Mayville Engineering Company (MEC) Q2 2024 earnings summary

Executive summary

• Net sales increased 17.7% year-over-year to $163.6 million in Q2 2024, driven by the MSA acquisition, organic growth, and new project wins, with margin expansion and robust free cash flow conversion.

• Adjusted EBITDA rose 28.4% to $19.6 million, with margin expanding to 12.0% from 11.0% in the prior year.

• Net income more than doubled to $3.8 million, and Adjusted EPS increased 30% to $0.26.

• Free cash flow reached $19.2 million, a $22.9 million improvement year-over-year, driven by working capital efficiency.

• Strategic execution of MBX initiatives and automation investments drove operational improvements and above-market growth.

Financial highlights

• Q2 2024 net sales: $163.6 million, up from $139.0 million in Q2 2023; organic growth was 6.9% excluding MSA acquisition.

• Adjusted EBITDA: $19.6 million (12.0% margin), up from $15.3 million (11.0% margin) last year.

• Net income: $3.8 million ($0.18/diluted share); Adjusted net income: $5.5 million ($0.26/diluted share).

• Free cash flow: $19.2 million, up from negative $3.7 million in Q2 2023.

• Net leverage ratio below 1.7x at quarter-end, with target range of 1.5x–2.0x by year-end.

Outlook and guidance

• FY 2024 net sales guidance reaffirmed at $620–$640 million; Adjusted EBITDA at $72–$76 million.

• FY 2024 free cash flow guidance raised to $45–$55 million, reflecting strong H1 cash generation.

• Organic net sales growth for 2024 projected at 1.5%–2.5%, with MSA contributing $20–$30 million incremental net sales.

• MBX and pricing initiatives expected to contribute $3–$6 million incremental Adjusted EBITDA in 2024.

• Long-term targets for 2026: $750–$850 million in revenue, 14%–16% adjusted EBITDA margin, and $65–$75 million free cash flow.