivalents at end of period	$	314	$	90,125

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

7

Mayville Engineering Company, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Six Months Ended
	June 30,
	2024		2023
Supplemental disclosure of cash flow information:
Cash paid for interest	$	5,577	$	3,383
Cash paid for taxes	$	796	$	278
Non-cash property, plant & equipment, net	$	1,492	$	2,283
Non-cash 401(k) contribution of treasury stock	$	—	$	2,500

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

8

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, 2023	$	205,373	$	(9,513)	$	34,118	$	229,978
Net income		—		—		3,241		3,241
Stock-based compensation		1,157		—		—		1,157
Stock options exercised net of employee tax withholding		185		—		—		185
Restricted stock units net of employee tax withholding		(524)		—		—		(524)
Balance as of March 31, 2024	$	206,191	$	(9,513)	$	37,359	$	234,037
Net income		—		—		3,782		3,782
Purchase of treasury stock		—		(998)		—		(998)
Stock-based compensation		1,338		—		—		1,338
Stock options exercised net of employee tax withholding		(75)		—		—		(75)
Balance as of June 30, 2024	$	207,454	$	(10,511)	$	41,141	$	238,084
	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
Net income		—		—		1,614		1,614
Purchase of treasury stock		—		(1,000)		—		(1,000)
Stock-based compensation		1,354		—		—		1,354
Stock options exercised net of employee tax withholding		58		—		—		58
Balance as of June 30, 2023	$	203,423	$	(8,513)	$	30,459	$	225,369

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

9

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, 2023, 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 2023 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, aluminum extrusion, 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 Milwaukee, 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 23 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 December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09, Improvements to Income Tax Disclosures, amending Accounting Standards Codification (ASC) 740, Income Taxes. The amendment is intended to enhance the transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The amendments require that on an annual basis, entities disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. In addition, the amendments require that entities disclose additional information about income taxes paid as well as additional disclosures of pretax income and income tax expense and remove the requirement to disclose certain items that are no longer considered cost beneficial or relevant. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. The Company is evaluating the potential impact of adopting this guidance on the consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures, amending ASC 280, Segment Reporting. The amendment is intended to improve reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment and contain other disclosure requirements. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and for interim periods after December 15, 2024. The Company is evaluating the potential impact of adopting this guidance on the consolidated financial statements.

10

Note 2. Acquisition

On July 1, 2023, the Company completed its acquisition of Mid-States Aluminum (MSA). The acquisition was consummated in accordance with terms and conditions of the certain Unit Purchase Agreement, dated as of June 19, 2023, among the Company and shareholders of MSA. The purchase price of the acquisition was $95,945, subject to adjustments for the amount of cash, indebtedness, net working capital and certain expenses of MSA as of the closing. At the closing of the acquisition, the Company applied an estimate of the adjustments and paid total net consideration of $90,002. The Company financed the acquisition by borrowing under its amended and restated credit agreement, as described in Note 4 – Debt in the Notes to Condensed Consolidated Financial Statements.

Located in Fond du Lac, WI, MSA is an industry leading, vertically-integrated manufacturer of custom aluminum extrusions and fabrications that also offers related services including design, engineering, anodizing and finishing, assembly and packaging. The acquisition enables MEC to secure an attractive entry point within light-weight materials fabrication, while providing significant new cross-selling opportunities with both new and existing customers.

The aggregate purchase price has been allocated to the assets acquired and liabilities assumed based on their preliminary estimated fair values at the acquisition date. The estimate of the excess purchase price over the preliminary estimated fair value of net tangible assets acquired was allocated to identifiable intangible assets and goodwill. The Company engaged an independent third party to assist with the identification and valuation of these intangible assets. Management makes significant estimates and assumptions when determining the fair value of assets acquired and liabilities assumed. These estimates include, but are not limited to, discount rates, projected future net sales, projected future expected cash flows, useful lives, attrition rates, royalty rates and growth rates. These measures are based on significant Level 3 inputs (see Note 13) not observable in the market.

The following table is a summary of the assets acquired, liabilities assumed and net cash consideration paid for MSA during 2023:

	Opening Balance		Estimated
	Sheet Allocation		Useful Life
Cash	$	324
Accounts receivable, net		7,381
Inventory		9,698
Property, plant and equipment		41,271
Other assets		291
Intangible assets
Developed technology		4,900	7 Years
Customer relationships		17,700	17 Years
Goodwill		21,115	Indefinite
Total assets acquired		102,680
Accounts payable		(2,386)
Accrued expenses		(1,509)
Other liabilities		(1,984)
Debt		(7,884)
Total consideration	$	88,917

Inventory was valued at its estimated fair value, which is defined as expected sales price, less costs to sell, plus a reasonable margin for selling effort. The valuation resulted in an inventory fair value step-up of $891 and was fully expensed and reflected in cost of sales on the Condensed Consolidated Statements of Comprehensive Income during the three months ended September 30, 2023.

Property, plant and equipment was valued at its estimated fair value using the cost, market and sales comparison approaches. The valuation resulted in a property, plant and equipment fair value step-up of $21,157. Depreciation on property, plant and equipment is computed on a straight-line basis over the estimated useful life of the respective assets.

The Company also recorded $17,700 of customer relationships intangible assets with an estimated useful life of 17 years and $4,900 of developed technology intangible assets with an estimated useful life of 7 years. The purchase price allocated to these assets

11

was based on management’s forecasted cash inflows and outflows and using a relief from royalty method for developed technologies and the multi-period excess earnings method for customer relationships. Amortization expense related to these intangible assets is recorded on a straight-line basis and reflected in amortization of intangible expenses on the Condensed Consolidated Statements of Comprehensive Income.

The purchase price of MSA exceeded the preliminary estimated fair value of identifiable net assets and accordingly, the difference was allocated to goodwill, which is not tax deductible.

As of December 31, 2023, the Company finalized the net working capital adjustment in conjunction with the fair value estimates for assets acquired, liabilities assumed, identifiable assets and the net income tax provision. Since its preliminary estimates, the Company adjusted the purchase price by ($1,084) related to working capital adjustments. The offsetting adjustment was primarily related to goodwill. As of June 30, 2024, the Company has finalized the estimates of assets and acquired liabilities assumed.

Pro Forma Financial Information (Unaudited)

In accordance with ASC 805, the following unaudited pro forma combined results of operations have been prepared and presented to give effect to the MSA acquisition as if it had occurred on January 1, 2023, the beginning of the comparable period, applying certain assumptions and pro forma adjustments. These pro forma adjustments primarily relate to the estimated depreciation expense associated with the fair value of the acquired property, plant and equipment, amortization of identifiable intangible assets, interest expense related to additional debt needed to fund the acquisition, and the tax impact of these adjustments. Additionally, the pro forma adjustments include non-recurring expenses related to transaction costs and the sale of stepped-up inventory. The unaudited pro forma consolidated results are provided for illustrative purposes only, are not indicative of the Company’s actual consolidated results of operations or consolidated financial position and do not reflect any revenue and operating synergies or cost savings that may result from the acquisition.

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2023		2023
Net sales	$	153,862	$	312,582
Net income	$	451	$	1,835

Note 3. 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 June 30, 2024 and December 31, 2023 consist of:

	June 30,		December 31,
	2024		2023
Finished goods and purchased parts	$	27,435	$	31,489
Raw materials		23,256		25,929
Work-in-process		10,126		10,363
Total	$	60,816	$	67,782

12

Property, plant and equipment

Property, plant and equipment as of June 30, 2024 and December 31, 2023 consist of:

	Useful Lives		June 30,		December 31,
	Years		2024		2023
Land		Indefinite	$	2,640	$	2,640
Land improvements		15-39		4,291		4,378
Building and building improvements		15-39		82,043		79,682
Machinery, equipment and tooling		3-10		304,727		295,960
Vehicles		5		4,424		4,571
Office furniture and fixtures		3-7		22,522		21,325
Construction in progress		N/A		5,599		9,779
Total property, plant and equipment, gross				426,246		418,335
Less accumulated depreciation				257,489		242,590
Total property, plant and equipment, net			$	168,757	$	175,745

Depreciation expense was $7,658 and $6,273 for the three months ended June 30, 2024 and 2023, respectively, and $15,179 and $12,415 for the six months ended June 30, 2024 and 2023, respectively.

Goodwill

There were no changes to the goodwill balance of $92,650 between December 31, 2023 and June 30, 2024.

Intangible Assets

The following is a listing of definite-lived intangible assets, the useful lives in years (amortization period) and accumulated amortization as of June 30, 2024 and December 31, 2023:

			June 30, 2024
	Useful Lives		Gross Carrying		Accumulated
	Years		Amount		Amortization			Net
Amortizable intangible assets:
Customer relationships and contracts		9-17	$	96,040	$	55,454	$	40,586
Trade name		10		14,780		8,185		6,595
Non-compete agreements		5		8,800		8,800		—
Developed technology		7		4,900		700		4,200
Patents		19		24		15		9
Total intangible assets, net			$	124,544	$	73,154	$	51,390

			December 31, 2023
	Useful Lives		Gross Carrying		Accumulated
	Years		Amount		Amortization			Net
Amortizable intangible assets:
Customer relationships and contracts		9-17	$	96,040	$	53,078	$	42,962
Trade name		10		14,780		7,446		7,334
Non-compete agreements		5		8,800		8,800		—
Developed technology		7		4,900		350		4,550
Patents		19		24		14		10
Total intangible assets, net			$	124,544	$	69,688	$	54,856

Additionally, the Company reported an indefinite lived non-amortizable brand name asset with a balance of $3,811 as of June 30, 2024 and December 31, 2023.

13

Changes in intangible assets between December 31, 2023 and June 30, 2024 consist of:

Balance as of December 31, 2023	$	58,667
Amortization expense		(3,466)
Balance as of June 30, 2024	$	55,201

Amortization expense was $1,733 and $1,738 for the three months ended June 30, 2024 and 2023, respectively, and $3,466 and $3,476 for the six months ended June 30, 2024 and 2023, respectively.

Future amortization expense is expected to be as followed:

Year ending December 31,
2024 (remainder)	$	3,466
2025	$	6,933
2026	$	6,933
2027	$	6,933
2028	$	6,877
Thereafter	$	20,248

Note 4. Debt

Bank Revolving Credit Notes

On June 28, 2023, we entered into an amended and restated credit agreement (the Credit Agreement) with certain lenders and Wells Fargo Bank, National Association, as administrative agent (the Agent). The Credit Agreement provides for a $250,000 revolving credit facility, with a letter of credit sub-facility, and a swingline facility in an aggregate amount of $25,000. The Credit Agreement also provides the availability of incremental facilities to the greater of $100,000 and 125% of the Company’s twelve month trailing Consolidated EBITDA through an accordion feature. All amounts borrowed under the credit agreement mature on June 28, 2028.

The Credit Agreement 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, incur, assume or suffer to exist liens; make certain investments; allow our subsidiaries to merge or consolidate with another entity; make certain asset dispositions; pay certain dividends or other distributions to shareholders; enter into transactions with affiliates; enter into sale leaseback transactions; and exceed the limits on annual capital expenditures. The Credit Agreement also requires us to satisfy certain financial covenants, including a minimum consolidated interest coverage ratio of 3.00 to 1.00 as well as a consolidated total leverage ratio not to exceed 4.00 to 1.00 (which was increased as of July 1, 2023 from 3.50 to 1.00 in connection with the acquisition of MSA). Starting July 1, 2024, the Company’s consolidated total leverage ratio will decrease to 3.50 to 1.00 as the one-year leverage increase of 0.50 due to the MSA acquisition has ended.

The Company incurred deferred financing costs of $1,248 associated with executing the Credit Agreement, which has been recorded as an other long-term asset in the Condensed Consolidated Balance Sheets and will be amortized over the duration of the agreement.

At June 30, 2024, our consolidated total leverage ratio was 1.69 to 1.00 as compared to a covenant maximum of 4.00 to 1.00 under the Credit Agreement.

At June 30, 2024, our consolidated interest coverage ratio was 4.57 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 secured overnight financing rate (SOFR) plus an applicable margin based on the current consolidated total leverage ratio. The interest rate was 7.68% and 7.71% as of June 30, 2024 and December 31, 2023, respectively. Additionally, the agreement has a fee on the average daily unused portion of the aggregate unused revolving commitments. This fee was 0.30% as of June 30, 2024 and December 31, 2023.

14

Prior to June 28, 2023, the Company maintained a credit agreement (Former Credit Agreement) with certain lenders and the Agent. The Former Credit Agreement provided for a $200,000 revolving credit facility, 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 Former Credit Agreement also provided for an additional $100,000 of debt capacity through an accordion feature.

The Company was in compliance with all financial covenants of its credit agreements as of June 30, 2024 and December 31, 2023. The amount borrowed on the revolving credit notes was $122,063 and $147,493 as of June 30, 2024 and December 31, 2023, respectively.

Other Debt

With the consummation of the MSA acquisition, the Company assumed a Fond du Lac County and Fond du Lac Economic Development Corporation term note (Fond du Lac Term Note). The Fond du Lac Term Note is secured by a security agreement, payable in annual installments of $500 plus interest at 2.00% and is due in full in December 2028. The balance outstanding as of June 30, 2024 and December 31, 2023 was $2,375. The short-term and long-term balance of $500 and $1,875, respectively, are recorded in other current liabilities and other long-term liabilities in the Condensed Consolidated Balance Sheets.

Note 5. 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 right-of-use (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 equipment used throughout its office and manufacturing facilities. 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				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Finance lease cost:
Amortization of finance lease assets	$	119	$	94	$	223	$	188
Interest on finance lease liabilities		12		10		20		21
Total finance lease expense		131		104		243		209
Operating lease expense		1,353		1,321		2,693		2,607
Short-term lease expense		159		131		311		270
Variable lease expense		60		48		112		117
Lease income (1)		(537)		(404)		(1,069)		(1,035)
Total lease expense	$	1,166	$	1,200	$	2,290	$	2,168

(1) The Company subleased a portion of its Hazel Park, MI facility starting in June 2022. Lease income for the three months ended June 30, 2024 and 2023 was $537 and $404, respectively, and $1,069 and $1,035 for the six months ended June 30, 2024 and 2023, respectively.

15

Lease related supplemental cash flow information:

	Six Months Ended
	June 30,
	2024		2023
Cash paid for amounts included in the measurement of lease liabilities for finance leases:
Operating cash flows	$	20	$	21
Financing cash flows	$	343	$	192
Cash paid for amounts included in the measurement of lease liabilities for operating leases:
Operating cash flows	$	2,980	$	2,891
Right-of-use assets obtained in exchange for recorded lease obligations:
Operating leases	$	337	$	363
Finance leases	$	383	$	—

Note 6. Employee stock ownership plan

Under the Mayville Engineering Company, Inc. Employee Stock Ownership Plan (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. The Company recorded no ESOP expense for the three and six months ended June 30, 2024 and 2023.

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.

As of June 30, 2024 and December 31, 2023, the ESOP shares consisted of 3,474,467 and 4,062,583 in allocated shares, respectively.

Note 7. 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.

The Company provides a 50% match for employee contributions, up to 6%. For the three months ended June 30, 2024 and 2023, the Company’s employer match expense was $922 and $770, respectively. Total employer match expense for the six months ended June 30, 2024 and 2023 was $1,976 and $1,644, respectively. 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 and six months ended June 30, 2024 and 2023, the Company’s estimated discretionary profit-sharing expense was $0.

Note 8. 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 and adjusted for discrete taxable events that may occur in the quarter. As the year progresses, the Company will refine its estimate based on facts and circumstances by each tax jurisdiction.

16

Income tax expense was $1,399 and $2,433, and the effective tax rate (ETR) was 27.00% and 25.73% for the three and six months ended June 30, 2024, respectively. Our ETR is different from the expected tax rate due to state taxes, non-deductible items, research and development credits and excess tax benefit associated with stock-based compensation items.

For the three and six months ended June 30, 2023, income tax expense was estimated at $475 and $916 and the ETR was 22.73% and 17.96%, respectively.

Uncertain Tax Positions

Based on the Company’s evaluation, it has been concluded that there is one unrecognized tax benefit requiring recognition in its financial statements as of June 30, 2024. The Company does not anticipate that there will be a material change in the balance of the unrecognized tax benefits in the next twelve months. Any interest and penalties related to uncertain tax positions are recorded in income tax expense. At June 30, 2024 and December 31, 2023, a total of $861 and $771 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, 2020, and state tax returns beginning January 1, 2019, are open for examination.

Note 9. Commitments and contingencies

Litigation

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 parties cross-appealed the court’s order on the motion to dismiss – Peloton appealed the portion of the order that denied the motion to dismiss the claim for breach and anticipatory repudiation of contract and MEC appealed the portion of the order that dismissed the claim for breach of duty of good faith and fair dealing. On April 11, 2024, the First Department, Appellate Division issued a decision and order affirming the court’s order on the motion to dismiss and affirming the court’s dismissal of the alternate claim of good faith and fair dealing.

On November 3, 2023, Peloton filed a counterclaim alleging that Peloton was induced by fraud to enter into the Supply Agreement and seeking recission of the Supply Agreement and damages, among other forms of relief. On November 22, 2023, the Company answered Peloton’s counterclaim, denying the allegations in the counterclaim.

The total amount for damages claimed by MEC 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 10. 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 their 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.

17

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 and six months ended June 30, 2024, eligible employees elected to defer compensation of $83 and $447, respectively. Eligible employees elected to defer compensation of $80 and $316 for the three and six months ended June 30, 2023, respectively. As of June 30, 2024 and December 31, 2023, the short-term portion accrued for all benefit years less than twelve months under this plan was $241 and $289, respectively. As of June 30, 2024 and December 31, 2023, the long-term portion accrued for all benefit years greater than twelve months under this plan was $4,315 and $3,816. 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 for the deferred compensation plan for the three months ended June 30, 2024 and 2023 was $53 and $169, respectively. Total expense for the deferred compensation plan for the six months ended June 30, 2024 and 2023 was $285 and $729, respectively. These expenses are included in profit-sharing, bonuses and deferred compensation on the Condensed Consolidated Statements of Comprehensive Income. Additionally, the Company made cash distributions of $286 and $17,562 for the six months ended June 30, 2024 and 2023, respectively.

Note 11. 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. The Company has an aggregate stop loss limit to mitigate risk. Expenses related to this were $6,382 and $5,133 for the three months ended June 30, 2024 and 2023, respectively, and $12,551 and $9,768 for the six months ended June 30, 2024 and 2023, respectively. An estimated accrued liability of $1,894 and $1,018 was recorded as of June 30, 2024 and December 31, 2023, respectively, for estimated unpaid claims and is included within other current liabilities on the Condensed Consolidated Balance Sheets.

Note 12. 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 13. 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

18

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
	June 30,		Report Date Using
	2024		(Level 1)		(Level 2)		(Level 3)
Deferred compensation liability	$	4,556	$	4,556	$	—	$	—
Total	$	4,556	$	4,556	$	—	$	—